and we get the june read on consumer prices. they expect to remain hot after the big jump in may. plus, is your state the best in in the country for business? scott cohn joins us from the undisclosed location tweet us your guesses. it is tuesday, july 13th, 2021 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin and mike santoli. joe is off today you saw the dow up by 126 points to close within four points of 35,000

new records for the s&p 500 and nasdaq if you look, the dow futures are down by 33 points. s&p futures are up and the nasdaq is indicated up by 55 points again, these new records every day gives you something to think about and something to talk about. mike, the one thing i'll say is we talk about the concerns and every day a new record is this the classic wall of worry? >> it seems like it. it is a grind. it is not the markets shooting higher that clustering of all-time highs hasn't happened in 60 years or 50 years. it shows a resilience in the market obviously the treasury is the story. it is interesting how the market digests the inflation number. >> the cpi >> the hotter the inflation numbers, the faster the people k

the fed has to run >> right now, you see the yield back at 1.36% after the low last week of 1.26%? >> 1.25% for a moment. let's look at the "squawk stack. you could point out not a single sector is not a point from a 52-week high all of those hitting new highs as well. not everything goes up check out lumber prices. lumber came crashing back. it wiped out the 2021 gains yesterday. now down 0.6% based on yesterday's close. we touched a high. you see it is down to $712 for the same metric. >> so much focus on the lumber market

everyone getting a lesson in how the relatively small the commodities futures market works. >> very fast correction. andrew, we pointed out on the way up we will point out on the way down >> unclear whether it will get past some of the consumers i was talking to a pal yesterday who was doing some house work on the lumber side. hasn't passed to him at least. >> he got lucky. he must have signed a contract early. i know anecdotally from people trying to do things. the price of the new deck went from $30,000 to $60,000 over the course of a few weeks. >> it hasn't come down >> you are right. >> that's the point. if you signed the contract for

the new deck, they are not giving you a better deal. >> you better wait let's bring everybody up to date with boeing faa says boeing is fixing another defect discovered on the 787 dreamliners have not been delivered to customers the latest issue at the nose of the dreamliners awaiting delivery it poses no immediate threat to flight safety. boeing says it will fix those planes before resuming deliveries boeing halting deliveries back in may as the faa reviewed the aircraft evaluation procedure. expecting to review second quarter delivery numbers later today. we will watch for that, mike. pepsi earnings came in at 1$1.72 per share.

revenue. forecast over $19 billion. the estimate under $18 billion pepsi cfo hugh johnston will join us later this morning $19.2 billion in revenue the stock you see responding positively pepsi, as a rule, beats earnings they had one quarter in last five years they matched. a smaller beat this is a higher margin of out performance here full year 2021 the company now expects to deliver 6% organic re. >> referee: krevenue increase 11 pue 11% increase oufrmt that is now pepsi's forecast with prior guidance with high single digits >> i haven't done the math on that i looked at the increase of 11%. i don't know how much is based

on the beat they saw today or if they anticipate additional beats in the second half of the year >> that probably seems to reflect what we got today. just for comparison sake i want to look at two years ago. the quarter in 2019. the company earned $1.54 we have $1.72 versus $1.54 decent growth. >> we will speak with the cfo coming up in a little bit. in the meantime, the fda adding a new warning to the j&j covid vaccine over concerns of a neurological reaction. the agency saying that reaction can cause muscle weakness and occasionally paralysis there have been reports of 100 cases so far the fda said it is not clear the shot actually caused the problem. we will talk more about this warning at 7:15 with dr. anthony

fauci. >> so much to talk to dr. fauci about. the booster shot how do you get people to take the first shot if you tell them there is a third shot booster and what the behavior science says about all that. so much to discuss with him. i know you are looking forward to it. we all are. we should talk about cryptocurrency they have been in a summer slump. prices of major coins in a correction period for the last two months according to crypto compare, trading volumes fell 40% in june china, of course, is a major catalyst after crackdown of bitcoin miners despite the drop in june, the month still ranked in the top five months of volume ever you have to put it in context after record volumes reported in may.

bitcoin trading at $33,000 and ethereum at $2,000 mike. all right. coming up, earnings season has kicked off this hour we get ready for the big reports to come. inflation data before the opening bell and as we head to break, shares of virgin galactic after the branson space flight the company planning to sell up to $500 million in additional stock. that stock trading below the selling price of 4920. you see it indicated lower this morning. >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most. at's why td ameritre designed a first-of-its-kind, personalized education center. oh. their award-winning content is tailored to fit your investing goals and interests. and it learns with you, so as you become smarter, so do its recommendations.

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a busy day on the squawk planner. starting with the kickoff to earnings season. we hear from jpmorgan chase and goldman sachs in the next 90 minutes. the latest read on inflation we get the june cpi data at 8:30 a.m. eastern expected to show a 5% gain year over year. that would match the may level which was the highest since august of 2008 for more, less bring in kari firestone. chairman of asset management and cnbc contributor kari, good morning >> mike, thanks for having me on the warm-up session for the

major league baseball all-star an game. >> i thought you might have something to say the yankees can't lose today i'm happy. >> we're on the same team. >> your take on the market here in terms of the broad set up we have the inflation numbers coming out the market was on edge of the bond market doing with the yields sinking with many expected what is up with the yield and the market up 17% year over date with expected returns? >> huge market if you watched the action yesterday, the top of the leaderboard was financials we had sl greene and american express and charles schwab we had others like facebook and peloton next highest on the board there. it is showing the market is not

one dimensional. it has reopening names we are reopened already. it is looking at growth. tech has had a big rally we seem to be picking and choosing among the names investors think could have good quarters, but raise guidance and show high margins and explain that they can have pricing power that inflation is not the threat to them as it might be to some sectors. that, i think, is going to sustain this rally particularly as the big cap names that have been quiet for months began a resurgence a couple of months ago they heare taking a lead in movn the market higher. >> what is the take away from that you mentioned the growth stocks really carried the market in the last phase to new records although it has not been either/or. either cyclicals or growth

a sense that while the market d digests the growth cap is this sniffed out by the growth stocks or the companies that did nothing for long enough >> i think you made a good point. the market with interest rates coming down became more aware that the type of gdp we're seeing this year of 6.5% to 7% is not sustainable and the stimulus packaging will end. not all of the money going into personal income. you have to focus who is really growing and who has top line growth and who can keep their margins and who can pass on prices that is more growth than value traditionally. packaged goods will not do well by comparison. food stocks this quarter the market has really made an effort to go with what's going to work over the next year or

two if gdp is more in the 3% range, not higher. not 4% to 7% or wherever 7.5% where we are running now. i think it is meaningful that the markets have narrowed. at the beginning of the year, we had most stocks in s&p beating the national average last year, that was not true narrower market. in the last month, 29% of names are ahead of the s&p that's a little bit of a concern. that can last for several more months it did for most of 2020. you know, we're seeing that again with apple, amazon, microsoft hitting new highs. up over 20% since early march. >> are there any areas that you look at that you play in that you feel as if the earnings growth path is under appreciated? it seems as if right now, earnings are huge for this

reporting quarter based on year over year numbers. 68% for earnings per share is the forecast >> definitely. >> two years, it is 12% over the 2019 quarter that is healthy, but younot extraordinary. i wonder what themes are coming out of your work with the neglected areas or areas with not the same potential >> good question i think what clearly has been recognized recently is financials recognized. some of the reopening trade. industrials. that's not where we think there is big value you tech names like crm as an example. a stock with a big move last summer now it is this summer. under performed a lot. starting to come back. some of the medical device companies and technology names hit the skids with no dis discretionary surgeries could

show improvement health care is coming back strongly lately. tech was ignored it is rebounding you can look at any of the big device companies they have moved. i think there is more to go. whether it is medtronic or abbott integer. in the past like boston scientific these stocks have not done well. if you look out a year or two, they will be beating their 2019 numbers. that should be a sustainable growth rate over the '22 and '23 period that the market has not paid attention >> and before you leave, what powell has said? >> i think the market accepted what jay powell said

we talked about lumber prices that have come down. there is inflation out there whatever jay powell said, the market is concerned and aware of inflation. who can pass on those prices whether or not you have the ability -- you can because you get a percent of your merchant revenue. if you have tech names with seat models, that is good for inflation. big names that have in the service industry huge labor costs i think we have to worry about that the market does care what he says it is a little skeptical how transitory that inflation is going to be. >> a wait and see on the transitory question. kari, good to see you. thanks a lot >> thanks. bye, kari. when we come back, which state is best for business it is almost time to reveal the

winner scott cohn will join us next with the five diabolical hints he tweeted out you can tweet your gu guess @squawknbc as we head to break, let's look at the pre-market winners and losers in the s&p 500. hanes brand up 2%. pepsi up after the better than expected earnings. we will talk to the cfo in just a bit. "squawbo wl rhtack x"ilbeig bk.

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we are counting down to the big reveal of the cnbc top state for business right now, we will recap the hints to see if you can figure it out before revealed scott cohn joining me from parts unknown usa. walk us through the clues one more time, scott >> that's what we're here for, becky. drive you nuts we narrow it down. there is water in this state so, we will give you the order of business. next hour on "squawk box" we will reveal the runners up states five, four, three and two. then in the 8:00 hour, we will reveal the top state for business we will talk to the state's governor and see where your state stacks up. all this from the top state. we gave you the patented

diabolical hints let's look at them to give you something to think about over the next couple hours. the hints are turn, turn, turn break a leg. talking turkey mic drop and one and done. where am i guess away we will let you know the top state at 8:00 a.m. eastern guys. >> will you give us hints if we guess it i heard so many good guesses on twitter from the turn, turn, turn one people said turn, turn, turn could be the indianapolis speedway somebody said it could be the speedway in pennsylvania which has three sides. somebody else said they thought they recognized the teepee where you were standing. one said it was a state park in arizona and another said it was virginia

we had good guesses. turn, turn, turn could be alabama because it was played in "forrest gump. there were are good and deep thoughts on twitter or guesses after the hints. anybody right? >> it always is interesting to get into the minds of "squawk box" viewers you are right. there were good guesses. there may have been some correct guesses in there there may not have been. you have a 1 in 50 chance, i suppose. >> 1 in 50 okay another hint mike santoli asked is that fresh or saltwater behind you? >> see, santoli, i get nervous when he gets involved. he is too good at guessing i'm not going to say if it is fresh or salt. this is good >> i need to know -- >> i know we did it right. >> that alone would not have sealed it for me >> scott, just so we're clear,

it is not a green screen behind you? >> no, no, no. that's real. after we're done, i'll jump in >> okay. >> throw something in. >> at lead west we know it is lt outside. we can take everything west of the mississippi at this point. fair >> maybe -- i don't know i might be a time traveler i don't know >> all right we will think more about these five clues scott's obviously not going to give it away he never does. scott will be back in the 7:00 hour to reveal the runners up. he will reveal the location of the top state in the 8:00 hour let's continue the guessing game on twitter send the best guess. let us know if you recognize where he is or if you have the answer we'll play along andrew. when with we e come back, w quarterly results from jpmorgan

chase and followed by goldman sachs in the 7:00 hour later, ceos of paypal and chipotle will join us. a conversation you don't want to miss as we look to the s&p winners and losers and then we have dr. fauci in the 7:00 hour ♪ ♪ ♪ digital transformation has failed to take off. because it hasn't removed the endless mundane work we all hate. ♪ ♪ ♪ automation can solve that by taking on repetitive tasks for us. unleash your potential. uipath. reboot work.

