Skip to main content

tv   Squawk Box  CNBC  July 29, 2019 6:00am-9:00am EDT

6:00 am
thanks, janet. we'll show you what she said last night merger monday, we have deal talks to talk about and pharmaceuticals means megan here is we also have financial data and food delivery. it's monday, july 29th, 2019 michelle layoff lin -- you're waiting for the,ism. >> the,ism, is the most important with the jobs numbers. >> "squawk box" begins right now. ♪ >> announcer: live from new york where business never sleeps, this is "squawk box." live at the nasdaq markets site our guest host this morning is michelle girard, chief u.s. economists worried about the isms we'll talk about that in just a
6:01 am
minute look at quick u.s. equity futures at this hour show you how things look to be opening up in about 3 1/2 hours from now dow would be off about 20 points nasdaq looking to open up 15 points s&p 500 looking to open off a little off we'll call it 3 1/2 points right now and also show you what's happening overnight in asia right now as we speak. you're looking at red arrows across the board but we'll call it marginal except for the hang sang take a quick look at european equities as well as we flip that board around you're looking at mostly red picture, except the ftse 100 looking up 1% right now and finally treasury yields, ten-year notes unless you're looking for a 30-year fixed right now the ten-year note is at 2.060 joe? big deal of the morning. big. big. >> mylan, potential pharma deal to tell you about. unit of pfizer with mylan. >> that's right. we're expecting this news to be
6:02 am
announced sometime this morning. what we're hearing is that pfizer plans to spin off a unit called up john, off patent br d branded drugs to combine with mylan. this will be a combined company, new company that could have more than $20 billion in annual sales. it will be majority owned by pfizer 60% and about 40% from mylan shareholders it's a unit that pfizer calls up john brought in about $3 billion in first quarter sales it's 20 brand that you know well, viagra, lipitor. with mylan's epipen. in terms of management, mylan chairman robert courey will be the chairman of the new company, heather bresch is going to depart and pfizer executive who currently leads up john will be the ceo of the new company it will be domiciled in the u.s. and will get a new name which we
6:03 am
don't know yet and mylan shares are up quite a bit this morning. if you look at what's happened to that stock over the last few years, quite a demise. >> i'm excited that it's going to be based in the united states because this was one of the great tax dodgers in the world right? they moved they were one of the great -- >> mylan is domiciled in -- >> if you think about why is this happening, the tax policy is working on the corporate side i told you i would surprise you this morning, that's what i'm excited about. >> that's something we have heard from a lot of pharmaceutical executives. allergen is overseas and inverted >> they're coming back to america, people. >> they are. >> see, joe. you should be excited. >> i am. >> i can say a lot of nasty things on certain days, this i can say something nice about. >> you know heather bresch's father, too. >> i do. >> which is bizarre the whole epipen joe mansion, the
6:04 am
democrat deno he is. no, he is. >> here i am throwing you a bone i'm throwing you a bone deno or die know >> i'm throwing you a bone. >> i'm just saying -- >> tax policy. companies are coming back. >> it's weird that she's joe manchin's daughter >> right but up john at one point was -- >> i think so way back -- yeah >> so pharmacia bought it. >> pfizer bought that company. but really pfizer only started breaking out this unit earlier this year and calling it up john. >> it's kind of a who's who of drugs that were huge before they went off patent. it's kind of depressing. >> huge. these are some of the biggest names, yeah. the biggest drugs in the world
6:05 am
lipitor at bun point was the biggest drug in the world. >> you can see from pfizer's perspective, a lot of very large companies that have an older slow growth division, they want to clean up their story and hive it off spinoffs make sense in this context, i guess now you get -- do it in a way that has scale with mylan, i suppose. what's going to be the story with what remains of pfizer? what will be the things that drive that company >> that's a great question there's a new ceo who has been pushing to move the company to sort of streamline into a more traditional bio pharma driven company. they bought a cancer drug company array earlier this year. so really trying to focus in on those highly inknow vainovativiy priced vaccines. >> you remember the epipen controversy. >> i do. >> heather bresch got hammered and her father is on the other side of the aisle trying to get drug pricing under control and
6:06 am
she's -- you know, that's what's interesting about this those are the dynamics that you don't want to talk about. >> what's going to be the legacy of heather bresch? >> that's a really good question i mean, most of the public probably associates heather bresch with the epipen pricing. >> "60 minutes" story and all the things. >> yeah. of course mylan is its most visible product but the company sells a lot of generic drugs part of the reason the stock has been doing so poorly in addition to other issues is that generic drug prices in the united states has been going down quite a lot. so the company does sell a lot of very cheap medicines in addition to the epipen it got dinged ding is a light term. >> more and more women coming into the s&p 500 running companies. >> vertex. >> but this will take one off the list. >> it's unfortunate. there are very few women. >> every time i write these articles about women running companies and you sort of keeping a tally because sadly
6:07 am
the tally is so small. so any time one comes off even though a number have come on in the past year. >> yeah. we just got a new ceo announced for vertex pharmaceuticals is a woman and that's exciting. >> automation. >> auto nation >> and the defense industry. >> autonation a s&p 500 company? >> no, it's not. remember the day we had them on. it was in 2003 >> right. >> it became an s&p 500. >> no. i just looked it up that day because i was going to say for you, since you're always talking about it, i was going to say the ceo of fortune 500 -- >> i was going to say it to make sure i didn't say it in error. i looked it up and it exited the s&p in 2017 and became a mid cap, what is it, 400 and bright side financial replaced auto nation there's all the -- >> do you remember mylan and king
6:08 am
>> i do mylan and king. >> carl icahn. >> carl was watching this show shaving, watching this show, shaving and he heard that. what is this that's ridiculous. he made his mind up that quickly. and actually thwarted the -- >> okay. we have another deal to talk about this morning yes, this is very interesting and deals with a competitor of ours, joe. the london stock exchange says it's now in talks to buy financial data firm refinitiv. the old thompson roitders would include debt blackstone bought a majority stake in refinitiv less than a year ago which valued the firm back then at $20 billion when i say it has to do with a competitor of ours it would put the london stock exchange directly into the line of sight with bloomberg. >> how much debt are we talking about? >> a lot. >> so it's not really worth that much we're hyping -- >> we're not hyping. >> you don't use transaction
6:09 am
value. >> yeah, you are what is the debt actually in this we actual factor out the debt. >> enterprise value of the company includes the debt. >> we never use enterprise value when we talk about mergers. >> the total price which we can do, hopefully the folks who are doing the deal know the price, the larger issue is, a, is it worth this b, having a stock exchange effectively in the business of bloomberg, does it force bloomberg to actually do something? that's sort of the larger piece of this. you remember the news operation of refinitiv has now been spun off as a separate piece. i can't really say we're in full-on competition with them, but given that the terminalings are a big deal also, joe, you happen to use this service i thought you would care. >> tell me, when. >> thompson. >> thompson. >> you use ichan in there on your system? >> it's not called that.
6:10 am
you mean the -- where we have the scripts, the run-down and everything >> no, no, no, no, no. you always look at the wires, right? >> i have all news is what i look at. >> when there's earnings reports on the computer. >> usually i have them memorized. >> first of all, fascinating that it would be such a quick flip from blackstone, right, that this was a deal that's not that old but also underscores that exchanges are just data platforms and information being exchain exchanged. you're right, in terms of distribution of it, stock exchange and member firms. >> find out how much debt -- >> i will find out during the commercial break maybe we'll get see whether this is -- she can talk to us about exchanges to see whether this is -- >> it's data. >> nasdaq is actually data we look here and you think about ipos but that's not business. it is. it's part of the business. >> coming up, buckle up for a
6:11 am
busy week from a bierage of earnings how long do we go back me and you, 25 years >> yeah. i thought we were talking these kind of numbers. >> no, we're not i said your old name it's michelle girard, but i'm entitled to mess that up. >> we go long ago you get grandfathered in. >> we'll get you ready for it all right after the break. right now here is a look at the biggest premarket winners and losers ♪ ♪ dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. can we build ai without bias? how do we bake security into everything we do?
6:12 am
we need tech that helps people understand each other. that understands my business. we've got some work to do. and we need your help. we need your support. let's expect more from technology. let's put smart to work. ♪ ♪
6:13 am
6:14 am
♪ it will be the biggest week in the summer for the markets on the earnings front we'll hear from nearly anird of the s&p 500 companies, including apple, exxon, chevron, merk, pfizer and gamble, verizon. trade talks are resuming between the u.s. and china robert lighthizer and steven mnuchin are set to arrive in shanghai tomorrow to meet with china's top negotiator the federal reserve kicks off a two-day policy meeting tomorrow.
