jerome powell. it's thursday, july 25, 2019, "squawk box" begins right now. ♪ live from new york where business never sleeps. th this is "squawk box." good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. yesterday a down day for the dow, that was because of boeing, caterpillar and disappointing news out of boeing we saw the s&p 500 and the nasdaq up. those two indices have been up for two straight days in a row this morning dow futures up by 27 points.

s&p up by a point. nasdaq down by about 4 points. overnight in asia, the nikkei up 0.2% the hang seng up by a quarter percent. the shanghai up by a half percent. this is all ahead of those talks expected to resume next week between china and the united states when it comes to trade. this morning on the continent, in europe we will see equities for the major averages, the dax is flat. the cac is up by 0.6%. the ftse is up by a quarter percent. in the treasury market, you can see at this point the ten-year is yielding 2.031% >> we'll be getting a lot of earnings, big earnings movers in just a minute. first a developing story, the embattled governor of puerto rico will be stepping down on august 2nd the announcement coming late yesterday. he had been under pressure from

protester force ne he had been under pressure from protester force ne for proteste nearly two weeks after chat messages were released crowds of demonstrators erupted into cheers after that announcement we're looking at some images there of protesters and citizens apparently happy >> we'll go to main lane here. back to more developments over there in a bit dow component dow inc. just reported the chemical maker earned 86 cents per share. revenue slightly below wall street forecasts really weird it did forecast some -- impacted by price declines in certain segments the parade of results marches on

today. 52 companies in the s&p 500 will report including 3m, our parent company comcast, amazon, which has decimated the retail industry according to steven mnuchin. alphabet and starbucks >> we asked about all kinds of stuff. he answered. >> he made a lot of news with that comment >> do we ever learn? has amazon been a bad thing for society? >> history is littered with heart breaking stories of families or people in the same business forever or are dislocated and disrupted, there are times when government has to step in and ease the transition for new technology that dislocates or supplants other people >> the way to do it is not to stop the innovation. >> your point with walmart, that's the same thing they said about walmart.

what happened is walmart gets disrupted. the companies in retail that were up to the task in terms of innovation have not been able to compete with amazon. >> including walmart, by the way. >> what was interesting is that the nasdaq closed up 70 points i thought the nasdaq -- complaining what are you doing you have the dow hitting new highs, everything is going great. now you will derail the s&p and the dow with the nasdaq, the dow went down because of boeing and caterpillar. you know why >> because they think it's not a real investigation >> what we said yesterday, they'll make it look good. all right. all right. we hear you about these big tech companies. >> if you're facebook, i don't know if you feel that way. facebook shares were higher after hours because of great results. they also announced that the ftc launched another investigation into us starting in june that's not related to the $5 billion settlement we cut with them and announced today or yesterday or the day before. >> the 5 billion, totally --

>> having mark zuckerberg be on the line for privacy issues, i think, will affect how the company operates to learn that, okay, it's $5 billion we're moving on. but the next investigation is right here and we're announcing it at the same time. >> contrast that with a company that doesn't have great results. and, you know, they have their own regulatory issues. think about -- >> regulators will have a light touch. >> true. >> look at what the ftc is doing. >> the earnings and business are going gang busters look at when earnings are not good >> the problem was they lost almost 500 -- >> where is the price now? it's been in a sustained downturn >> down 11% when i looked. >> 240 >> okay. >> hold on >> 235 >> that was yesterday's close. the indication today is at 235

>> okay. >> that's -- we'll talk more about this, including that amazon comment that was a fascinating comment i do i do i think amazon is one of the greatest >> it seems like an ant quaiantd viewpoint. >> the ecb, we don't give them enough credit really for setting interest rates -- not setting, but being partly responsible for what's going on in this country. we can't go higher with rates, we're tethered to the unbelievably low rates over on the continent. the central bank's meeting with poli policymakers will have a policy decision at 7:45 a.m. eastern. expectations are divided on whether the central bank wants to preempt the policy move here by the fed that could push down the dollar and strengthen the euro watch for the bank's forward

guidance because backward guidance -- we have a good idea about what that is watch for the forward guidance for signals of a rate cut or stimulus in september. i love backward guidance >> they just changed twitter on me what is this stupid new twitter? >> i've been dealing with that >> drives me nuts. >> are you guys now on -- are you on new twitter >> in the last five minutes they put me on new fwtwitter. >> you can be on beta. >> all my things are on the left >> you have to rethink your life >> don't change. >> notifications over here when you hit notifications, right above you can get verified it's all there i don't know you know what i don't understand -- i don't know what everybody was complaining about then new twitter came to me. >> i follow kevin mccarthy you know who they suggest for me >> who >> the squad, pelosi --

>> you're into politics obviously. >> not a single republican suggested for me all your people. >> are you going along with the -- >> oh gosh >> not for nothing, i look at it, i'm like i don't want to follow any of those people i follow a journalist, then it's paul krugman >> you don't want to follow anyone period. >> you block too many people >> if i'm blocking, they have to see who i'm blocking and block those suggestions for me it's horrible. >> wait, there's your page it's on the screen >> oh, my god. is that really -- no, that's a fake one that's a fake one. >> no, it's not. it's you >> it is yeah why does it say -- okay. i couldn't see that. i'm not sure if it's at joe

sidewal squawk >> it used to be at becky quick cnbc but that was too long. you can switch without using viewers. you can switch without changing anything else. >> can you help me with that do i have to use those key chains -- >> not while we're on tv >> maybe we should get back to the news >> maybe samsung's first foldable smartphone will go on sale in september. the launch of the galaxy fold had been planned for april but it was postponed affect nol ji after technology reviewers found the phone broke easily they remember forced the screen a and hinge area we'll see. it looked like it was promising. we'll see what happens. when we come back, our two biggest stock stories of the morning are up next. we'll break down the big moves from facebook and tesla. facebook up by 1% this morning

tesla down by close to 11.5% plus we'll get you ready for reports from 3m, southwest airlines, comcast and more right now as wehead to a break we will look at the biggest premarket winners and losers in the dow. utx leading the way. we're the slowskys.

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i'd rather not. welcome back our two big stock stories of the morning, facebook and tesla. we'll start with facebook, which was out with impressive numbers after the close, but also warning of slowing growth ahead. the company reported better than expected profit and revenue for the second quarter user growth was in line with estimates, while average revenue per user topped forecasts by a wide margin. facebook results included a $2 billion charge as part of the settlement with the ftc. joining us to talk about this is dan ives from webbush securities the facebook numbers were impressive and i think the most impressive

part is that the advertisers are not leaving facebook and doubles down on this >> if you look at it, the modernization kingdom continues to be there. average revenue per user, and with the antitrust issues t shows they continued to be goig on the offensive >> i will admit i did a bit of a double take. wait a minute, the ftc launched another investigation? i thought i was reading old headlines. the idea that you can announce a settlement one day and then announce there's another ftc investigation. that's a high wall to kind of climb with some of these issues. >> it almost feels like there's a line in the beltd way. you have doj, ftc and others --

>> and especially facebook >> they have the bullseye on their back in terms of what will happen over the next year or two, you will see focus around privacy, modernization and anti-trusz issues you can see that with sikh zthah zuk a zuckerberg and everything they're trying to do >> you don't want to be too profitable because of washington >> in terms of regulatory, modernization -- >> does this turn out to an privacy story via the ftc, or does this turn into an anti trust case that's a structural issue. >> the broader worry is

antitrust. when you look at facebook between whatsapp and facebook, them and amazon, there's a brighter spot line in antitrust. privacy continues to be there. no doubt >> what can you point to within the world of anti trusz when tit comes to took where you think they put other competitors at a disadvantage >> when you look at an overall user perspective, right now it's tough in terms of our opinion for doj to prove pure anti trust. it's a finer business model tweak. but nonetheless they will peel away the onion here. for investors they want to continue to see strong fundamentals on user growth and active sort of engagement.

>> very quickly, do you buy the stock here >> i think you continue to own the name, and what you saw last night gives another feather in the cap for the bulls. >> let's talk about tesla. tesla had deliveries that were stronger than anticipated. the margins were not strong. they shrunk to 18% what do you think about this >> this was a major gut punch for the bulls. they fundamentally can't make a profit on record deliveries. gross margins is the key that needed to be above 20%. it came in below this calls into question can they have a profitable business model with model 3 >> model 3 being average selling price of 50,000.

you think part of it is they need more luxury sales do you think the model 3 is cannibalizing part of the luxury sales? >> we believe there's 10%, 15% cannibalization. they pushed out profitability. they kept their delivery guidance, which we continue to think will be extremely challenging for them to hit. that's the problem for tesla even though deliveries came through, the whole profitability profile will come through. >> some say when they open the shanghai facility, some of these issue also be resolved do you buy that? >> that's something on paper that makes sense >> i think that continues to be a worry and balancing act for tesla as they build out giga 3

>> do you think the stock price is worth 230 bucks >> i think this is something that could go lower. we're lowering our price tar ge to 220 you look at what's happened on delivery -- >> how do you get to 220 do the math on 220 >> 220 is what long-term profitability could be in a multiple on that call to 15 times multiple in terms of where they could eventually be on a profitability profile. that's why right now this is a glass half empty view of tesla until they prove otherwise i view last night as a step back for the bulls, just given what you saw on profit bltsd aabilith overall profile they should have ripped the band-aid off i think 340 to 350 is the line in the sand. >> ripped the band-aid off and said this is the top line for

production f you're g production, if you're getting the bad news out there, get it all out there at the same time >> i think if you look at whisper numbers, 340 to 350k is where they would like to be. the business model is built on that type of demand. if you don't see the demand, ultimately pushed out profitability doesn't happen >> if you do see those numbers, will they then be vindicated >> if they hit the 360 to 400k that would be a huge improvement for musk and tesla that would be a check of the box they need to do. if not, you have major issues and questions of the business model going into next year >> dan, thank you. good to see you. coming up, when we return, we have a ton of other big movers to tell you about, including an orthodontics company that is bracing itself after a 20% drop in early trading. details on that straight ahead kevin, meet your father.