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good morning check check out the futures right now. the dow looks like it would open down 35 points s&p 500 up marginally. nasdaq looking to open 50 points higher mike. in the wake of antitrust legislation and chinese regulation, investors are watching tech stocks joining us to talk about what is in the sector is gene. gene, good morning we talked about it multiple times on many fronts some pressure on the business models of big tech companies and

practices. investors say high sustainable profit margins and digital advertising. why should they worry? should they? >> near term, yes. these impact the near-term psychology the core, mike, is to invest in great companies. great companies are the products we can't live without and we are willing to spend more money. amazon, apple. some of the iron corners of this china is an important x factor with apple and understanding the supply chain to answer your question, what should investors worry about they should worry about these great companies thinking about how their lives will evolve and which companies power that evolution. >> in other words, the great companies that are in demand by consumers, whatever happens in

terms of -- if google has to stop privileging its own search results or tweaks around the edges of doing business, you don't think that pinches them? >> historically it hasn't. they navigated that in europe and navigated that somewhat in the u.s. it is a near-term consideration. ultimately, again, we guard ourselves in which products we can't live without and pay more. google is a product which is described as the oxygen of the internet something we can't live without. the definition of a great company is apple those are products that ultimately can't get a hold of right now with mac and ipad being a month delayed. >> that is interesting we wanted to get into the apple story here just because obviously the stock had an incredible run in september of last year. sideways for ten months.

now broken higher again. i think there is a sense it just acts as kind of partly safety and stability and partly rallies with the bond market obviously they have long-term cash flow. you can raise the value of it if you feel like it today what is going on product wise that we should be aware of that is also part of the story? >> i think the essence, the core of this is the belief by investors that the march quarter was as good as it gets i follow apple for a long time it is the best quarter in more than a decade. the piece that is missing to your point is i think the best days are still ahead of the company. whether it is 5g or augmented reality or health care or transportation or other additional services. what does all that mean or play together is this going to continue to be a growth story

the street is looking for 5.50 dol5 5.50next year. i want to point out i have been bullish on apple for a long time i made a prediction that apple would be the top performing faang stock. that will not happen google is up 9%. apple is up 5% i believe apple is the top performing faang in the back half i think it can get better. >> looking more broadly across tech wondering about the smaller and emerging areas and how this idea and the message sent out by the government that large tech company acquisitions might get a little bit more scrutiny or more friction in terms of cons consolidating parts of the industry are there sections of tech in

cloud and software or somewhere where a lot of the companies with the case premised on being sold to a larger company and whether too much supply of names that will not be able to stand on their own >> there is this emerging class of stocks we just talked about called faang microsoft is foundational. the emerging class the $5 billion to $75 billion in market cap this could impact a great company which is unity unity software is defining the metaverse. this competes with epic and their real engine. that does get acquired by auto desk or adobe. there may be some exit that may become more difficult. you look at the broader class of

carvana or zillow or opendoor. those will go at their own the tougher legislation on m & a is the companies $5 billion and less in enterprise value sdplchvalue. >> i want to get a word on the company you highlighted and invested in. what is the company doing and how do you compare it to existing public companies out there? >> this is going to go public via spac this summer think of this as the future of commerce every decade or more than every 25 years, there is a shift in terms of how people buy things if you think back in the '50s, the shopping mall and big box in the '80s and internet in 2000. the next phase is commerce at home bringing stores to your home it is a variation of consumer convenience and doing more

things at home essentially that is what enjoy is doing they work with at&t and bt and apple. founded by ron johnson they have a long way to go i think this concept of the next 25 years in retail and bringing the store into your home how many times have you been to the apple store and want to bring a genius home to figure out your tech. that is what enjoy is doing. that is a massive opportunity. >> doing that, redesigning the environment and doing it virtually you mean >> enjoy actually has experts that come into your home and troubleshoot your network and get devices up and running it is great for working and learning everywhere and have the store right at your door. >> gene, i appreciate the time this morning >> thank you when we come back, u.s. productivity surging during the

pandemic we have a new report on the productivity next. later, dr. anthony fauci will join us to give us an update on the spread of the delta variant and if a booster is needed and the issues with the j&j vaccine. a reminder, you can watch us anytime on the cnbc app. >> announcer: what's working is brought to you by comcast business bounce forward at comcast.com. . get ready for it all with an advanced network and managed services from comcast business. and get cybersecurity solutions that let you see everything on your network. plus an expert team looking ahead 24/7 to help prevent threats. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities. girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast.

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welcome back to "squawk box. look at u.s. equities. dow off 33 nasdaq off 54 points a bunch of big earnings reports we will get within minutes and talk about them as they hit. right now, the executive edge. i don't know what you think about this goldman sachs says the pandemic led to a surge in productivity in businesses. the bank saying companies forced to rapidly digitize operations since the health crisis began. that resulted in growth and output per hour climbing to more than 3%. that compares to the 1.4% reported in the previous business cycle becky, interesting maybe we're making some lemonade out of lemons.digitalization

people are working harder at home than anybody thought at the time >> every company is trying to maximize gdp is back before the pandemic with 7 million fewer people working. that is long term. you don't want to get that set in stone. >> meaning you wouldn't need those workers. >> exactly >> how many of those people sidelines will have a place when things get rolling. let's look at stocks to watch as well. walmart's sam's club is testing a feature called scan and go it let's shoppers buy patio furniture and tvs in the aisles of the store and choose home delivery you will select size and color options before you buy next, look at disney the company raising the monthly and annual fees for espn plus. the plan goes up by $1 to $6.99. the annual plan is $69.99.

that move comes as espn signed new streams rights deals including the pga tour the price of the espn plus and disney plus and hulu remains at $13.99 a month no cost to pay-per-view fights. coming up on the other side of the break jpmorgan chase is set to report. we bring you the numbers and reaction straight ahead. we will have reaction from the goldman sachs report as well we talk to dr. fauci about thlae test vaccine news when "squawk box" returns >> announcer: executive edge is sponsored by at&t business our people and network will help keep you connected let's take care of business. okay, imagine this... your mover, rob, he's on the scene

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jpmorgan chase just out with the results. headlines on this. not the details. earnings per share $3.78 the street was looking for $3.21. i have not seen the release yet. revenue came in at $38.5 billion versus $29.9 billion better numbers there you see the stock is pulling back down by 1.5% we should point out that this stock was higher yesterday by morning that as we anticipated earnings it looks like better than expected numbers assets under management up 21% to $3 trillion in book value you, up 10%.

$84.85 non interest revenue $18.5 billion. return on equity at 18%. quickly looking through the headlines. we want to bring in the analyst. ken leon to get his reaction ken, what do you think it looks like the stock is down a little bit it looks like stronger than anticipated numbers. >> it is great to be here. i think the market wants to know if the consumer is back. jpmorgan chase gets 85% of the revenue from consume r and investment bank. jpmorgan chase is a bellwether becky, on the quality of earnings, i wish i could see whether there were any loan loss reversals from the reserves. that will hone in on the quality of the earnings. i think this is probably going to be a solid quarter as reported >> you know, there had been all of these thoughts that the banks had done well in terms of

controlling what they could control. we watched them release the loans they satisved up for the d loans that never showed up banks have been pretty good of passing the stress test from the fed. a lot of good news baked into this the question becomes what happens now? especially when you look at the declining yields fortress ris. is this a case where valuations have built in? jpmorgan chase is built in versus the s&p 500 you had stocks that run up along the way, too happen but stocks have run up this way, too. >> we have you have this power bolic movement in stocks this year you've seen some optimism on rates. you got to make it up in volume, especially for the consumer. i think it's going to be a steady climb for the next six to 12 months. the first half from the

traditional back and then we'll probably be getting back to the narrative of an improving yield curve on rates for 2022. you know, there's also a return of capital the overall market begins to fade, jp morgan brings enormous power with share repurchases and dividend increases after the fed stress test. i think it's going to be a little bit more of a quiet climb. not what we saw either in the last quarter or last year. >> ken, to your point about investors wanted to see the consumers back, jp morgan saying credit and debit card up year over year, and 20% from two years ago. precovid level that obviously is pretty healthy wonder about how the capital markets results might fit in, versus expectations. total markets revenue down 30% fixed income markets down 44% in the quarter. is that in line with what people thought we might see >> it is

and i took a close look at the investment bank over the last few quarters the second quarter typically is weaker than the first, first being the strongest. we have kind of a seasonal soft third quarter and then it's the race for bonuses with a strong fourth quarter the pipeline for ipos and equity underwriting is enormous ly strong we hit record first half results in merger and acquisitions global for m & a m & a is here, much stronger than last year then again it's really the last component of trading, which obviously has might of ease. >> that stock is down 1% now, decline of $1.60 how do you look at jp morgan along with the other banks you're watching? what comes in as your favorite >> it's a great question among bank analysts, do you go with a more traditional,

commercial bank or an investment bank goldman sachs is also reporting today. we have a strong buy, goldman as well as morgan stanley, we feel they have more lift across all their businesses whereas jp morgan is a hybrid tomorrow we have bank of america, citi group and wells fargo. either more of a traditional bank, global or u.s., and they have to rely much more on commercial and consumer loans. >> and then finally in terms of the reserves they give back, they did give back more on the reserves what would be a high number to you? what would make you think these are the reserves we would anticipate and maybe it doesn't muddy the waters as much. >> certainly when it's reversal of loan reserves, you just don't know essentially, they get baked into the earnings numbers but the market is smart enough to read through what is being produced

from operations versus the reversals. we can't forecast that. >> but what would be a number that you would say, oh, that was more than i had anticipated or not? >> i think it's just, you know, continually tapering down. mostly because you look closer at the loan provision per expense and those numbers are very, very small we don't have any distress industries, energy and we got the reflation trade. leisure, hospitality, hotel, don't seem to be a problem commercial real estate it would take multiple quarters or even into next year if there's any distress properties. it's an amazing year right now for credit risk. really good. >> great to see you today. thank you for doing this and doing this rapid fire right after the numbers came out we appreciate it. >> thank you. coming up, pepsico cfo hugh

johnston joins us. as we head to a break, take a look at the biggest gainers in the nasdaq this morning. peps co-is on pepsico is on that list you packed a record 1.1 trillion transistors into this chip i invested in invesco qqq a fund that invests in the innovators of the nasdaq 100 like you become an agent of innovation with invesco qqq like you these days, we want sophisticated but simple. cutting edge made user friendly. in other words, we want a hybrid. and so do retailers. which is why they're going hybrid, with ibm. a hybrid cloud approach with watson ai helps manage