6:15 am
it's expected to cut interest rates for the first time since the financial crisis and it's also jobs week. polled forecasters expect an increase of 166,000 nonpharm jobs in july and decrease in the unplace of employment rate at 3.6% bad jobs number and most recent one which seems like it's just like couple days ago but it wasn't apparently. any way, joining us now, a fed rated investors and our guest host, michelle girard. all this is happening in the backdrop of the summer, rj when i read it's going to be a big week, it is. but i'm not sure it's going to feel like that because you just can't, you know, late july, early august you just -- everybody is just kind of ah, sleepy but, pick the biggest data point, pick the development this week that the markets could key off of, r.j. >> well, interestingly enough we're heading into a federal
6:16 am
reserve meeting week and it feels like the conclusion is baked in usually fed meetings are in a pretty high profile. this certainly is, but the spotlight on the fed now is whether or not they'll deliver and meet the markets expectations, not whether they'll ease or not. i think everybody expects that there's still some question of 25 versus 50 basis cut in terms of size of the cut maybe more important is what do they say our view here is we think they'll cut 25 and insurance ease, calibration of monetary policy given they probably tightened a little too much at the end of last year what do they say clearly the main focus is beyond our shores the u.s. economy is in pretty good shape people wouldn't complain about inflation below 2 it's just not that bad we have brexit to a clear global deceleration and global growth the fed is huge. i think the jobs data would be the second thing i would focus on jobs have been a bit saw tooth of late. they have been strong but up
6:17 am
strong one month and a little softer the next. i don't think any one job's numbers is going to change the fed's mind however economic movement in the u.s. is good the focus is abroad. >> so the whole reason for the new transparent shed is so we're not never surprised. they're telling us 25. it's not going to be 15 or 0, right? >> i still talk to a lot of people and you still have people betting on 50 in the market. that surprises me because i feel like the fed has been clear in sort of telegraphing why 25 makes sense, but yet you still see the markets betting on 50. a lot of people looking at some of the signals that the fed has sent and suggesting that maybe they back the market off to expect 25 so they can deliver 50 so there is speculation about a larger number. the thing that is interesting and r.j., i would be curious to get exactly what you're talking about. the other question is what do they say and will they be able to outdove the markets as they
6:18 am
have done in previous meetings that's really the question can they do enough given what the market is expecting to actually meet or exceed expectations >> i think they can. when you look at the federal reserve under powell, they haven't been wed to their position, to put it lightly. it wasn't that long ago that i was on this show talking about fed tightening it's been a complete 180 chairman powell has been clear walking in a darkroom with respect to the fomc use of interest rates to try to find our star, te quill librium interest rate. he doesn't know where the chair is in that darkroom, he's pretty modest in terms of his profile and how confident they are about where they're going next right now inflation is 1/5, 1/6. the target is two. they can't hit it with any sustained.
6:19 am
they can be asymmetrically pro-growth and asymmetrically focussed growth even though the u.s. economy is right. what he says up at the press conference, his terminology, can say, look, we're going to react. we're focussing on what the global economy is doing and not just the u.s they can be dovish enough even if they just do 25 >> they never do just one. it's always a series of rates. it's like if you got an infection and give you a half dose of penicillin maybe it will work if not, we'll give you the other one. just knock it out. >> the new york fed president had stated which got the markets excited for 50 when you see the lower bound in view, you want to act more aggressively exactly. >> people would say, oh my god the world is ending. >> i think we're beyond that time when people actually say, oh the fed must know something >> we know they know nothing.
6:20 am
>> this is not a bigger sign >> leaning toward 50 could just be if this is a technical adjustment to get the short end yields down to where it makes sense relative to the rest of the world, that's why 50 and say now we're patient, now we're on hold. >> does the market like 50 and a signal that that's it? or do they want 25 with expectations and signals they're going to do more >> r.j., thank you michelle will be here. >> you know nothing, jay powell. i'll be watching all that. i'm getting close, sorkin. season 5 episode number 6, i think. when we return, we're going to talk about the impacts -- impact of the grounded boeing 737 max on airline earnings. phil lebeau is digging through the quarterly results for a look at what it will mean for airlines back in a moment
6:21 am
we're changing what's possible every single day., and if you run a business, that means a lot.
6:22 am
we create financing options for your customers. to help them get the things they love instantly. our data provides insights into what your shoppers have already bought. so you can offer them what they might consider buying next. our financial and tech solutions are changing what's possible in all sorts of ways. so, how can we change what's possible for you?
6:23 am
can the past help you write the future? can you feel calm in the eye of a storm? can you do more with less? can you raise the bar while reducing your footprint? for our 100 years we've been answering the questions of today to meet the energy needs of tomorrow. southern company
6:24 am
ryanair out with quarterly results this morning phil lebeau joins with us a look at the impact of the grounding 737 max. good morning, phil >> good morning, mike. and remember ryanair like southwest flies a 737 lineup so the impact of the max at it is supposed to filter in those planes that's going to be felt and they noticed it in quarterly results in the most recent quarter. overall profits down 21% revenue per passenger simply because their load capacity is close to 97% it was up 11%. but with regard to the max, the ceo of ryanair never wanted to pull punches basically saying, look, it's january at the earliest that we get the first of our 737 maxes
6:25 am
and even then he has said in recent interviews it's questionable whether or not that's going to be delivered at that time. they have about 30 maxes due to filter in to the fleet next year they're saying, look, we're only expecting to get maybe, maybe half of those in 2020 and then in terms of savings from those 737 maxes because they're much more fuel efficient, they do not expect those savings to filter into the bottom line until 2021. so as you take a look at shares of ryanair and the conference call is going on right now, guys not surprising to see this kind of a chart remember, there's so much capacity in europe as well right now. that's the other issue that's weighing on shares of ryanair given what's going on in germany. that's their second largest market and there's just -- it's a capacity war and they're just flooding the market with seats the whole industry is right now in germany that's partially weighing on the results as well. >> okay. hey, phil, stick with us because we have another big story on your beat that's breaking right
6:26 am
now. clear has a new stake holder united following delta's lead bringing clear kiosks to all of its hubs including right here at new york liberty this will help joe kernen only likes to go to teterboro >> you are a clear member. >> a big fan big fan. early adopter. >> i'm an envious non-member who wants to be a member i was sitting in a line at atlanta and was watching all those people go through clear and i was sitting there even in the tsa line dying effectively. >> because the tsa lines are getting long clear to be able to go in, not pull out your driver's license, fullabling around, it's fantastic. >> we have a good ad right here. united is getting around -- delta was the first to do it i thought maybe there was an exclusive arrangement here not so much? >> so we signed exclusive with
6:27 am
delta for the first three years and now united airlines has joined the party focussed on bringing innovation to transform the travel experience. room for everybody. >> room for everybody. and can other airlines now jump in are we going to be seeing a handful of these deals >> we hope that all airlines want to bring this to their customers to drive a predictable, consistent experience. >> during the commercial break i said the deal for delta if you were a late comer like myself, you can get a discount i'm also a united guy as well. >> yes >> is there a discount coming for me >> there is a discount for united members on parody with delta. it's a substantial discount. it's less than $10 a month and you can use it in more and more places. >> here is the real question right now we all talk about the benefit being in the airlines at airports bauds youcan hopefull fly through the line if you can. one of the things you're doing is opening up at sports stadiums, msg and so many other places where does this go long-term >> so we believe that
6:28 am
biometrics, fingerprint, face, voice can change the customer experience in so many different places where you're pulling out your wallet, credit card, building access, health care id. so it's to change the way people live, work and travel. you are you so we make experiences more secure and frictionless and so getting into a sports stadium, you are your ticket at the mets it's citi field, you can buy beer with it. you have your driver's license and your credit card, think about health care, but biometrics, first of all it's about protecting privacy that's really important in job one in building that trust but driving that experience everywhere. >> phil, jump in. >> karen, that was going to be my next question i know you have this biometric screening payment method but you have it already being used at t mobile park out in seattle. when do we start to see that being used in airports i think that's the number one complaint or frustration i see from travelers, those who travel a lot and i do travel a lot, i
6:29 am
see people who are like, i have to go through my wallet when i'm at mcdonald's or restaurant or anywhere when does that start to filter into the restaurants and services in airports >> i believe that comes in the next 12 months i was in l.a.x. getting magazines and finding your wallet, finding your credit card and none of them are good customer experiences and painful when you have big bags like me the next 12 months it will be here for plain payment and payment with age validation which is also still important because you're still taking out your driver's license. >> what's the big challenge, is it getting the vendors to sign up or is it getting people to actually enroll because they're concerned about privacy in the expansion of the product >> so the subscriber growth has really been explosive over the last few years took us seven years to get million customers. now 8 1/2, 6 1/2
6:30 am
as long as your driving trust, securing data, we have flashing lights saying we do not sell or share your data. once you do that and other customers are liking it, it definitely goes viral. it's been about bringing on the partners who want to use it and delta was an early adopter united has now come on and so excited about changing their customer service from curb to gate >> how do you think about an apple or samsung or any of these other devices people are using them for payment, for other things it know it's not biometric yet but sort of is because they have the face id and will start doing things like this are they competition >> i really think you can work together we're rolling out a mobile app to do mobile enrollment because today you have to enroll on the pod for uses outside the security check point but i also think that the best thing is that you are you and you walk around with nothing. >> karen, very cool. thank you. >> thank you. >> appreciate it congratulations. >> thanks. >> are you going to use it >> yeah. >> we're going to sign you up, joe.
