♪ live from new york where business never sleeps this is "squawk box. good morning welcome to "squawk box" on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. joe mentioned the federal reserve decision coming at 2:00 p.m. that is looming large but also adp hitting at 8:15 and all the earnings reports ahead of that, the dow futures are indicated up about 74 points s&p futures up by 4.8. the nasdaq up by 32. it's the last trading day of the month. overnight in asia, stocks in

shanghai and tokyo were moderately lower the nikkei finished down by almost 0.9%. the shanghai was down by two-thirds of a percentage point. this comes as we were getting manufacturing data out of china showed they're still contracting. it was better than anticipated the number was 49.7. that was better than the 49.6 anticipated. still below 50 in hong kong, the hang seng was down 1.3%. trading was cut short there because of an impending tropical storm. markets were normally close at 4:00 p.m. were suspended for the second half of the day this morning there are a mixed picture. the dax is up. the cac is up slightly the ftse is down a bit finally look at what's happening here in the treasury markets the ten-year right now ahead of

that fed meeting, 2.054% let's look at what's happening with gold. that could be a mover after today's fed decision gold is up more than 10% in the last three months. apple big number of the week and it's our top corporate story. earnings and revenue topped estimates. the big story out of the company is a shift away from the flagship product iphone sales fell to less than half of quarterly revenue for the first time in seven years. tim cook described the change as a success in diversification >> what's more, we had double digit services revenue growth in all five of our geographic segments we surpassed 420 million paid subscriptions to services across our platform and we remain on track to double our fiscal year '16 services revenue in 2020

the decline in iphone sales was offset by growth in other places as for fears for the u.s./china trade war, investors were relieved to hear greater china sales dipped only slightly that was a change from earlier in the year when the company saw a pretty big drop. they grew revenues 1% this quarter after a couple of back-to-back declines. the services and app stores and things like that, i guess that was up 13% sounds good. 11$11.5 billion is a lot but th was the slowest growth in services revenue since 2015. everything else pretty good. >> wearables was good. >> 12% decline in iphone sales, how much of that is units, how much of that is cheaper models i believe it's units more than cheaper models >> people are holding on to their phones longer. >> you have people not buying the most expensive models. that's continuing to an issue

for them >> but the most expensive models have gotten a lot more expensive. and the wearables. >> and the wearables business is bigger than a lot of companies revenue. >> the margin on the air pods, the technology that's in those things actually happens to be expensive. >> they're not cheap they're 100 bucks a pop. >> 150, 170 i think. online people do breakdowns where they tear apart the device to see the technology inside it. like a macbook, there's margin on a macbook there's less margin on an ipad >> but people lose those things so frequently. they're buying 27 of them. >> or they walk over a grate and they fall out of your ears because they don't fit >>ly i have had them, my first

original pair -- i have two pairs. >> because you thought you lost one. >> i thought i did, but i have both pairs >> hold on a second. apple is 960 billion is the close. it's up $9 premarket >> 4%. >> 4% on 960, should be close to a trillion when it -- >> microsoft is over 1 trillion now. >> yeah. >> on the topic of apple, tim cook confirming reports that am's credit card will launch in august it will show you users -- or you if you have one of these, where each purchase was made and it

ends up breaking down the purchase into different categories so people know where their money is going perhaps most importantly -- we have not had our conversation about capital one yet. but in terms of privacy, there is no number on the card what is absolutely interesting about what apple is doing, there's no number on the card, not only physically on the card, there's no permanent number. your number cannot be stolen >> i don't care about my credit card number being stolen because the bank covers that that's the bank's problem not mine i care about my social security number, i care about things that track me in terms of my credit card numbers fsh numbers, if that's stolen, that's the bank's problem. it's the rest of the information that's my problem. i just cancel the card, they're responsible for the losses on it smart for them, but it's not protecting me. >> it will make it less likely

that people will try to hack that part of the account >> apple has more information on me that's more sensitive >> there's more value in the credit card number >> i don't think apple is mining my data or selling it to other people, but the card number itself -- that's your problem, not mine bad news for an apple competitor samsung's second quarter profit fell 56% as a glut of memory chips continued to weigh on prices the company warning that japan's curbs on some tech imports from south korea is blurring its outlook for the rest of the year >> what do you think of capital one? >> you know my view about all of this stuff i think people will continue to use capital one. >> it shows the -- >> that all of this stuff is out there. >> you're only as strong as the weakest link in any of these situations these banks are constantly attacked they do their best to protect.

the smallest issue can lead to other issues >> when there's 25 of our cnbc 50 disrupters are firewall and security builders, there's a reason they're in that top 50. here's what i was looking for. i couldn't remember which newspaper. did you see this article the walkman at 40. >> i used to have one. >> i just switched >> you just switched >> that's overstating it but they mean 40 years >> yeah. >> sony's greatest gadget tells us about -- you remember you put those on you were like i'm s surrounded by wonderful -- they were cushiony, comfortable 40 years of progress and these things fall out while i'm walking over a sewer great >> yet you still have them >> very elegant, that little box. >> it's the greatest thing >> but couldn't they just make one different size >> would you pay extra

>> i wouldn't pay extra, but i would buy the smaller one so they go in >> yep music streaming service spotify is out with quarterly results. the company reporting a loss of 42 euro cents per share. revenue did beat forecasts monthly active users grew to 232 million, above the prior guidance, up about 29% from a year ago premium subscribership is at 108 million, up about 30% from a year ago the company looks like it's trading down by a tenth of a percent. when we return, it is decision day for the fed we'll tell you what to expect from jay powell and how markets could react. as we head to break, look at the biggest premarket winners and losers in the dow.

do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

in just a few hours the fed is expected to cut interest rates for the first time in 11 years likely by a quarter percentage point that decision will be released at 2:00 p.m. eastern time. then chairman powell will hold a

news conference to explain that decision and talk about what comes next that's what the markets are thinking about joining us now to talk about that is sean snyder from citi personal wealth management and ed campbell who is managing director and portfolio manager at qma welcome to both of you ed, we're thinking a quarter basis point at this point. the first cut in 11 years, the market is already thinking what comes next, right? >> yeah. this is one or two insurance cuts and done rather than the beginning of a big easing cycle. i know the market expects more, but that's a probability weighted average of 70% this is a couple of insurance cuts, we don't go into recession. 30%, you know, the fed is behind the curve. and this is eventually going to result in a recession and a big easing cycle >> what's the market's reaction if we get a 25 basis point cut today and powell sounds like he

will be waiting and seeing what happens next >> that's been expected and well telegraphed. i don't expect too big a market reaction stocks are up now in anticipation but it could be a situation of buy the rumor sell the news. >> and what do you think about that >> i don't disagree with that. i think it's widely expected to get 25 basis points. you saw a rebound in consumer spending in the second quarter 2.9% in gdp. consumer confidence numbers coming in strong that limits the case for a 50 basis point cut. at the same time dovish surprises from the fed are twice as likely as hawkish surprises so there is a chance they go 50 basis points >> if they did, would you say fantastic? this is good news, or would you say what do they know that we don't know >> this they send an overly

dovish message that frightens the markets, maybe it would not be good. >> yesterday we talked about whether people still worry about what they say, and we decided that nobody has an idea what they know. so they make all these decisions without knowing. at least we know now there's nothing to fear because they have no idea >> remember, sorkin? we had guys on who said that experts. no, no, we wouldn't think that about the fed. >> that because they're reversing -- always review mirror stuff >> if we don't care about what the fed does or what they don't know, let's talk about earnings. earnings have been strong overall. >> yeah. it's turning out to be a good earnings season. >> relative to expectations.

>> the earnings surprise factor is larger than usual the percentage of companies beating is larger than usual earnings have slowed to a crawl for q2 and q3. if the economic expansion is sustain sustained, profits should perk up in q4 >> the other big thing that happened this morning is the trade talks with china, they seem to have wrapped um. looks like the american delegation is on their way back. so far no big announcements, but it also looks like things are cordial. how does the market factor that in >> i don't think the market cares right now as long as things are staying at a stalemate. as long as tariffs don't increase, i think the market can look past this for now

maybe in november, later in the year, things will start to bubble up again. a lot of these things have been delayed for a while. that doesn't mean they won't come back to the table i personally think they may want to be careful with the trade talks heading into the election. >> who needs to be careful the administration needs to be careful with that? >> i think they may want to be careful with the trade talks in the sense that they may not want to escalate trade tensions heading into an election >> because you want to keep the stock market and economy humming along? >> right >> the other thing we're looking for is the adp number that hits at 8:15. expectations are private sector job growth of 115,000. >> the labor market has been a source of strength for the u.s. economy. i expect that should continue. unemployment rate is low we can see the i78 pampact of a

stronger labor market on consumption. we think that continues. >> even though we're near highs, would you be telling people to buy here >> we're neutral now on equities we're looking for an opportunity to add exposure here we would like to do that on a pull back. >> pull back of 5% or more >> let's say 5%. i don't think it will be anything more than that. >> sean, how about you >> sean, you saw these guys are headed back, right lighthizer and mnuchin >> yes >> trump recently said, oh, they want to make a deal, but maybe they won't make a deal until after the election why wouldn't you -- if you were

china, why wouldn't you turn the screws on things last time it was russia that affected the election. this time it could be china. >> it depends on how much pain they're feeling internally >> manufacturing still shrinking but not as much. things are a little bit better >> you could make the case that they could try to wait it out. if they want to play hard ball when is xi's next election oh, that's right >> are you going to disagree i didn't say anything significant. >> we had a guest on yesterday who -- i will just channel him for a second, who made the comment that actually trump would have more leverage after an election, not >> you believe this will change

the outcome? >> if it -- even though it's not anything he did, he gets to say the economy is his, even though he's in the office at the time things good are happening, you actually give him credit for being in the office. because he's in the office, he gets to own the economy basically, right >> it's not because of tax reform he happens to be there and it's an extension of the economy -- >> when obama was in office, the economy did well despite him, he deserved no credit i said the man in the office should get credit. trump is in the office, give him credit and stop complaining about him. >> the economy with obama was 1.7%, not 2.4% did you see personal income what it was up recently >> i'm just saying -- you're not

going to give credit -- i'm saying if you want to give credit to trump now. sure then you have to give -- >> because of tax reform or because he's sitting in the chair? >> because he's in the chair >> that's what you said yesterday. that's my only point sean, thank you. >> bye, ed >> he's there, he gets credit. obama gets credit for 1.7% stocks to watch is next. "squawk box" will be right back. people know aflac.