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welcome back time for the executive edge. we have some big movers to tell you about. ford earnings missing forecasts the results were hit by charges to restructure its divisions in europe and south america nearly all the company's profit

came from north america where pickup trucks drive margins. ford issues weaker than expected guidance for the year. shares of paypal are dropping as well results did beat forecast but the company is luring its revenue outlook for the full year paypal blaming delays in integrating services with some of its partners on that news shares down about 3.5% align technology falling more than 20% today. the maker of invisalign braces reported better than expecte results, but shipments fell short of estimates due to shorter growth in north america and uncertainty in china align slashing its third quarter guidance that was similar to the move we saw from the roomba company, irobot, the day before china matters for some of these companies.

these are a couple of stand-outs two big reports due in the next couple of minutes numbers from 3m and southwest airlines we'll bring you those numbers after a quick break. as we head to a break, here's yesterday's s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth.

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welcome back you're watching "squawk box" live from the nasdaq market site it times square. look at u.s. equity futures.

dow would open up a beth higher. the s&p looking to open off by 2 points a big shakeup at uber on the board of directors the company says arianna huffington and nat kohler have resigned arianna said she needed to concentrate more on her own company and could not give the board duties the attention they deserved she missed two meetings in a letter to the company. she joined the board in 2016 at the request of travis kalanick, who she was close to kohler is a venture investor who was involved with uber since it since the earliest days. he ousted travis kalanick. he said he was thrilled with uber's position but gave no reason for his departure sounds like some of these folks were holding on until after the ipo.

benchmark is one of the biggest shareholders in the company. after getting off the board, you can sell your shares without having to disclose you are selling your shares. >> 3m, the adjusted number is hitting. the sales were above the gaap number is below estimates at 1.92. the adjusted number is 2.20. that's a good number 15 cents ahead of expectations the sales estimate was 8.035 the company was able to do 8.2 looked weird when it hit at 1.92 adjusted 220 the company affirms full-year organic growth and the adjusted earnings expectations. the street is at 939 on adjusted they break out some of the industrial sales 2.96 billion healthcare, 1.83

consumer sales, 1.3 billion. operating margin 20.8%. there was some affect for currency local currency sales fell 0.9% in the quarter foreign currency cut sales by 1.8% year over year. >> we often look at this company as an economic indicator of what's out there the ceo, mike roman, making some comments about it. he said our execution was strong in the face of continued slow growth conditions and key end markets. he said they managed costs and improved cash flow through it. if you want a broader read on the economy, it's not a great one, they say they're still continuing to see slow growth in key markets. we have a smile stone on mi s&p. there are no all-male boards among the index's companies. >> the last company without a

female director, they hired dan morfield to its board. in 2012, one in eight s&p 500 companies had an all-male board. overall, just 27% of board seats in the index of companies are filled by women. in the broader russell 3000, 376 firms still had all-male boards as of the first quarter of this year there is still work to be done we have more coming up on "squawk. we'll have more on earnings. big earnings coming up next, we'll dig into data privacy issues that debate with a company at the heart of consumer data. plus a little later, the latest on the looming sprint t-mobile link up. you're watching "squawk box" on cnbc

antitrust. welcome back we've been watching the u.s. equity futures after a few reports from a couple companies out this morning, you will see the dow futures are still hanging in there up about 25 points s&p futures are down by 2 points the nasdaq, which has been lower all through the morning is now indicated down by 16 points. the government's crackdown on large tech companies hy s hi given some investors pause but

it's also created opportunity for smaller players in the growing online ad world. now you may not have heard of tobulu, but you have probably seen ads like this at the bottom of different articles you have ran across on the web. these are powered bay native advertising company that partner with nbc news, sony, and more. they are at the heart of the debate of data privacy and online spending. joining us is the founder and ceo of taboola i see these ads a lot to if you couldn't advertise on facebook or instagram or google, could you even have a business today? my question is do you think you could? >> i think that's part of the problem. today the reason we're spending so much time with f.a.n.g. in general is because so much of advertising budgets are going to two or three companies

i am optimistic, i think we're seeing a slew of new companies that are going public and worth almost a quarter trillion dollars. and companies like us, still small, but giving small businesses and brands an opportunity to explore other options. >> it's not illegal to be a monopoly if facebook has done this legally and on its own without trying to maintain its monopoly or create the monopoly illegally, there's technically no problem with that, right? do you believe as a competitor, if the ftc called you or the department of justice called you and said are these people doing damage to your business through either misleading people, or doing other things, what would you tell them? >> i don't think they're misleading people. the main challenge is that you have primarily two channels to spend money, which creates disadvantage from pricing perspective, disadvantages from data access.

i don't know how to answer if they're a monopoly or not. when you reach 2.7 billion people, it's worth a look. >> but do you believe that they're doing something fundamentally right now to disadvantage competitors that's actually -- from an antitrust perspective, that's fundamentally the monopoly issue. >> i don't know if it's pro acti proactively or not when they host content within facebook versus allowing traffic to go back to journalism, to me that was a mistake that mistake cost a lot to journalism and it is only big enough because they're so big i don't know if it's proactive or not, but when you're so big, even a mistake that happens by mistake is significant >> i want to talk about these ads on the bottom of these stories. >> "squawk box." >> they're on cnbc's site as well they're on everybody's site. congratulations to you >> thank you >> oftentimes i look at these

things, they look like articles. you click on them. some of them are articles, some of them are like slide shows you have to get to the 30th thing to actually get there. what's happening how am i supposed to feel about this >> i'm happy you're clicking on it you're part of the system. >> i'm clicking away i'm clicking too much. >> that's good i'll take it the way i think about it is we spend time making sure there's no fake news and inappropriate content. we have human beings that monitor everything that goes on to the network but then beyond that, you know, it's a mix of content such as cnbc to fun and entertaining stuff. i have no problem with kim kardashian some people like it. what we do care about is to make sure there's no inappropriate stuff on the web >> i never get to the one that gets me to click on it >> the one where they say -- >> the child star looks like this now -- >> yeah.

>> i never get to that i see ones before, but i never get to the one i did it for. i have no idea what pamela anderson looks like now. >> nobody does i think that there is a trend of clicky content i think we know companies like buzzfeed created a whole new trae trend that younger audiences like only older people use the term click bait even the "new york times" uses click bait >> do you think you're attracting a certain type of advertiser as opposed to some folks who are advertising on an instagram or a facebook? is it a different advertiser i don't see those kinds of advertisers on those sites i wonder is that because of the pricing? why am i not seeing that there but i'm seeing it here >> i think every advertiser has an account on facebook, but they

have 7 million advertisers, we have 20,000. they're still 60 times bigger than taboola we have more roads to go there's no advertiser who works with us that does not have -- everybody has a google or facebook account we just have 20,000 of them. >> i asked a lot about facebook in the beginning where do you stand on google is that different to you do you think they're advantages you or disadvantages you >> i think they go to a different bucket, but google i think is facing their own facebook movement with advertising slowing down they may have to introduce a libra calibra initiative on their own looking for the next search engine type of growth >> so you think libra is facebook's next answer to where you find the growth? >> i think nobody but joe dislikes facebook more >> right >> with facebook, they own their rpo with so much growth and

stories in asia pacific, why launch libra unless you know something we don't know. unless you need a growth engine that goes beyond advertising or because you see privacy looking at your business i think it's interesting to launch calibra as a wallet i don't understand why they need libra. i think google -- they spend billions of dollars on nonadvertising initiatives for years. some of it has to pan out. >> i'll give you a different view >> please. >> dave marcus who is the man behind libra, i think ar"a," you had mark zuckerberg interested in crypto. dave marcus wanting to do something like this. i think he was going to think about leaving. if you wanted to keep him -- no. i think there's a more rational version. >> so you launch a global currency to keep one of your employees? >> it costs nothing to do. it's like a free option.

>> my opinion -- >> i think that's how we got here i think that's a much more rational -- >> i'm with joe on this. i don't know if you do something of that magnitude to keep a person if they do, kudos to them from a cultural perspective for keeping strong people. when you follow wechat's playbook,ting into crypto or something so controversial in this world especially in the past when you had instant articles that caused so much attention from journalism from my perspective, calibra makes sense. libra, i would skip it >> we're already in your business six ways to sunday. now we'll be in your finances. mark is in charge. or david i don't know that makes no sense. you remember forest gump looks nothing like him how about i see dead people.

have you seen him now? he's in a bunch of tuff. the entourage movie but also the latest ted bundy movie >> i have not seen that yet. >> look at haley joel -- that's one child star you can't believe. have you seen them >> do you look at these ads? >> are you looking at ads now? >> yes during this interview we've been looking at a lot of stuff. i was on the daily beast earlier. >> they had the one positive article about mueller. >> i didn't look at that. >> he knocked it out of the park yesterday. the daily beast said that. >> go on "squawk box" and see what's happening >> i'm looking at southwesternings c southwest earnings. 1.37 adjusted verse theus the 13 the street was looking for digging through, what we have been waiting to hear about from this company, the max 737, the delays and what they will mean

for it southwest saying due to extensive delays in returning the max to service we expect 2019 asms will degreacrease yea over year compared to our capacity to grow 5%. we are mitigating damages. we will consolidate our new york city presence to laguardia airport. as a result of the 737 max groundings going on longer than anticipated, sweftd will outhweo longer be servicing newark liberty airport effective november 3rd the financial results at newark have been below expectations despite the excellent team at newark sounds like they're winding this down, not just because of the 737 max but because results have not been what they anticipated

>> they did not have huge operations at newark >> no, but it was a big deal that they moved there. the idea that you would see more competition at newark, where united has 85% of the departures coming in and out of there southwest, second quarter operating cash flow, 9$966 million. free cash flow, 7$736 million and capacity down by 3.6%, the load factor 86.4%. >> okay. you don't want to miss -- >> by the way, that's right. gary kelly, southwest ceo will be coming up today at 9:35 on "squawk on the street. we'll go to commercial break. we'll spend the rest of our days looking at the bottom of all the articles >> thank you it was interesting having you here >> appreciate it this was fun thank you. >> until next time. when we come back. more on the southwest report and we'll get you ready for the american airlines report that's due around 7:30 eastern time

doesn't look anything like they used to. he before we head to break a quick check of the european markets. we saw the dax flat, now it's down by 0.10%. the cac is up bay quarter percent. ft is up as well there he is. change which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪

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welcome back, everybody. southwest airlines kale out with earnings that beat refnous by 3 cents.