6:31 am
it will be great. >> i actually should sign up if i can do a quick signup. >> i will bring the pod to you guys. >> i want to do a sign up. i was thinking of that recently. >> it's time. >> you made a sale coming up, the fed expected to cut interest rates for the first time since the financial crisis janet yellen, the fed chair who began hiking rates back in 2015 speaking out about a potential rate cut we'll show you what she said next as we head to break, here is a look at yesterday's s&p 500 winners and losers ♪ ♪ through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business.
6:32 am
from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. ♪ can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you.
6:33 am
let's cowboy up! exhilarating speed.
6:34 am
woo! precision control. woo! maximum reliability. access denied. [ repeats ] access denied. if it's not xfinity xfi, it's not good enough. for wifi with super powers, get xfinity xfi. and go see, fast & furious presents, hobbs & shaw. august 2. ♪ >> announcer: welcome back you'rewatching "squawk box," live from the nasdaq market site in times square. ♪ good morning welcome back to "squawk box. take a look at u.s. equity futures at that mour let's show you what's going on dow looks like it will open off little over 11 point nasdaq down about 12 points.
6:35 am
s&p 500 down we'll call it -- i hate to round up when it's down but we'll round up to 3. central bank widely expected to announce its first interest rate cut since the financial crisis former fed chair janet yellen says she's in favor of a 25 bases cut point. speaking at the aspen economic strategy group meeting in colorado last night, yellen said that the trade war has created an uncertain global environment for business while the u.s. economy is still going strong. here is what she had to say. >> although the u.s. is doing well, i would be focussed on wanting to keep it doing well, to keep the expansion on track and i think in light of the risks, i would be inclined to cut a bit. i wouldn't see this as the beginning unless things change of a major easing cycle. >> a rate cut on wednesday would be the first as we mentioned in more than a decade yellen was fed chair in december
6:36 am
of 2015 when the fed raised rated for the first time in nearly a decade. so going in the opposite direction. >> and after that, i think it's relevant to this current situation, after that december, 2015, rate increase, markets were unsettled the economy was slowing down yields were very low and she backed off the fed kind of went on hold for a year and before that they were anticipating another hike. so, you know, the flexibility has precedent, i guess coming up, what's new on the china trade front? secretary mnuchin and lighthizer travel to shanghai to resume negotiations a live report from washington next. later, busiest week of earnings with companies like apple, beyond meat, is that already after apple in our lines? mastercard and pfizer all set to report we'll tell you what you need to know u' wchg quk x" yoreatin"sawbo on cnbc ♪
6:37 am
6:38 am
6:39 am
what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information. read it carefully.
6:40 am
treasury sec stair steven mnuchin and u.s. trade representative lighthizer traveling to shanghai, china, to resume trade negotiations this week i want to get over to kayla who joins us with more of the details of where these talks are headed good morning. >> good morning. a month after the two sides reached a truce at the g-20, the trade representative and treasury secretary will sit down with chinese counterparts to reach agreement on some short-term deliverables that are expected to clear the way to revisit the text of any
6:41 am
underlying agreement the u.s. has been discussing how to carve out business for china's huawei to conduct outside the scope of national security while china in return has been expected to buy u.s. farm products. chinese state media are suggesting some of those purchases started ramping up july 19th; but that it's only temporary. the hawkish global times writes, china again restarted purchases and might exempt the tariffs imposed on these products. a clear sign of china's goodwill and such goodwill is expected to produce good outcomes. but if the trade continues, u.s. farmers will have to face the dilemma of relying on the chinese market or making a structural adjustment, end quote. president trump on friday suggested that reaching a broader deal, though, could take much longer. >> china will probably say, let's wait it's 14, 15 months until te election let's see if one of these people
6:42 am
that give the united states away, let's see if one of them could possibly get elected i'll tell you what, when i win, like almost immediately, they're all going to sign deals. >> that is the same stall tactic china employed ahead of the 2018 midterms you may recall a truce came just weeks later. andrew >> okay. thanks kayla for more on what we can expect from the next round of trade talks i want to welcome ambassador wendy cutler, she is now vice president of the asia society policy institute ambassador, good morning and thank you for joining us what do you think the chances are we actually get something real here? >> well, again, there's going to be no breakthrough at this current round of talks this is going to be a meeting that's taking place four weeks after the g-20 i think both sides will want to confirm that agricultural purchases are going forward, that relaxation of huawei licenses are going forward and then they'll really need to get down to the dirty and that is
6:43 am
try to figure out which text will be the basis for moving forward and then in future rounds start getting back to the substance of these issues, trying to break the deadlocks. >> but you just mentioned two things that i imagine are gaining factors before you even get to the taxes and the tariff issue, which is to say huawei i don't think has been resolved and maybe you could argue that the agriculture issue has been resolved, at least temporarily speak to the huawei issue. that seems to be sort of the ultimate pawn or chess piece in this negotiation before we even get to the others. >> i think for now what china wants to see is some licenses given to u.s. companies to sell their components to huawei and presumably lighthizer and mnuchin can give the chinese some assurance that that process is going forward >> but do you think that they should be doing that look, there are advocates or political advocates on both sides of the aisle, chuck
6:44 am
schumer on one, others who say we should not be doing business with them at all >> well, my view is we need to sort out what's national security and what isn't national security is selling some semiconductors to huawei for their hand sets that if the u.s. doesn't provide those semiconductors other countries do i don't think that's national security that might be okay to go forward with >> you know, wendy, can i ask you in terms of the timing, the president obviously saying that it was in china's best interest to hold out. i hear a lot of people here speculating that even if administration isn't going to be that anxious to make a deal because it would sure be nice to announce something next year ahead of the elections how do you think all of this factors in in terms of timing on both sides >> well, i think both sides don't want a deal right now. it means they need to keep meeting but i don't think the meetings will be as intensive as they were last fall. however, i think ultimately both sides will reach a deal.
6:45 am
but the timing and trade negotiations is so important, so all the work they're doing now will help lay the ground work for when both sides are ready to make the deal. >> ambassador, longer this goes on in a way maybe the urgency goes down for both sides, in the sense that one year after the tariffs were imposed, i mean, you kind of adjust to it or the year other year change is not that dramatic, the chinese economy not doing great but also kind of in this steady state right now. what are the chances this is status quo >> well what you haven't mentioned is that the president is threatening another slew of tariffs that would hit $300 billion worth of u.s. imports which would hit our consumers very squarely and directly so i think if the president hints that he's going to be moving forward on those tariffs, both sides may find that it's in their interest to try and reach a deal >> okay. ambassador, really appreciate your time this morning thank you.
6:46 am
>> thank you >> you bet. the deal we told you about earlier this morning is now official meg joins us now with more meg? >> hi, guys. that deal of course is pfizer combining its off patent medicines business with mylan. this just crossing the wire, getting some additional details. this company is expected to have revenues in 2020 of 19 to $20 billion. earnings in that year of 7.5 to $8 billion so this is going to be a pretty big company. it's going to receive a new name it's going to be domiciled in the united states. pfizer is structuring this as what's known as a reverse mortgage trusts where it die vests or spins out its unit it calls up john and will combine that with mylan. we're getting more details on the management structure we knew that mylan's current chairman robert coury would be the new head and that pfizer ceo would be the company we knew that heather bresch is
6:47 am
going to depart. this is her retiring from mylan. we have gotten additional details that the current president of mylan is going to be the president of the new combined company where as mylan-cfo is planning to depart. 13 directors in the board. 8 of the new board members will be selected by mylan, 3 by pfizer in terms of ownership, pfizer shareholders will own 57% of the new company, mylan 43% mylan shares up 26%. pfizer was up this morning the feedback i have been hearing over the weekend, the wall street reported on saturday and we confirmed yesterday that pfizer shareholders were mixed on this deal they are streamlining their business to focus more on higher priced innovative medicines. this gets rid of maybe 20% of the company. up john had about $3 billion in the first quarter revenue. so interesting to see.
6:48 am
we'll get a brand new drug company here in the united states. >> yeah. there's also some language in the release about how they expect this new company to be kind of a cash cow business, right? they're going to initiate a dividend 28% of cash flow and put some leverage on the company, so it seems like it's mature cash flow kind of harvesting business and will initiate a generous dividend. >> yeah. one of the reasons people might be mixed on the deal this could be delutive to pfizer over the near term because of that cash generation and the profitability of the up john business. these are some of the world's best known brands, viagra, lipitor. they are off patent but they were big moneymakers for pfizer. still important. it will be interesting to see how this shakes out. >> okay. meg, thank you. coming up, taking a bite out of apple we used every single way of saying something about apple core and peeling and falling from the tree. any way, the company is set to
6:49 am
report tuesday after the bell. stocks up more than 30% this year it's the apple of investor's eyes going to keep on rolling we'll have a preview of what to expect next. as we head to break, here is a quick look at what's happening in european markets right now. the mix, not much except the ftse looks pretty good ♪ we're carvana, the company who invented
6:50 am
car vending machines and buying a car 100% online. now we've created a brand new way for you to sell your car. whether it's a year old or a few years old, we want to buy your car. so go to carvana and enter your license plate, answer a few questions, and our techno-wizardry calculates your car's value and gives you a real offer in seconds. when you're ready, we'll come to you, pay you on the spot, and pick up your car.
6:51 am
that's it. so ditch the old way of selling your car, and say hello to the new way-- at carvana.