aflac! but not when to use it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com

you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. ge out with some results adjusted profit of 17 cents a share was 5 cents above

estimates. revenue beat wall street forecasts. joining us now for more on these numbers, scott davis how much have you been able to look into these, scott, at this point? there were some charges and gaap earnings were not earnings, correct? but is this a good number? >> it looks clean. it's early we need to read through everything the call is at 8:30. 17 cents was -- a nick elel bet than expected. 17 is good larry is having an impact. >> what are the -- in terms of key parts of the company, it's stull a multi f-faceted company where were the problems? where is there progress in turning things around? there were things after immelt left then we had the interim -- he

wasn't turning things around quickly enough are things turning quickly now >> larry culp is the real deal he's excellent i think he's having an immediate impact the power business will take a couple years to turn around. so we're looking for baby steps that it's fixable. this is a company that's still able to earn $1 more earnings with its core businesses, not even executing at a full level >> what do you care about, free cash flow? >> everything at this point. showing stability and power is key. you have to stop bleeding cash you're still negative cash territory now. that should turn by the end of the year you need some visibility >> it's not a yield stock anymore. 0.38%. it's going to earn a dollar, you think. it's at $10. why would you -- >> it has the potential to earn more than a dollar >> it's not even earning a

dollar now >> it's not. >> why buy the stock it doesn't look like anyone is today. 10.50, 10.60 now why buy the stock now? you're buying it for the turnaround you have a power business alone that's probably 50 cents, 60 cents of earnings. sometimes you have to put it into context you have less than 1$100 billion market cap company you have the aerospace company that is 25% of the company that represents a market cap of 100 billion. if you can turn around power, you essentially get healthcare and the rest for free. >> it is up from 6 >> but down from 30. down from 60 i know exactly where it was. i have my house wallpapered with my ge options that i had they looked nice any way, scott, thank you. ten times earnings, if it earns

a dollar the shy 13. >> what else are you buying in the market ten times earnings? >> something with a dividend >> it will have a dividend eventually >> good. woel get up to we'll get up to a half percent good when we come back, we have the highlights from last night's democratic debate. we'll show you what the candidates said about the economy and about american businesses through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats...

to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

breaking news for you. the carlyle group announcing its converting from a publicly traded partnership to become a full c-corporation that will happen january 1st it is the fifth of the big private equity firms following in the footsteps of blackstone, apollo, kkr and ares management. in a statement carlyle saying we couldn't be more pleased to see the company we started 30 years ago achieve this next step in our evolution. we're confident this step will support carlyle's growth long-term into the future.

what is unique about this, guys, the idea -- just looking through this, that the founders to some degree are the first one of this sort of vintage, if you will, given that you think about blackstone and kkr, that are giving up control through the company of this. this c-corporation conversion will institute a one share one vote structure virtually all the others have a dual class structure so you're giving up control. one reason that carlyle is doing this, and one reason so many companies have been trying to convert to begin with into a c-corporation is to get into the indexes. it's been a struggle for these publicly traded private equity firms to be in the index you look at the russell, the russell won't let you in with a dual class structure >> and that's a big deal

>> most of the private equity firms that have announced these types of moves, their shares have gone up the liquidity issue has become real but you cosuld see carlyle make the s&p 500. the last company to get in with a dual class structure was facebook if carlyle is the only one, maybe it will give them an advantage. we'll see in the coming weeks, years and months the other guys are lobbying the s&p and everybody else to try to get in to those indexes. >> i was looking up their market cap, $2.7 billion right now. we'll see. >> that is not enough. >> not enough yet? >> do you think? like a mid cap >> trying to get -- that's the goal for all of them

i think the bigger issue is russell. with their size you want to get in at the russell level. you can't get in now with the dual class >> which is crazy because there's not even 2,000 stocks in the russell 2000 anymore did you know that? >> i'm still working on the s&p 500. it's like 501. >> 502 i think two dual class structures. there's not even 2,000 stocks in the russell 2000 >> i broke into programming yesterday to report that walgreens is in the dow. >> yes did you know that? >> yes >> because of boots. >> i forgot. a lot of dow stocks come up -- ge is not. i routinely look at the list on cnbc.com >> it's a good idea. they ruined it sort of >> they change it frequently >> yeah. there are a couple of things that ought to be there >> you could argue they're

changing it quickly because the economy is changing so quickly >> you mean as in growing rapidly now. >> yes >> okay. >> it's a joke, easy easy cash for clunkers, $10 trillion airbus reporting better than expected second quarter profits helped bay swity a switch to the efficient single aisle jets. did they give up on the giant city bus you have to board and land in under a minute and a half. >> it couldn't land at a lot of airports you're talking about the a380? >> yeah. it's huge. you see them, you can't miss them they're mammoth. but i would hate to think about

being in -- you're in group z, it's longer than the flight. the company is warning of delivery challenges in the second half of the yea especially if the u.s. imposes tariffs on european planes as part of a long running trade dispute. when we return, last night marked the start of the second round of democratic presidential debates. we'll show you the highlights for the markets and the economy after this coming up at 8:30, we'll be joined by energy secretary rick perry to talk tensions in the middle east, oil prices and much more stay tuned, you're watching "squawk box" on cnbc carvana is six years old this year

and is the fastest growing place to buy a car in the nation. it's because we have thousands of people working hard to make our customers' experiences the best. it's because we have tens of thousands of cars ready to be delivered to your doorstep. and it's why hundreds of thousands of happy customers have ditched the dealership and bought their car online, earning us an average 4.7 stars in the process. so if you didn't know about us before, you do now. we're carvana, and we want to give you the car buying experience you deserve.

welcome back night one of the second round of democratic debates wrapping up hours ago in detroit ten candidates took the stage to make their case with ten more on the docket tonight ka'aih kayla tausche has the big headlines and what it ment for business >> it was a battle for the direction of the democratic party last night with progressive candidates like elizabeth warren and bernie sanders who together were pressed to defend their plans for free healthcare, no student debt who would benefit, and who would pay for these policies here's one exchange where senator sanders was asked

specifically about which workers would lose insurance if they were forced to buy it from the government medicare for all is comprehensive. it covers all healthcare needs for senior citizens it will finally include dental care, hearing aids and eyeglasses. >> you don't know that, bernie do know it i wrote the damn bill. >> sanders began fund-raising off of that viral moment in the middle of the debate last night. former maryland congressman and healthcare executive john delaney was more than happy to enter the fray with sanders and warren earning him some notable exchanges and more speaking time than expected for someone polling at the levels he was including this exchange between delaney and senator elizabeth warren that was the most tweeted moment of the night. >> i don't understand why anybody goes through all the trouble of running for president of the united states just to talk about what we really can't do and shouldn't fight for >> when we created social security, we didn't say pensions

were illegal >> so besides delaney, sanders and warren, the top candidates that were getting the most social buzz, pete buttigieg who had a few notable moments where he was discussing gun control and a lack of courage among the republican party and mary ann williamson, the author and activist she had several notable moments where she was discussing race, the crisis in flint, michigan and the types of programs that government should get involved in and perhaps we could see her poll numbers increase. tonight's debate features former vice president joe biden with senators cory booker and kamala harris there could be a similar type dynamic tonight on stage where you have three front-runners commanding much of the speaking time a lot of other candidates may be trying to get a word in

edgewise >> did you watch the whole thing? you have to, that's your beat. >> i did >> were you -- i watched the beginning. were you struck at the beginning by the -- did it seem surreal that the announcer and in the center we got -- did you see that part? i thought it was surreal i thought it was like -- >> the fact that senators sanders and warren were in the center of the stage? >> in the center, the two progressives will be battling it out -- >> i'm sure that irony wasn't lost on many >> zucker was an entertainment guy, but he had just given a long-range interview about fox news i think it wabout chris wallace this debate how it started -- >> it's not unusual to put the

candidates that are polling the highest in the center of the stage because there's an expectation -- >> but they did a draw, too, that i didn't see, like the nfl draft. >> clever. smart. >> it just seems -- i guess you want to make it as interesting as you can then you have to watch it and it probably won't deliver okay all right. i know there was other people who noticed. i know that for a fact it seemed a little -- i don't know, surreal for me that's just me >> kayla, thank you. for more on the debate let's welcome dan clifton. thank you for being here >> good morning. >> watching the debates last night with an eye on what the business community and the markets are expecting, what did you think? >> you have to look and say where was there agreement and where was there disagreement if you look attacks, all the candidates, the moderates and the progressive agreed that the

capital gains rate should be taxed at the ordinary tax rate, the estate tax should be moved over to a carryover basis. there is some sort of agreement on the bare minimum of what the democrats would be looking for tax increases. interestingly we had an hour debate on healthcare no talk about what the republicans are doing. really a fight for the direction on healthcare amongst the democrats and very little agreement or very little view that the aca was successful, that we need to throw that out and do something more. that was a signature policy of the democrats. then on trade policy, i was just floored that the democrats didn't have a good response to donald trump at times you feel as if trump cut them off on some key issues they're trying to debate whether that's trade, drug prices, some other issues that are not traditional republican issues that trump grabbed on to. the key issue is can the democrats win with an agenda moving to the left, can they

take control of the senate, the betting odds are 30% that they can, if they have control of the senate can they enact those policies i think that would be very hard. democrats will be challenged to get this this is an aspirational thing. overtime it will winnow itself down >> that has to be the big concern when it comes to business, hearing the more progressive ideas out there, that would be radical change for corporate america. >> absolutely. the banning of private insurance for healthcare, 80% or 70% disapprove of that very hard for something like that to go through the level of tax increases the idea of taxing wealth rather than income. constitutionally suspect those would be difficult to get through. i do have to say we're in a bull market for populism, that's

populism on the right for donald trump and brexit, and populism on the left. don't discount the idea that a more progressive candidate could win the democratic nomination. we're a 50/50 nation this race will be close. it is difficult to be the ind b incumbent president when the economy is strong. today we'll get a federal reserve interest rate. the first in a decade. there are challenges for the democrats. >> it's possible now i finally see that's a possibility. i've been reading about someonen vo suburban women, the tweets, the economy being overshadowed by that we could eventually have medicare for all theoretically or at least a push towards it and all the things they're talking about, we could have a president advocating that because of bad tweets. some of the histrionics to where

we're left with none of those trump policies that conservatives like because of the -- because of elijah cummings or something. it's scary >> i would agree with you that sometimes the president kind of builds his own mess, but i think the larger issue is the economy. the trade negotiations >> reporter: o 6 arare goin on in china, and there's talk that they will come back with no deal does that affected the economy when trump is oning for e i runr reelection the fed cuts rates at the place of bill clinton's -- when bill clinton was president, july of 1995, 2qgdp in was 6.5% for

clinton. maybe the president gets that tailwind from the economy that offsets the tweets there's a lot of headwinds for the president. he has to make the other candidate more toxic to win. coming up, apple shares surging 4% overnight as the company reported earnings and revenue that beat expectations we'll talk with an analyst that downgraded the company to a sell rating earlier this month to see if this changed his mind so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.