the company said that results were pressured by the grounding of the 737 max joining us right now is seth kaplan of kaplan research. seth, what do you think of the numbers? ah, they're good yeah, their margins applied by less than half of a point here despite everything that's happened, obviously, they're dealing with an operational mess with the max the southwest is doing very well southwest still has probably more opportunities than any other airline. the opportunities partly lie if doing things that people night m not like, in unbundling the product. charming for bags, itinerary changes and doing things other airlines have done considering they haven't done those things, doing very well. you mentioned before the break getting out of newark, that's interesting for united, by the way. as you said, not a huge presence there. i was just looking at the capacity data, 15 flights a day

for southwest. but they fly to austin, nashville, denver, chicago, phoenix and st. louis, so united loses an important competitor in those markets. >> meaning united wins >> exactly as you said, it was big news when southwest goes into the market if anything, bicker news when they leave a market. they don't do that a lot they have as much patience as any airline in the world they can do that because of how big they are this is what capacity cuts, forced capacity cuts in this case cause you to do when they look at 5% growth looking at shrinking the airline. you will not shrink what works >> that tells you how bad it must have been for newark or northwest. >> currently assuming they will get approval for the max to return to service in the fourth quarter. they go on to make the point that even if that happens, that it will take one-to-two months to comply with any perspective faa directives after that ground

secretary lifted you are talking about at least the first quarter of next year before these airlines can continue to put the 737 max back into play? >> boeing says they are talking essential fourth quarter airlines, if you look at what they have been doing with their schedules, again, that's not necessarily a discrepancy, boeing is talking about a plane being safe n. carrying meaningful numbers of passengers, at this point you are looking somewhere right at the end of the year. >> southwest says they have had preliminary talks with boeing for compensation for the grounding. that's something we all anticipated and expected all these airlines are doing how do you think this plays out, boeing and all the airlines, how does it play out for boeing, for the airlines and a year from now are we going to be talking about this in. >> well, the airlines all have leverage, even southwest, which nobody really believes is going to probably buy anything at boeing, said in recent months,

basically, there is no law we can only buy boeing, so, you know, if anything here, these airlines, even if they are rooting very much for this all to work out with the max, southwest is doing it as much as any other airline in the world, they have some leverage here in the case of southwest, the compensation is probably not going to be a fat check to them. it will be discounts on future aircraft deliveries. >> that itself the big deal for boeing largely, the larger question, one thing i'm looking at here, leg e becky, is there will be additional training ireland for the max. that was a big selling point of this plain was revolutionary operating to economics hey, you can drop it in your fleet, pilots don't need a lot of retraining. if airlines look at this thing and say, hey, this will need additional dollars in pilot training over the course of the life of the aircraft, then that could put downward pressure on pricing for the planes for the long term. boeing now is probably saying

that isn't going to happen. >> great to see you. don't miss ceo gary kelly. he will be up on "squawk on the street". t-mobile, a potential megamerger next. next, we will talk to one of tesla's biggest bears of what's shaping up for a bad day the stock down 10% in the pre-market quk x"uned "sawbo will be right back on cnbc. ♪ how do you gauge the greatness of an suv?

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earnings galore. more than 50 s&p 500 companies reporting this morning we'll break down what you need to know and watch. could today's ecb meeting sway the fed a key rate decision coming this hour we will have the news and what it means for j. powell ahead of next week's fomc meeting. how do people feel about facebook 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 to "squawk box" right here on cnbc. andrew ross sorkin along with becky quick. we have a number of companies reporting earnings the next couple ours. dow up 45 points, the s&p 500 off about a point and our own parent company just announcing its own earnings >> comcast out with numbers this morning. it looks like the company beat the street by a lot of different metrics. as justed earnings per share, 78 cents, that's better than street was expecting. they also beat in terms of cash flow, 4.3 billion versus the consensus of 3.5 billion they beat consolidated cable, universal, all the way across. beat in terms of revenue and internet customer editions son sol dated ebitda was up to

8.7 billion and consolidated pro forma revenue up 0.8%. they say primarily because of the tough comp in film going up against jurassic films a year ago and the currency at sky in 2019 the sky performer total relationships up by 304,000. they talk about strength and net streaming examiner edition as well as the unique content launches there sky's ebitda was up excluding the impact of currency, nbc universal down 0.8%. that was from tough comps a year ago. cable networks up, eb do up 2.2% broadcast revenue up 0.5%. theme parks up 7.5% to 1.5

billion. >> the video customer losses were worse than a year ago but i think people are comfortable with that because of the high speed internet. loss were 224,000 last year it was 140,000. as we continue to feel and respond to the behavior changes in the transforming competitive landscape in the u.s., but point out, sorkin, you understand, many losses were customers with skinnier bundles, which are less profitable we're not chasing unprofitable subscribers. >> it was the high speed internet customers, though, they added 209,000, that beat the street's expectations. >> that has been the growth engine cable ebitda was up to 5.9 billion. >> you got to stream your stuff you cut the chord on >> you have to stream the stuff.

at the moment, they're up on mobile commerce as well. it was a littles that what they had in q 2018. >> as an oversight, i don't see "squawk box" mentioned. >> in the line item on "squawk box," it's not there it might be in the footnotes i didn't see that let me look at that >> the line item on "squawk." >> i'll get back to you. all right. here's what's making headlines at this hour, dow component 3m reported at justed shares. the revenue was also above wall street's forecast. then it went, it was just interesting to look. because the company did slower -- lower its gap they're comfortable with it. the reason, i just happen to see it i had left because it was so specific exactly what was the reason for it.

it was a very strange reason i can't see it now it was due to a charge related to the rationalization of one of its subsidiarys in venezuela >> okay. >> which, you can imagine. >> venezuela and what's been happening there. >> exactly. >> i would point that out, too it's a case specific, country specific country >> theired a judd net of 9.75 is the mid-point of that is above where the street is currently. although they had to bring down the gap. tesla reported a wider than expected loss for the second quarter despite record deliveries of it's electric cars that's 12% you know what it's not back to the dire days we saw a couple months ago, down below 200 i don't know, the jury is still out on tess louisiana it's almost like there are tesla

people and there are non-tesla people a lot of non-tesla people that love the stock love the car. even jen has been making comments. >> if you love the car >> is that enough? >> sometimes that equates to i remember people that used to love that circuit city parking lot was crowded. stock, things like that best buy went in. >> there are people if you had a pair of nikes bought the stock you can do okay. >> right >> they have more nikes. >> exactly >> we got some news to bring you as well. the other big story of the morning, t-mobile and sprint could be getting the green light to american as soon as today we might get an announcement while "squawk" is on the air joining us to talk about what it means for the sector, the senior telecom analyst at wells fargo securities good morning to you. >> good morning. >> we are expecting this news that the doj has approved this transaction, that would include spinning off part of the business and selling it to dish to create a fourth competitor.

i think the big question right now is if, in fact, that transaction takes place. if the doj puts its stash of approval open it, we still have the states to deal with. so what do you think happens >> yes so i do think, it's being referred to as conditional approval as long as the divestitures and sales go through to dish. with the state's argument. there is something like concern is state ag's citing that. there are concerns on pricing and competition f. this is done and essentially a fourth competitor is created maybe sin thetically through dish, that should be enough in my view to weaken the state dramatically. sprint and t-mobile said they won't close this deal until the state's deal is worked out so we won't have closure immediately. until that is completed. but my expectation is that will come in short order. >> and in terms of what the means for this fourth

competitor, this dish competitor, how meaningful can they actually be >> you know, i think there is a lot to still see, under what the, you know, we only know what the press is reporting, including you guys what we're hearing is that dish is going to offer service under dish mobile or whatever the name is going to be and the margin that is incrementally negative for the three other players there. it's a competitor. that's somewhat easier said than done you think of customer care, billing, t-mobile, et cetera t-mobile may have that support there is a lot of hidden costs that will make it harder >> what about the marketing costs? i assume there is going to have to be a huge spin to effectively create, a an opposite edition, not a brand that people don't know nationwide already, a huge spin to effectively announce we're in this business now >> right

exactly. and they have the dish at ceo says that really maybe that's not the model he is following. off know it might be more of an iot business center. think of what's going on in ecommerce in japan has been brought up as a model. so i think there is still so much to do you are absolutely right, the marketing costs of wireless, just look at t-mobile advertisements everywhere you look it's not inexpensive to say the least. >> how big a plus is this for the atmosphe&ts and verizons or. t the anti-trust, the doj approving it is, does this make the marketplace more competitive or less? i know we had this conversation before i imagine it may have evolved over time here. >> i think spectrum the a key part of this how much spec truthftrum dish i to work with is the question

i think it makes it more competitive. at&t said open their call just yesterday, nothing here, whatever happens here, how the chips fall out with dish really changes their strategy as their strategy to quote randall stephenson is already fully baked, meaning at&t strategy, they're definitely going down that media path. i think it's a question of what does verizon do? if you could own any of these three companies, i'm saying three as t-mobile and sprints now could be one. >> could be one. >> which one do you like >> i like t-mobile i think i've used these words before, if they get what they get in terms of spectrum and the high spectrum is very powerful they have the big airplane and they can be the -- >> in terms of 5g? >> in terms of continued market share gain in the wireless for the 5g, i think that fibber is a key part of 5g. there i don't think verizon has been shy of their cyber

ambitions. >> that has been hidden in plain sight. i think that's the key infrastructure they needed. >> i know at&t and media ambitions. where do you stand on at&t right now? >> at&t we're at a hold. although i liked the narrative yesterday. i thought they did a good session on their call. i think that they articulated the strategy and the big day to watch is october 29th, which will be the warner media analyst in burbank i believe >> appreciate your time this morning. >> thank you >> thank you >> you bet coming up, the busiest day of earnings so far with more than 50 s&p 500 reporting. we'll break down what you need to watch, including tesla. the stock gepting hit after hours, posting a wider than expected loss. we will discuss this down the road for the elected car maker as we head to break. here's elon musk talking about model 3 demands, "squawk box"

coming right back. >> this is speculation, it's my opinion, what i think long-term demand is for all three, it's probably 15,000 a year roughly about that the music event of summer...