6:52 am
there will be no relief on apple parts in china joining us, dan morgan for a preview -- before we get to what's expected out of the results and how the stock looks, apple has stopped trading to some degree. do you think that's a risk covering out there i think it is. the china situation is difficult. you have threats of sensors from
6:53 am
the u.s. back into china i think it's out there it doesn't seem like the stock is trading in regard to those concerns i think it is something out there. probably we'll learn more here tomorrow when they come out with numbers. >> obviously, it could be one of the reasons that apple's shares are 10% below from last year big comeback from early january. but the market is working through a flattening out over apple earnings it's gone sideways in net income the storyline has changed and let's watch services what do you think is in the numbers? what are you expecting to hear on tuesday >> the two numbers, obviously, as you mention
6:54 am
we're going to focus on his iphone revenues. it will be about a 10% drop from a year ago this will be the third-consecuti third-consecutive quarter in iphone growth. if you're an apple bear or bull, you're going to talk about gross margins in the service segment should be 64%. should do 11.8 billion in revenues should be an 18% increase. the big challenge for apple is, you have a deaccelerating iphone market, smartphone business. and you're trying to counter for the service side can the services offset the fact that your core business is slowing down that's where the challenge comes from apple we'll see more this quarter. >> that's probably one of the things that apple appears relatively inexpensive as a stock.
6:55 am
it's well below a market multiple right now keep buying back a lot of staoc. they announce an acquisition of intel's smartphone chip business last week. that highlights the run-up to a 5g version of iphone and how big the stakes are for apple. how is that playing out? and what are we going to hear tomorrow >> that's huge we don't expect a 5g foldable this year but next year. not only on 5g, they pick up the modem business from intel. it's about $1 billion they pay for that the road map to get to 6g. that's a big race for apple. they have to come out with phones that will get people to have a catalyst to move on and put away their old phones.
6:56 am
there's talk of this fall, an iphone 11 coming out >> we have 30 seconds. you said foldable phone. is that what you said? >> well -- you think they will have a foldable phone? >> yeah. >> qualcomm, do you think this has any impact on that transaction? >> i think it puts risk for qualcomm down the road that apple will self-engineer that modem and they won't need qualcomm right now, they're leaning on qualcomm for the next 5g migration. >> bottom line, in terms of where the stock is set up for earnings, or no? >> we are still bullish. the stock purchase is 15
6:57 am
billion. very low multiple, about 15-times earnings. we have to let it work out >> dan, thank you very much. coming up, when we return, two, big hours of squawk" ahead. we're going to get you caught up on the markets and how it can impact your money. later, the business of e-sports with the first fortnite world cup. what lies ahead in online gaming should you tell your kid not to play games i don't know after this weekend. $3 million worth that's happening on "squawk box. back in a moment
6:58 am
oh, wow. you two are going to have such a great trip. thanks to you, we will. this is why voya helps reach today's goals... ...all while helping you to and through retirement. can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to and through retirement.
6:59 am
your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. you need decision tech. [what about him? let's do it. [ sniffing ] come on. this summer, add a new member to the family. hurry into the mercedes-benz summer event today for exceptional offers. lease the glc 300 suv for just $419 a month
7:00 am
at the mercedes-benz summer event. going on now. a huge week ahead on wall street u.s./china trade talks and don't forget, friday's job reports. pfizer combining its drug unit with milen. the next time you tell your kids to put away the video game, just remember this a major sports stadium and a $3 million prize. we'll take you inside the first-ever fortnite world cup. >> bow down to your fortnite world champion >> as the second hour of "squawk box" starts right now.
7:01 am
>> life, from the beating heart of business, new york, this is "squawk box. >> i feel like back in the '80s. good morning welcome back to "squawk box. i'm trying to maintain u.s. equity futures down about 18 points. we'll have to wait for this week we're in the beginning of a big week nothing has happened yet we have the milen deal with pfizer there's a lot to look forward to >> let's tell you about the headlines.
7:02 am
pfizer mylan, moments ago. pfizer combining its off-patten drug business. you're looking at mylan shares up about 22% that's not the only pharma deal. exact science, buying genomic health for about $2.8 billion. it would boost its cancer testing product line, close to 11% on that news one of the day's most widely watched quarterly reports. it comes after the closing bell. it is beyond meat. it is still losing money and is expected to post another loss this time around we'll see if it holds up >> i don't think the $14 billion market value that's been assigned right now is hinging on
7:03 am
what happened the last three months >> can you grow into this valuation? is that the idea here? that's the only way to do it >> it trades like a video game >> we're going to talk video games in a little bit. it's amazing separately, the fed's two-day policy meeting kicking off tomorrow just another part of this very superbusy week for the markets and the one and only steve liesman, has arrived >> don't they know it's summertime can't we take a break here >> you have to go all the way down to d.c. >> i have to go to d.c bank of japan. bank of england. and it's july. it's 98 degrees out. 98% humidity a huge week, around the world and the fed. it's a curious case of the court
7:04 am
coming before the house. the data has come after the fed decided on its policy. tuesday, we get income and spending, not a big deal adp comes wednesday, followed by the fed decision you have jobless claims. the ism, which has become one of the more important indicators because of the importance of manufacturing through the whole idea of a slowdown and friday, we get jobs. let's look closely at jobs adp estimate, 145. payroll is 166, that's the friday government report that's off of a 160 the prior month. unemployment rate, 3.6%, coming down a tick. it's one of the more -- we say here one of the controversial rate moves by the fed with many not sold on the need for it. but there could be more than just a cut hfe writes this morning, the
7:05 am
title of the piece, whether needed or not. along with a 25 basis point rate cut, this week's fomc statement will likely include the announcement of balance shrinkage. an 18-point chance of and 82% chance of a 25 and bank of japan, i don't know if they meet -- they are meeting monday and tuesday it's monday in new york. i don't know when they meet. we get back to england and they have low inflation, low growth they've been at zero >> you think if we didn't cover all of this, it will still get out. like an empty force. it is -- it's like august. i'm exhausted already. i'm going on vacation. >> are you going soon? >> friday, after the show. >> overseas? >> no. we'll stay local do we need to -- >> they take august off.
7:06 am
>> jackson hole. >> you're going to give it the college try. but you're tired and it's hot. >> he has to make -- >> if you look at the table. you get a wide shot. we have seven people speaking of summer, that's the number of people on a water polo team >> did you know that >> i googled it. it's correct >> i would play water polo, but in a five-foot pool. >> you can pretend you're treading water >> that's why we have seven. it's summer. fed, water polo. >> are you too board to talk about this >> it's hard in midsummers i think the latest job report is not four weeks between it must have been a late one and now, an early one.
7:07 am
i think she's 9. bring in the ceo app and we know what they're going to do it's going to be anti-climatic >> i would find it very exciting >> yes >> they have to articulate what the driver of all of this is whether it's 25 or 50 basis points, it doesn't matter. they are rolling back the tightening they did last year, at least second half of last year and what is the logic behind that that's important that tells you what the future path is going to be for quite
7:08 am
some time. the most important thing right now, the fact that they are easing, ensures they won't be tightening for 12 to 24 months that's the most important thing for the markets. >> our concern is -- we expect 25 basis points. back in december, it was move towards tightening we think this is a symbolic. the growth in credit and the quality of credit being pushed into the public markets, is the ticking time bomb in the market. the numbers are good you go back to august 1968, you see 3 1/2% unemployment. when it shifts, it will spike. and we're just -- we're just waiting on that right now. >> the concern about growth and credit is important. one thing that we have to remember is the fact that without growth and credit, there would be no growth >> that's true >> that goes together. the quality of credit growth is something to be concerned about.
7:09 am
when you look at for the majority of the corporate bond market, the coverage ratios are decent it's something to be worried about but not to go overboard. >> what about the other side of it we talk about the fed cutting rates. the concern is, you're going to continue to push asset prices up and the credit sector is an area, that people point to as one of the more vulnerable sectors of the market. people have been forced to get yield. and that's a liquid. is that the angle in terms of the corporate credit concerns? more than the leverage and the ability to service a debt, that's afecter where you see overheating. >> it's the investment credit that looks good. it e's the middle pact of the market that's been yushed off of the balance sheet into the markets. we're seeing the deterioration and the quality.