welcome back to "squawk box. i want to talk about apple and reported quarterly results after the bell that beat expectations on both the top and the bottom line and they saw growth in services and wearables including the airpods we talk about all the time outperformed expectations in china. all of this sending shares up more than 4% overnight joining us is an analyst who had

downgraded the stock to a sell rating jun zhang. you were in a different place before today why? >> good morning. so, yes, i think apple was not a surprise to me i think that two or three -- it was a traditional quarter for apple. they cleaned up some inventory for q2 and kind of the q3 guidance mostly reflected the new product brand into the september quarter. so i think my concern is more into the -- often we talk about the launch we expect there will be -- sell through the weakness that's why we think even in china, i think it should stabilize the sales that there was a big promotion by apple, you know -- >> just to clarify, you're saying when you made this

downgrade, you were expecting for example the wearables and services numbers to be as strong as they were >> yeah, the wearables, i think they launched the new air pods, i think there was a lot of shipment into q2, q3 so that was better than i expected i think it's kind of a -- we expect after the iphone sales slowed down, the sales growth will be also slowing down. also, i think we need to point out that iphone sales also in q2 actually below consensus so i think the upside, from the earliest mostly coming from the wearable which is the airpods. >> okay. given the results today, given the fact that this stock is going to be up this morningwhe we open up, where -- what do you think fair value is for this company now? is it any different than where you were a month ago >> i think i'm not changing any

deal on the stock right now. i think the stock obviously, it's low, but i think that people kind have become a little bit positive in this cycle but i call it more, one, i think that we expect iphone sales continue to be weak. iphone sales are losing share. i think of 5g cycle, apple is still behind android camp so we expect in the first wave adoption to smartphone -- it will take the share in the high end so that puts more risk for the cycle. >> so we have had a number of investors and analysts come on the program saying, look, we don't know what will happen this fall when it comes to the new iphone release and what sales look like there. some people feel like it will be a good thing some people are a little bit more anxious as you may be

but a lot of people think come 2020 there's going to be a big upgrade cycle based on 5g. you say no and you think that android is really going to be stealing the thunder? >> yes, i think so i think if you look at the global 5g market, china is still the largest 5g initially in 2020 because of the 5g network deployment schedule. and i think right now if you look at huawei, other chinese brands, they have the 5g smartphone pocket in the first half of next year. so we need all the chinese -- they should have more than 150 million by this time next year i think initial 5g adoption, a lot will choose android. i think that apple seems a little bit conservative in launching the 5g. >> it is a longer debate and we will have it we appreciate you joining us this morning thank you. >> no problem.

thanks we have a lot more big two hours on "squawk box" coming up. ahead, the big issue of the day. the fed interest rate decision is now just hours away we'll discuss what to expect from jay powell and from the markets and president trump. then later we'll be joined by the ceo of southern company, thomas fni tanngo make down the second quarter results and what they mean for the energy sector. "squawk" will return -driverless cars... -all ground personnel...

...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade. the fed set to cut rates for

the first time since 2008. is it enough to keep the economic expansion going we'll discuss. apple's big beat the tech giant keeping investors coming back for more the latest on the results and what's next for the tech giant is straight ahead. plus, senator rick scott joins us to discuss the latest trade talk developments, last night's debate in taxes as the second hour of "squawk box" begins right now >> live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc i'm joe kernen with becky quick and andrew ross sorkin both have ties on. we're going to stick with that, don't you think? >> i'm not wearing a tie >> not wearing a tie.

>> discussing some people not wearing ties >> on the network. but they're wearing jackets. >> jackets i think you have to have a tie on or a jacket can't just go just shirt. >> and pants i think -- >> pants are a good idea typically. >> underwear helps u.s. equity futures at this hour -- nobody knows, right? people don't check the dow is open about 56 points higher nasdaq is strong at 24 s&p is up 2 and change i think everything was even better before those guys headed out of town, to shanghai with nothing. they'll say something later but the scuttlebutt is we're not getting anywhere we're further away than three months ago when -- and - >> so cordial in the china trade talks for the most part. >> but the one thing -- and people said, well, if that's all you get it's not enough. but the grain purchases from china that we thought would be a

consolation prize for nothing happening to ip or theft or any of that stuff and now they're reneging on that apparently. or not to the extent that -- >> it's certainly not happening as quickly as the president -- >> time -- there will be an election there will be spring there will be followed by summer and fall. >> followed by the pickup of the next election cycle two days later. >> but it's coming winter is coming you know never saw game of -- i didn't stick with it the whole time i got through like the fifth season unbelievable anyway - >> what's going on what are you looking at? if i'm wearing underwear >> panty lines. >> no, no visible -- i insist on that. >> okay. so you have underwear on >> yes. >> thank you just checking. here's what's making headlines at this hour you said it was optional, just checking. >> i have a story though. >> i know.

>> some peter -- >> the apple shares are jumping in the premarket trading apple beat wall street's estimates on both the top and the bottom line and revenue from all the other units picked up. you can see that apple shares are up by 4.3% the carlyle group is announcing a conversion in ownership structure. they're moving from the public will traded to the c corps that follows similar moves by blackstone and kkr the hope is to get more liquidity and potentially make it into the index fund because there's so much money in index funds. the stock is un so cents today and we're moments way from the adp employment report. that compares to 102,000 a month ago and of course it's a big precursor of what you can expect on friday. okay for more on fed's decision, we want to get over to steve liesman who is in washington awaiting the big moment.

good morning, steve. >> yeah. andrew, the federal reserve set to make history today with its first rate cut in 11 years moving to shore up the u.s. economy from global economic weakness and addressed those concerns about u.s. inflation running persistently below the 2% market but acting in the face of several dilemmas. jobs, consumer spending and confidence, well, they have held up at decent levels. markets at all-time highs so financial conditions are not tight and the cut from the fed comes amid unprecedented public campaigns from the president for rate cuts. >> frankly, if we ever got interest rates down where they should be, and if they weren't raised so fast you would see another probably 10,000 points on the dow the dow acted too soon, i turned out to be right. they acted too soon and too violently. i made the economy so strong

that nothing is going to stop us, but the fed could have made it a lot easier. >> the president's written ten tweets critical of the federal reserve, the most before any fed meeting during his presidency which is the most for any president since whenever the fed insists they make their decision independently, but could well, guys, could announce today they will start running off the balance sheets two months early that will be a close call and andrew, one last look at the futures here, we're at 100% probability for july and for the next month we're up nearly 7% for the next cut in september and nearly 50% for december cuts. so three cuts really built into the market here. >> built into the market already. we want to continue this conversation right through, steve, and bring in vince reinhart he spent 24 years of course at the fed and an adviser from wells fargo is with us as well vince, what do you think the fed

will do and what do you think the fed should do? >> the fed is going to do 25 because as steve said it's priced into the markets. the problem with doing 25 when you have already hinted that you'll do 50 for the year is that market participants are going to see a succession of 25 basis point cuts and extrapolate. they'll draw a straight line and then the fed is in a position where they're expected to ease too much i think what they should do, 50 basis points say this balance is the risk, dig a fire break and then just wait for the data. what they really should have done is not tightened in december or at least not pivot so strongly, but that's water under the bridge. >> and let me just follow-up on one other issue which is you heard what steve said about the rest of the year forget about just today, we have two more in the offing does that make sense to you? >> not particularly right now, given the economic data.

you know, we had heard that the decline in the inflation was supposed to be transitory. unemployment gains are still well above the run rate that keeps the unemployment rate unchanged and we see wage growth picking up slowly. they're going to be easing policy because it's built in to financial markets and they don't want to tighten financial conditions too much. but, you know, if the president actually delivers something on trade, it doesn't have to be much we're going to see a -- you know, a different configuration of markets and they may look back at this with regret. >> all right hey, brian, why do you and your colleagues seem to think that this is going to happen three times already this year? i mean, i'm with vince, it doesn't make sense to me. >> no, i mean we only look for two rate cuts this year and it doesn't make a lot of sense to me either. i can't understand what change

dramatically ten months ago and they feel the need to cut rates and inflation doesn't look that different. so i think the fed needs to better articulate their story and what they're really watching going forward. >> hey, steve, jump in. >> yeah, i was going to say i was looking this up yesterday. to brian's point, i think that the outlook for gdp is like 0.2% today than it was in december. and the unemployment rate about the same inflation just a little bit lower. you don't have the kind of change in the forecast or as vince suggested change in the data to warrant this really double pivot it was a pivot from hiking to hold and then from hold to cutting. i just wonder if i could ask vince how he thinks the chairman gets up and explains this because maybe vince there's another pivot here from data

dependent to something else. >> so i think the big change was from december to january the fed earlier had been leading markets. jay powell is in front of the pack saying this is what we'll be doing we're on autopilot on the balance sheet. we'll be doing these rate hikes and got criticized a lot he got criticized in markets he got criticized by the president and now they're pushing the data dependence. he has gone to the back of the pack but the problem is the pack financial market pricing has gotten way ahead of him. i think the risk is he does 25 there's some weight on 50 in the markets today. and he'll sound dovish and then people will extrapolate. >> i want to push back a little bit. if i raise my hand at the press conference and say, mr. chairman, what data are you looking at which part of the forecast has changed to warrant this dramatic change in policy

how would you think he would answer that question >> we are in a big world we see a marked slowing in global trade and global industrial production. there are considerable risks outside -- out there and we view this as insurance to protect ourselves from those risks. >> but to steve's other point, are we still a data dependent fed? >> not particularly. we are following markets >> and does that worry you, vince? >> oh, sure. again, my chief worry is that he does 25. he sounds dovish to justify the disappointment for not doing more and it just bakes in the cake 75 to 100 and we'll get to the september meeting in the same position. do you want to disappoint markets and tighten financial conditions at some point they have to at some point if the data rolled the way steve's talking about,

they're going to have to actually be the grown-up in the room and say, we don't need this much easing. >> okay. >> and real quick, brian, what do you think the market's reaction is going to be if it's anything but it's not going to be anything but but it's going to be what it is, probably but what does the market do? >> i think you have a little bit of short term disappointments that the fed is not a little bit more forceful, but, you know, there's not a lot of other alternatives out there right now. so lower rates kind of wins in the market, sales, so to speak as long as there's not an unexpected shock that occurs >> thank you steve, we'll be watching all day and talking to you. >> 8:15 adp. be here for that southern company's tom fanning talks the quarterly results, the state of the economy and the fed and general electric beat expectations

we'll discuss the company's outlook and then the turn around stay tuned you're watching "squawk box" on cnbc here, it all starts with a simple...

hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.

welcome back to "squawk box. additional news from general electric jamie miller, the cfo is stepping down and she'll be staying at the company until they find a successor. and the company says helping with the transition. as we told you earlier, ge did beat estimates on both the top and the bottom lines for the second quarter and also raised the forecast and that stock is up by almost 5%. okay coming up, southern company's ceo tom fanning will discuss quarterly results, the economy and energy prices and then apple shares rising more than 4% we'll break down the results and the big move in shares this morning. "squawk" returns more in a moment. time now for aflac's trivia question how much did the first sixla st to build? the answer when cnbc's "squawk box" continues do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance.

slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com who used expedia to book the vacation rental which led to the discovery that sometimes a little down time can lift you right up. expedia. everything you need to go.

expedia. oh, wow. you two are going to have such a great trip. thanks to you, we will. this is why voya helps reach today's goals... ...all while helping you to and through retirement. can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to and through retirement. now the answer to today's aflac trivia question. how much did the first six flags cost to build? the answer -- $10 million. ♪ million and a half per flag.