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box. sources telling wnbc in new york accused sex trafficker jeffrey epstein was found injured in a feal position in his cell. he was reportedly found semi conscious with marks on his neck, he is being held at the jail awaiting trial for sex trafficking and conspiracy, two sources say epstein may have tried to hang himself, another course says his injuries aren't serious and may be using it as a way to get a transfer to a hospital a fourth source is he may have been attacked and investigators are questioning an inmate, an accused killer epstein pled not guilty to sex trafficking charges brought by the new york offices in manhattan. so many big names, of course, who have been involved with him one way or the other over the past several decades >> i imagine him in the general population ever, anywhere year

someone, you think >> i don't know. >> i think it's interesting to argue. >> you would never let him in with other guys like him to do not do well in police zbln the thing that makes this interesting to our viewers is the ties not only to wall street but lots of companies, limited brands yesterday announcing it was going to be doing an investigation about any relationship the company had with him because he was the personal money man, so we'll see how that plays out. >> he was on the boards with leon black, a number of leon black's own personal boards. he helped negotiate the hybrids deal, j.p. morgan, so their a whole number of connections to so many people on wall street that he has been connected to over the past couple decades. when we return, the ecb's decision on interest rates and what it means for j. powell, plus, elon musk telling investors tesla will break even this quarter and be profitable

in the next quarter. we will talk about the future of the car maker shortly. check out the futures at this hour it looks like the dow is indicated up by 42 points. yesterday the dow was down the s&p 500 and nasdaq closed up the third session in a row the nasdaq off by almost 13 points ths&e p down by 1.5. "squawk box" will be right back.

♪ let's get at it. dom chu with this morning's market movers. >> we will start with what's happening with southwest airlines, because the shares are down by about at this point 4.5% or so more than 3,000, 4,000 shares of pre-market volume, america's fourth biggest airline came in with mixed results, better profits, it says it expects higher costs in the second half of the year and unit measures in the third quarter as well, southwest is the biggest user of the boeing 737 max jet that grounding cause it to cease flying in the new york area,

consolidate its operations and those headlines not helping matters much we are watching shares of bristol meyers squid, which are down around 1.5% or so, over 50,000 shares of pre-market volume they posted profits and revenue that came in better than estimates and also boosted its full year profit guidance. it was helped along with its blood medication and medication aurencia, there was a cancer study, they announced that late yesterday. we're going to end on shares of align technology, which are down around 20% or so over 15,000 shares pre-market. inv invisaline dental. the ceo will be on tonight to discuss with jim cramer. those are some of the movers. >> dom, thank you. we are in the middle of market season, today's durable goods data and tomorrow's second

quarter gdp report all of this leads up to next week's fed meeting let's talk about the markets and the xi, joining seems to me a chief economist and cnpc contributor, also, michael santoli, the markets commentator, the earnings season again, you had 33m, dow, southwest, comcast, all of them here for the most part, the numbers are good in companies operating through economic issues like 3m. >> that's pretty much the take aways. the companies are beating at least at the historical rate the market wanted to see that this flattening out of earnings in the first half of this year was not a cliff. right? i think the fact that you can still look towards the later part of this year as having a pickup, it's been good enough, given what else is going on with bond yields and liquidity support as well. >> you think there has been a change going from what we heard, maybe a quarter ago, two

quarters ago, from fought being able to see the future to now we feel more confident about what's coming? >> i think you are closer to whatever you were afraid of six months ago, and it hasn't come to bite. also the stockmarket is at an all time high. >> i don't think anything changes ceo confidence more than that. >> looking at stock price. >> things are working fine we have some room to maneuver. >> so what's the real pick, joe? >> the fed it's the same. we talked about this many times. it's the fed, michael talks about bond yields. that's true. they're falling everywhere as you know, greece now has a lower ten-year yield than the u.s., ten-year treasury, which is remarkable. the fed has the economies back the fed i think could make a mistake next week and only go 35 i think they should be 50. i have been vocal about that >> why >> they need to try, wrestle control back from the markets, which basically pushed them around.

>> you don't think it's an economic issue back down the markets? >> if they go 50, they'll uninvert the yield curve, number one, number two, it will give them functionality to not have to go in september, they can be more balanced in their statement. >> why do you think if they go 25 basis points now it automatically means they have to go -- >> as silly as it sounds, the market is expecting. the market is essentially saying you have to go 75. >> or what do they have a temper tantrum? >> two reasons, there is a wisdom of crowds aspect, the yield curve has been a pediatricer of cycles. the other thing, beck years and this is important, that the inversion of the yield curve actually can cause economic conditions to tighten because of the borrowing, short lending long aspect of financial intermediation. >> joe, let me get back to the basic point. you think the market is right. is the economy demanding this because of weakness we seen from

i don't have seas being imported here >> that's certainly a part of it, the dollar has been strong as well. the gdf data look good at the moment that's always the case even if this was a economic point, the market is looking forward looking. it's slowing in a world where the fed believes it is under shooting its inflation charges. it should be easing rates, lowering rates >> mike what do you think the market is demanding? what do you think? >> they are impliciting demanding what joe is saying if the fed goes 25 basis points, the three month yield is 208 or 209. that's where you have the slight inskrergs. >> right. >> if you only go 25 basis points, it brings the rate to 2 and a quarter is the range it doesn't automatically mean projecting out three months from there, people assume they can go below 2% you clearly say you have to go

25 in steve. >> what if the next employment is soft? can they do 50 in september? >> what if the point is strong if they cut it 50 basis point? it's unlikely, people will mark up their gdp relative to where they were in 2013. >> keep in mind what this one line of thinking at the bun fed is saying last week, which is you have markets as at an all time high. the volatility is at 12. the markets are very flush right now. >> temper tantrum. >> eric is so far out of main stream, with all due respect he should be ignored. >> there is a faction out there -- >> why did john williams have to walk it back when he suggested they cut it 50 points, there was a call that probably came from the fed that said what are you doing? you got to say this is just you, not us >> sure. absolutely it negates the other people on the committee that want to have their voice heard, sure.

it tells us where the risks are and where they're going, which is lower rates and inflation, the other thing, becky, you talked about da that look at five-year forward break even rates in europe and in the u.s., they're plunging >> you got to be in denial then you mentioned at the top. >> denial is not just -- >> no longer just, there was a time when it was us. now it's. >> three month treasury is up gs, >>uy thank you, we got to run. >> more to come. back in a moment . they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪

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check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. shares of southwest airlines are dropping this morning. the company says its latest results were pressured by the grounding of the 737 max, which of course has been an issue for several months phil lebeau joins us with more on that story. >> reporter: andrew, we've known there were going to be pressure points for southwest in the second quarter because it doesn't have the full complement of a 737 maxes to fly. remember they have 34, more than any other airline in the world 34 of those maxes that are grounded because of that, that puts some pressure on q2 numbers not only that, the company is

saying because it will not have the max at least until november 3rd it expects its capacity to be down about 2% system wide in the second half of this year remember, originally, they thought they'd be capacity 5%. not only that, they are trying to optimize the aircraft they do have since they don't have the full complement of what they expected they will cease operations in newark and consolidate their operations out of newark, laguardia. that's to get better optimization of their fleet as they adjust to having fewer planes than expected flying around we will be talking with gary kelly exclusively on "squawk on the street". you do not want to miss what he is saying later. guys >> before you go, you want to pivot real quick you are standing in front of tesla and tesla reported last night. it's like another hard quarter. >> reporter: well, right this is a case of everybody knew that the margins would be under

some pressure in the second quarter as they ramp up delivery, basically pushing the medal. they wanted to push those delivery goals well, that happened. so when you look at the results from the second quarter, the loss was greater than expected it's the fact that the automotive growth margins dropped under 8%, came down from the first quarter, down from a year ago, when again it was over 20% for those automotive growth margins. they also saw stronger free cash flow, not surprising here's what elon musk had to say on the conference calm last night about the company's prospects in the second half hoff this year >> we believe tesla has, is now at the point of being self funding and would accept a pre-cash flow in future quarters with the possible temporary exceptions around the launch around new product >> we should point out that tesla did re-affirm its guidance

to deliver between 360 and 400,000 vehicles this year guys, they have to come up with at least 300,000 in deliveries to hit that target chief technology officer j.b. strobel, they announced on the call he is training out of the cto role, more management shakeup if you will or transitions at tesla guys >> real quick. phil, elon has said before that the company would be self funding. right? >> reporter: yes the question is when remember when they said this in the first quarter? >> right. >> reporter: they said we expect to be profitable, we expect free cash flow starting in the second quarter i believe. it continues to get pushed out quarter after quarter. that's going to be one of the things that the bears will look at and sit there and say when is is this? when is it sustainable when do we see this? quarter after quarter

consistently >> when do you anticipate there will be new product? >> reporter: well, they said model wide by the end of 2020. so that will be the next new model that they plan to roll out. they plan to have that by the end of 2020. by the end of this year, they expect to have the shanghai plan up and running also in the second half of this year, they will show us the electric pickup truck. do not expect that to be the high volume vehicle. but it will 16 rate a lot of buzz >> we should also ask you about american airlines. phil, those numbers hit heing while you were talking they came in with an adjusted 182, revenue came in at learn.96 billion. the company is saying it sees 450 to $6 a share in earnings for the full year. street's at 519. >> that range is unbelievable. >> it's a huge range then you also talk about the full year impact because of the grounding of the 737. >> they don't know. >> of $400 million the maxes were ground basically

through the rest of the year they had it down to per second then they talk about the same thing we heard from southwest earlier today you are talking about probably two months of time to deal with the faa directives that come after that. and doug parker comes with what he says a challenging start to the summer, near term adversity the company is dealing with, he's proud of his team for operating through that it's not because of passengerles. the load factor is 86.6% it's because of the 737 max grounding and also what he is calling an illegal work stoppage >> right >> a little slowdown i should say by the mechanics unions. the company says to influence contract talks so both those two at a time you would think a lot of people flying a lot of high load capacity open all these issues, being hit by these two other issues out there. >> look at the cancellations this summer. if you look at the cancellations american has had to deal with, because they are dealing with a

mechanics union, this is a fine line, guys you don't want to say the mechanics union is purposely delaying activity so that a flight is canceled but we saw this with southwest earlier this year. if you have enough mechanic at a certain point saying you know what, by the letter of the law, this plane is not 100% ready to go they're legally, that's what they're supposed to do at the same time, guys, we know how all airlines work. these planes are moving and moving and moving. it's not that they're looking the other way saying, ah, it's not safe there is a fine line there american is definitely paying the price. don't forgive, doug parker, you do not want to miss the interview exclusively later on today on the exchange. >> thanks. getting back to something we were talking about >> that is tesla in the future of the car maker, joining us now, our "wall street journal" reporter tim higgins and senior analysts, one of our favorites,