7:10 am
>> i would say again on that particular point, also, we have to maintain a little bit of perspective the growth in the private credit market isn't just about bad credit getting -- bad credit getting loans. it's more about mediation. as the banks pulled back, and as people were looking for higher yield, it provided other intermediaries away from banks and lend to people, after the banks won't lend after the financial crisis >> the federal reserve in 1998 and again in 2007, cited international concerns, when it cut rates. it's hard for me -- it's not impossible but it's hard to see similarities between 1998, the lcm blow-up. '07, you know what happened on there after. between those times when the fed
7:11 am
cut and what's going on today, i get that we have a global slowdown in manufacturing, but i don't see a global crisis. >> well, and in '98 in particular, not only did they cite international concerns, but they cited the tightening of financial conditions that's not the situation right now. the angle, though, i think is important that i think we'll hear about this week, is the low inflation numbers. i think that's something that the fed -- in trying to thread the needle about why you move when the economy is strong without sending an alarm that you're concerned or more concerned about the economy. you talk about the inflation impetus. that's a significant drive, as much as the growth concerns. >> i think when we kind of think in just plain and simple economic terms, it becomes challenging to see why the fed is doing what they are doing
7:12 am
>> the fed didn't say it was dat dat data-dependent >> exactly we are saying that we are unwinding -- what they should say, is we are effectively unwinding the tightening that we did last year, which, given the market conditions, specifically, with respect to inflation, really wasn't warranted. i think that pivot in december eased financial conditions without that, we would be in a very tight financial condition situation. and growth would slow down precipitously. very wide move on the part of the fed. >> the fed has to put it through the lanz ens of inflation we have in an inflationary world. are markets priced for this scenario exactly do we know what's going to happen market closes, s&p at an all-time high. the volatility index at 12
7:13 am
there's no stress in the credit markets right now. can you build upon that when we get just an expected rate cut? >> it's going to be hard the markets are priced to perfection look at historic returns, just year-to-date these are phenomenal returns for fixed income we're looking at single digits that's the challenge for investors now. >> i think a lot of it depends on the guidance we get that's where there's a big question mark. do they cut 25 and say, now, we're going to hang out for the rest of the summer or the fall, too? or do they say 25 and more to come >> it's 25 this. what they do in jackson hole is actually quite important in terms of what future policy path is going to be and thirdly, what happens with respect to growth. our expectations of growth probably picks up somewhat as a result, the markets can probably go higher
7:14 am
>> we heard they need to be dovish >> the reason i brought it up is because i heard people talking about it the cut and then stopping the balance sheet reduction. i'm not sure that's priced in by the market i like what we said earlier. if they cut, it's hard to think of them possibly tightening again, for 12 months i don't know if that's in the market this idea that they're not going to do a triple axle, right they cut, they hike and they cut and go around. or a double axle >> you see him asking about the dollar will weaken the dollar >> doesn't like to talk about that >> i know. meanwhile, they were talking about that >> that was unbelievable they had a meeting about weakening the dollar >> they did. >> i think weakening of the dollar is -- a domestic economy
7:15 am
focusing on the dollar doesn't do you go. >> that's never number one they did it. number two, they admitted that they talked about it but they said they're not doing it for now >> but the idea that navarro had a powerpoint presentation. they talked about capital controls >> that would be something >> they talked about it. >> never say never >> they talked about it. >> thank you a lot more to come on "squawk" this morning. the story of three ceos with a lot in common. relatively new on their jobs, running fast food chains and serving up major returns for shareholders we'll bring you that story when "squawk box" returns here, it all starts with a simple...
7:16 am
7:17 am
7:18 am
hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. welcome back to "squawk box" this morning three restaurant brands have new results. new ceos injecting some life into their brands. kay rogers joins us with the numbers and that story
7:19 am
>> all three ceos are successfully transforming the businesses steve easterbrook has been taking the brand through a dramatic turnaround. during his run, the stock has gained 118%. he added all-day breakfast, and updated restaurants. now, uber eats and door dash, set to bring in $4 billion globally overat starbucks, kevin johnson has been foe cussing on driving sales in two, key markets, the u.s. and china since johnson took over in april of 2017, that stock is up 70%. he's grown through the nestle coffee alliance. but the biggest gains have come from brian niccol, who took over at chipotle. that stock has rallied 140%.
7:20 am
niccol came on and added a loyalty program. grown the digital business dramatically and sped up service in restaurants with things like second make lines for digital orders all three of the stocks are seeing big gains this year, chipotle in particular, up 80% that's the best performer in the restaurant space back over to you >> all right, kate thank you. he's done a great job. we don't call mcdonald's and say, they have, the blah, blah, blah we're talking about the same stuff. remember, they couldn't keep the ceos they had health issues i don't know if it was cancer or what coming up, remember when your mother said video games would rot your brain well, she made, in my case, space invaders that's how long ago that was
7:21 am
you may not have known about our next story details of a prize for playing fortnite, when "squawk box" comes back and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.
7:22 am
7:23 am
7:24 am
it's one of the most popular games on the planet. millions play fortnite and this weekend, a historic first. the fortnite world cup josh lipton joins us with more hey, josh. >> joe, that's right fortnite players battling in new york city, at the arthur ashe stadium thousands attending. millions more watching online with epic games. fortnite's owner streaming the competition on youtube and twitch channels. your champion, kyle deersdorf. $3 million fortnite is a powerhouse the game boasts s 250 million players. and the game forced publishers
7:25 am
like e.a. and act vision to respond. updating their games more frequently a direct answer to fortnite. in june, people spent 78 million hours watching other people play fortnite live on amazon's twitch that's down from a peak of 149 million hours last july. but michael pachter says viewership spent in-game, wax and wayne, depending on seasonality. and he says fortnite remains a powerhouse >> thank you for that report it was fascinating to watch, viral all over i don't know if you saw. joining us to talk about the market opportunity, john costas, chairman of global e-sports
7:26 am
brand. and johnn yow heck of a weekend. i should tell my children to play fortnite. is that the lesson of all this >> $31 million exchanged hands it was a pretty exciting weekend. >> early on in e-sports. people were going to have teams. it was going to be a team-based situation. i'm thinking of what act vision blizzard was doing the more time seeing this, it's about individuals. it's about the michael jordans of this, rather than the teams how do you think about that? >> it's a little bit of both you're going to get jordan and barkley. but they reside around teams people think about success, they think about the patriots, the lakers, the bulls, et cetera you will get very strong franchises >> are the franchises geographic but in this virtual world, doesn't matter where you are
7:27 am
>> they're global. onis on a plane, lives at 24/7 first thing i ask, which continecan continent are you on, john this fortnite game is much more focused on individual players, where the team competitions literally have a team bitted against another team i think the fortnite was skewed a little more towards individuals. >> are you convinced that fortnite will be the game? in terms of the game we'll be talking about five years from now. i think so fortnite has something that no other game has it's pushed e-sports to the mainstream all of the gaming enthusiasts were involved in e-sports. but fortnite put it in the forefront.
7:28 am
i think that has really changed the dynamic. >> we see the hours on the platforms. is that people finding things? or is there going to be a time when there's rights to these things and it's like other sports >> all these questions, the evolution and the movement in this space is unbelievable i find it interesting and fascinating to be part of it there's a game, apex legends, did not exist months ago, and 50 million people playing it today. to both of your points, the migration of where the value is derived in participating in this space, our goal is to discern where the correct path will be
7:29 am
to build the team. your parent company is building a physical place in philadelphia that will be a massive scale for their team there's cafes in europe and participation on twitch and other forums that's the fun of it trying to understand, a lot like the internet in the late '90s, most of the opportunities -- >> from the investment perspective, do you want to own the gamemakers or the physical places where the games are being played do you want to own the media or the distribution companies how do you think about that? >> first of all, all of the above. what percentage and how you allocate resources $4 billion raised just an
7:30 am
e-sports team space. the valuations and i put that in quotes, are 20 to 50-times revenues they're option premiums to have a space on the table our approach is going to be, john is out there, thinking what is the ultimate path >> is there a david bowie situation, where certain players that will be able to monetize themselves is that how this is going to go? how much are you paying players to join the team >> we do pay salaries. the teams have a very big role >> what's the minimum salary >> it depends on the market. we have seven teams across 15 different countries.
7:31 am
>> on the high end >> some players can make $500,000 a year, at the age of 16, 18 >> when you talk about participation, is it kids that are playing it are we seeing older individuals getting involved women getting involved >> the athletes are younger. fortnite, you have kids as young as 13 playing it our oldest player is 27. that's the range >> 27 is old you have to retire do you think -- is it a thumb situation? what are we talking about? >> mechanically, you age out a little bit you know, the younger kids are faster >> this is a longer conversation we appreciate you both coming in we have to do this again >> thank you >> thanks for having us. >> you bet coming up, polaris makes everything from atvs to boats.
7:32 am
it's rebranding itself appealing to more women, minorities and millennials. veuscompany's ceo will join li
7:33 am
7:34 am
7:35 am
♪ still to come on "squawk box," top u.s. and chinese trade officials will resume talks. we'll talk expectations. then, the ceo of polaris will join us. and real estate in the hamptons is typically tied to the stock market but not this year. we'll tell you why n instant savd i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today. i felt completely helpless. trashed online. and we're usaa members for life. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out,
7:36 am
they'll find more of the truth, not trash. if you have search results that are wrong or unfair, visit or call 1-877-866-8555. they have businesses to grow customers to care for lives to get home to they use print discounted postage for any letter any package any time right from your computer all the amazing services of the post office only cheaper
7:37 am
get our special tv offer a 4-week trial plus postage and a digital scale go to and never go to the post office again!