>> yeah. had more than just six flags there. >> okay. >> roller coasters. >> that's right. southern company releasing second quarter results a short while ago. adjusted profit of 80 cents a share and revenue slightly below forecasts here to break down the numbers, southern company chairman and ceo, tom fanning. a former chairman of the federal reserve bank of atlanta until january when mike jackson stepped in former ceo, mike jackson, stepped in still chairman so tom, for those of us that don't run a utility, can you tell us what happened? almost all of your electricity sales were down. is that due to the price of oil? the weather that customers are getting? you know, commercial electricity sales down 7.4 industrial down 5.2. total electricity down 7.2, just depends on whether you neat heat or air conditioning?

>> well, let's think about that for a moment if you think about industrial sales, for example, i know it's been reported that there is kind of bigger effects of that elsewhere in the united states particularly in the midwest and things the southeast in fact is seeing a bit of a pause our industrial sales when you adjust for weather and all these other effects year over year is about a 2% reduction i think half is due to one-time effects or timing. so look, we are definitely seeing a bit of a plateauing or a pause. you know, i have been on this show a ton of times and we have talked about for all of the good tail winds that we got from tax reform and smart regulation, we are seeing a bit of a pause long term capital likes certainty in the markets. the trade skirmishes do provide some uncertainty and therefore we are seeing a bit of a pause we have been talking about that for a while. the other effect i don't think people are talking about enough

is really this issue of currency valuations you know, in the past 18 months or so we have seen about a 10% strengthening of the dollar this year 2 to 3%. that is having some effect as well but overall, when you look at our quarter, we're hitting in every number we could hit. our nuclear project, we're hitting our milestones had some exciting news yesterday that we put in an order for the fuel that will be required to run the plant. we expect that to be some time the end of next year. >> meanwhile - >> a lot of exciting stuff going on. >> well, you must really be a great ceo. nowed i'm kind of kidding, but your stock is at near a high because you have a great yield and interest rates are now going back down. so utilities are back in vogue. >> well, let me tell you something else i think the general thesis of an acceptable growth rate with a low beta, low risk and an

attractive yield i think is a great thing when you consider the demographics of the country going forward. yeah, it's fun to own apple and the big growth stories but as a retirement foundation, boy, opening southern company makes a lot of sense to me. >> yeah. we'll have rick perry on a little bit later you're mostly natural gas now, right? not quite 0% but that's the biggest thing you're using the prices -- you can't budge those things because the supply is so great. like a wealth of -- you know, poverty of wealth almost. >> well, and here's the thing, joe, that's so exciting to me. i would think we have kind of unleashed the energy sector here recently and this is an unassailable advantage in a globally competitive worldwide economy that the united states has to take advantage of listen we'll transition over to the low or no carbon fleet i'm sure as that as a nation, but

taking advantage of the blessings that we have in the current period only help to make this economy stronger. certainly relative to anybody that we compete with so this is a great thing. >> the -- we'll talk to rick perry about exporting lng and that might help a little bit in terms of the price, but people don't see much movement in the price of natural gas for decades really because of the abundance. >> yeah. yeah you know what? i mean, you hear smart regulation and variety of other things but the kind of technology revolution that has permitted the accessing of cheap, plentiful natural gas is great for everybody. there's an emerging concept and if you consider people on the lower end of the income scale we have talked about that in terms of fed policy and a variety of other things who is really sharing in the benefit of the recovery? son of a gun, energy policy done well disproportionately helps people on the lower end of the

income scale and so taking advantage of these things is a great way to think about improving the economy for everybody. >> hey, tom, joe pointed out at the top of the introduction that you're the former chairman of the atlanta fed. as somebody who's running an energy company and probably has a pretty good feel of what the economy looks like in the markets you serve, and as somebody who's used to providing some of that input and data to the fed what do you think the fed should be doing today? >> listen, in fact, i was also chair of what they call the conference of chairs, kind of an advisory board to the big fed up in d.c. and i was there at the time of yellen to powell i know jay powell exceedingly well and he's a terrific guy here's my sense. i know we get into a lot of short termism when we talk about the actions of of the fed. the fed, "a," is i think really focused on long term results and they do analyze reams of

data and not just take data, but turn it into information and insight. and i believe what they do is they try to take a long-term perspective. i think that probably with the plateauing, this pause that we're seeing until we resolve some of the uncertainty in the worldwide markets that probably a 25% cut makes a lot of sense but i really do trust in the process of the fed i really do believe in that institution. >> steve liesman raised the point earlier that the data doesn't look that different today than it did in december when they decided to go ahead and raise rates. are there other things they're looking at or are we not as data dependent as we used to be are we paying more attention to the markets? >> yeah. becky, i don't believe they're paying attention to the markets. here again that's the short term and when you ask the question, you asked it exactly right the data today but the data i think that the fed really considers is not just

in period data it is projections, it is a lot of not only kind of macroeconomic research, but also insight they get from all of the districts around the united states what are people that have boots on the ground seeing in terms of what's happening in the economy? for example, that's why electricity is such a good long term indicator we have data that will show it's not just kind of last quarter, last year or current period. we look at our economic development activity and we can see that there is in fact a bit of a reluctance to commit long term capital in light of these kind of longer term uncertainties related to trade look, you solve those things and i think we have the ability to breath some more oxygen into another potential economic recovery so i think he's doing the right thing. >> tom fanning, thank you for -- you wear a lot of different hats

for us so we appreciate that. >> always great being with you guys you bet. when we return, much more to talk about apple's wearables, home and accessories business brought in billions last year that's more than whirlpool, marriott and mcdonald's and shares are higher after reporting the results. we'll break down the numbers in just a bit. as we head to the break, look at the u.s. equities. dow futures up about 72 points and s&p up by 4 and the nasdaq up by 29 on the last trading day in the month of july "squawk" ceo call is sponsored by is up trust corporate and commercial banking. confidence inspired by one team. here, it all starts with a simple...

hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. welcome back to "squawk box" right here on cnbc take a look at ge shares because they're rising this morning. the company posting better than expected quarterly results and raising its outlook. ge also announced that jamie miller, the cfo is leaving the company and that they're searching for her replacement.

joining us right now on the "squawk" news line, nick heyman from william blair good morning, nick what do you think of these results? >> well, we have to cut through the fog. eps doesn't mean that much right now. 17 cents included 5.5 cents from tail wind in the tax so really in line with the 12 cents that the folks had. the free cash use at the low end, of the 1 to $2 billion prior -- >> but hold on just to clarify for the viewers, they had guided that they -- it could be negative $2 billion and now guided into negative 1 so that's good news. >> so they raised the full year from break even to$2 billion use to now plus or minus $1 billion half of that is lower restructuring, half is better operating performance so that was encouraging. i think when you kind of look at the pulse of the business, your

backlog was up 11% organically your orders were up 4 and your sales up 7 obviously, we had weaker profitability. ironically over at aviation because of a mixed shift to the new engine and also power but power is getting back on its feet. >> what do you think of this jamie miller story, the cfo leaving? >> well, it's interesting. larry has changed everybody out. everybody out. and jamie was the last you know of the brigade from before and i think what it says, it has nothing to with her performance but larry has his arms around the change at ge because jamie really is formerly the controller she knew where all of the issues were within the financials of the company. and larry now is basically telling us i think i got this. i want to get, you know, somebody that i -- you know, i ultimately have ridden with in the past and he just did this at ge digital and brought in his chief

technology officer from danherrer. this is nothing against jamie. i think it's quite honestly it's a bench mark for where his confidence level is he has his arms around the turn around at ge. >> what do you think the stock is really worth? >> i think it's 14 to 16 and if we start to see power not only operationally improve, but as we believe we'll see a gradual beginning of a recovery in the demand for large gas turbines in 2020, i think if you give power 50% of, you know, its pure value you're at 17 to 19 some time in the second half of next year. i think you're at 14 to 15 as we exit this year. >> so you think we're undervalue at this point? >> i think this is the target price within the industrial arena. we have $5 at the low end, we

don't have target prices but calls ours $15 at the high end and there are others with us that today is almost 100% of the share price. but as we look at the stock we're moving away from critical chernobyl meltdowns and the concerns are about chinese competition in the middle or latter part of next decade in power or the concerns about the underfunded pension, which has improved although rates have come down. so it's actually on paper increased. but, you know, ge in turn is not moving closer to new fissures. it really isn't. it's actually operationally sorting things out it's hard to see, there's a lot of moving parts but it's on the mend. >> are we ever getting back to the old numbers? or justdecide this is a different company? we talk about it with the sort of legacy -- almost nostalgia when you talk about ge. >> i can't see 60 bucks, okay,

that was the prior peak. what i can see is in the mid to upper 20s before it spurs up in 2022. >> okay. >> write my words down. >> we'll write them down nick, great to hear from you this morning. >> thank you for you understanding in the middle of a crazy quarter. shares of apple are up today after the company reported third quarter earnings in revenue that beat the street's expectations even as iphone sales declined again. we'll break down the numbers right after the break. check out the futures at this hour. the dow indicated up by 66 of points and the nasdaq up by 27 "squawk box" will be right back. dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. can we build ai without bias? how do we bake security into everything we do?