jeffrey osborne. jeff has the lowest price target for tesla at $140. tim, i'll start with you some of this was, i'm reading some of your comments, we knew some of this was going to happen why is the stock down 10%? it was a narrower loss much more than some people thought. >> a huge loss compared to what the expectations were. on top of that you know the company earlier was signaling that its going from this previous kind of commentary that they were going to be able to generate quarter after quarter after quarter of profits going into the future indefinitely to now saying, yeah, break even this quarter, but really the priority is sales volume that's what they used to be doing as a startup, going back to this idea of chasing growth >> and i mean, jeff, there are some comments that once you become more come mod advertised,

if if -- if you are selling the less probably model 3, that is going to be a tough transition is that what we are seeing here? >> yeah. exactly. joe, they actually had to reduce the price of the model 3 four or five times now over the last six month, elon referred to demand activity for lowering prices the margins are less tan 20% that was the biggest negative. you have a period of profitless prosperity, moving the prices to move the vehicles off the lot. >> in tim's piece, he points out, if tesla becomes a traditional car maker rather than this dream car, dream stock, then they're trying to make a bmw three series competitor they have the extra cost of batteries. i don't know how you command a premium valuation with that. >> one of the remarkable things about the model is the idea that people are going to start paying $100,000 for a sedan so many people there are a lot of people buying

this vehicle over the last seven years. enough to you can buy a model 3 for half the costs looks similar and has the bells and whistles and is seen by buyers as essentially being the next generation of the model s. even if you look at elon musk, the model s is better, does better things. you talk to average buyers they're saying, hey, ki get a model 3. >> jeff. if you are one of the biggest bears. give us your bear. hough does this unravel? where does the stock go? >> i think the second quarter is the best in terms of volume. as we get closer to that model y launch next year, which is similar to the three looking, the y is like a pick clang aspea-- pick changing aspect ratios. >> where is the stock in the next six-to-12 months?

where is the low >> i think they are under investing in the brand i think we will break 200 later this year and go well below that next year. >> wow >> thank you, both. when we return, the european central bank'secio disn on interest rates "squawk box" will be back after a quick break. ♪ keeping the night interesting, is all about setting the right tone. ♪ lower carbs. lower calories. higher expectations. ♪ the light beer you've been waiting for has arrived. corona premier.

welcome back to "squawk" a few stocks to watch, 3m reported earnings and beat estimates and revenue coming in above forecasts. comcast quarterly results came in 3 cents above estimates revenue was slightly below analyst's forecasts, let's stock up b test up, when we return, the ecinre rates and reaction. "squawk" returns right after this

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aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. all right. the ecb's decision on interest rates is out they are leaving them unchanged let's look at the futures at this hour. the dow indicated up by 43 points the s&p down by less than a point. the nasdaq is off by less than ten points, firming things up a little bit let's head overto steve liesman. he joins us with what to watch when maria draghi speaks in less than an hour's time, they left things unchanged but, of course, what he says is something the market tees off. >> there are some newly dovish comments in here there is a clang in the inflation language that kind of suggests maybe the ecb is going to either a higher target or a different kind of target before

they've said that they were going to, they wanted a place to converge at or below 2%. now they talk about continuing to see convergence to its aim over the median term what that aim is, is maybe something that the ecb is discussing also, a line here that says the governing council also underlines the need for a highly comment stance for monetary policy for a prolonged period of time as inflation rates realized and prompted have serious low levels let me give people the background there was some expectation of sort of a modest vote that maybe they would act today instead, the general feeling is that they're going to act. take some action in terms of rates and/or additional qe in september. let me read you some of the expectations then that are coming up for this press conference at 8:30 where this very, very strong expectations for drag hi to hint he will have a dovish pressure

to keep investors happy. that was the expectation he would deliver anything in terms of cuts. evercore writes, we believe the ecb will pave the way for a 10 to 15 rate cut they write it is going to take a bold stroke to both satisfy markets clamoring for increment am easing and make a difference to the economy we hope you will not be disappointing. we fear that a satisfactory easing of monetary conditions is impossible what does this mean nor the u.s. european growth is significant for the united states. also for the federal reserve i want to show you the u.s. german tenure. what you see is this spread. it's 250, 260 basis points it had tightened a bit as it looked like the u.s. was easing. here we go again, it's up to widening again that's this morning. but the longer-term charges which shows you that it had tightened and then it was

widening again so here it is, there is that widening again, back up towards 242 and the story here is that the u.s. seemed like it was going to ease. europe is going to ease, is this guy answering the question we have, a race to the bottom of rates? >> a race to the bottom on rates. it's the other stuff is that people are watching, too currency is a huge issue is it mark lazry here last week talking about how he thinks they will have to move in all new directions, there will be pressure on them, particularly with the new ecb chief coming in, to do things like buy stocks kind of, was he the one who was saying that? am i puting? oh, mary, that's right, it was larry fink somebody was respected >> there are a couple folks out there talking about buying stocks i don't think they're quite there yet, becky think about this, part of the rationale is for the fed to bring u.s. rates more in line with the rest of the world, they

do that europe does that i guess we got to do it again. >> maria draghi, how much will he be holding off, somebody new is coming in, you think he will take drastic steps before or - >> i think he will take steps and tell us in about 51 or 41 minutes actually that he's going to take those steps. >> okay. >> we will keep our eyes on that meantime, i want to talk about facebook this morning arc little info cuss has the social media giant beating on the top and bottom lines last night. bicker news, the company agreed to pay a $5 billion fine anding a only iffed it is under investigation by the ftc again over anti-trust concerns >> that stock up about 2.5%. i want to show you or want you to listen to what ceo mark zuckerberg had to say yesterday on the company's earnings call >> this is a major shift for us. we built services that billions of people trust every day that communicate with the people they care about privacy has always been

important to the services we provide and now it's even more central to our future vision for social networking. it's critical that we get this right. we're going to build it into all of our systems >> joining us right now to discuss the social media's giant messaging to the public. pollster, it's great to see you frank, clearly facebook is in the crosshairs the question i would ask you is how he key messages to the public and how he messages to washington what he has to do to gain the confidence of washington so that he's not paying even more fines, if you think that is the goal. >> i think that he needs to change the focus, what you just heard in that clip and his statement a few days ago is all about what facebook is going to do rather than what facebook users want facebook to do. it may sound subtle to your viewers. but it is actually an essential distinction. our users told us, therefore, we

will do. our users want, therefore, we will provide it should start with our users >> frank, there is an irony here which is the conversation we all have about what maybe we want facebook to do i would argue based on the results that facebook is getting a and the users and the users interactions they are getting is it's not clear users are necessarily clamoring or screaming from the rooftop disway washington is >> yes, but washington is reacting to facebook irss. washington is reacting to the appreciate they're getting from their constituents navgs i'd argue that washington was a little bit slow. the average constituent is about five years younger than the average senator. and so they may not fully understand what the technology s. i want to raise another point. because some of what mark zuckerberg says is very effective. but i looked to his statement, the one he made about privacy and there isn't a single mention

of a specific term and that is accountability i'm going to give you an example if you allow me to read it >> please. >> we've asked one of our most experienced product leaders to take on the role to have chief privacy of product itself. we will set up our privacy beard to oversee our privacy programs. this is all about facebook rather than bringing users into this process there is no organization in america that has a more grass roots user base than facebook. so why aren't they using that? why aren't they consulting them, bringing them into the process and giving them a sense of authority? if i were advising them in communications, i'd sayyaf good it backwards, it's not what facebook will do it's what you want facebook to do. >> what do you make of what seems to be a disconnect between what users have been willing to either put up with or deal with or maybe even embrace when you look at their earnings, when you look at the amount of traffic and users that are still using

facebook relative to this other conversation how do you square that >> it matters. it matters to people facebook is still not only a relevant communication tool. it's an essential communications tool there is no other place where hundreds of millions of users across the globe go to get their information, go to get their exchange, and so, this is an example. you raise a fair point of where, how consumers react may be different than the value of the company. it is unprecedented, but i'll say one thing here, facebook has to demonstrate accountability and what it does and how it communicates >> that would be my advice to mark zuckerberg. you need to post on accountability >> that will re-earn you respect of your leadership. >> frank, in the last month, they introduced libra, this new crypto currency. a lot of blowback from washington on that was that a mistake to launch was it a mismake the

how they launched? in how they communicated what would you have done >> first off, it's too early to say. one of the things we've learned with technology, if you make a conclusion based on 24 hours or one week or one month, you are not understanding the marketplace. it takes time for all these new products and services to penetrate the mark place so i'm not going to jump off into the swimming pool without knowing what's beneath me. >> hey, frank, a political question we interviewed the treasury secretary yesterday. he talked and effectively went off on amazon. you polled a lot of people across this country about big tech, what these big tech companies mean to them what do you think the ultimate feeling is underneath all of this >> people love amazon. it's a passion it's a relationship. amazon really matters to people. it is one place where the white house isn't quite where the american people are.

onlyson to them changed how they live, it's changed how they shop it's changed how they consume. they don't want anything to happen to amazon it's somewhat similar to google as well. it's changed how we live, how we interact with technology, how that affects our lives sometimes you have a political component that works its way into washington's communication. but i can assure you, amazon is still one of the most popular, credible companies on the face of the ear zblth you put goog until that category, real quick? apple, what about apple in that category >> apple has gone back into that category it lost some of its luster in the last few years its technology did not seem to keep up with the times it's back again. yes, i do put apple in that category >> traffic, fascinating. i look forward to talk to you again. >> my apple watch. i found it i found it, it was on the floor. i was wearing a roly yesterday the kids say. >> wearing it well >> a little heavy.

lot of utility >> as a man of the people. >> very galitarian person. >> i see. >> when we come back, georgia's senator david perdue on issues in washington that mean something to your money. much more, these comments are next ecouthfutures. dow futures indicated up by 66 points we'll be right back. that means . we create financing options for your customers. to help them get the things they love instantly. our data provides insights into what your shoppers have already bought. so you can offer them what they might consider buying next. our financial and tech solutions are changing what's possible in all sorts of ways. so, how can we change what's possible for you? has been excellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good,