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good morning wall street is ready to play ball as jp morgan throws out the first pitch on earnings season on deck, goldman sachs the fight against covid. fights about vaccinations, boosters and getting more jabs in the arms of americans dr. anthony fauci is our special guest. back by popular demand, cnbc's top states for business you've heard the hints now it's time for the big unveil the second hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin with becky quick and mike santoli

joe is off today banks are in focus right now quarter results reported by jp morgan moments ago we'll be hearing from goldman sachs in a couple of minutes as well w wilfred frost joins us with the big headlines. wilf >> yeah. trading a little low, forecast was 30 billion and eps 378 forecast was for 321 beat on both lines and the reason for the beat on the bottom line mainly because of a net benefit on the credit losses line of $2.3 billion, forecast all over the place for that the release a bit bigger than expected and therefore that eps beat, which is significant, not being given big weight by investors and shares down. revenue beat as well, in particular on the capital markets. yes, capital markets are down year over year because of a blowout second quarter last year, but down less than expected fixed income trading coming in

where it was expected, 4.1 billion, down 44% from last year the other two lines stronger than expected. investment banking fees, 3.4 billion. the forecast was for about 3 billion. that is up year over year by 11% and equity trading 2.7 billion the forecast there was for 2.2 billion and that is up 13% so only the fixed income part of that was down aggressive year over year. the other two parts, it will be interesting to see what goldman sachs does there big debate about who has taken market share or not. decent numbers for jp morgan net interest income, the other part of the bank, a little disappointing. 12.9 billion they had guided that down the last month or so the forecast was 13.2 billion for that slight miss on that part strong capital markets i'll send it back to you, mike stock down 1.7. >> thank you, wilf we have big news on boeing phil lebeau joins us

phil >> the company is announcing it has a new issue with the 787 dreamliner we'll talk about that issue in a little bit the impact and why investors are worried right now is because boeing is saying at least for a few weeks, it will be slowing its monthly production of the 787 dream liner currently at five per month they will be bringing that down. it won't go down to zero exactly where it will be remains to be seen what's the issue with the 787 dream liner? it is with the forward pressure bulkhead they need to be inspected. and in some cases there will be rework that is done. the in-service planes are not impacted at this point we just heard from the faa that may be an issue to be addressed in the future. planes in inventory, however, planes that are built but not yet delivered, they will be checked and there will be some rework that will have to be done with at least some of those planes boeing will deliver fewer than

half of the 787 inventory this year it has about 100 787 dreamliners in inventory it expects to deliver fewer than half of those dreamliners this year it hoped held deliveries in octr and march and then again in may as the company is trying to deal with manufacturing and inspection issues with the dreamliner and they're currently working with the faa on that inspection piece of the puzzle, if you will in a statement, the company issued, the company says it will continue to take necessary time to ensure boeing airplanes meet the highest quality prior to delivery across the enterprise, our teams remain focused on safety and integrity as we drive stability, first-time quality and productivity in our operations all of this comes as boeing is announcing its june orders and deliveries in june, it had received net

orders for 146 planes. remember, there was the big order for united announce d a couple of weeks ago. and then you have deliveries in june totaling 45 commercial airplanes. that is the most since march of 2019 that was after the second 737 max crash halted delivery. so on a day when they announce that deliveries continue to increase, certainly because of what's happening with the max, as they continue to get production increasing, they have yet another issue when it comes to the 787 dreamliner, guys. and that's why shares of boeing are under pressure right now back to you. >> phil, boeing share ings downy 1.7%, dropping the entire time you were report ing what's happening there. we should point out the dow component has an impact on the dow, indicated down 58 points. obviously yesterday dow closed at a record level. this morning boeing shares are definitely putting pressure on that the dow is indicated down about 59. >> becky, one quick note, we've

just heard from the faa that at this point, it is not believed that this is an issue with regard to the manufacturing in the forward pressure bulkhead for 787 dreamliners but a question of how that particular piece of the plane ages. the analogy that was given to me is imagine if you have a tire that is supposed to go for 100,000 miles and, in fact, it's only going to go for 80,000 miles before it needs to be replaced in layman's terms that's what they're looking at with this particular issue with the dreamliner in terms of whether or not those planes that are in service, those 787s that are currently being flown by airlines around the world, the faa says it will continue looking at this issue at this point. it is not believed to be a flight safety issue where those planes would have to be pulled out of service but clearly boeing and the faa are looking at this particular issue with the forward pressure bulkhead in dreamliners.

>> phil, if it's not a manufacturing problem, it's a wear and tear issue and how long that lasts overtime, how could that not impact the planes in service? >> could be, yes but it could be something you could handle with regular maintenance where you don't have to change your schedule in terms of when you fly that particular plane. >> phil, thank you for bringing us that news. >> you bet. >> i'm sure we'll check in with you later about it, too. pepsico out earlier with an upbeat earnings report, beating on the top and bottom line business a lot and raising its four-year forecast benefitting fromrelaxed restrictions from restaurants and bars as the economy increasingly reopens the stock is up less than 1% so far this year, trailing the s&p 500 index, up more than 16%. joining us right now in a first on cnbc interview is hugh johnston, vice chairman and chief financial officer of pepsico. he also serves on our cnbc cfo

global council good to see you. thanks for being with us this morning. >> great to be back with you all, becky nice to be here, particularly on a positive earnings morning for us the way it is we feel awfully good about the way the business is performing right now. 28% eps growth a lot of the things we did through the pandemic, continuing to invest in the business, are now paying dividends as mobility increased and consumers are getting out more. >> you hit a lot of strong returns from lots of different units. when you look at pepsico beverages north america, organic revenue growth of 24% and currency operating profit up is that just a reflection of the reopening of america >> i think it's a reflection par partially of that, to be sure. those are obviously quite big numbers. at the same time, that business right now has got terrific innovation in the marketplace,

mountain dew rise, exciting new product, mountain dew major melon, terrific product. in addition to that, the business is gaining market share. it's a reeflths of clear reflection of clear. >> who are you stealing products from >> down in atlanta but we're across the board performing well versus competition. >> when you talk about market share you mentioned mountain dew rise is that stealing market share from other places or are they your traditional products that are gaining back ground? what's the story >> yeah, it's both mountain dew rise is off to a great start. it's beating our expectations. carbonated soft drinks, pepsi and mountain dew, are performing

well tropicana business is performing well if you look at it from a category perspective, most of the categories we're in, our market shares are going up. >> quaker foods north america did gain market share in snacks and meal categories but was down this quarter over a year ago obviously, you you've got people going back into work does that have an impact on how and where people are buying and eating >> it is and we're also overlapping last year at this time, if you recall, in the second quarter, everyone had virtually gone into their home completely. eating out of the home was nonexistent. for a service like quaker, they clearly benefited through that we're lapping our way through that if you look at quaker on a two-year basis, the business is up 8% or 9% the last two years we're clearly keeping some of the gains we picked up over the past couple of years. >> you raised your guidance for the full year. you're looking at global organic revenue up 6% before you're

seeing mid single growth and 11% increase, earnings per share verse the previous guidance of high single digit growth is that because of how strong the beat was this quarter, or are you anticipating you'll be beating the expectations built in for the second half of the year, too? >> it's a combination of both. clearly, we saw a very strong quarter. we flowed that through into the f four-year forecast in addition to that, i will tell you historically as a company we've guided historically. i won't predict any beats going forward. we're pretty good at being around the market or a little bit better. >> there are so many questions that investors have, kind of looking at what inflation is doing. are your costs going up? how is your supply chain handling things? are you having problems finding wor workers? how is pepsi dealing with all those issues >> yeah. those are all issues we're managing right now the good news is from an

employee perspective, we're doing quite well we offer terrific pay and great benefits people do tend to both come to us and then stay with us once they come here in terms of inflation, it's a factor like it is for everyone else the fact that we invested so much in our brands and so much in our ability to serve as customers is enabling us to take pricing up so we can offset the impacts of inflation. >> hugh, there's so many companies that felt like they were trying to tread water and survive during the pandemic, but there are a lot of big companies also during that time that were trying to think about reorganization obviously, you're no exception to this rule you're expanding the duration and scope of your 2019 productivity plan and target to deliver at least $1 billion in productivity savings through 2026 but that's going to come at a cost, 3.15 billion versus the 2. 5 billion before.

how does that play out what will those costs be used for? how is the company going to look different acfterwards? >> some of it is reconfiguring our organization to look at where demand is going right now. clearly, commerce is doing well. smaller customers continue to do well we want to make sure that we've got an organization that's ready to deal with where consumers are ready to go. one of the big things we have to do in that regard is invest in digital, and making our supply chain more digital, making our interactions with consumers more digital. so the restructuring contemplates all of that so you can continue to take cost out of places that are relevant and put money behind places that are much more relevant in terms of driving growth. >> hugh, thank you for being with us today. stock is up almost 1.7%, but we appreciate your time and it's really good to see you. >> thank you, becky. good to be with you all. >> take care. >> coming up after the break,

dr. anthony fauci on fighting covid, convincing more americans to get vaccinated and the discussion over whether boosters are needed we'll talk to him after this brk. ay tuned you're watching "squawk box" on cnbc i think you're going to like it here. umm, why is everyone... throwing things at me? look, as cfo it's my job to be ready for whatever's next. that's why i have my finance team, randomly hurl things at me. it's also why we use workday. it gives us insights, so we quickly pivot our strategy, people, planning, you name it. sorry, sir. i will aim straight at your next step. see that you do. would you like some coffee? workday. the finance, hr, and planning system for a changing world. ♪