7:38 am
welcome back to "squawk box. officials from the u.s. and china, will resume high-level trade talks. it will happen this week we go to washington with more. >> good morning. a month after the two sides reached a truce, the treasury secretary and the trade representative will sit down to try to reach agreement on short-term deliverables to relive the text of the underlying agreement the u.s. is discussing how to carve out business for china ease huawei to dispute chinese security
7:39 am
china restarted purchases and might resume the tariffs on those products, a clear signal of china's goodwill. if the trade row continues, the u.s. farmers will have to face the dilemma of relying on the chinese market, or making a structural adjustment. president trump suggested that reaching the broader deal could take much longer >> china will probably say, let's wait it's 14, 15 months until the election let's see if one of these people that give the united states away, let's see if one of them could get elected. i'll tell you what, when i win, almost immediately, they're all going to sign deals. >> that's the same tactic china employed during the midterm last year a truce came just weeks after
7:40 am
that mike >> kayla, thank you very much. brian sullivan has a guest that knows all about the trade war. >> thank you for having us joining us is scott, the ceo of polaris. we were supposed to be there thanks for being cool and coming on "squawk box." so many of your motorcycles and your atvs, and boats, they are made in the u.s. but a lot of the steel and aluminum are imparted. the tariffs were 10% and they're 25% now. you were able to raise the guidance on the year is this a pass through to the consumer? or is it tightening up or buttoning up the procurement and manufacturing? i asked a question and the feed goes down.
7:41 am
amazing how we do that >> i thought he was having a really considered answer wow. >> give me time to think about it i think we're going to work scott back the reason that polaris is an important story, by they are a consumer company the stuff they make, is not the stuff you need, mike but the stuff you want, right? the motorcycles and the atvs >> very discretionary. >> and you asked the question we want to know what does a company do in that circumstance are they able to pass the cost on through or are they forced to cut costs to keep margins? >> i was going to ask the exact question how much can we pass the higher costs to the consumer on an idea they don't necessarily need. the polaris story is interesting
7:42 am
because they raise the lower end of their guidance. some of the things, the four-wheelers, joe, they cost 25,000 bucks sometimes, just t go riding down a dirt road fun. but not necessarily a must-have. and i think the polaris story is key there. we want to see -- we went down, remember, last year. in huntsville to their manufacturing facility in september. they have to squeeze the suppliers and tighten up the manufacturing. and we will have to pass on the costs to consumers >> away from the tariff story, we talk about the company. and you're talking about a discretionary product, and the fact that you have demand in a company that's doing well, it underscores the real help to the u.s. consumer. >> hopefully we get scott back
7:43 am
up soon. >> we're efforting that. coming up, stocks are trading at record highs why are real estate prices in one of the most summer sought-after resorts suffering e hamptons there's only one road that goes out there. squawk box, when we come back. it's show time.
7:44 am
7:45 am
let's cowboy up! exhilarating speed. woo! precision control. woo! maximum reliability. access denied. [ repeats ] access denied. if it's not xfinity xfi, it's not good enough. for wifi with super powers, get xfinity xfi. and go see, fast & furious presents, hobbs & shaw. august 2.
7:46 am
all right. welcome back we are back, now joined by scott wine of polaris. scott, we have you back up we had a discussion. i don't know if you can hear it here how are you dealing with tariffs that have gone from 10% to 25% are you eating the costs or are you able to pass them on to the consume center. >> brian, good morning we had raised races almost a 3% price increase we led the industry in price that hurt market share the big issue for us with tariffs, while we support the administration's goal in trade with china, we have the most manufacturing here, we're paying $110 million in tariff costs where most of our competitors don't pay any. we're working with the administration to get relief they don't want to penalize
7:47 am
companies for investing and manufacturing in america we bring our products to our consumers. we launched a lot of great products i wish you could have been here for the show our team has the worked so hard for the year to deal with tariffs. when it went from 10% to 25%, we covered that all not with price increases but mitigation efforts, changing the country of origin or pushing back on our chinese suppliers, really taking a multi-pronged approach, to make sure that didn't impact our investors. >> how are you working with the administration you're the guy they want you're making the stuff in iowa and minnesota and huntsville, alabama. and you're almost penalized for that because you have to bring in all of the steel and alumi m aluminum how are you talking with and dealing with the administration, scott? >> the administration's been open to meeting with us and understanding the fact that we have 9,000 u.s. employees.
7:48 am
we just invested in a $60 million facility in nevada, to be able to serve our customers on the west coast faster our competitors are investing in mexico and avoiding the tariffs. they are working with us, trying to get relief. we're going to keep fighting that battle until it happens i know they want us to continue to invest in our american workforce. that's our goal, as well >> how much is the -- how strong are they are they strong enough to deal with the price increases, scott, that you talked about? >> we lead the industry in innovation at the high end, our consumers are continuing to buy us more than our competitors at the low end, where the prices are more sensitive, we saw some market share losses. that's what we're trying to make sure to balance out more the consumer is strong right now. weav we're encouraged where the industry is. recognizing where we went up and
7:49 am
our competitors didn't, puts us in our competitive position. >> andrew mentioned, getting more women involved in the polaris scheme how do you do that i see the monster thing, the jacked-up razor that you got how do you bring in 50% of the spending power in the united states, into the polaris showrooms? >> that's one of our mud machines if you look across the portfolio, we really do offer products that many people, not just our core consumer, can participate in and we re-evaluated where our brand should be. the new logo and the think outside, opens us up to be a more inclusive company we're giving peoples more opportunities to embrace the sport of powersports and the
7:50 am
products we make >> maybe talk to musk. i'm ready to fly, dude you got anything yet let's get going on that. >> you know, even better than that, is the fact that the drone that went down in the strait of hormuz was on the back of a polaris razor on top warship. >> did you see the french soldier? he looked like the green goblin. did you see that french soldier flying around on the elevated platform did you see that >> the green goblin. >> come on i just -- you're going to get into that sooner or later at polaris, are you not >> i have to pay you a commission >> i know you have secrets >> when it happens >> i know you have secret research make it safe or just fly it like three feet >> you look at this, scott we're in times square.
7:51 am
you have six-seaters why not retro fit some of your stuff for urban environments we see people jumping on the dirt roads can you see polaris in manhattan, replacing cars. no doors easy it's interesting you say that. in four cities across the states, our e-6 vehicles provide autonomous vehicle transportation we are in that market. we think it's a place we continue to play and apply the brand. >> we're done. thank you. >> scott wine, joining us from the dealer day have a great one there good luck today. >> thanks, brian >> thank you real estate in the hamptons, typically tied to the stock market robert frank joins us with that
7:52 am
story. it feels all on sale now >> the stock market up 30%, the hamptons has posted six-straight quarters of falling sales. the second quarter was the worst spring in eight years. it's unable to rebound there's a record number of homes with inventory up 85% over the last year. the weakest segment, the very high end there's a three-year supply of luxury homes for sale. and 10% to 20% price cuts are becoming increasingly common the ten most expensive homes last year, spent an average of two years sitting on the market. brokers say, there's a few signs of hope. that remains strong. the rental market is holding up. and there's buyers out there they are sitting on the
7:53 am
sidelines until prices become more realistic and bargains in the hamptons, as i mentioned, all relative. the average sale price in the hamptons, 1.7 million. >> for city dwellers if you have a place here, you need a place out in, you know, where you're not in the city but if you have a beautiful house around here, you don't need a house in the hamptons, do you? what's that road >> montauk highway >> is this a reflection -- >> the only road there >> what's interesting, yes a lot of people are blaming it on the tax changes this started before the salt tax was imposed. it accelerated the downturn. it started when the market was strong you go back to the '80s. this is a market going back to
7:54 am
"wall street." this is a movie because 80% of the buyers are financed in wall street, and the hamptons, it's been closely tied. that's the mystery right now things are so good on wall street, at least in the stock market but the hamptons is down >> you need a polaris drone to get out there. >> joining us now, a real estate broker with the atlantic team. what will be the bottom and cause the turn, do you think >> we have to see how it plays out. we see some excited about the market and what the price value are. i think it will get better coming into the third and fourth quarter. >> you look at the hamptons. it's segment specific.
7:55 am
how do you see that playing out? what is working for you? when you say, things are getting better, will we see a stronger third quarter. is that on the low end or the high end >> that's going to have to depend on the sellers. a lot of them have priced their houses aggressive. they're not extremely motivated to sell. if they come into a price point, to where buyers see the value, that product will move under $2 million, there's a lot of people that can afford that they want to get into that market those values seem to be doing really well. but the high end really needs to focus on a number that buyers see as a value >> you did see a difference after tax reform, huh?
7:56 am
>> they have a home in the hamptons and in florida. had too much on their plate. a lot of them reached out to us to list their homes. and it just really flooded the invento inventory, making it very competitive. >> one of the things, to that point, i heard that new york state tax authorities are tougher on you if you have a big place in the hamptons, as well as a police statilace in new yo. if you're tax domiciled in florida, is that a good reason to sell in the hamptons? >> that's exactly what's happening. it seems like the hamptons house is the one they want to get rid of before anything else they have >> good golf courses three of the best. right on the same plot of land out there.
7:57 am
coming up, another big hour ahead. ryanair's ceo, what many are saying in private about the 737 max. the words you needo ar the to believe. we have that story when we return
7:58 am
7:59 am
the heat is on a fed decision july jobs and much more. we're kicking off the hottest week of the summer for the markets. pharma investors take note
8:00 am
pfizer and mylan upend the markets. and the war for brainpower silicon valley versus silicon alley. our final hour of "squawk box" begins right now ♪ >> live, from the most powerful city in the world, new york, this is "squawk box. ♪ start spreading the news >> welcome back to "squawk box." becky is off this morning. our guest host is michelle girard, managing director at natwest markets. the s&p is down marginally and the nasdaq, off about three.