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southwest airline ceo reacts to numbers and the grounding of the 737 max. it's the busiest day of earnings season so far the stocks making the biggest pre mark moves two steps forward. one step back for facebook the stock pops on solid earnings now there is another government investigation into the company and did amazon kill american retailing? an industry facing massive digital disruption we will create the line between digital destruction and simply destruction. the final hour of "squawk box" begins right now live from the most powerful city in the world. new york this is "squawk box. good morning, well combom back to "squawk box" here on

cnbc live from the nasdaq market site time's square i'm joe concern none with andrew ross concekerr none and becky q. the s&p and nasdaq are now positive i think the ecb helped a little bit, too we don't want them to get too far ahead of this. it will be dovish. italian tenures, 1 -- 10 years 140. they're so squared away over there. >> although, it's a great place, if greece, too >> anyway, we're at 202 as treasury yields. we just need a new way of thinking about a lot of these things, i think. >> what way is that? >> it doesn't have to do one employment and gdp it has to do with what the yield curve is telling you where inflation is and where you can expect where flows are you can't automatically knee jerk it down to where it used to be

although, i had someone write in, that you can look at a 100-year average of inflation and the average of where rates are and it is not always been -- like that. >> if you combine out over a thousand years, it wouldn't show up as more than a blip either. >> they should still be 6% >> i thought you meant, it doesn't seem all that unusual. >> inflation has been low for a long time and i don't know. >> it's when you have all central banks helping. like everybody. >> that's what it is >> let's tell you about some other stories investors will be talking about this morning southwest airlines reporting a mixed quarter. the results continue to be pressured by the grounding of the boeing 737 yet announcing it would cease operations at newark liberty airport in jersey. an exclusive interview coming up with southwest ceo gary kelly. >> that will happen at 9:30.

dow component 3m out with the maker of consumer and healthcare products, topping estimates, with 3m's healthcare business, particularly strong results. that stock is up 5%. nbc universal parent comcast posting a mixed second quarter they beat expectations, the revenue was short of wall street forecasts, comcast adding more high speed internet customers. a number of video and phone customers. stock holding relatively steady. a few stocks, tesla missing on the top and bottom lines. the company suggested loss of 12 cents a share, much wider than the loss the streets were looking for. those came despite tesla deliveries tesla shares, down by almost 12% this morning a decline of about 11.8% facebook, the social media

giant, beating expectations on the bottom and the top lines for the second quarter facebook said that new data privacy rules will slow its revenue growth and raise expenses, the company disclosed a new ftc anti-trust probe at the same time it announced the settlement for another probe, $5 billion. facebook shares up by more than 2% 20890 is the last trade. the house is preparing to vote on this week's pc budget deal later today it's expected to pass in the chamber. some republicans are pushing back on the if you deal. let's talk to someone, find out where he is. joining us, senator david perdue, you are going to vote for this around you, senator >> i am. >> what is your rational how is it distinct from what some other republicans see as a non-starter? >> well, look, i'm a dead hawk as much as anybody here in the

senate but i can tell you that this bill reduces discretionary spending as a percentage of the gdp. it's 54 billion over two years this is about 2% per year increase the irony here, joe, while some say i don't want spending increases, they don't say anything about mandatory spending which is going up 427 billion over the next two years. that's where the battle is to get the debt under control >> so in that respect. i guess you like the certainty it provides for the military as well, that's a priority for you? >> it does we have three alternative itself one is to take this deal second is a sequestration, which would reduce military spending dramatically we saw what that did sa decade ago. the third is another continuing resolution over the next year. we know what that's doing. >> that adds hundreds of billions of dollars to the expense over a decade. here's the reality a no vote actually increases government spending over the next decade, it's an irony, it's the truth.

>> where is the usmca right now? do you think of actually passing things, did yesterday's developments move that down the -- ball down the field, do you think? will that be a focus for democrats or will it still not be brought up because the ewill exis too close >> joe, this should be a non-starter. we should be, we should have already voted for that, the usmca gives the democrats everything they have asked for in the last decade it's a great deal. it adds 68 billion to the gdp. it puts much stronger labor controls and wage controls in mexico mexico has already ratified. randa is the in the process. i think if we put it on the floor, it would pass in the senate and house today, joe. >> do you think yesterday's developments, do you think that is partially put to rest now with the democrats and they're going to -- from i think it is, i hope so. the democrats i'm talking to say it was important i think it will.

if we put it on the floor, like i said, i this i the thing would pass. >> yeah. what's the next step who do you need to do this >> i think speaker pelosi has to make the decision. >> they say she was a winner yesterday. did you see the crazy analysis because she's been pushing back. >> no, but why hasn't she brought it to the floor? >> i don't know. >> take your pick. >> senator, why do you think it is >> i think speaker pelosi has the same problem that boehner had when he was speaker. and that, she's trying to control a very diverse group of members. i think that's a problem she's trying to corral that right now, make sure she continues to have unity. there was a problem that speaker boehner had maybe one reason why he left. this is one that's so important. it's much better than nafta. everybody says it's a good deal. right now it does a lot of things the democrats have been asking for in the last decade, i

for one am calling him saying let's vote on this >> with china, with hugh whauwei what are you feeling with hauwei and whether the market was strong recently because they're going to get back in the arena with carolina again i guess? >> i don't know. joe, i have been looking at buying italian bonds so what do i know >> good idea it'sese year to go visit than buy bonds. >> you have to go with cash. they don't take credit cards anymore. i'm worried about hauwei, the concessions we made on non-military issues is okay. the issue is they're violating our sanctions with iran. they do business with iran and north korea. that's unacceptable. we know they've penetrated the u.s. economy and we're worried about what they are doing with the military hauwei is still an outstanding issue. the trade, ambassador ligtehausr

goes to china next week to continue this conversation we have the ball moving forward. it took a big step back when they withdrew some of the agreements back in may i'm still hopeful litehauser and mnuchin can move that forward. i think it's simple. what we're asking them to do is stop stealing our technology and stop forcing the transfer of technology, comply with the wto, comply with cyber warfare and give us equal access, that's a great way to show some progress and agreements i don't know if they are agreeing that's one way you can deal with the chinese mentality. >> senator, i want to ask you about a different issue. you are a former ceo of reebok, you know this world very well, steve mnuchin was on our air yesterday and said amazon was responsible in large part for the decimation effect of the retail industry and he encouraged the department of justice to look into them. what do you think? >> well, the automobile killed

the buggy whip makers, too, didn't it? look, this is globalization. it's innovation. what they've done at amazon over the last couple decades is changed the landscape here it was the walmart impact back in the '70s and '80s that everybody complained about, that they lowered cost of goods here in the united states, increased consumerism and actually increased the standard of living what they've done is used technology and innovation. if you were to ask walmart ceos today, who their number one competitor they would have said amazon. decades ago they would have said castgo and target. we had to deal with issues with online consumption those are beginning to be ironed out. this is a new form of retailing. we got to adjust to this. >> do you object to the efforts by the administration to investigate whether amazon is a monopoly >> we want fair play

obviously, there might be a monopoly issue in here you could have said the same thing about walmart, when i was competing with them at dollar general, i certainly made that claim a few times. i think it's reasonable to investigate. you will see other forms coming out right now. they are trying to build out and go vertical in their distribution this is a new form of retail design >> where do you stand in the worlds of google, facebook, apple? by the way, in many respects they have marketplaces and all sorts of other things in the retail world as well and clearly, the administration has put a target on their backs. by the way, this comes as you talk about the u.s. being more competitive globally and what it means for some of our biggest companies relative to some of the really big companies in china, for example. >> this is one of the problems with federal government oversight on economy, a free enterprise system. this is innovated. these are innovated companies, they're competing in the rest of the world, let's remember, we don't have the right to do cloud

computing in china with regard to anti-trust and the size of these companies, this is a new era for oversight and regulation what we want to make sure is we have a level playing field for equal competitive ness among players so that we have innovation with small companies who are trying to get into this space and not pushed out by these large mammoth companies. >> that really was, people throw around the term for textiles it's similar to mnuchin. he's living in what year is he living in? >> are you objecting to what the administration is doing? sflim obje >> i'm objecting about saying that about amazon. also, how much bitcoin do you have he says that will be gone in five years, there won't be such thing. i'm not sure i'm with him on that. >> i'm not sure what that will look like if five years or five minutes. it's a rapidly changing area the rest of the world may be

getting ahead of us on that facebook found out they had not prepared the ground for this sort of proposal with lib. >> reporter: it will take some time we are in the area where derivative players got ahead of the players in washington. i'm not a regulation freak this is one where we had some controls for this outrageous leverage this is a similar situation where washington is trying to catch up >> all right for, thanks again. >> good to see you again this morning. thanks coming up, we will continue this conversation. has amazon destroyed retail? the head of the online second quarter results, we will debate that very question stay tuned you are watching "squawk box" right here on -- cnbc these folks don't have time to go to the post office

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if you look at amazon, although there are benefits to it they've destroyed the retail industry across the united states there is no question they've limited competition. their areas where they've really hurt small businesses. >> that was secretary steven mnuchin right here on "squawk

box" yesterday blaming amazon for the decline of american retailing. joining us to talk about the industries, jay nippet and liz dunn, who is founder and ceo of pro forma, inc., welcome to both of you it's a long running conversation when you start talking about regulating the companies amazon is unique as a retail giant who has fared very well. are they limiting competition? >> no, they're not limiting competition they are destroying retail there is not new i stalked the lawn ware store, nobody said gee we should stop them along the way and they were 3% of sales when they were 20-years-old, amazon percent of sales is 20-years-old. they got 50 cents out of every new sale, amazon gets 25 cents this is the traditional destruction. department stores destroyed downtown, suburban malls

destroyed downtopps, wal-mart, target, destroyed department stores now amazon is destroying other people they're more efficient they're convenient walmart destroyed the world by being cheap. amazon is destroying the world by being more convenient then than anybody else. >> i agree we seen this over the history of new channels come up and displace those that are the incumbents i think in the case of amazon, you know it seems like it's happened overnight it hasn't, it's happened over 20 years. you could maybe say there is a little of their pricing that's predatory. really it benefits the consumer. so you can't fault them for that that is what happens so i don't think that retail is, retail's demise has to do necessarily with amazon. amazon is an accelerant. >> we have a fundamental question, a, whether it's a monopoly first you have to define the market. >> it's clearly not a monopoly. >> you could maybe make the