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welcome back to "squawk. this morning, j&j, as trazeneca are exploring modifying vaccines conducting early stage research with outside sicientists. too early to know just yet whether either shot could be modified or doing so would make commercial sense bit of news there, becky, on what j&j and astrazen heeca are trying to do. >> pressure on those stocks, as astrazeneca down by about .5%. big focus, whether fully vaccinated people will need a booster shot dr. fauci was part of that meeting. he joins us this morning the chief medical adviser to the president and, dr. fauci, thank you very much for being with us today. have a lot of questions and

we're hoping you can sort through some of this with us first of all, what happened at the pfizer meeting yesterday what was the internal data that they showed? did it get you to the point where you think americans may eventually need boosters >> well, it was fundamentally a courtesy meeting they made an announcement a day or two before regarding some data from israel as well as data that they had collected. they wanted to share it with us because there was obviously a lot of attention publicly to that so, it was a meeting, courteous meeting where they exchanged information. it certainly was not anything even approximating a decisional meeting at all their data, as important as it will be, and likely is, is really one part of a very larger puzzle of data as it were, a lot of which will be coming from our own cdc when they look at more than 20 cohorts that they're following to ask and answer the

same question. and that is what is the durability of the protective response we know for sure that these vaccines are highly, highly effective in protecting you and quite safe the real question that is being examined right now is what is the durability of that protection does it wane off if so, how soon? and if you do do a boost, how high do you get the response up? those, we'll all discuss as i mention, there was nothing that came even close to any decision it was mostly a kcourtesy meeting, briefing us on their data. >> i wouldn't expect any deci decisions to be made at this point, but it would be interesting to know if the data influenced you what do you see in terms of the effectiveness over time? does it drop dramatically over two months, four months, six

months >> i can't tell you much about their own data because it's still at the level that we agreed upon confidentiality. i don't think it will surprise anybody. the data that is public now is the israeli data, which they made public. as you can see from the data, there seems to have been a sharp drop in protection against just information, asymptomatic infection, after a certain number of months what happens held firm is the very good protection against severe disease that might lead to hospitalization. >> that's great news and i'll tell you what we discussed with the doctor who we had on the show yesterday. i mean, i've been fully vaccinated i feel very comfortable about myself what i feel less confident in is the idea of whether or not i can pass this on to my children, who are too young to be vaccinated at this point. the delta variant, if something else were to come through, how confident do you feel that i either won't pass this on to my children who haven't been vaccinated or parents who are in a position of being medically

compromised? what can you tell us, or anybody else, who has those same concerns right now >> they're understandable concerns they're quite reasonable we're being asked that a lot again, we are collecting data now that will allow us to hopefully, in a more confident way, answer your question. i can tell you what data we have that does show that -- of a young, otherwise healthy person like yourself is fully vaccinated even if you do get a breakthrough infection, it likely will be either with no symptoms or minimal symptoms one of the studies showed that if you examine the level of virus in the nasopharynx and compare that to the nasopharynx

of an unvaccinated person, the level of virus in the vaccinated person is considerably lower than that of the unvaccinated person, which would strongly suggest that the likelihood of your pass ing it on to anyone else is much, much, much less than if you are not vaccinated now, the study that does need to be done is the actual clinical observation study to determine the efficiency or not of transmission and those studies are ongoing now. even though we have a suggestion of what the answer is, we haven't definitively shown it yet. we will have that data within a reasonable period of time. >> dr. fauci, it's andrew. behavioral science question of sorts. how concerned are you, and how concerned is the administration effectively that engaging in a conversation about boosters makes it even less attractive for those who have yet to take

the first shot of the vaccine, that they won't want to take it at all they're going to say either it's not effective or they're going to say i'm not only in for one shot or two. i may be in for three and i may even be in for more over time. >> okay. that's really a great question and it allows me to make a point that we really need to clarify when you're talking about a booster, namely a third shot in a two-shot regimen, what we're discuss ing now, or a booster following a single shot of j&j, this has absolutely nothing to do with the effectiveness of the vaccine. these vaccines are highly, highly effective, both in the clinical trial and in the real world effectiveness studies. let me give you a cogent example. 99.5% of people who die of covid are unvaccinated only 0.5% of those who die are

vaccinated so, it isn't a question of whether the vaccine is effective or not it has to do with the durability of the protection. so there really is nothing wrong if, in fact -- and i don't know whether it's going to happen or not. but if there will be a necessity to maintain the high level of effectiveness by having a booster some time down the pipe, be that a year or two, or what have you, be that selectively in elderly or in people who have underlying condition there's nothing intrinsically wrong with that. we do that with vaccines all the time when you look at the regimen of the vaccines that you and i got when we were children, namely the measles, mumps, rubella, et cetera, you get a vaccine, a second shot. and a few years later you get a

third shot so, there's nothing new or mysterious about the possibility or even the likelihood that in order to maintain the durability of the protection that you might need another shot. we've got to make sure we clarify that with people it has nothing to do whether or not it's effective we know it's highly effective. >> dr. fauci, i appreciate that point. the reason i asked the question is because there seems to have been some frustration inside the administration about pfizer coming out with its announcement, anticipating a booster and from the reporting that i've done, i gather that the concern seems to be that, look, we haven't even gotten enough people vaccinated the first time, and conversations about a booster are not going to help that conversation and there's a question about should we just -- should we not engage with that discussion? should we -- do we need to be

straighter with the public that maybe a booster is going to be in the offing, and how you think about the push/pull? i know part of this is a behavioral science issue it became an issue when it came to masking. >> right you know, you make, again, excellent points so let me give you my perspective on it. the discussion about boosters is really an appropriate preparation on the part of the companies, together with the nih and the cdc and others in being prepared in the eventuality that you might need a boost but when you translate that into we will need a boost, everyone is going to get a boost, that is not appropriate. it's not appropriate for the reasons that you just mentioned. we still haven't vaccinated enough people in the primary part of this we only have 48% of the total population vaccinated. we have about 68 or so percent

of adults having received at least one dose if you think back, take a look at what the w.h.o. is faced with when they have to worry about the entire world and know that there are some countries when there's less than a couple percent of the population being vaccinated and this is a global pandemic, which requires a global response so, you're absolutely right. here we are, talking about the possibility of a third shot boost, and a major component of the world has never even received a single shot we've got to make sure we take those things into consideration. >> i want to ask you about some other issues just as a follow-up on that, does that get you into the ethics of whether americans will look greedy if they get booster shots which then takes me back to the idea we need to share, we understand this is a global problem. does that guide us into whether

or not we decide whether booster shots are necessary early on >> i think you can do both in the sense of consider the possibility and maybe even implement boosters at the same time that you make sure we do everything we can to get doses to people in parts of the world that don't have ready access to that if you look at what the united states is doing, we're doing a lot. i mean, we now have pledged 500 million doses in addition to the 80 million doses that we said we would be distributing. we're already distributing a considerable amount of that. we have $4 billion that we put into the covax, the w.h.o., and other organizations that are going to be putting the resources into getting vaccines. so, we are doing both. we are clearly making an effort. we all need to do more the entire world, at least the developed world, the world that has the resources, needs to do more to make sure that vaccines

get distributed equitably throughout the world you're right, that is an ethical issue. >> at the same time, there are questions about different types of vaccines and whether they're all created equal. johnson & johnson, astrazene krca, are researching into if they modify their covid-19 vaccines if they could reduce or eliminate the risk of blood clots that come with that. fda attached the warning of the rare nerve syndrome to the j&j vaccine as well. those seem to be the vaccines that are having more questions asked versus the mrna vaccines like pfizer and moderna. is that an accurate description? >> obviously, there are always -- we've seen it already -- unusual and even rare adverse events associated with vaccines with all the vaccines, you'll see that.

every time it's been examined, the conclusion has come firmly that the benefit of the vaccine far outweighs any risk of an adverse event. the vaccines that have been given emergency use authorization in the united states are all highly effective vaccines and i think we can say that with a degree of confidence. >> how long do you think it will be before there is full authorization for those vaccines, which i ask in part because a lot of workplaces are reluctant to require vaccinations when those vaccines are still being used under the emergency use authorization? >> yeah. a couple of comments about that. i don't know when. i can't get ahead of the fda they do their thing. they dot all the i's and cross all the t's about that one thing people should realize, even though we are still under an emergency use authorization, it's a bit different than other emergency use authorizations,

which usually are granted with not nearly as much positive data as we have for these products. so, all euas are not created equal. when we say it's still not fully approved, the data are about as good as it gets. so, as i said multiple times, and i have no hesitation to say it now, i would be astounded if these vaccines, mainly mrna and j&j didn't get full approval if you look at the united states, which mostly are the mrna vaccines, we've given hundreds of millions of doses to people and the efficacy or effectiveness in the real world is unquestioned. so, we're going to get a full approval the question is, it's just going to take a little bit more time. >> dr. fauci, to the extent that business leaders are watching you this morning on this very program and are considering

whether they should main date the vacmandate the vaccine, wher you think a walmart, amazon, federal express should ultimately mandate the vaccine but mandate it before the emergency use turns into a regular use. there's still questions, a lot of lawyers are giving lots of advice to these leaders about whether they'll have liability or not if you could advise them, what would you tell them? >> you know, i can just tell you what i have said before. and i think that given the fact that there is a reluctance among some in the yunited states to take what is unquestionably a life-saving vaccine, and if we really do want to get back to normal, at least approximating normal in this country, it's important to get as many people vaccinated as we possibly can.