we need tech that helps people understand each other. that understands my business. we've got some work to do. and we need your help. we need your support. let's expect more from technology. let's put smart to work. ♪ ♪

now before the open, shares of apple moving higher after reporting revenue that beat expectations for more we're joined now by paul hickey, cofounder of the spoke investment group and mike santoli. start with you, mike, because of the reaction in the stock and cramer was talking about how important it was going to be what is it that got people so excited after the report

do you think it's the revenue rose again after a couple of down quarters? >> yeah, i think the revenue guidance was an upside surprise, just in the current quarter is above where the street was and also i think -- the fact they're kind of managing this transition reasonably well. so less than half of the revenues last quarter was iphone i think this is a greater incremental clarity that the company is navigating this transition. >> and they figured it out. >> in the low growth craze, exactly. up 4% is what was handicapped by the pretrading options trading and things like that it makes a lot of sense and i think the positive too in terms of where the stock is is it's finally getting above where it topped out in may so it doesn't look as much like kind of the trap situation on the chart. >> i mean, pauley, the mac sales remind me of when microsoft reports with windows it's always there. it's always better than people think and it's a real component

of what -- you know, what we think of iphones and watches and all that, but still sell a lot of maces. >> it'll real strong sub 1,000 mac era right now. and the guidance they usually guide 10% and they got 16%, strong the smallest percentage of the buy ratings on the stock in over ten years heading in to this quarter, the company you know lowered guidance in january so analysts haven't liked the stock, they have thought it was a one trick pony and apple's saying, you know, we have a lot of other things going on here too that are making up for the short fall in the iphone so i think that's a good thing but also important to remember, this quarter for earnings the stock has historically been the best quarter for the earnings report in terms of performance and prior to last night which was an earnings triple play what we call, they beat revenues, raised guidance, the last three july reports were earnings

triple plays. >> i never heard of an earnings triple play before. >> they typically do well in this quarter so that's just important to keep in mind when looking at the stock. >> up 4.5%. >> so the iphones -- the average selling price was lower, because of china trying to compete? >> they're adding promotional -- >> and fewer units but both were been guidance or better than expected >> i think it was weaker than expected when we start to get to new models later on, it's become increasingly cyclical on the iphone so i mean, we'll get a new model and then - >> the new ones are really big i like mine because it's not really big but i think -- >> i want a bigger one. >> my -- they look really big. i think right in between this and the -- maybe they should have new features.

>> what do you want? >> got everything. >> because you don't know. >> that's the problem. >> that gets back to the other thing. the airpods when they first came out, people laughed at them like who is going to wear those they're the fastest growing product right now so they're telling us what we want. >> what do you know about the margin on this we were talking about the margin issue on the mac book, great margin on the mac book, ipad, less margin. >> we don't follow the -- you know, the component pricing, we're more of the technical, historical side and sentiment towards the stock so you have much better to ask on that. >> so is the health -- cramer talked about that. the watch and the heart rates is that reporting to your doctor, how far off are those things >> i think that's still a ways off. before we get to that. >> big growth. >> it will be. you see more insurance companies start to adopt it, but the health aspect, apple with the

health of the market, growth in emerging markets so apple is the biggest -- one of the biggest companies in the world and we are seeing, you know, incremental rebounds across the world whereas in december quarter it was, you know, not looking good. >> by the way, also showing in this case the effectiveness of an aggressive buy back. >> yeah. >> so pointing out yesterday and today in a piece online that 2015 this year it's the same exact net income for apple $50 billion, eps is up 25% because they bought back 1.2 billion shares and they can't spend it fast enough they're trying to get down to zero net cash. and then a billion in debt against it it shows you that each individual shareholder who did not sell into the buy back has an incremental 25 -- >> it's still a trillion too. >> getting there, that's right

>> awfully close. >> we hear that buy backs are horrible we had a guest the other day tax -- all it did was increase buy backs it was the worst thing in the world. >> it's weird how it's getting villainized. it depends on what you pay in terms of the wealth and the inequality debate. >> so services, does that plateau the increases there or is there more to do? >> i mean, you can continue to grow i mean, i think the apple card which isn't talked about very much i think it will be -- the buzz surrounding that as it comes up to launch i think that will benefit the stock and i think it can benefit the stock longer term as well. >> to them or to goldman >> who does it benefit >> yeah. >> i think it's a benefit to both of them that's a reason we have liked goldman ever since the launch of it because they're branching out

to the consumer side from the institutional side of the business. >> i was skeptical that the market would suddenly revalue apple, but over time i do think it matters there's going to be a threshold where the services business is viewed as very stable and kind of a growing kind of annuity type of business that they will get a better multiple. if you look at the way this market wants to value -- whether it's starbucks or anything else. >> the multiple is still a -- still an enigma. what's the deal? >> it's around the market multiple now roughly. >> well, seems like it should be better - >> i think it has to seem less hit driven and it has to seem as - >> they're working towards that for a quarter and a half. >> it seems they haven't been overearning on the iphone to such a degree that's a big profit pool that's going to erode. >> i think the other thing you have to acknowledge there's still a china overhang on this stock. we may not be in a panic about trade talks right now but doesn't seem like there's much

progress. >> even though the effects from china were not that great. >> but china -- but for apple, it was something that tim cook has mentioned on the calls about being an issue when they missed what was it a year ago, it was something they brought up at the time. >> on the road to the market quarter, to what mike was saying about buy backs, there's good and bad buy backs. if you're a stock like apple trading at below market multiif you're buying back stock it's not the worst thing in the world to be doing. >> i did get a very nice christmas card from tim cook i found out because i went out to do -- >> finally looked at your mail >> i did i went out to the exchange a couple of weeks ago. what month is it, july. >> i would make fun of you, but i was opening christmas stuff last night. >> i saw a bunch of stuff on your personal note, very nice. very nice. i was mad, you know, for six months where's my tim cook -- >> it helps if you open your mail. >> got to open your mail. >> you should say your home address here so he can send it to you there. >> good idea. >> if you need postage i'll give

you my credit card. >> i did that once i pulled out the stupid thing and you people zoomed in duh. >> dummy. >> identity theft. paul and mike, thanks. all right, coming up - >> did you get a christmas card from tim cook? >> you know what i don't like to talk about private letters that i get or correspondence that i have with people i'm sorry. >> i'll talk to him for you. >> i did get a nice card. >> oh! i knew -- i can flesh you out. >> well -- >> i knew i would. >> you lead me into it we'll talk trade, the fed, the taxes and last night's debate withenor sat rick scott. he'll join us after the break. hi, tim. stay tuned you're watching "squawk" on cnbc 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?

welcome back, everybody. senate preparing to vote on the budget deal and while it's expected to pass, several republican senators are planning to vote against that deal including our next guest joining us right now is senator rick scott and senator, good to see you today. >> good morning. i know people worked really hard i think that president trump and steven mnuchin and mitch mcconnell and richard shelby and i know it's complicated in a divided government but i'm worried about the debt i paid off a third of the state debt when i was governor there's no focus up here on the debt

we can't have $22 trillion wort worth of debt growing at a $1 trillion a year and not having a consequence at some point. >> what has been the response from the administration when you tell them that >> well, i mean, look, they would like, you know -- you know president trump, he'd like everybody to agree with everything he does i know they all worked but it's hard it's hard to get things done up here but we have to start to focus on this debt. you know, i -- you can look around every day and you see waste. the peace corps is spending $4 million a year teaching english in china while china is stealing our technology. why are we doing that? there are so many ways that we see waste up here. we have to without more focus up here. >> it's probably going to pass anyway, but would you still vote no if it meant that there was no budget deal and the government was shut down at some point? >> absolutely. we have got to have -- we have got to have -- i don't want government to shut down but let's have a legitimate

conversation about how do we spend our money up here. let's stop the waste let's live within our means. we do it at the state. i mean, i paid off $10 billion worth of debt and we cut 20% of our regulation and we added 1.7 million jobs. this is all doable but you have to make choices. up here, everybody gets everything so there's no tough choices made doesn't make any sense not the way that the real world works. >> what would you go back to senate priority is about what to cut. that's where you run into trouble when you have the divided government and two parties that see things pretty differently. what would you do if you were responsible for a compromise would you go back to where we stood, where both sides were going to have to agree with things they didn't like to do? >> of course i mean, that's the way our government was set up. no one gets everything they want but the way to think about it, we should say, you know, we collect, you know, 3 plus trillion dollars worth of taxes a year, how are we going to allocate the dollars

you do it like your family has to do. like a business has to do it you say how am i going to the allocate the dollars the best way and let's make choices for the kids and the grandkids i mean, they're the ones who will pay for this so we're spending the money and they have to pay off the debt. no one thinks that way or that's what's happening but that's what is happening up here. >> so senator, what would you eliminate? >> let's start with theprogram by program the peace corps came in to tell me how it makes sense for them to continue to stay in china and spend $4 million a year teaching english to the same country that's stealing our technology let's go agency by agency. it's what i did in the state government there were 4,000 lines in the budget in florida and for the first budget i went line by line i said what do we get for it. >> the $4 million in china, the peace corps, we can debate that. but is it going to be a rounding error in the grand scheme of things what would be a big -- if you had to go after a big piece of this, what would you do?

>> i think you have to look at every agency and say, should the federal government be doing this or -- look, it doesn't mean it's not a good idea. it's the idea that, you know, we are only collecting 3 plus trillion dollars in taxes so we have to look at everything we're doing and say let's prioritize it so you take every agency you do what you do with your family and your business i'd like to do i think the thises but i don't have the money, so let's look at what's the highest priority we want to make sure that people can get health care, make sure that people have other things that we care about but we have got -- we have to have a military so my highest priority is going to be always be the military. i want to defend the freedom of this country it's the most important thing to me and my family. >> we have the china trade talks. our delegation looks like they have left shanghai we haven't heard any announcements of any potential progress being made. but it also does seem a bit cordial at least at this point you don't think a china trade

deal is going to get done any time soon. >> no, this is a group of people who don't live up to what they say, they're stealing our technology so i think it's very difficult to think that they're going to poof like that change their minds, oh, yeah, we'll comply. we'll open up our markets. i mean, they won't do it unless they feel like they have to do it and i filed a bill that says americans ought to know when you buy something online where it's made so hopefully americans will buy more american products because i think that's what they ought to do they want more jobs in this country. i have a bill that says we won't buy any more drones from china we're worried about huawei, we ought to be worried about these things so i'm -- i told you about the peace corps. i think we ought to look at china as a competitor and treat them like a competitor that doesn't comply with whatever they say they're going to do they're not a fair negotiator. >> you have support for those

bills that you just mentioned, the prime act? >> i believe i'll get them done. up here, you do what you do. i'm a brand-new senator, you slowly start working into it individual by individual you build up support but i think -- yeah, i think those all of those things are going to happen. >> senator, if things quiet down a little in the economy and i don't know, the president is seen by a large percentage of people as being too divisive or something and we get one of these people in from last night, i mean, you're talking about worrying about debt now. what would we look like if that were to happen that's a possibility you have to consider that possibility. >> so that's why we -- everybody has got to be involved in the elections. i mean, $100 trillion for the debt is what the proposal is who -- you know, go around people don't want socialized medicine they like their employer's sponsored health plan. they know the green new deal. >> they don't like the tweets. some of them

that could happen. anyway, i think we have to run, senator. >> all right. >> but the caution flag should be going up. have a good day. >> all right. >> you too when we return, we'll be joined by energy secretary rick perry to talk about tensions in the middle east. oil prices and much more in the meantime, check out the futures at this hour right now looks like the dow is indicated up by 61 points, nasdaq up by 28 and s&p up by 3. "squawk box" will be right back. kevin kevin kevin kevin kevin trusted advice for life. kevin, how's your mom? life well planned. see what a raymond james financial advisor can do for you.