8:01 am
treasury yields are hovering a couple of big stories that investors will be looking at today. pfizer, looking to devest its market and sharing it with mylan. it's an all-stock deal each mylan share, would be converted to the new company you look at mylan up, 14%. pfizer is down a little bit. but in terms of giving it new life, that may be helpful, as well talk about tax inversions, mylan is coming back to the usa. not only the only pharma deal in the works. exact sciences is buying genomic
8:02 am
health we should show you that. genomic health, up 2%. big day for the hottest ipos beyond meat, after the close of the bell the company is losing money and expected to post another loss this time. the stock is up 800% since it started trading on may 2nd >> yeah. you have to grow into that >> the fishing markets we had an update on boeing 737 max. ryanair sounding off about the grounded plane phil lebeau joins us about those details. >> god bless michael o'leary that happened on the ryanair earnings call. let me set this up you're hearing his response to an rianalyst, saying what is yor plan for receiving the 737 max
8:03 am
in the summer of 2020? they were scheduled to receive 58 i'll make michael o'leary take it from there. >> we were expecting 58 aircraft for the summer of 2020 that's 30, at best it may well move to 20 it could move to ten and it could well move to zero, if boeing don't get their [ bleep ] pretty quickly together with the regulators >> he's saying what you hear from a lot of executives in the airline industry publicly, they say, we know that boeing is working hard on this and, yes, boeing is working on resolving the 737 max. what you heard from michael o'leary, not only that comment, but a lot of others on the conference call. he goes on to say in this conference call, he thought they would file the 737 max software update by the end of september over the weekend, he was told, it won't happen until october. that's the frustration that's coming through and you heard it there from michael o'leary.
8:04 am
>> phil, big story on the front page of "the new york times," the role of the faa and how little they knew and how compromised they even were, in terms of how much oversight they had given over to boeing how do you think that changes in the future do you think this will have a lasting impact or do you think it will be business as usual? >> yes you're seeing it with the new aaa 777x they say, we expect first flight to happen some time, maybe in the fall now, it won't be until next year that's the schedule right now. look, nobody will come out and say that it's because the faa is going to be more stringent, more strident, about certifying aspects of that airplane but there's no doubt it has to be the way we look at the faa
8:05 am
and its relationship, not only with boeing but also with airbus, as they -- they've got to figure out a way of working with the aircraft manufactures at the same time, it has to be more rigorous than it was. >> can you imagine the faa will hire more people to oversee -- >> that's the challenge. you heard dan elwell, the acting faa administrator, before the new administrator was approved in the last week when dan elwell was asked about this on capitol hill, he said, you want to give me "x" billion dollars. i will hire these guys will congress give the faa that money? there's a long track record on capitol hill of congress shortchanging the faa, so to speak. not giving them the resources or the air traffic control systems, the resources that it needs. and that will have to be resolved >> one other question, buried in
8:06 am
that story if you read deep enough into the story, was what seemed to be an anecdote about a fight on another issue, related to the 737 max. that was these cables. there was a worry that if there was a blowout of the engine, they could ricochet and hit one of the cables. there were people that wanted a separate set of cables or wanted a software fix it sounds like boeing won that fight. the faa lost that fight. now, that the fight is public, do you think that will be revisited? if it is revisited, are these planes going to sit on the ground for a lot longer? >> i'm not sure if it may be revisited. i'm not sure it's going to lead to the planes being grounded longer this gets to the heart of the
8:07 am
tension between faa regulators, those who are with the faa, and the aircraft manufacturers, who have designated certain employees to self-certify aspects of airplanes there's been this tension. i think that tension, may have gone too far look it did go too far, toward the aircraft manufacturers you can see with the certification, look at the 777x they have an airplane they will bring out, you can bet the time line will be mixed further >> do you remember how long ago that was there was an engine that came apart and lost steering completely >> i don't know the exact
8:08 am
timeframe for when that happened >> i thought they got around that once it happened, you wouldn't want it to happen again. >> that is emblematic, of the tension between the faa and the aircraft manufacturers the temperatures may be down slightly here in new york. this week could be the hottest of the summer for the markets. dom joins us now >> it will be a sizzling week. that stock is riding a seven-day win streak going into today. and it's up 35% in the last five trading days this week is massive look at the companies behind me. ryanair, and apple is tomorrow and qualcomm and gm, and the
8:09 am
energy companies, as well. we will be more than halfway through earnings season, by the time tomorrow comes around let's talk about the sizzling parts of this summer in addition to it being the busiest week of earnings, for the s&p 500, about 155 to 157 companies, are expected to report throughout the course of the week you have that going. seven dow components in that mix. that big fed decision day on wednesday, when the markets are pricing in almost a certainty of a 25% basis rate cut some seeing a 50% cut. but the commentary is going to be key it all ends up on friday, with the grandaddy of them all in terms of economic reports. that's the jobs number, 8:30 a.m. on friday all this comes when the stock markets are on record highs, an
8:10 am
interest rate cut needed from the fed and how the corporate health of america really is. a massive, massive week. of course, with stock markets at record highs, it makes it that much more interesting. >> is the grandaddy more than the mother >> i argue that the grandaddy is more than the mother of all. >> i'm not sure that's true. do you know? >> it's usually the grandaddy is older than the mother. >> older but - >> i think it's intended to convey bigger. >> the rose bowl >> the mother of all economic indicators >> remember the m.o.a.b., the mother of all bombs. i think mother might be above grandaddies. >> all of that market moving, might be why there's hedging going on last week we're going to talk about that right now. also, about how investors are
8:11 am
preparing in general for the busy week. >> katherine, so sh, we have an overwhelming indication that the fed will cut rates and how does it react to the ways the fed might characterize that move? >> the market is pricing in way more than they are going to deliver. record hayekty markets seems beyond what the fed is likely to deliver. in which case, one has to ask, what will the reaction be in the markets. that will be to the downsood that's why i'm recommending put options on guys who are ready to forfeit 3 1/2% of the return
8:12 am
year to date that's a good call if they do a one and one they don't do 3 to 25 basis point cuts, it would be a good time to get in when you see the retracement in markets >> if you say it's sensible to spend about 3 /2% to protect against the downside, what kind of event do you think this might be >> sure. if we get a repricing in the markets, instead of three to five, one to two, i think you get 5% and if we get a hard brexit, we're going to get more than that protecting your portfolio is a very smart thing to do looking for opportunities, which i think will come about to re-entry or to accumulate in the
8:13 am
fourth quarter of this year. >> can we talk about the earnings season? there's some question about the economic outlook, globally we're looking for the earnings, is there investnenervousness th should be looking at equity prices how are you seeing the earnings coming in? does that give you confidence, in the longer run, we can continue to see equity markets move higher? >> sure. there's three things we heard repeatedly one is the u.s. recession. and three is trade war now, we're looking at an environment, where none of those are coming to fruition
8:14 am
there's been a s&p 500 of nearly 3,000. if you compare to q2 last year, earnings are posting an extraordinary expansion, given that the earnings growth was about 25%. we're at 3.5%, 4%, at the moment i think earnings growth is very strong if we get one cut that is a boost of economic growth, is a positive for the session i don't think that it will get worse before the election. so, all of that is positive. i think the market will have to reprice the extent and the velocity of the cuts >> we sit here with the s&p around 2035. thank you very much. >> my pleasure thank you. coming up, making the case against the trump economy.
8:15 am
democrats at this week's presidential debates are hoping to win over the economic with their economic arguments how do they do that in an economy that seems to be in the group? we're going to preview this week's political showdown. here, it all starts with a simple...
8:16 am
hello! -hi!
8:17 am
how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.
8:18 am
welcome back to "squawk box" this morning democrats will be back for a second round of presidential debates to handle trump and his economy. joining us now, terry mcauliffe, the former governor of virginia. he wrote a book called "beyond charlottesville. you're with us here in person. i'm going to go to you first what do you expect to see in there's a big question about biden being the front-runner and who is behind him now? >> i think biden is the front-runner and the polls have him higher than the first debate. he has to have a good debate every poll shows he is most likely to beat donald trump
8:19 am
badly in most of the states. he has to show on the debate stage that he can take on donald trump. in the first debate, it didn't look that way. they want to show him coming out with strength. >> is there any lesson of what happened during the last election hillary clinton ran as a candidate that was not donald trump. that was like, i'm not him that's the biden strategy. >> he is laying out health care propos proposals. we have issues today that, we have to deal with i didn't hear development, or cyber security i want the debate to be about the future
8:20 am
you have to deal with racism he came out as a full-ledged ray sis in charlottesville horrible people, telling jewish people they wanted to burn them alive. is it that hard to come out and condemn them he would not do it that day, after i begged him you see what he's trying to do, double down on his insanity. i don't think it works >> senator gregg, you want to respond to that? whether you think that puts president trump in jeopardy at all. >> if you add up the proposals they're putting forward, there's
8:21 am
over 1$160 trillion of new spending on all of the socialist drivel they're putting out you have paying people's rent when they earn less than $30,000. giving people downpayments on their home in the inner city areas. it's beyond comprehension the am their talking about. nobody is talking about the defic deficit. they're talking about it exploding, this debt this country has. we have 22 trillion dollar in debt 10% of what they're proposing on that you're bankrupting this country. >> how are you just getting religion on this snow? >> me? i've always had religion on
8:22 am
this i don't think you can't accuse me of not having religion on the debt i've been fighting this battle for a long, long time. >> i don't think we're at a revenue problem. we're in a spending problem. a massive expansion, that are being proposed, you're going to make the government the only player in town there's no way you can pay for it you have to inflate the currency or drive the debt up to a point that is totally unable >> governor what do you say >> this is why a governor should be president no offense to senate aend membes of the congress. i had to act every day i said that governors ought to be presidents.