i would be in favor, and i'm not saying anything new. i've said it before, in local entities getting mandates for vaccines it's not going to happen centrally from the federal government but i believe that local mandates, at universities, coll colleges, businesses and cruise lines, whatever. i'm not pointing out any individual one but in those general categories, i believe if we do have local mandates, we will get many people vaccinated and that will be to the benefit of the entire country as well as to the individuals who are being vaccinated and protected. >> dr. fauci, i want to thank you for your time today and for being with us. we appreciate these important updates. thank you. >> my pleasure good to be with you. goldman sachs results are out. let's get to wilfred frost with the numbers. hey, wilf. >> yeah, massive beat on both lines, revenue coming in at 15.5

billion, forecast was for 12.2 billion. eps coming in at 15 cents -- 15.02 a share. the forecast was for 10.54 there is a benefit on the reserve but only of 92 million it's driven by the fundamentals. the biggest part of the beat quite comfortably is asset management revenue, 5.1 billion. the forecast was for 2.4 billion. it is largely the equity investment line rising tide floats all boats but it's floated this part of the boat enormously so, very impressive there. again, albeit not a fee-generating part of the business, but no doubt about it, massive beat in asset management nice beat, 3.6 billion versus 3 billion forecast that's up 36% year over year compares to jp morgan up 11% year over year in that space fixed income trading down 45% year over year, 2.3 billion, in line with expectations and also

in line with jp morgan, down about 44%. equity trading 2.6 billion forecast was 2.3 billion down about 12% year over year. jp morgan doing slightly better in that, but overall very strong num numbers, particularly in asset management and investment banking. big beats on both lines. no surprise to see it down 0.4%. >> wilf, thank you for bringing us those numbers and a bit of analysis there we'll be talking more about those numbers in a bit still to come here on "squawk box," he gives you the clues and the methodology. now it is time for scott cohen to begin the unveil of the 2021 cnbc top states for business we're back with that right after this the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes, actively managing investments in the world's public and private markets. outscale, with the resources to serve 1,500 clients

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>> welcome back to "squawk box." it is a very big day here at cnbc as we unveil our top states for business scott cohen is in a state that's oh, so close, scott. >> won't be a mystery that much longer this say process we go through, takes six months to crunch all the numbers, figure out the top states for business and so for 2021, let's let the countdown begin. state number five.

tennessee, the volunteer state, cracks our top five for the first timewith one of the best economies in the country, including rock solid state finances but tennessee falters on life health and inclusion with high crime, low covid vaccinations and new laws targeting transgender rights number four, texas, the lone star state time for its lowest ranking since our study began. still a business powerhouse. america's top workforce and attracting more educated workers every day. but texas could put that at risk with a growing lack of inclus inclusiveness. the governor isn't worried about companies going elsewhere. >> they're coming here to a state, laws are in rules and regulations in these other states. >> reporter: state number three, utah, beefing up its infrastructure with one of the most reliable electrical grids but it lags on public health

2021 runner-up, north carolina, the tarheel state, strongest finish in the history of our study. strong economy and great workforce, enough to get apple to build its first east coast campus here. >> have a choice and could have gone anyplace else in the world but they chose north carolina because of the assets that we have here in the state. >> reporter: but as one of only five states with no anti-discrimination laws, north carolina falls short of life, health and inclusion lot of people online were guessing north carolina. they came oh, so close 41 points away from the top state for business, which leaves this state, where i am we will reveal it next hour. we always do it in a big way and we will not disappoint this year we'll talk to this state's governor and you'll be able to see where your state stacks up at top states.cnbc.com guys >> scott, i've got a couple of questions. one, how has -- and i don't remember

have there been instances where the top state has been the same state multiple years in a row? that probably wouldn't be the case this year, but i was just thinking through that. >> reporter: well, we've had multiple winners in the past we've never had a back-to-back winner but we've had texas that has won four times, virginia has won four times and we've had washington, utah, minnesota and south dakota so, it's been a pretty wide variety and we'll have to see if it's one of those usual suspects or if enough has changed this year where i am some place different entirely. >> real quick, what do you think the boost is when you put the stamp right on them, what do you think happens afterwards >> reporter: to the top state? >> yeah. >> reporter: it certainly is something that they talk about and we like to look at this as a conversation starter clearly, every state has different attributes every company has different needs. so, this is very much a sort of

35,000-feet, one-size-fits-all type of thing but at least gives you a sense of how states are competing. ag again, we do this by looking at what the states are doing, how they're selling themselves, and then hold them to those standards. that's what this is all about. >> scott, appreciate it. thank you. we look forward to the big unveil that's happening the stop state at 8:10 eastern time you do not want to miss it stay tuned "quauk" returns after this to balance risk and reward. with one element securing portfolios, time after time. gold. agile and liquid. a proven protector. an ever-evolving enabler of bold decisions. an asset more relevant than ever before. gold. your strategic advantage. ♪ ♪ ♪ digital transformation has failed to take off.

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at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds. an executive order and cracking down on anti-competitive practices new book about facebook is out titled "an ugly truth:inside

f facebook's battle for domination." facebook shares continue to soar, though, above $1 trillion. joining us to talk about it are the co-authors, sharon frankel and cecilia, ckang congratulations to both of you there's so many aspects of what's taken place the last five years. in terms of revelations for the audience, what do you think is the biggest? >> you know, i think people going into this think they know facebook we, as reporters, have reported on it for a decade combined and we were surprised by what we found. there's a pattern of if abook repeatedly making the same m mistakes again and again, ignoring warnings, not heeding the things they knew themselves about the company. the strength in the book is showing that repeated pattern. >> cecilia, the thing that i've

been baffled by, there is a narrative. in fact, it's the narrative of the book, that there are these ugly truths about facebook and yet, i just mentioned it, you look at the market value of this company it's at its absolute height. there have been so many issues where you would have imagined that the public might have stepped back from using the product, and yet more are using the product. where do you think the disconnect exists? >> well, i do think that facebook has become a ubiquitous utility for so many users it's hard not to use facebook, especially if you're a parent or involved in some sort of club where they meet on facebook, through facebook groups. that's the consumer side of it i think people get enjoyment out of facebook but are also uncomfortable with what they see as repeated harms. markets are enthusiastic about the company because it's a business that's unabated

it's a business model that's been completely unslowed or unhindered in any way and the future looks very bright for this model that facebook has really led. >> but if the company is as tortured as the book would suggest and the governance -- one of the things that's so interesting about the book, you take a real hard look at the governance of the company and specifically the role of mark zuckerberg, his relationship with sheryl sandberg in the book, and the idea that in many ways i think the book effectively argues that while there may be a board it is really run by one individual you would think there would be more concern about that if that was the problem. >> absolutely, andrew. you're so right. one of the main takeaways of this book is what absolute power lays with mark zuckerberg. it's unusual to have a company that's insstructured in the wita facebook is for so long with a founder and ceo who has such absolute control the board that exists is really there for recommendations.

they have no power over him. the other executives serve as something of a court they serve at his will the mistakes that were made and continue to be made is because really at the top nothing changes. >> cecilia, in terms of facebook's reaction to this, you've seen multiple statements facebook critiquing the book on the other side you've critiqued facebook. they're critiquing the book, suggesting they don't believe it's reflective of what's gone on inside the company. what do you say to that? >> we talked to over 400 people for this book, conducted over 1,000 hours of interviews. many of these people we talked to multiple times. the vast majority of the people are employees, either current or former many are current employees every single scene has been validated by two multiple sources. we reported vigorously on this book and made sure every scene was validated and went through a very rigorous fact checking process that took months, and we

incorporated a lot of the feedback for facebook. i think we are taking people, for the first time, very up close to the executives and inside the company in a way that is uncomfortable and we're revealing a lot in our book, and through many of the scenes we think through our rich detail people will take away perhaps a different sort of look and lens into how facebook operates. >> sheera, we're in a moment now where there are still clouds or questions, i should say, about the future of facebook, the future of regulation around facebook as i mentioned at the top, president biden trying to push some new laws around competition, but then there was the ruling, literally i believe in the last two weeks now, by the ftc, effectively -- not by the ftc. effectively against the ftc rather in terms of that case and

the states what do you think the future holds? >> well, you know, that ruling certainly helped facebook. it was a moment where facebook got to breathe, pause and maybe internally really celebrate. what really happened was they told the ftc that that particular lawsuit was not done appropriately, it needed to be redone i think we're going to see other lawsuits coming forth. it's not a matter of if. it's a matter of when. we also have to remember that countries all over the world are looking at regulation of facebook right now, europe and other places have advanced on some of that regulation. i think facebook's days of this free wheeling, being able to do what they want are numbered. while facebook says they welcome recommendation, that's a very strong pr line for them. at some level it's probably true i don't know that they'll necessarily welcome all the regulation that is coming down the road for them. >> cecilia, there seems to be two types of regulation we can talk about the free speech side of it, and the privacy issue in terms of how that works

the other is whether the company should be broken up and whether the company unto itself is anti-competitive how do you see those two issues? >> so, there is more activity and more energy in washington than i've ever seen. i've been covering this area of technology policy for a long time there are few things that unite democrats and republicans and the idea that facebook needs to be reigned in and big tech companies need to be reigned in. you'll see a lot of momentum for a suite of bills that have passed the house that will be headed to the senate i also think that the court decision to throw out the ftc enforcement action and the lawsuit, to break up facebook, will give momentum to this legislation i do think on the data privacy side, the u.s. is so far behind many other countries, there's more energy those things will be a little bit harder speech will be a hard thing to regulate because in the u.s. we have a very strong first amendment culture as well as the statue itself so, it's going to -- there are a

lot of things in motion. i was really surprised to see the biden administration pick people who are very, very vocal critics of big tech to be in the most important regulatory positions, lena kahn, tim wu within the white house so there's a lot of energy right now in washington. i do think the days are numbered for facebook to be unregulated, as sheera said i think everybody should watch closely. you'll see more action than we've seen in quite some time going forward. >> okay. we'll leave the conversation there. the book "the ugly truth," sheera, cecilia, thank you. >> thanks, andrew. >> you bet. when we return, top corporate stories, including boeing shares that are under pressure as the company cuts its delivery among product problems. we've got a big hour ahead as "squawk box" rolls on.