decision day for the fed wall street holding its breath for what could be the first interest rate cut in 11 years. apple's next chapter the tech giant posting beats for the latest quarter but also leaving wall street wondering about sources for future growth. and energy secretary rick perry will talk about oil prices and much more. the final hour of "squawk box" begins right now ♪ >> live from the most powerful city in the world, new york.

this is "squawk box. good morning welcome back to "squawk box" here on cnbc live from the nasdaq market side in times square. i'm joe kernen with becky quick and andrew ross sorkin the futures right now indicated up 63 points or so apple had a good report. nasdaq up 28 1/2 s&p indicated up about 3 -- just under 4 points at. treasuries, at this point, are about where they were -- got a big decision today 205 is where we're going into that meeting we have the adp report in 15 minutes too. a couple of big stories that investors are talking about, shares of apple are higher after the company reported top and bottom line beats and the revenue returned to growth after two straight down quarters and guidance came in above analyst expectations iphone revenue fell 12% from the same quarter last year and the services revenue from things like apple's app store growing 13% but slightly missed analyst

expectations we'll talk more about apple a little later this hour. another key earnings report, general electric beating profit and revenue estimates. it increased the full year outlook. ge said ongoing weakness in the power business but aviation, oil and gas and renewable revenue grew separately. they announced that the cfo, jamie miller, will be leaving the company but will stay on until a replacement is found. private equity firm the carlo group will convert into the c-corporation. it's the latest to do so following blackstone and apollo and doing something slightly different in this case in which it is going to a one share, one vote program no dual class there. you're watching that stock up a little over 5% this morning. the first round of the second round of the democratic presidential debates taking place in detroit last night. kayla tausche is there and she

has the highlights hi, kayla. >> good morning, becky in a debate that pitted moderates against two progressive allies, bernie sanders and elizabeth warren, a common antagonist emerged in corporate america. >> these insurance companies do not have a god given right to make $23 billion in profits. >> under medicare for all, the hospitals will save substantial sums of money because they won't be spending a fortune doing billing and the other bureaucratic things that they have to do today second of all -- maybe you did that, and made money off of health care but our job is to run a nonprofit health care system. >> the nra has us in a choke hold and so do the pharmaceutical and the defense contractors and none of this will change until we either pass a constitutional amendment or pass legislation that establishes public funding for federal campaigns. >> there's some noticeable

differences on the degree to which the government should be involved in the programs among the candidates but they agreed on things one, that campaign finance laws should be reformed and that capital gains taxes should be increased and that the president's tariffs are not working as a way to get the ideal trade policy in this country. these are some of the themes we could re-emerge this evening when the former vice president appears on stage with cory booker and kamala harris as well as seven other candidates. >> kayla, thank you for that report. we want to continue this conversation, jared bernstein, he's now a senior fellow at the center on budget priorities. cnbc contributor as well and genevieve wood, a senior adviser and spokesperson for the heritage foundation. good morning to both of you. jared, you listened to the debate last night. and it just -- i mean, it's hard

to understand -- especially on the health care issue where you think this party is ultimately headed >> yes i think that's true. and i think that's actually a good place to be i thought that the debate while the format was very unfortunate and nobody had time to really explain anything was precisely the debate that the democrats need to have i don't i think it's clear which path is more appealing to the democratic electorate. now, the base is -- the kind of twitter base is very outspoken regarding let's take a leapfrog jump right into medicare for all and skip the more incremental sort of path dependency ideas around a public option, giving people a choice. medicare for all who want it medicare for more. and again, i think that's a really important debate to have. but i do think the commonalties and kayla brought this out, health care has to change, has to become more accessible and

affordable and the democrats are much better positioned to do that for you than republicans. >> but jared, you're not worried that the party -- that may be salable within the party but not salable to the general public? >> i think what's salable to the general public is exactly what's under debate right now and that's why i think it's so important. we have ample time to work this out. it is early, it is preseason you saw -- you're going to see 20 people on that stage. and whether the more moderate path or the more left leaning path is -- appeals more to the democratic electorate is yet to be seen. i think the moderates are making interesting inroads and that this notion of path dependency and getting to where we want to go incrementally is gaining some traction. >> genevieve, do you think the moderates are winning this or is the left pulling it even more left >> well i mean, it depends on who you ask. if you listen to the audience who was there last night they didn't like it so much when the

moderates asked the questions of elizabeth warren and bernie sanders when it came to things like medicare for all and their health care plans. they wanted the more the better. so look, i was encouraged to hear them be asked those questions but let's keep in mind, yes, to the left is bernie sanders, elizabeth warren. harris and -- that we'll hear tonight and others but the reality is everybody on that stage wants to spend more money. and that's where we're talking about health care and free tuition for college. you name the program everybody on the stage wants to spend more money. as you just talked about in the previous segment, at some point you have to ask the question who is going to pay the bills? and i know that elizabeth warren and others well, it's just the rich but the truth is, you know, to pay for everything that the folks on that stage were talking about last night, that we'll hear from tonight, you could -- the rich will only pay about 6% of what they're talking about. which means everybody else is

going to be in this too. and when you start talking to average americans, middle income earners and they realize how much taxes are going to have to go up to pay for these things, you see a real drop in support. >> jared, did you see the bureau of economic -- i'm sure you did. genevieve, you can weigh in. bureau of economic analysis published the annual revisions to the personal income data and it was a huge jump in disposable income, these were -- these are good, jared. you can't -- >> no, good numbers. >> it flies in the face of the idea that we used to hear about secular stagnation during the previous administration. that that's why wages weren't going up will you concede that wages are starting to rise, maybe because of some of the policies or it was just - >> look, we have a tight labor market and that always pushes up wages but if you look at the middle of the pay scale which i think is really important especially in the context of

these debates and what the democrats are talking about. some of the points about corporate power. you actually see the median wages growing slower than both the bottom and the high end. >> but the economy is head wind - >> no question. >> something that trump can run on. >> this is a problem for democrats is that unemployment is low historically across the board. name the group that you want to talk about the numbers are lower for them and when you talk about wages, since the tax cuts of over a year ago it's actually the folks at the 25% -- at the bottom their wages have gone up almost the most in terms of seeing growth in their actual paycheck. look, the average family in this country got $1,000 to $2,000 back in a tax cut. nine out of ten of americans benefited from the tax cut plan. so look, i don't think we want to get debate about tweets i definitely agree on that, but if the president runs on the economy i think it will but tough for somebody on the left to say let's spend a lot more money and by the way, we have to

take some of the tax cuts -- we have to take that back. >> you have to be really careful about throwing out aggregate numbers. you talked, joe, about the personal income data that's the aggregate data in the whole economy and i totally agree, by the way, that the low end is doing pretty well that has to do with low unemployment and with minimum wage hikes if you look at where the low end is doing better it's in states raised their minimum wages something that republicans vehemently oppose. but most of the growth has gone to the top end of the scale and the democrats are right about that and that's why bringing down inequality typically through taxes on wealth is a live issue for them. >> but jared, the problem as you know there aren't enough rich people to pay for this stuff i mean, the top 10% of earners already pay over 70% of the taxes. >> i'm going to help you here, because i want to go to jared on this final question here which is during the debate, elizabeth warren was effectively asked if you do this medicare for all

program, if you do all of the things she's talking about, are you going to ultimately need to raise taxes on the middle class and she very explicitly said no, we're going to raise taxes on billionaires and corporations. that's how we'll pay for it. and somehow that seemed to end the conversation it didn't end the conversation in my mind and i'm going to ask you if it ended the conversation in yours because i don't know how you make the math work. >> it didn't end the conversation in my mind and i take your point. i think what she was trying to say, anything you pay for in taxes you'll get back in lower premium taxes -- >> no, she said lower cost total for the middle class. >> that's the question -- the question is who is the middle class? the median household -- that never came up. the median household income in this country is $60,000. i don't think we should raises on the middle on down. i agree with genevieve we can't get there on the backs of the top 1% we have to be much more precise about who we're talking about.

>> thank you both very much. appreciate it. all right. coming up, breaking jobs data. the latest adp report is out in minutes. it's a critical look at the hiring ahead of friday's job report it's next when we return

welcome back to "squawk box," everybody. we are seconds away from the adp private payroll report the futures have been higher all morning long, right now the dow futures are up 54 points and the nasdaq is up by close to 30. let's get over to steve liesman. he's standing by for the fed but he has the adp report. steve, take it away. >> becky, 156,000 is the adp report for the month of july private sector payroll seen rising by about 156,000 and that's spot on june which was a weak number was revised up just a little bit by 10,000 to 112,000. but a good sector up 9,000 service sector, pulling most of the weight, 146,000 and the nonfarm payroll 165. small business 11,000.

they have struggled the last couple months. so doing a little bit better right now. median business 67 large business, this could be a question of who has the ability to attract workers in a scarce market for labor right now let's look at where the jobs have been educational -- health services up 87,000 trade transport is 27,000. construction not too bad up 15 and financial 11 manufacturing only 1,000 even though this number is higher than the prior month it's indicative of a slowing job market you can see our job growth in adp is about half what it was back in january or so. so a little bit better on this month compared to june but the three month average suggests that we're still slowing in terms of the overall job market. >> steve, thank you.