argument that they have a huge share of the electronic retail market but even then, it gets complicated. especially if the argument is they are decimating retail across the board, you have to open up the aperture and all of a sudden you are talking about a company 10 or 15% of the market? you are not saying 35% of every dollar, though >> every new dollar. walmart is 10% of total u.s. sales. they were about 3. >> and about 4 >> so it's hard to get to the monopoly place to begin with and then the second component is, you know, are they maintaining this non-monopoly position that's the other complicated part, by other predatory prices or something in terms of the marketplaces that they're running? that's it. >> i'd have a hard argument making predatory prices on them. they're not the cheapest guy out there. >> now everyone price matches almost immediately i think the bigger guys are actually doing a better job these days keeping pace with the

growth of amazon in their online businesses and so it's not that they're destroying retail. i think it's hard to be a smaller retail >> is this all noise >> well, she made a good point about it's harder to be retail right now. this will be a fifth year in a row that local businesses outgrew as a percent of growth not a percent of the market. they're growing. they get destroyed, too. a lot go broke we are seeing local businesses do well. we all want to shop local. be environmentally friendly. touchy feely stuff that's happening. >> would you tell them to start open these stores every which way? some think it's a thumb. that's the real thumb in the nose >> i would tell them not to open the stores, they're not good at it >> exactly they haven't done the number of locations they've added and the amount of sales that they've added, they're not organically growing retail they haven't figured out how to

do it successfully or profitably. >> you know, how is retail changing for this? it may be getting destroyed and broken down, building up at the same time. do you have to copy amazon, be a target or a walmart and try and do what's right for them or can you take other places away from amazon or are there places new retailers are in >> i think it's simple you have to fill a consumer need figure out where the consumer is going and follow them there and get products to them more efficiently. i think it's not necessarily taking a page from amazon, it's figuring out who your consumer is and retailers have been slow to do that as a result they've sealed their own fates in many cases. >> strong brands still wins, local still wins, online wins. you can still win. >> the death of them all i feel i have been reading that story for 25 years. >> still true there is it for real

>> there is 280 great malls in america. the rest of them are in big trouble. they're losing share every day traffic is down in those other malls, 6 or 7% every year has been for five or six years, yes, the mall is in trouble >> kids don't even hang out at the mall >> that should tell you something. >> and the mall experience is not what consumers are looking for anymore. they're not going to the mall to discover new products. they're going to their phone to discover new products. you've disrupted the reason the mall is important. also, it's not a great experience these are in closed centers that are kind of corydoning consumers off so they can't really access the rest of the world. that's not how consumers want to shop these days. >> do you see a risk as a result of this doj investigation? >> risk. yeah i see risk i still think it's a joke. i don't think there is any reason we should be investigating amazon for anti-trust

we might investigate with the data, from the point of view of sales, they are benefiting the customer they're not a dominant force from the point of view of percentage of retail and they're not anti-competitive on price i don't understand why we would be looking at them. >> i think there is absolutely a risk if it's the administration is acting in a way that is not necessarily aligned with capitalist principles, particularly republicans. >> you think this is a jeff bezos washington post trump hate story underneath this? >> well, it's coming from both sides. i think amazon is under attack from both the republicans and the democrats. have you the liz warrens of the world and bernie sanders attacking amazon as well it is actually a little bit. there is risk. people are not necessarily acting rash. >> she didn't do it because of the washington post? >> i think it's a politically popular thing to do, though, attack tech guys like it used to be political popularism >> frank luntz says people love

amazon. >> i love amazon they come to my house every day. don't they come to your house every day? >> multiple times. coming up on "squawk", the good and the bad, facebook's second quarter, nicebook shares up more than 50% this year, the latest headlines, a stock that just can't be stopped? we'll talk about that and more you are watching "squawk" right here on cnbc

. welcome back to "squawk box" the euro trading near one-year lows following this morning's ecb decision 111 now. as you can see a part of what we're talking about here we may match the dovish language >> breaking economic data on the way. we'll brief you in just minutes when "squawk" returns right after this

. welcome back to "squawk box. the latest data on jobless claims and durable goods jim is standing by with the numbers. please >> the durable is most important one. it was awful last month because of the boeing air stuff. it was up 2% we expected .7 expected .2. non-defense is up 1.9, much better than expected let's skip over to claims. claims comes out at 206, still hovering around historic lows.

we were expecting 218 on that. whole sale inventories doesn't come out until later the stockmarket was boeing coming in. the ten year was trading at 2.013. now it's 2.018 up a little bit. this is interesting. the fed stays away, they were telling us they were going 25 points that's what i heard last week. this is curious if the gdp comes in way higher than expected. i don't think i can see how the fed hasn't painted themselves back into a corner. >> thank you what do you think if they cut 25 versus 50 basis points >> i think they'll be minor disappointment right now the market is pricing in 17% chance of 25. 25 of 50 i don't see why the market keeps thinking 50. the last thing i heard is williams was speaking out of turn and that 25 basis points. i don't know why they would have

given, i think it was bullit before the blackout period if they weren't planning on going 25 now to see a number like this, which is pretty blockbuster and to think that they're still going to go 50 anyway, to me seems ridiculous, the stockmarket is buoyant as heck i understand earnings we talk down every quarter everyone gets beat, everybody loves a beat earnings are slightly better than expected. we talked about a month ago here, people say they are seeing a recession. they see the same things we are, i don't see what they are talking about. >> jim, thank you. meantime, i want to get back to one of the key stocks, facebook julia boorstin joins us with a second quarter earnings wrap upup. look at some of the new challenges the company is facing julia. >> reporter: well, good morning, andrew basic shares are moving high their morning pre-market after beating expectations on the top and bottom line. this morning, they seem to be shaking up stocks that brought us into the red yesterday. the ceo says they expect more

deceleration of the revenue growth into the fourth quarter into 2020. they are partially driven by adding targeted-related headwinds and uncertainties. on the earnings calm, ceo mark zuckerberg focused on privacy, saying this was an important quarter to determine facebook's path forward, both if terms of regulation announced yesterday and in terms of the company's business focus now on secure communication and it was secure payment that both zuckerberg and cheryl sandberg pointed to as a key place for potential growth >> these areas around commerce and payments i think are one of the most exciting areas of product development for the next several years and the way that we kind of see the products now is we've helped people map out and wire up their networks over the last several years so now in each of these apps, we have opportunities to help people get more value from the

networks they've created. >> analysts are starting to weigh in this morning. the majority are bullish we've counted nine analysts so far who have raised their price targets. mark moheney saying the worst fears appear fought to have been realized he says, while this ftc and regulatory oversight makes regulation more costly and time consuming, they remain confident if product innovation. andrew. >> stick around, joining us is the senior analyst covering technology for rosenblatt securities good morning to you. thank you for joining us >> morning. >> the results are good, what's happening in washington is bad what do you do about it? >> sorry, what was that last point? >> the results are good, what is happening in washington is bad then what do you do about it >> oh, sure. well, i think, obviously, facebook has quite a bit of lobbying yet to go as it relates

to, you know, it's data privacy positioning and libra, et cetera but you know largely we think privacy issues, data privacy issues are behind the stock now. i certainly think the ftc's ruling was, you know, largely a get out of jail free pass for facebook here. and with that behind them and a stock that's you know really trading at 20 times earnings, growing top line comfortably and you know call it mid-20s with 40, 50% on margins, we're regrets and buyers of the stock here. >> how do you think, is the if you ftc investigation, the department of justty, on anti-trust, all noise? >> yeah, i think -- well, i think partly it's noise. i think on the antitrust side, i think we just don't quite see what the ftc will be looking for here even if you split these companies in two, you will still have two of the biggest platforms from a users

standpoint that are out there in social media you know, that being instagram and you know messenger and news feeds. so i'm not sure that you are going to stem any sort of competitive concerns for the anti-trust review. we don't see a split-up happening at instagram and certainly think that there is some, obviously, political theater here but largely speaking, we think, the companies will, the pieces of this company will stay in place. >> i want to get to june in the west coast in one second i did want to ask you about libra, does that factor into any of your thinking around the stock? >> no, libra is a call action on this stock here. there is no expectation built into this stock here at least for us and largely like i said, i think there is some lobby tack facebook has to do here so we'll reserve judgment there, but, you know, i would say, we're a little more optimistic on facebook getting this through

i'd say than generally what you hear out in the media. >> julia, what itself the mood right now inside facebook? given the fines, given these new investigations is it better is it worse? i mean the results speak for themselves, yet, there is this overhang >> well, i think the results speak for themselves there is still this question of what the future holds. i think it's really interesting when you had that one comment from the ceo sending the stocks from higher after hours into the red. he says there is more pronounced acceleration around uncertainties the around ad targeting. you have to ask what are those uncertainties? is it the fact they're giving consumers the option of opting out of ad targets? which makes the ads less valuable is it that they don't know how much regulation will come and how they impact targeting ads? i think there is a sense that they're glad this ftc announcement is done, they think it's a big deal in their

reforms. we don't know what the future holds and there is this target about the targeting engine, which has been so valuable is going to be less powerful if they can't use as much data about you in that targeting. so, i this i that they know there is a big quarter ahead, the next couple months in washington are going to be very busy for facebook. i think they want to get through that as unscathed as they may have been by the ftc. >> mark, as a bull on the stock, how do you evaluate what julia just said in terms of the challenges they have in terms of targeting ads in the future. >> those are great points, i would say, i'd probably separate privacy from facebook usage of data for targeting so i don't think what the ftc is doing is saying facebook has to close down its data collection practices. it's more in a more privacy friendly way so i think you know i think facebook has probably learned a lot of lessons here, largely, we think we'll have a much more

data privacy centered platform here as we move forward. so, you know, i go es the other point i would make is it speaks to the anti-trust. i mean, this is sort of a balance between utility to the user in a data protected way so when you split up these companies or if the proposals proposal is to think about splitting up these countries, how does that affect the utility of the user? i think generally speaking the user will find much more with these platforms together or combined in a data privacy way than they will split i think those are the questions that you know should be looked at as it relates to the anti-trust review. >> we will leave the conversation there mark, thank you, judgmentia thank you. >> thank you. >> you bet coming up arc live update on this morning's european central bank decision and maria draghi speaking right now take a look at the rur ro, after the banks kept rates unchanged we'll get the highlights and

fixed income when "squawk box" comes right back

welcome back to "squawk box," we have been watching the dow futures. they're up by 82 points. earlier the s&p was indicated down it's up over 5 points. nasdaq is indicated up by 3.5 points we have been hearing from the european central bank.

the president there mario draghi is speaking live after the decision to not change interest rates in the last hour steve liesman has been keying in what are you hearing >> i think he hit the button itself let me give you three headlines here, he says the governing council is determined to act that's number one. number two, he says the ecb stand ready to adjust all, i would emphasize that, all instruments as appropriate those options include potential new asset purchases. so i think those are the three things the mark wanted to hear a little commentary. he says significant stimulus is still necessary. inflation may be declining and growth is tilted to the downside i don't know if you remember at 7:45 we talked about what the market wanted to hear it seems like draghi has checked all the boxes here becky. >> steven, thank you very much >> my pleasure.