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i'm dad's greatest sandcastle - and greatest memory! and it orchestration by cdw, but even i'm not as memorable as eating turkey hill chocolate peanut butter cup ice cream with real cocoa. well, that's the way the sandcastle crumbles. you can't beat turkey hill memories. good morning here comes earnings season with a consumer giant details are straight ahead. investors are standing by for new inflation data in just 30 minutes we'll bring you the number then, talk about consumer spending and financial health of wor workers with the ceos of chipotle and paypal. the final countdown is on. in minutes we'll reveal the year's top state for business 2021 "squawk box" begins right now.

good morning, everybody. welcome back to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin and mike santoli. joe is out today things have firmed up for the dow futures. they're down but only about 13 points this comes after two dow components have reported those earnings, goldman sachs and jp morgan goldman sachs reporting higher, jp morgan a bit weaker nasdaq is indicated up 43 points all three of those major averages closed at record levels yesterday once again treasury market, the yield on the ten-year looks like it's sitting right around 1.354%, little higher than the lows of last week but well below the highs we saw earlier this year andrew news just out from verizon

and mastercard we want to get over to frank holland on that. frank? >> new partnership announced by mastercard and ver identitien, focusing on using 5g to digitize the global spending market here at mastercard's new york city tech hub collaborating, looking at things like innovation, tap and touch technology for smart phones that allows these smart phones to be turned into tap and touch. this partnership will focus in part on enabling small and medium medium-sized businesses to take payments with smart phones with wearables and also use touchless shopping technology. >> a large retailer can easily do this. a small business, how are they going to do it that's exactly what this will bring. 5g allows us to deliver the full experience i'm going to go, choose an item in the shop. but tilely you don't have the

color i like i'm going to have it sent home it's going to be paid once it arrives. all of that is coming together. >> and i spoke to the ceos from both companies they say they expect new innovations from this partnership by 2023. back over to you. >> frank, really quick, just to put a fine point on it, is this to go after the paypals and squares of the world what are they trying to do >> well, i mean, according to them, the real focus here is just using 5g to kind of make it easier for small and medium-sized businesses to use emerging technology, things like tap and touch or even contactless. they have a higher turnover rate than traditional retail at times. it's faster. data security, to use mobilized computing where you can have the hardware from payments further away from a retail site that enables amazon ghost stores where you can walk in a store, grab something and walk out with it. >> frank, appreciate it. thanks so much for that report. >> thank you.

>> becky, it's an interesting new world. >> yes, it is. i think we find that about three or four times a day. that's why it's worth getting up and watching in the morning. let's get back to the broader markets right now. mike has been looking at inflation and disinflation sectors with s&p sitting at an all-time high and less than half hour before we get those inflation numbers, too, mike. >> holding firm at those highs 10 of the last 12 days we've actually clicked to a new record in the s&p 500, pretty rare persistence of this trend. take a look at the one-year chart. during earnings season is not often when the broad market necessarily gets that big thrust you look here, april's earnings season flattened out also at records, look back to january, also you had this period of back and forth, lots of individual stock markets. october was choppy as well those were the last three earnings reported seasons. even though earnings themselves is what's been powering this rally in large part it's not usually reporting season when

you have broad s&p 500 kind of launch angle stuff that's really working. take a look at those inflationary or reinflammationry versus disinflationary also cyclical versus growth this is the fang stocks basically, communication services basic materials, igv software. what you have is banks and materials still maintaining a year-to-date lead over the growth sectors they've been sagging this way, whereas you have consumer -- communication services and software actually kind of catching up a little bit so, really, we're converging at this point s&p 500 itself is up 17% you've actually had both types of stocks working at different times. now we are basically sitting at a moment where maybe we have to decide are we going to have clear leadership or is it just going to be a little bit less specific than merely reflation versus disinflation? that number may have something

to say about that. >> such a broad rally at this point, none of the sectors are 10% away from their all-time highs. >> yeah. >> so many of them setting all-time highs and weird ones, not ones that you may anticipate are moving in lockstep. >> yeah. >> real estate along with tech, consumer discretionary. >> with the year-to-date snapshot, that's exactly the case if you look at particular sections of the year whereas february and march you had massive moves in the banks we've settled out to the point where there has not been much in terms of actual stock by stock market, it's been a little bit lacking. you look at the number of stocks up each day, that's been something that's been flagged a bit in the last couple of weeks. bee people have been focused on this idea that it's a slightly narrower market. these things can change quickly. >> setting new records almost every day at this point for the major averages, that's why you come into earnings season, it's tough to boost sentiment because we're looking at such high

sentiment. >> certainly on an index level, absolutely we beat by such tremendous margins in the last three quarters in terms of relative consensus that it's almost assumed there's going to be massive across the board beats and the market knows that even if it hasn't made its way into analyst numbers. we'll see if there's a broad news response here. >> thanks, mike. andrew >> let's bring you up to speed on the other stories that investors will be talking about today. perhaps the biggest, boeing says it will be cutting production rate for its 787 dreamliner to deal with the new production is issue, fewer than half of the roughly 787s in the inventory this year instead of the vast majority that it had previously predicted. meantime, pepsi beating estimates on the top and bottom line of the earnings season kicking off, raising its four-year forecast pepsi's cfo joined us last hour. >> we feel awfully good at the

way business is performing, 27% eps growth and, frankly, a lot of the things we did through the pandemic, continuing to invest in the business, are now paying divi dividends as mobility has increased and consumers are getting out more. >> pepsi's profit beat was helped last quarter by increasing north american beverage sales mike just mentioned the banks but let's give you the details on the two earnings reports we've got thus far this morning. jp morgan beating analyst for profit and revenue with a boost in increase in investment banking fees that stock down marginally goldman sachs scoring top and bottom line beats, helped by a profit don't miss an interview with david solomon later today on close ""closing bell. muk? >> dr. fauci telling us earlier this hour that booster shots have nothing to do with effectiveness. the shots are incredibly effective, he says

his comments come after biden administration met with representatives from pfizer on the booster shot question. here is dr. fauci with us last hour. >> the discussion about boosters is really an appropriate preparation on the part of the companies together with the nih and the cdc and others in being prepared in the eventuality that you might need a boost but when you translate that into we will need a boost, everyone is going to get a boost, that is not appropriate. it's not appropriate for the reasons that you just mentioned. we still haven't vaccinated enough people in the primary part of this. >> and some other vaccine news this morning sources tell "the wall street journal" thatjohnson & johnson and astrazeneca looking into modifying their vaccines may have reduced blood clots in

association with the shots. chief executives of paypal and chipotle will join us with their unique insights on reopening the u.s. economy plus a big announcement on financial wellness next, big moment the reveal of america's top state for business 2021. scott cohn is in that mystery state. any final hints for us i need something get me through the commercial break. >> reporter: we will end the suspense and guessing in a couple of minutes as we reveal in a very, very important pivotal year, really, for the american economy, america's top state for business 2021. wa tmi it nto sst. we'll talk to this state's governor and a whole lot more, coming up on "squawk box."

here are the two battling to the line and allyson felix... simone manuel's above her trying to fight on,

and above simone... getting an opportunity to show her stuff. nonstop, displayed at the highest performance level... finding something and the us takes gold! ♪ dream on ♪ ♪ dream on ♪ ♪ dream on ♪ ♪ dream on ♪ - yes! ♪ ahhhhhhh ♪ ♪ dream until your dreams come true ♪ we've heard the methodology, we've heard all the hints. now it's finally time to reveal america's top state for business 2021 scott cohn joins us once again for that take it away. >> reporter: hey, becky. we rate all 50 states, ten categories of competitiveness, 2500 total points. this year, in 2021, america's top state for business is a

state that knows how to toot its own horn we are live in norfolk at the port of virginia this is america's top state for business this port in the midost of a $15 billion restoration, this is how virginia stayed on top. >> the winner and still champion, virginia, our first-ever back-to-back winner, scor best category education with well-performing public schools and great universities all feeding the third best workforce in the country, smart and tech savvy leading the comeback. >> we've seen a remarkable recovery from covid. >> biggest strides in life, health and inclusion,

traditionally not its strong suit two years ago, embroiled in his own controversy about race, governor ralph northam vowed to turn it around. >> i want to let this country know and certainly virginians know we are an inclusive state. >> reporter: since then, expanding voting rights, protected lgbtq rights and removed confederate statutes critics say northam went too far. and the republican nominee for governor says -- >> we're going to share a virgs of commonwealth that will be thriving, a commonwealth that will be competing with and beating the other states for business. >> reporter: while the democratic nominee, also northam's predecessor, is promising to stay the course. >> we are a different state than we were eight years ago. and we are not going back. >> reporter: virginia does have issues costs are high and the state was

attracting fewer educated workers even before last year. virginia is still on top going into the pandemic and coming out. virginia, america's top state for business, 2021 yesterday we were at machicomoco state park, virginia's newest state park, payi ing homage to native americans turn, turn, turn, after drafting the declaration of independence, thomas jefferson, perhaps the most famous virginian invented the swivel chair break a leg, america's first public theater was in williamsburg talking turkey that might be massachusetts, but no, the first thanksgiving was in jamestown two years earlier in 1619. mic drop, the electric micr microphone, on your phone, on everything else. that was invented by a virginian, james west, born in prince edward county

one and done, first state to limit its governor to one term at a time, which brings us to the 73rd governor of the commonwealth of virginia, ralph northam. good to have you with us congratulations. >> thank you, scott. it's great day for virginia, to be the number one state for business, third year running port of virginia, appreciate cnbc being here. we put a lot of investment, a lot of thought into our port it's a tremendous asset for our economy. as you said, we've invested close to 1.5 billion we'll have the deepest channes, widest channels to allow these large ships coming from the panama canal it's a great day for virginia. >> reporter: last time we did this was two years ago we didn't award a top state last year we have a bit of catching up to do. >> yeah. >> reporter: in 2019, as we alluded to a moment ago, you were coming off a rough patch. the state was coming off a rough patch. you vowed to use the remainder of your term to push for equity.