we have more to talk about and in order to do that let's bring in michelle meyers, the head of merrill lynch research and mark from moody's. adp numbers something we're watching very closely. right in line with expectations. how would you summarize what you're seeing right now? >> healthy job growth but slowing. last year, 2018 average monthly job growth was close to 225,000. so far this year we are down to 170. feels like underlying trends is close to 150 "k. taking the brunt of the slowdown are small businesses as steve mentioned that but if you look at particularly very small businesses, those with less than 20 employees, job growth now has been negative for three months in a row. so the trade war, the labor shortages, what's going on with online retailing is doing a lot of damage to smaller mom and pop companies. >> which of those would you put at the top of the list

is it just impossible to compete with the bigger companies that can offer more perks or do you think this is really -- they're seeing a slowdown in demand for their products >> i say all three things. i put at the top of the list the labor shortage you can see real softness in construction leisure hospitality. you know, even education, health care you know, that's where we're seeing the real constraints but also the online retailing and retailers are laying off workers because of the competition and the trade war's doing a lot of damage to manufacturing we have seen a pretty sharp slowing there. transportation distribution and also ag related. anything ag related is pretty weak all three of those things are contributing by the way, becky, i would expect further slowing in job growth as we move through the year into next. >> michelle, if you compare us to what we see with china, china has some manufacturing numbers that show their manufacturing is

still contracting. 49.7 so below 50. a little better than anticipated but still slowing. how do you think this measures up with what we're seeing at this point >> i think that's a really important distinction which is that globally there's a manufacturing contraction. china leading the way but the u.s. hasn't contracted just yet. the manufacturing sums are still positive manufacturing jobs are being added. they're slowing. there's clear weakness but we haven't moved into the negative territory for manufacturing. we'll get the ism report later on in the week and it will be interesting to see what it shows. on a relative scale for manufacturing the u.s. has not done as badly as some of our trading partners >> however, what you just lay out may be what the fed is thinking about as they're considering of cutting today what's happening off our shores and trying to prevent that from landing here. >> yeah. i don't think they're cutting because of the domestic economy is in really bad shape look, we're still creating jobs, over 150,000 on the trend basis.

we think that friday's job report will show something similar and even manufacturing it's still positive though much weaker but they're worried about the pain that we're seeing abroad which is partly driven by the trade uncertainties is going to spill over to the u.s. and they want to get ahead of that that's why fed chair powell has to do a good job in explaining what that is, what exactly is driving him to cut rates right now and how much more does he think is necessary to address the risks >> does the fed pay attention to a number like the adp? >> -- which is some big data that they incorporate into their models, we have been using the adp to get a better read out there. if i can make a case for free trade here, becky, based on what michelle is saying yeah, we may do better than they do when all of these trade tensions are out there but we all do worse than we all

did before i think that's worth pointing out. and we all do better when everybody does better. so if we want a race to the bottom here and say well, we didn't finish first in the race to the bottom then i guess we can put a check mark next to our box right there. but if we want to say how do we all do well, well, free trade, open borders, lower tariffs we all do a little better. >> mark? >> i would agree with steve. i think it's not just manufacturing. i mean, i think if you look at the transportation distribution sector it's getting nailed by this and this is -- you know early days you know, the trade war continues. and i think the fed is easing not so much because of what has happened they're easing because they're uncertain as to what will occur. it's the uncertainty around where the president is going to take all of this when he's going to take it there that's causing them to move in

lower interest rates >> mark, do you think they're moving to give the president room for negotiation or because they're worried about that i mean, that wasn't the impression i got. >> i don't think they're moving to get the president -- to give the president room, he's shoving them out of the way. they have to react right? their mandate is to make sure that this economy doesn't go into recession and they have to react to the president's policy so if the president takes us down a trade warpath, they have to react to that that's as simple as that they're not making room for him. he's pushing them into this direction and in a place they don't want to be. >> michelle, where do you think the economy is going to head the rest of this year? >> i think we probably are on track for some slowing into the second half of the year, given that we have had this global weakness there's probably some room for payback as well in a lot of the high frequency indicators so we're thinking close to high growth so for the full year low 2% growth. which is fine. it's fairly consistent for this recovery it's a slow patch, but it's not

a contraction. >> mark, go ahead. >> the only thing i'd say -- i agree with michelle. but here's the issue so if growth slows a little bit more and we start growing below potential that means unemployment starts to notch higher, which is very possible when we're in this kind of a situation, that's the fodder for recession because as soon as unemployment starts to tick up, consumers which have been stalwart, they're spending, they'll stop spending or become more cautious. the businesses will pull back on the hiring and we go from the virtuous cycle into the vicious cycle. we're in a much more fragile place than people think. because we're right on the edge of going into the below potential growth economy. >> all right mark, michelle, steve, thank you all. steve, see you in a little bit. coming up a live interview with energy secretary rick perry. we'll talk about the tensions flairing in the middle east and where to put your tech dollars after that to work now that all

five faang companies have reported stay tuned you're watching "squawk box" on cnbc

welcome back to "squawk box. the futures right now are indicated up about 68 points on the dow. the s&p up 4 and nasdaq up 30 or so apple's strong and we should point out since adp, since that number it was

basically right where people thought it was doing to be at 1 56 so we haven't seen any movement really in the futures whatsoever we're waiting for the fed. >> okay. let's talk trade news right now. u.s. and china officials have ended after one working dinner and robert lighthizer and treasury secretary steven mnuchin are departing for the airport earlier than expected. trump warned china against stalling in the talks and people are trying to find out where we're headed >> all the way over there, why would you end it early >> because you're not making any progress that's what you would assume. >> i guess. >> never mind. when we come back -- >> long way to go for our dinner. >> a "squawk box" exclusive. energy secretary rick perry on the recent moves in the oil and gas markets. also energy security andhe t

world's biggest geopolitical hot spots. that interview is next when "squawk box" returns

welcome back to "squawk box" right here on cnbc live at the nasdaq market site and we're an hour away from the opening bell on wall street. i want to get over to dom chu who has a look at the biggest stock movers >> so the busiest week of earnings season rolls on, big moves on the heels of the reports. we have shares of humana up around 7 or 8%, roughly 6,000 shares and profits and sales both topped estimates and humana boosted the forecast here. separately it said it will do an accelerated 1 billion share repurchase program so the shares run on that news shares of spotify meanwhile, lower by just around maybe 4 or 5% or so now about 3.5% 115,000 shares premarket volume. it posted a bigger than expected loss for the quarter but

revenues were better than expected it also reported a 29% rise in monthly active users and a 30% jump in the number of paying subscribers. and we'll end with shares of garmin which was up around 7% roughly 30,000 shares premarket. the gps navigation and wearable company posted better than expected sales and boosted the full year profit and sales guidance as well it was helped along by growth in the aviation, marine, fitness and outdoor products so a lot of greens back over to you. >> i'm sorry -- just real quick, dom? >> yes, sir? >> i don't understand the humana chart. are they whistling past the graveyard? did anyone tell them we're getting rid of private insurance? >> i think they may have, but there's still stuff in there -- if it's medicare advantage it's going to be -- >> no no but if it's medicare for all it's going to be no more

insurance companies in the -- and the stock is up 18 are they just deaf or blind to what's happening or didn't see the debate >> they could have seen the debate, yes, you're right. but if the democrats go that way so the markets are handicapping this. >> he's answering this seriously. >> i know you're just yanking my chain. >> thank you, sir, may i have another. we don't need a serious answer but i'm trying to point out the absurdity -- >> did you enjoy it last night >> i watched the beginning and i have been saying i was just talking to andrew off the air. there was some stuff with the republicans last time -- you have seen network, the movie, right? >> i have seen. >> the way that cnn that i felt like faye dunaway was running the production from network. a paddy chayefsky film i didn't know what to think. >> the best part about it, you get another night of it tonight.

>> tonight is going to be interesting. see how -- >> it will be crazy. >> vice president joe biden has a lot of expectations to perform. i kind of wish bernie and warren were there tonight just to see how he would walk that line. >> but it seems like it's brackets, right? you always put warren and bernie together on one side of the debate then you put kamala and joe biden on the other side they make it so it's like a bracketology type of situation. >> there are 15 -- i would keep the psychic though every decent debate needs a psychic. >> did you see the video about the kid asking about whether she had a cat, i had a cat, but my cat is dead. you should check it out. >> i think it's in a different -- not necessarily dead, andrew sort of in a different - >> we don't know if it's alive or dead yet. >> i'm sorry thank you, dom. >> you got it.

>> got a bad look from andrew. >> psychic on one side, reality show star on the other it's all - >> that's the best you can really -- anyway. >> the best right now. the best i have right now. >> it's tough. for your entire side. >> find me somebody in the middle. >> coming up our exclusive interview with energy secretary rick perry and apple's next big challenge the tech giant beat estimates for the latest quarter and the stock is up. but with iphone sales slowing can the services pick up the slack? the answer so far is yes we'll talk more out atabth answer and what apple will look like in the years to come. we'll break it all down when "squawk box" comes right back.

i'm at the nasdaq market site in times square with a portfolio manager at jpmorgan asset management how much higher is this bull market going >> i think we're in the higher sector of the bull market that will have much higher earnings and i think the s&p can be at 10,000 by the early to mid 20 or 30s. >> what do you see that others don't? >> the four key points, one, the rolling 20 year total return of

the s&p right through is about in the bottom 5% compared to the past when that's happened, the returns have been very good over the subsequent 10 to 15 years. second, valuation of equities relative to fixed income is very attractive today third, demographics. most think it's a head wind. data suggests it's a tail wind and fourth, investor positioning. flows have been very strong into fixed income quite anemic into equities >> so investors are too bearish? >> they should be at the high end of whatever they're comfortable at and i believe that's the not the case for most. >> thanks. for more expert analysis search for jpmorgan solve it online

welcome back to "squawk box. take a look at the futures right now. let's show you what's going on we're under an hour away from opening bell the dow looks like it will open up about 75 points higher and the s&p 500 up 5 right now. oil prices are on the rise this morning traders anticipate a potential interest rate cut from the fed and joining us to talk about the state of the global energy arena as well as some news on u.s. lng exports secretary of energy, rick perry mr. secretary, great to have you on this morning. let's talk about -- we'll get to all of the big issues because --

tell us where you are and let's talk about the lng news that was embargoed. it's been hard for us to get clearance to export some of this stuff that we're flush with around the world it might help to be able to do that for our industry. >> yeah. that's one of the pushes that president trump has made he said, look, step in to this, lean into this i want regulations that are either costly or just getting away or somebody may have thought they were a good idea at one time but really they don't serve the public get them out of the way. and across government now, you're seeing that type of approach that's saving literally billions of dollars and so much time and getting energy into the world market so this in mississippi, kinder morgan is the 50% owner of it, a

great company. out of my home state of texas, rich kinder has done a fabulous job through the years and these guys are -- it's exciting to see them coming online with a new lng facility we are in 36 different countries now shipping lng i think we have four facilities up and going there's a couple more online along the gulf coast so infrastructure is the name of the game you're seeing a lot of the infrastructure the states blocking the progress i would suggest are making huge mistakes from the standpoint of being able to not -- like new york for instance, not building across new york, their citizens will be paying the higher power rates in the country along the gulf coast, not the case they're moving product out there. they're making not only economic sense. but it's national security it's security for countries in the european theater