>> joining us to talk about interest rates and the fixed interest markets managing director at black rock. when did you finally, if ever, jeff, get into the camp that it maybe rates are somewhere near neutral given a, maybe we need to go lower, obviously, i guess, but given a 3% gdp and an unemployment rate under 4. when did that start to just not look crazy to you? has it been months or quarters or does it still look crazy to you? >> well, it's years, joe and, you know, we are really talking about the shift since the post-crisis environment of structural changes to the economy that drive that outlook. you know, investors often look back in their portfolios they look back to their personal experience to 5% interest rates. the ability to get yield and income without taking a lot of risk

you know with the draghi news the about today, what the fed will be later this month, it's about the challenges of a slowing global economy and how central banks aggressively respond through very aggressive zero interest rate, negative interest rate policies we've had a little bit of a reprieve of that in the u.s. we will start moving back in those directions it's a reminder it is a persistent lower interest rate environment and getting back to find yield without risk is structurally not going to happen. >> i don't remember. manitoba up didn't convince all of your overseers at black rock, i don't remember you years ago predicting 2% and i remember larry talking about how rates needed to go up. so for years you have known that we were headed back down to 2% and that that was going to make sense, even though the fed was in a tightening mode, you actually predicted all this? >> no, joe, so there are

certainly periods where we talk about rising interest rates, for a long period of time, we talked about the need to normalize interest rates it's about what does that mean what level does formal mean? that's the essence - >> when did it occur to you, that, wow, we have been thinking about this wrong because you weren't predicting this so was there a moment of awakening? it's not all of us at some point said, oh my god, what's happening? it was inflation people talk about or the globalization of interest rates or weakness in europe or something brought us to the realization that maybe not, maybe 3% isn't a given on the ten year >> yeah. i think it's over the course of the post-crisis environment. you know, the initial environment, it's really about the shock of the recovery. it's about the appreciation of a recovery, when you think about 2009, 2010 it was really about dealing with the successive crises from the u.s. centric credit crises

moving over into the euro zone as we emerge from that, then the larger structural issues become a dominant feature remember most of that was about the cyclical forces. what we are talking about here are the structural forces. in answering your questions about when and the timing, it was as the cyclical aspecs of the recovery started or became more complete, then there was a bicker focus on the structural element. you had much more discussion about r. starr and lower rates and the permanence because of the structural issues as opposed to the cyclical elements >> so the range over the next five years, the high and the low on, let's say, the average yield, either in the u.s. or sovereign yields or whatever, are we now in a one to three or four percent instead of a four-to-eight percent world? is it going to stay like this, jeff is that what these structural changes are telling you? >> yeah. that's precisely what the structural --

>> what are insurance companies -- what's that everybody has to buy dividend stocks then or something? >> well, you have to do a couple of things. you got to change your portfolio mix or you you've got to change your expected returns and your required returns so when you think about that mixture, if returns are going to be lower tan savings rates have to be higher or the amount risks are willing to take in their portfolios has to go up. certainly the level ofexpected returns for both stocks and bonds is going to a lower level. that's a realization i think many investors have slowly slightly come around to. >> frightening, jeff you think about larry, larry fink has been very worried about peoples and baby boomers preparation for retirement it used to be if you had a million dollars saved, you can have $80,000 a year maybe to live on. now you got, what you got? $20,000? what does this mean for all the people planning on having a retirement and haven't saved

enough money now it's frightening, isn't it >> well, it can be it's about planning. you got to remember, there is two side of that retirement equation part of the lower level of interest rates is a lower level of inflation while there is a lot of debate whether we measure inflation, right, whether it reflects my experience of inflation, that that impact helps to mitigate a bit. but it doesn't mitigate the decline in real interest rates >> it's great, if someone is young and looking to buy a louse for the first time, gets a lower interest rates it's nowhere near if you do everything you are to do now. >> so that for folks who have enough time in their retirement, you can start to impact that today. >> that changes, number one it changes your savings rate. right f. you can't get the increase on your savings through higher expectant returns, then you got to change how much you are adding every year in terms of the savings rate.

the other piece then is portfolio mix and strategies joe, you mentioned, does it mean more dividend stocks does it mean more higher risk areas of the market? does it mean using ill liquidity and private markets, all of these things investors across the spectrum, whether they're large institutions, pension funds, or individual retail investors, they're all -- for a while now, it's not like this story is new, that we're in a lower return environment, so different types of strategies have been employed and will continue to need to be >> a lot of people are waiting, you know waiting for the higher rates that come. now it's like, what happened pretty staggering. i wonder if we get -- when all of us are totally sold on this new environment, i wonder if that's the bottom in rates, you know then they finally -- maybe then inflation comes back and no one locked in. everybody's got floating rate stuff and we float back up i don't know we're always going to be, you

know, whatever we get too sure about, usually the opposite finally happens. >> that would require a bigger structural change. that isn't out of the question really, instead of talking about monetary policy, that's talking about significant structural changes around fiscal policy, which is possible, not likely, in today's environment, but it is possible you could have those changes, investments being made, structural changes to raise the potential growth level of the economy, which would raise these levels of expected returns it's the lowering of the potential growth rate of the economy that really ultimately drives that base level of expected returns across portfolios >> okay. jeff, thank you. >> great thanks >> good to see you thanks let's get down to the new york stock exchange. we want to check in with jim cramer, as he's getting ready for another big hour at 9:00 what do you think of the earnings so far? maybe 3m, maybe southwest. what jumps out at you as things that maybe caught you off guard or surprised you >> i'm coming up with new

things better than excepted bte better than feared btf some of these companies are wtf. southwest was definitely wtf 3m right now looks btf i want to hear about the ground water situation. facebook was very btf. and then there's just these companies that are just kind of there, like dow. every single line down in dow. every single line. but everyone expected every single line. ford was a surprise. i thought ford was going to be better ford is back to being a show-me stock. i thought paypal would be really good paypal had issues. they were kind of like, listen, give us a break. i spoke to service now last night. the stock is down. it could be up three days from now. >> why is southwest a wtf? >> well, because, for instance, they pulled out in newark. >> that sounded like it was almost an excuse for pulling out of newark. like maybe it's been too tough

to compete there all the way along. if you've got to cut somewhere >> that's true, but here's my worry. some of the airlines that have fewer max planes, what happens if they just say, you know what, we're not going to fly the max because we don't think the max is that great. what happens to southwest? what happens if american says -- >> what happens to boeing? >> well, boeing needs -- boeing's got to come to terms with this. they lost control of the narrative again. now it's like boeing may stop production then the country is crippled these stories are very, very negative so i think boeing had -- was controlling the narrative then lost control of the narrative. i think that gary is going to give us a very critical view of boeing maybe it's one of these things where he just says, listen, i'm taking it off line with them i'm not going to let him do that i want to know what off line means. this thing is becoming once again a little out of control.

>> you think all of the talk yesterday about potentially shutting down the production line was done kind of to throw out some concerns to washington? like, if you continue to not allow this to be recertified, guess what this is going to do to the economy or you think they're just saying, hey, this is the solution at this point it's been so long and so bad, and we don't know what's going to happen if this is going to be recertified. >> i think the latter. i think they're worried about that they're more worried about safety, always, than they are about washington but boeing is a big part of our economy. they could slow the economy. it's incredible. but it's a big part of the economy. i think this on again, off again, what boeing is going to do, come on. you take the charge, why didn't you at that time say, okay, listen, we're shutting down the assembly line. i just don't know. every day something new at boeing boeing has just become a very unpredictable situation. very bad for boeing, even bad for the economy. >> want to talk tesla with you

real quick, jim. more departures. elon musk's right-hand man leaving the company. what does this mean? what does it portend we've seen this over and over again. yet, the bulls don't seem to blink, and the bears seem to scream from the rooftops >> i think the bulls will say, i never heard of this guy, and i don't really care. i know he's number two, but there's always been number two who leaves as long as elon is there i think the stock -- i mean, the bears are trying to press the short right here, right now. $5 billion in cash they do have strong demand they're talking about maybe making 2 million cars. the bears are saying, look, it wasn't a good quarter. i think the bulls will say -- and this key man left. he does have some patents, by the way. that could be interesting. i think the bulls will say, hey, guys, elon, he's predicting profits some day elon is so elusive he wasn't arrogant at all. although, he does have some nut jobs on the call he has these people, like, hey,

let's have so-and-so from car nut. a guy says, hey, tesla, it's fabulous and musk says, yeah. then let's have the guys that guy says, hey, you know what, my tesla is fabulous it is a very unusual conference call he's so funny, elon. he's hilarious >> hey, jim -- >> i miss him in twitter so bad. >> well, the new twitter try him out on new twitter see if it's any different. >> definitely. he and the president >> jim, see you in a few minutes. thank you. >> exciting times. >> it is definitely watch for the gary love interview coming up in a little bit don't miss the ceo triple header tonight on "mad money. jim has the heads of royal electric power, royal caribbean, and align technology that's 6:00 m.p. eastern time. stay tuned we'll be right back.

a final check on the markets. we are now -- we've pared some of the gains to 51 points now on the dow. we were up almost triple digits. the nasdaq is now in negative territory. it had turned positive we've been all over the map.

a lot of earnings hitting the tape during the show a lot of changes changing. plus, the ecb decision the s&p is indicated up about 1.25 points right now. the euro 111 after the draghi comments euro stocks, we're not going to look at those because we don't have time. "squawk on the street" is next good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. it is peak day for earnings. more than 60 members of the s&p report we'll get to 3m, southwest, comcast, place facebook, tesla, fort, and more from last night europe is green, ecb going more dovish today back home, our ten year holding on to a two handle as durables and claims are better than