i think everybody can agree that became a priority for you. how do you feel about where you've gone, and is there a danger of going too far? >> well, you know, when you do the right thing for people, it's not only right for them, but it's good for business we have proven that, scott yes, virginia went through some tough times. virginians stuck with me i committed to dealing with equity, to address the numerous inequities that we have in virginia, 400-plus years of history. some of it good, some of it not good things like actcess to health care, we expanded medicaid thank goodness during the pandemic over 5 50,000 virginians had access to health care care, access to world-class education, so important, and virginia is promoting making it easier to vote while other states are not certainly as a veteran, that's the foundation of our democracy. a lot of good things are happening to virginia with

equity we pride ourselves in embracing diversity. we're an inclusive state and we're open for business. >> let me ask you about voting one of the things you did, you got rid of the voter i.d. requirement. and the way that this is framed in a lot of the debate say question of faith in the election system versus openness. and the idea of voter i.d. is not necessarily something that democrats now are necessarily against. and i asked you a moment ago if you've gone too far, is that a question are you risking the integrity of this state's voting system >> not at all. we've had a number of elections here in virginia they've been safe. we've had accurate results not only the voter i.d by the way, about 10% of the population doesn't have a photo i.d. that's just an attempt from the other party to make it more difficult to vote. we're not going to go there. we also have no excuse absentee voting we want to make it less cumbersome that's the foundation, the backbone of our democracy and that's the way we're going to

move forward. >> let's talk about health care, which you also spoke about a moment ago you're a physician, for those who don't know. >> yes. >> reporter: hopefully, we're through the worst of the pandemic first of all, what do you think about that are we rounding the corner is this done or are you worried about a resurgence >> we're certainly in a much better spot than we were 16 months ago our first case in virginia was in march 2020. initially, it was tough to get ppe and then testing supplies. we've had a very successful vaccine rollout in virginia, over 73% of virginians have now had their first shot or two, and so we're in a better place but i would encourage everybody across this great country of ours to roll up their sleeve and get a shot if they haven't already done so. that's the way we'll put this pandemic behind us as a doctor, i've used science, data i've communicated with virginians every day and let them know what's happening and they've done a great job in virginia. >> reporter: as we rate the state, we do this new category, life, health and inclusion,

which used to be quality of life virginia comes in at 11. the inclusiveness certainly helped you in the category. >> yes. >> reporter: in terms of health care, virginia understands the national average on public health funding you were stretched at times during the pandemic. do you feel like the state is prepared and has the resources for, heaven forbid, another pandemic or whatever else? >> we've learned a lot certainly we'll be in a much better situation if we do have another pandemic we still need to get this one in the rear view mirror but, you know, we've done things like expanded medicaid recently we made an announcement medicaid recipients were eligible for dental care we're moving in a positive direction. again, it is important from a business perspective i talk to businesses all the time in virginia and around the world. they want their employees to have access to affordable and quality health care and we're prepared to give it here in virginia. >> reporter: let's talk about cost, which has always been a difficulty here, and ties in with workforce. >> yeah. >> reporter: flow of educated workers into the state has

slowed it actually had slowed before the pandemic probably might have something to do with the high cost here what are you going to do to fix that and what do you hope that your successor will do to fix it? >> certainly when we talk to businesses and ask them what's impo important, it's a talented workforce. we're blissed in virginia. we have great colleges and universities we had 23 community colleges we started a program g3, get skilled, get back and get started that allows virginians to go to community college without incurring any debt lot of emphasis in k-12, given our teachers a 10% raise the last three years and put emphasis on early childhood education. workforce development is important. access to a world-class education is something that we feel very strongly in virginia where we're putting our money where our mouth is regarding education. >> reporter: we know who you favor in the governor's race i won't ask you to go there. but whoever takes over --

>> yes. >> reporter: mr. mcauliffe or mr. yukon, what is your message to keep virginia on top? >> over 45 billion of capital investment has come into virginia the last 3 1/2 years. what we're doing works when i turn over the keys in january of 2022, virginia will be in great fiscal shape our economy is roaring and we're very proud of that we just want to keep doing what we're doing. again, one of the most important things is being inclusive. welcoming people to virginia letting them know we're open for business as most people note, virginia is for lovers, and that's important. >> reporter: when you do turn over the keys, what's next for you? will we see you in politics again? >> i'm a physician, co-owner of a practice here in hampton rhodes, just down the river. i plan to go back to seeing patients and their families. >> governor northam,

congratulations on being the first back-to-back top state winner you can see where your state stacks up at top states.cnbc.com, our full study posted online. more coverage throughout the day on cnbc. andrew >> scott, there it is. i didn't get it right. i just want you to know, i had no idea. but you did it once again. and you did it beautifully scott, appreciate it congratulations. we'll be watching all day for more from there. meantime, when we return, some new cpi inflation data investors are going to be watching this one very closely plus an interview with the ceos of chipotle and paypal. don't go anywhere. "squawk box" is coming right back inance system than we do. workday. how do they make better decisions faster? workday. it's got to be something workday. i think i got something. work... hey, rob, you're on mute.

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up next, breaking inflation data, the latest cpi number. "squawk box" will be right back. s offers investors a broader view. ♪♪ we see companies protecting the bottom line by putting people first. we see a bright future, still hungry for the ingenuity of those ready for the next challenge. today, we are translating decades of experience into strategies for the road ahead. we are morgan stanley.

all right. welcome back to "squawk box," everybody. this is cnbc we're a few seconds away from a brand new read on the consumer price index. this is important, because we've been tracking inflation so quickly, and we're certainly seeing inflation rise. then you have situation like lumber where they've come right back down to earth once again. now negative for the year. let's take a look at the futures ahead of all of this indicated down by 35 points, dow, s&p down fractionally, less than a point nasdaq is indicated up by 43 points this comes after new records set across the board for all three of these indices yesterday

dow closed four points shy of 35,000, weaker than that with this new look we're seeing this morning. we should look at what's been happening with the ten-year note right now it looks like the ten-year is yielding 1.349%. of course, that's higher than we were at the lows of last week but significantly lower than where we had been. rick santelli is standing by rick, take it away. >> yes, we are expecting our june read on consumer price index. as becky pointed out, things like commodities have really reversed and the numbers are in. they're much hotter, up .9%. strip out the all-important food and energy still up .9. if we look at year-over-year cpi, which has a base effect, we know it will be a bit higher because of depressed covid levels a year ago, zooming up to 5.4% and if we look at x food and

energy year over year, up 4.5% all these numbers are hotter than expectations. all these numbers are hotter than what's in the rear view mirror and we continue, of course, to point out certain things yes, there are going to be bottlenecks that are going to reverse. there's going to be supply chain issues and commodity spikes that are going to reverse but are there things that may not reverse or it's too early to tell i certainly think so one of them we put in our gas tank every other day we have air conditioning on energy prices. 48% of small businesses, becky, have raised prices in may. that's the highest, largest percentage in 40 years and we all know green and climate change, there is a bit of a war on fossil fuels there will be a price for that might be a moral thing to do in many people's minds. trust me when it's 100 grease or you need to charge your ev in

certain states it's going to be an issue sticky energy prices also, services, and what's the most important aspect of any business, the best asset they have, the ones that go up and down the elevators every day and i personally think -- i don't know when prices start to go up for wages, i think they're going to be a bit sticky. i wouldn't look for the fed to normalize, but certain higher prices would not only normalize but become part of the fabric of the economy. that's just my opinion becky, back to you. >> we look at the ten-year before we got these numbers. it was yooeding 1.36%, i be believe, right before. right now you're going to see -- >> no, it was about 1.345, it's 1.37 now i would like to stress if you're a technician, i'll make this real easy for you. 1.36 to 1.38 is the zone above it, most likely we'll see

a bit of a selling and higher yields on a closing basis. below it, the pressure from last week sticks a bit. i think some of the selling had to do with supply this week and some of that may ease as we get through the auction, 20-year bonds today. >> steve liesman joins us now with more on what he's seeing in this data. steve, what do you think >> i think this is going to raise the pressure on the fed to act sooner rather than later, certainly, when it comes to reducing its asset purchases i don't think this changes the track but certainly keeps them on track for some kind of announcement in september. these kind of numbers they're going to look at and see specific stories inside. rick talked about those as well. for example, i will tell you, used cars, up 10.5% on the month. that was one-third of the overall increase that was there. food prices, up 0.8. that's double what it was,

inc including food away. i don't know if you've been out for dinner, but eating out is costing more and eating at home is costing more as well. we'll have to watch that it's bleeding over into the services sector as well. the federal reserve, i think, is going to look at these numbers and say, you know what this all may be temporary, but it might be more prudent to act. i don't think it means act quickly but certainly keep on track with the idea of reducing asset purchases and announcing that early some time in the fall. >> reducing asset purchases, you think, starting with mortgage-backed securities, steve? >> yeah. i think they'll do both. at the same time, though, i think there's more pressure on the fed to do more with mortgage-backed securities mortgages have done well recently, they have come down. the yields have come down. the price that they're paid by consumers. i think there's more pressure by the fed to do that it will do both simultaneously but again, i still think the

announcement in september and later in december or so, early next year, is when they begin that reduction i think there's a good argument they should do it sooner i just don't think i hear them saying that. i will be talking to mary daly at 11:15 on what the fed should be doing in light of these numbers. >> are we still in the transitory window? that's the question, right we're going up against very low numbers last year. does this settle anything? >> yeah. >> or can it be explain ed away by certain small factors >> if you want to explain it away, you certainly can. this was always going to be the tough period, july and august, because of the numbers in july and august, because the fed doesn't expect things to settle down on the transitory front until some time september when everybody comes back to work, when the schools are reopened, when the bottle necks have had a chance to work their way through. the fed is going to feel this pressure right now it's going to try to look

through it we'll see how successful they are. some members of the committee might be more concerned than others. >> steve, there was a new york fed survey that came out with consumer expectations for inflation and it jumped to a median 4.8% of what people are expecting the next 12 months that's the highest in history. but this is charts or records that have only been around since 2013 is that generally indicative of what's happening or counter indicative when you start asking people what they expect? >> well, expectations are kind of funny it's the thing that the fed looks at very carefully, and there's two components to that expectation story yesterday. the one you're talking about, the short-term increase, expected inflation in the next year went up by a record, to a new record up by 0.8% over the three-year horizon, they were a little more tame they remain high but didn't go up as much that's the one the fed is going

to watch a little more carefully, becky, the longer term those are the ones that the fed expects to be or wants to see anchored short term inflation expectations tend to move up and down with inflation. they don't tell you very much about where it's going the thing the fed wants to see are the long-term inflation anchored those are high but didn't go up in the last report. >> steve, thank you. >> pleasure. coming up, jim cramer's first take on the trading day ahead. plus, big announcement from the ceos of paypal and chipotle. stay tune for the record a wide-ranging conversation you n'afrdo miss "squawk box" is coming right back smartphones. let me break it down. you got your new customers — they get our best deals. you got your existing customers — they also get our best deals. everyone. gets. the deals. questions? got it. but, why did you use a permanent marker? because i want to make sure you remember. i am going to get a new whiteboard. it's not complicated.