so this is a fabulous story about energy that's having ramifications all around the world. >> sometimes the abundance we have in the united states unfortunately affects prices and that's counter -- counterintuitive and might hurt production but if we can export more and spread it around then you deal with the demand and we can keep it going. you're at the chambers global energy institute event and i think you're going to present. what do you have prepared? >> yeah, just back from the middle east, about four days in israel, two days in egypt. you know, fascinating world out there when it comes to the eastern mediterranean and the gas finds that their noble energy and another texas company that went out and found the massive find off the coast of israel and zorn field north of egypt, gathering all that, you have the israelis and you have

the egyptians as well as some other -- jordan for instance, you had israel and the palestinian people sitting down at a table in cairo talking about how can we work together to give energy resources in that region the proper focus and moving it around in country. just i'm telling you, joe, it's one of the most fascinating times in world history when it comes to energy and the united states leading the charge. >> can you weigh in on this, mr. secretary, i know that there's a statement from the d.o.e., by routinely engaging with energy stakeholders who are seeking the peaceful use of nuclear energy that's the answer to what happened with the saudis and with your involvement with ip 3 and whether to give nuclear technology to the saudis even a republican marco rubio is worried that maybe the atomic

energy act was violated in transferring some of this technology to the saudis was that all done by the book? do you have any concerns with that at all? >> yes, sir, no concerns at all. here's just cut through all of the chatter and the white noise. here's the issue the saudis are going to engage in a civil nuclear program for power for their country. who do you want working with them who do you want to be supplying the fuel, the technology you want the russians, you want the chinese that have zero interest in nonproliferation or do you want the united states? i would suggest that the united states makes all the sense in the world if they're going to do this we want a very strong one, two, three agreement signed with them and you want the united states being engaged with this. so you know, i understand all of the noise and the issues that pop up around this. >> but there's a lot swirling around all of our relations with

saudi arabia at this point and i guess, you know, nuclear technology and you wonder, you know, about the -- you know, what type of partner we really have we're kind of stuck with saudi arabia we are with a lot of countries around the world obviously when they do things that we don't really approve of or like very much i understand what the real world is, but no pause after the khashoggi incident >> well, listen, i don't get confused that there's always pause. i mean, we deal with countries on a regular basis that sometimes their activities are very counter to what you would want out of a decent partner and a decent neighbor. but the fact is i got to get back to saudi arabia is going to have a civil program do you want them to be partnered up with the russians or do you want them partnered up with the chinese? or do you want the united states to be in there working with them, looking over their shoulder, having this agreement

and i'll suggest the latter is the better work. >> kind of an argument for any country having our help when it comes to nuclear energy. >> indeed it is. >> so you would say the united states should partner with any country? >> i should say within reason. if we're going to sign an -- not within reason. absolutely if we're going to sign an agreement with somebody i think the united states has the best oversight. number one, i think we have the best technology. and certainly we have the right mindset when it comes to civil nuclear power. we'll limit that we're working with the international atomic energy agency i'll be back there in our annual conference in september. talking about getting a new director, director romano passed away this last -- ten days ago so there's a lot going on out there in the nuclear realm i will say with small modular reactors we have some great american companies that are leading the charge on that

so we're going to see the proliferation of nuclear energy going forward. i think it's in the world's best interest, certainly it's in america's best interest that we are engaged and we are partners with these countries as they develop those civil nuclear programs >> the trump administration, mr. secretary, is there less -- i mean are we not moving as quickly on renewable things? have we conceded that hydrocarbons are going to be with us for quite a while, whether it's natural gas, whether it's oil whatever you look at or are we on a longer schedule to where we get to what some peop people want and that's a carbon free -- are we moving that way >> no, we're headed in the right direction and let me share with you why. we're on the country making real

progress on the reduction of emissions and that's the transition to the cleaner burning plants america is leading this transitional fuel of natural gas. what we are seeing on renewables is pretty fascinating as well. battery storage, making some real progress on battery storage. i happen to think that's the holy grail if we can break the code on that, to be able to score this energy in massive amounts long term. our national labs are working on that we have some really great projects that are going on out there. you know, you're seeing wind energy continue to grow. so fusion energy, we have two companies on the west coast that are working on fusion energy listen, i know that's further down the road but there's exciting things going on in the zero emissions side. >> well, i hope so i heard again -- last night i heard we have like 12 years so i mean - >> there's the thing i don't understand. >> i love living >> given some of the comments that you have made and the administration and the president

have made about your views on climate change, why would you need to do any of these things >> well, the fact -- >> that sounds sarcastic, but not really. >> we're going to address the climate. it manges sense for us to have policies that reduce emissions, that reduce the pollutants that are in the air reduce the particles that cause massive health problems around the world. so you know, just common sense tells you bring the cleaner burning fuels, bring the things that bring emissions down. that's just common sense. >> but you don't believe that these -- that any of that is causing climate change >> listen, i'm on the record of saying that the climate is changing man, it's been changing forever. where have you been? the climate is changing. are we part of the reason? yeah, it is. you know, i'll let people debate about, you know, who's the bigger problem here. we're reducing emissions you go back to that paris accord and you look at those countries

that signed that paris accord that had their hair on fire because we got out, none of them are reducing their emissions and the united states is that's the real story. >> mr. secretary, the notion about there's a catastrophic event near term imminently from human activity, that's where people might disagree. >> but the administration has come out - >> catastrophic event. 12 years. >> let me clarify this the administration does not believe that carbon -- carbon dioxide is not a problem in terms of climate -- correct? >> we focus on reducing the emissions, that's all of - >> particulate, pollution, clean. >> okay. that's fair. >> it's fair to say that the administration does not think that catastrophic human induced global warming is settled. that's probably would be fair to say. >> fair to say that this administration is making more progress than any other administration in history in reducing emissions face it.

that's the facts it may not meet your narrative, but that's the facts. >> mr. secretary, all right, we appreciate it. thank you. >> you're welcome, man good to see you. >> see you later. apple reports on both the top and the bottom line in the latest quarterly report closer e tech sector now that all the faang company quarterly reports are in ann, great to see you this morning. so what did you think of apple better than most were expecting. >> well, definitely the top line and the guidance were what the street wanted, something better and larger i do think that the surprise was in wearables and that really plays to himapp' strengths. the disappointment was in services which didn't meet estimates. and is really growing not as fast as it should be to make up

for the differential in the iphone decline >> so the stock had been up about 4.5%, now 3.8% still the market valuation is really close to the market norm in what is typically a technology company, some people say it is more of a consumer company now. what do you think? >> i think that there are some rough waters ahead for apple it has the most famous brand in the world. it does great on things that it puts its brand on. but it really has to amp up growth and offerings and services i don't think that it will be an easy year as they move into 5g and have to have a new innovation cycle i think that it will be a tough year ahead for apple >> definitely counter to what a lot of market investors are thinking what do you like right now >> i really do like what is

still happening in the club first market place amazon, google, microsoft and of course crowd strike, zoom. we've seen these companies with big numbers, really large growth percentages, even companies that have been around for a while but still young like service now these are all benefiting from rebuilding the cloud first stack. that marketplace is part of almost a $4 trillion i.t. spend this year. and i think that we really have a market where there is not a winner take all but lots of winners and lots of high growth glp do you thi . >> do you think the government will be deciding any of those winners if they think about breaking off amazon web services or anything? >> i don't really worry about that i do think that the government will try to take a whack at everything here.

it will be part of everybody's political campaign we heard some of it -- although tech wasn't specifically mentioned last night with the democratic candidates, there seems to be sort of a lot of anguish toward anything that is large and growing. but we depend upon innovation as the backbone of this country and we also do see every enterprise becoming a software company and looking at how they improve their digital experience with customers we do truly have a global digital transformation under way. and there are many benefactors in the enterprise software space including companies that are critical to the long term viability of every enterprise which are the cloud vendors themselves microsoft, google and amazon >> having said that, it is not just the democrats, it is the republicans at this point too who are not thrilled with big companies on any level so it may not matter who wins the election in terms of silicon

valley's future on any of this >> yeah, i do think that companies can't have unfair competitive practices. and there are antitrust laws and companies should be held to the law of the land. but just breaking up for the sake of size i don't think that will happen. >> what did you think of netflix? i know that is not a cover that you traditionally cover closely. but it is certainly one that we're watching closely here. anything you've heard that quarter change your mind about it >> you know, it was very disappointing results for netflix especially the user growth and the competitive influences on that company it does speak again to apple who once again streaming media as part of their services offering. it is not a high agregross margn business just under 40% those are not software businesses which operate at 70% to 80% gross margins it is not to me as desirable a

business as the traditional software company or a cloud based software company like a sales force or even newer issue like crowd strike. >> ann, thank you. we'll talk to you soon >> thanks. jim cramer is joining us i just clicked on -- what is apple worth? here is what i think but it stops because i don't have access. >> i'm used to you -- >> tell me what you said >> proctor and gamble is a 24 multiple four turns less if you are apple because that is about how much is really service versus hardware i love the crowd strike, the service now. but service revenue stream is not slowing from apple you back out the one time gain from last year, you do 300 basis points of currency and you are

getting 18% growth wearables are on fire. so i'm saying this is a razor blade model. i think '21, we'll be saying hardware is the razor. and i think that you need to see the company not as a technologist you need to see it through the lens of what we heard yesterday from the cfo of proctor and ceo. it is not a tech company in the traditional sense. it is a pioneer with great customer satisfaction. we cannot value it and say it is slower than service now so we didn't really like it. that doesn't work for me >> and you tweeted that it is an investment, not a trade. it is a buy apple and it is for the future >> it is just so painful to see these people say sell it at 205, get back in at 195 joe, is everybody a hedge fund is that all that is out there? i thought the service revenue

was great. i thought that it was surprisingly good in june for hardware i think that they could charge for health care a year from now. i think that they charge for the credit card $10 stream and i think these will all work. and i don't understand why people refuse to look at the future and try to figure out what this is based on the past it makes no sense to me. >> all right jim, we'll see you in three minutes. thank you. stay tuned, "squawk box" is coming back in a moment. fr my experience with usaa

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, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.

. a quick final check on the markets. dow looks like it would open up 64 points. nasdaq looking to open about 29, 30 points higher s&p 500 about 4 points higher. of course we'll be waiting to hear from the fed later today. steve liesman is in washington and make sure that you join us tomorrow where we'll do the postmortem squawk on the street begins right now. good wednesday morning welcome to "squawk on the street." stocks are looking for a bounce on final day of july in addition to the decision, we got u.s./china trade talks wrap upping up, pmi improved a bit, earnings movers. adp in line 156,000, employment cost up year o