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let's get down to the new york stock exchange. jim cramer has been standing by. he has been watching everything, though, i know, jim. let's dive into the earnings, goldman sachs and jp morgan. goldman a little higher, jp a little lower what did you think when you dug through the numbers? >> jp is fine. consumer is doing inkrecredibly well they do need to see a bit more lending. trading is down as expected. goldman is just a blowout. they are number one in everything with investment bank. they had an amazing quarter. trading was good took a lot of market share wealth management is incredibly strong this was an excellent quarter by goldman. it's up against very difficult

comparisons about when -- people are going crazy with covid jp morgan, nothing but consistency but goldman is the big surprise and so far, so good. >> part of the question is, we've been talking about this this morning how do you beat expectations when there's already so much baked in the stocks have really run now the question is what comes next, right? >> there's critics that say there's a one-time story here, goldman tas taken private equity gains plugged into asset management private equity gains have been consistent in terms of -- everybody keeps saying they're one-off. this is the quarter where people are saying they're not one-off and the company is doing real well i can't believe my old division is doing incredibly well the star of the morning is p

pepsico. >> yes. >> let's give it to them. >> organic growth. organic growth numbers they came out with, incredibly impressive. they raised their guidance for the year but are pretty co conservative, as they said, and the numbers they're giving you now, considering the big beats they had today. >> yeah. he's getting consistent 6% now i was looking forward to 5%, maybe high-end 5%. he has taken a lot of share in carbon data. frito-lay is amazing what a juggernaut. they get the big convenience store mountain dew numbers very impressive quarter. that stock should be higher. i think goldman will be fine it will be higher. jp morgan will tread water here but in the end, only because it was up 7 from what it was thursday. >> anything else you're watching this morning, jim >> cpi, pepsico and conag tell

you food is about freight, which is about drivers they can't seem to find enough really, really tough costs they don't have the brands to be able to raise price the way pepsico can. we have to see who can take price and who can't. pe pepsico can clearly take price very exciting morning, though. kicking off earnings season. they're telling you that freight is really bad. by the way, boeing, can i just say bad set of facts there bad set of facts. >> what do you mean? >> i thinkwe are all looking a that company and saying what's really going on there? >> because of the additional questions? >> they're not making shampoo, right? they're not making shampoo. >> it's got to be right. >> but the dreamliner numbers aren't going to make it. pretty soon when we talk about the balance sheet. and if you talk about the balance sheet you're talking about equity offer ing, and talking about equity offering you say stay away until you get a better chance. >> can i add one thing

we have to run but huge picture of you on the west side highway on my way in i waved. >> thank you. >> very nice picture. >> i'm trying to get my wife to take a look at it. she's like, eh i said would you please? she sends me pictures of the dogs and i send her pictures of the billboard and she said your self grandizing, head too big to go in the board. pictures of the billboard for heaven's sake. i want to thank cnbc for doing t that it does make you feel good. >> pregame, post game. we've got it all covered with jim. >> appreciate it companies putting emphasis on employee's financial health chi chipotle, verizon, chobani, joining paypal in their worker financial wellness initiative, which aims to make employee financial wellness a top

corporate priority joining us now in an exclusive interview is verizon ceo dan schulman and chipotle ceo brian niccol thank you. dan, explain what this initiative is all about. >> thanks for having us on, andrew about two years or so ago, we noticed inside paypal when we did a survey of our employees that almost half of them were strug struggling to make ends meet at the end of every month, which isn't surprising 78% of all adults in the u.s. report that they struggle to pay their bills every single month and so this is really a national crisis and we felt that we needed to step up, take a real hard look, measure exactly the stress that our employees were feeling and then put into place initiatives that would raise the amount of

disposable income they had after they paid all their taxes and essential living expenses from what was 4 to 6%, we targeted 20% as a minimum today we're at 18% and with just capital in the financial network saw what we were doing we decided to come together to encourage other companies like chipotle, and brian who is on the show with us, to look at what is the real assessment of their workers' financial security and financial health, and then measure it, and then see what we could do to try to address this kind of national crisis that we're facing. >> so, brian, when you did this inside chipotle, what have you found and what are you doing about it >> yeah. so, similar to what dan was saying, you know, you definitely find that people at the end of every month are really living, you know, paycheck to paycheck,

and have a lot of concern about how they pay the next month's bills. obviously, some of the steps we've recently take n is we've increased wages for all of our employees to the tune of about -- close to 20%. now the average wage starting around $15 and the reason why that's important is, you know, as you look at that starting wage and you surround that with additional benefits, that gives some additional peace of mind to the employee it sets them up where hopefully they can train, develop and land in a role that ends up earning them close to $100,000 in less than three years and we tie that in with education, reimbursement as well as debt-free degrees and we've seen a dramatic change in people's retention as well as their confidence in their future, not just in our company but their confidence in being, i would say, a ben fefactor or a

true leader in their community. >> dan, can you speak to this? maybe brian as well. there are a lot of ceos and leaders who look at this and say, look, adding 20% to my cost or 20% to salaries, i don't know if it's in the full cost, but that's a lot and i'm not sure i'm going to get the productivity back. what do you say to them? >> i think the only sustainable competitive advantage that any company has is the strength of their workforce. how passionate is that workforce, how committed is it how engaged is it? and we found when we made this investment in our employees, just like we invest in market i ing, just like we invest in research and development, the payback was tremendous engagement scores hit all-time highs. our net promoter scores with customers hit all-time highs

our retention was at an all-time high and, therefore, training costs dropped much lower so, this kind of investment, andrew, i think, is essential. if you ever have any hope for moving from being a good company to a great company it all rests on the back of our employees. they need to be engaged. they need to be passionate and this is one way of showing them that we're all together in this, that we all need to lean in, serve customers. and when we do that, obviously, we serve shareholders at the end of the day. >> brian, can you speak to this issue, too i think there's a difference between the technology industry, very high-margin industry, perhaps, and yours and also just the psychology in the c suite which is typically if you send out an rfp, and i know that's not for employment, but rfp for some project typically you're looking for, quote, unquote, the best value

so how do you actually ascertain the lowest price, if you will, for the most bang for your buck? >> yeah. obviously, our industry say little different than the tech industry in regard to where people start but, you know, what i will tell you is, it's exactly the same as what dan just articulated. we have to invest in our people. it's really hard to make a great culinary experience if we don't have engaged people that believe in the company, believe in the purpose and purpose. and ultimately believe they can grow with us. >> right. >> so the investment, we know, pays off, because we get greater retention. you're going to hear a lot of similar things, greater retention, more engagement, more passion about chipotle and the way we're able to invest in this is we believe we build a great value proposition and provide to our customers, which gives us the ability to attract people

that want to be in the culinary restaurant industry to great experiences. the great experience is debt -- go ahead. >> does it feel like an employer's market or an employee's market and how much does that impact the way you're thinking >> look, it's definitely a very competitive market for labor i believe our purpose and our employee value proposition is what's leading our way to attract people into our organization you know, fortunately for us, we are back to, you know, our staffing levels pre the pandemic and in a really strong position han in a long time on our labor and engagement of our whole, entire organization. so you have to be on your game you have to be communicating you have to have a compelling employee proposition, and i think your company's got to have

a reason to get people excited about coming to work and being a part of something doing right by their community and the customers that they serve. >> dan, can you speak what's going on with the consumer in terms what you're seeing in terms of the flows i think it also speaks to the labor issue right now. >> yeah. well, we're clearly seeing a comeback in consumer spending that's not even across the world, andrew. you've got some -- some countries that are having an uneven recovery, because they're still battling covid, but here in the united states you're seeing the travel sector, the entertainment sector, the restaurant industry bounce back quite substantially, but in mid, by the way, elevated evalue spend. a one-two punch in the economy and quite strong here's in the u.s.

>> what are your feelings with respect to spend what people are doing with savings at this point and what happens when some of the payments roll off? what are you expecting later this fall in this -- i don't know if we're in a yolo moment but it feels like something is happening? >> well, savings accounts are at all-time highs right now, and you know, the consumer is beginning to flex their muscles within the economy so i think you're going to have, i think, a strong economic recovery at least in the u.s. through end of this year, and i would bet into the beginning part of next year as well there's a lot of money out there that's in savings. people have been careful about that through the pandemic. i think you're beginning to see companies step up, and address financial health for their workers. make sure that they don't struggle to make ends meet at

the end of every month so i think at least here in the u.s., i'm pretty bullish about the economy over the next year or so. >> brian, i don't know if you can speak to it, but we keep having questions whether this inflation is transitory or not talking here about wages going up i don't think those will be going down anytime soon. and then you're seeing it in -- in the cost of food. no >> you know, we're definitely seeing some cost pressure, you know, and whether or not that is permanent in some of the, you know, key inputs for our business is to be determined, but, you know, i think the positive is, our supply chain definitely seems to be starting to break through some of the bottlenecks that were battled throughout covid as the supply chain gets to a better more stable place i'm

optimistic some of these pricing movements will start to settle down, and then we can get going with business as usual on a lot of our key ingredients. >> dan before we go, you want to give your 30 seconds transitory, or the new normal? >> what are you talking about specifically, andrew >> inflation meaning, whether you're seeing inflation as a real issue that's not going away. >> i just say probably some pressure around inflation. i think we'll have to wait the next couple of months. you know, year seeing things like timber prices begin to come down that's probably an encouraging sign against inflation, but i think there's a number of -- of winds blowing either direction so i would just wait a couple of months before i would prognosticate one way or another, but i think there is some pressure in terms of inflation overall.

>> dan a good excuse to come on back brian, for you to come back as well thank you. crypto next time, dan, as well appreciate it. >> look forward to that. >> look forward to cfollowing progress of all of it. "squawk" returns, after this. oh, i've traveled all over the country. talking about saving with geico. but that's the important bit, innit? showing up, saying “hello! fancy a nice chat?” then we talk like two old friends about sticky buns and all the savings you could get by bundling your home and car insurance. but here's the real secret. eye contact. you feel that? we just had a moment. [chuckles] who would've thought it? geico. save even more when you bundle home and car insurance. this is how you become the best!

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all right. let's get a final check on the markets. dow futures down triple digits a lot because of cpi numbers at the end. much expected inflation month of june 0.9% year over year versus half percent the street anticipated saw weakness there and s&p future down by about 16. nasdaq off by 52 again, weakness that set in after 8:30 a lot of earnings out. two dow components jpmorgan weaker though numbers beat expectations. goldman sachs blew expectations out of the water stock higher pepsi shares higher after beating expectations as well look at what's happening wit treasury market, because, that's where we saw the big move after the cpi came out ten year, 1.386% saw that pop go straight up. >> yes shorter term, like two, three-year actually up more.

yield curve flattening meaning the market is pulling forward expectations when the fed might start to tighten probably what has the stock market unsettled. >> ignoring some of the numbers. andrew, waurcwatching somewhat seeing, more earnings tomorrow and watching that, too. >> big week ahead. we will see. we will see. >> we will see you back here tomorrow mike, thanks for being with us today. right now it's time for "squawk on the street". good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock market. jpmorgan, pepsi, futures dipping, though on hotter than expected consumer inflation year biggest jump since '08 transitory rages on. and we begin with earnings under way, jp and