8:23 am
this is what we do every day the deficit spending is unsustainable. >> look at the party look at the democratic party that's not saying they don't want to spend it, either most of the democrats say, we will get rid of the horrible tax cuts of two years ago. that tax cut did nothing but help the rich. it went for stock buybacks we have an infrastructure problem in this country we have to deal with nobody talks about that. the democrats will lay out a plan it's hard for donald trump to win an election. >> is there an economic argument that you can make for donald trump right now? in the midst of what looks like a very good economy. i'm not going to tell you a lot
8:24 am
of things. there's lots of issues but on a relative basis -- >> we've had a ten-year recovery we were on a fiscal clip >> i was the first to give obama credit when the economy was getting better you give credit to the person in the seat >> we had a sugar rush because of the tax cut there were things done i don't like the president on his tariffs. we have to be tough with china soybean farmers are getting crushed. farmers are losing their farms the costs of our goods are going up he doesn't have a clue what he's doing with the tariffs we have a lot of issues. we have income inequality today. >> your argument is going to be
8:25 am
stronger getting away from the economy. that's what i don't understand running on the economy, that seems like a hard way to go. i'm not going to diswade you we have a great argument on the economy. a ten-year run what do we do to prepare us for the next 20 or 30 years. we cannot continue to spend. we cannot do that. it will not affect me. we have open jobs in this country. building an education system that trains folks to match the skills needed today. that's what i did as a governor. number one state cyber security. building an economy for the future but racism and dividing people is not the answer. >> i recall that trump did say
8:26 am
some negative things about charles. i also remember he was talking about the people that didn't want to tear down the robert e. lee statue did you think it was wrong at charlottesville at all >> i think -- go ahead >> i'm not the guest you're the guest >> as a nation, we've gotten off track. both sides are shouting at each other, in terms that are really diminishing the debate there's issues that are social issues but you're not going to solve them by shouting at each other, saying this person is a racist >> hold on can you condemn the comments of the president? >> which ones, andrew?
8:27 am
>> do the comments about baltimore over the weekend even if you don't think the president is a racist, can you not see or appreciate the issue that large parts of this country do or worry that those comments are inciting a larger conflict >> i think they're being incited by both sides. when i read "the new york tim " times," i find it inciteful against people that are conservative let's get back to dialogue that creates action bipartisan dialogue. >> arthur brooks -- you got a copy, too, sorkin. "love thy enemy. i said, i'm not going to read this because i can't it's impossible for me
8:28 am
i tried reading it disagreeing with policies, not necessarily who people are they're well-intentioned on both sides. i'm trying, terry, aim i didn't think i could i love his books "the conservative heart," and "road to freedom." there's some -- i'm going to bring it in for you. i'm not going to pay you $1 a page, like i did that other one. i paid him $1 a page >> have you read my book yet >> and the appendix. >> have you read my book yet >> i just heard your comments on that and i think -- >> open yourself up. try it, read it. how hard is it to condemn neo-nazis? >> the quote is there when he condemned them that day. it's in the body of what you're talking about, that exact speech >> there are good people on both sides? >> he was talking about the people with the statues. >> these people, they didn't
8:29 am
know they -- >> with one of our reporters, his name was robert lee. he was not allowed to cover a football game in virginia because of where we are right now in this country. your side has taken it - >> the neo-nazis came to spew hatred >> the guys with the torches, no doubt. you agree -- on the antifa said, that weren't the most upstanding citizens, as well. i know they're there for different reasons. >> you were the guest, judd. and i'm trying to hold up your side of things >> thank you >> there should be no -- >> it's been a pleasure to be a guest, joe >> thank you >> yeah. >> i'm going to get the, you know, the hate mail. >> did a great job >> senator gregg, governor, very
8:30 am
good to see you. coming up, silicon valley versus silicon alley despite amazon's breakup with new york this year, the big apple can still make a play to be america's next tech capital and it could be short llg sein coming up. when i was diagnosed with breast cancer,
8:31 am
i went straight to ctca. after my mastectomy, i felt like part of my identity was being taken away. my team made me feel whole again. cancer treatment centers of america. appointments available now.
8:32 am
8:33 am
i'm not really a, i thought wall street guy.ns.merica. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade
8:34 am
8:35 am
8:36 am
♪ welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. gasoline prices are edging lower. the latest lundburg survey shows $2.81 a gallon down 2 cents over the last two weeks. janet yellen said she would endorse a quarter-point rate cut. ye yellen said she wouldn't see this as a major easing cycle we can go below zero, i guess.
8:37 am
but says it's appropriate with inflation running below target and disney's "the lion king" took in $75 million. it brings the domestic total to $358 million, after four days of results. our next guest thinks that the best could be to come for start-ups in new york. he wrote an op-ed in "the new york post," how new york can do it without silicon valley greet great to see you this morning. there's been headlines, just in the past couple weeks, from aoc, de blasio. saying new york is doing just great. look at the companies coming to manhattan. and this is crazy talk nobody is going to long island
8:38 am
city, which is where the goal of that project was -- or what the whole project was really all about. >> i think you're right. it's sad for long island city that the amazon deal fell through. we would love to have them there. the reason i wrote the piece is there was a lot of depression, dejected folks saying tech had top ticked in new york that is not the case but building start-ups is a long game and it takes five, six, ten years even if we want to start now, we have to do it the old-fashioned way investing in companies there >> was it a mistake to offer the tax incentives to amazon >> not at all. it was a public partnership that fell through for sad reasons >> you think we will do it again? >> sure. >> is that where the focus should be? >> i think new york made an
8:39 am
intention al decision to make itself into a tech hub. we should be using private partnerships and government money. we have 9,000, maybe 20,000, start-ups here in new york when i was a kid and the yankees started winning world series, we grew our own players and supplemented with folks from the outside. >> what does that look like? everybody is happy to sit on this island. this is a popular place to be. nobody is going to brooklyn. some are, but not enough you're going to tell me about etsy and others. >> when you say nobody is going, none of the big firms has located an office there. who is going is founders
8:40 am
i think one of the things that is a huge opportunity for us, we don't have major tech hubs we have vast access to talent and capital. this is happening here we don't have a big west coast name in the outer boroughs, doesn't mean we need it to happen right now it's a high-cost place to be the software engineering talent or the schools or whatever here, it seems like the start-up culture in tech, with financial, things like that is that the lane that new york continues to travel in what can be done to beef up the depth of the resources >> we've seen in our firm, start-up proposals from all sorts of industries. do your point, every stay has
8:41 am
natural strengths. if i were to bet on strengths, i would bet on new york. as you pointed out, you can list five or six or seven or ten strengths off of the bat this is a great place to start off a business we're seeing that play out >> what about the tax picture? >> we have high taxes. >> and the salt issue makes it harder >> particularly for investors. one of the hardest thing for start-ups is getting initial capital. >> why wouldn't you start in texas right now? you have housing at lower prices, taxes are lower. you can get to california pretty easily >> two things on that. a lot of people are. and it's great that tech is diversifying through the country. this is an incredibly strong city on so many market areas the customers are just outside these windows. right? what a great place to start a business, even with the tax situation, it could be a lot
8:42 am
better and we can focus on that >> oliver, thank you this morning. come on back coming up, we're kicking off the busiest week of earning seasons. how have companies measured up so far and wall street, ready to sink its teeth into beyond meet earnings and preview what could be a week for orsht sellers when "squawk box" comes right back. woman: my reputation was trashed online.
8:43 am
i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair, visit or call 1-877-866-8555.
8:44 am
8:45 am
under an hour until the opening bell on wall street. dominic chu joins us to look at some of the biggest stock movers good morning again >> we get ready for the busiest week some of the movers are tied to recent releases. we'll start with shares of u.p.s., lower around a percent or so. roughly 3,000 shares of premarket volume part of that is from analysts to a prior buy, after a 24% run of the stock year-to-date they passed the target price they have tempered expectations from u.p.s. management, about the challenging environment. they are looking at a lower entry price to get back into the shares then, there are shares of starbucks which are lower around a percent or so. the coffee giant after a well-received earnings report.
8:46 am
it goes to a neutral, to a prior overweight they say voluatialuation becomea stretch. we'll watch those shares, as well and apple, up fractionally and over 60,000 chairs the giant reports earnings reports tomorrow they have upped their target price to keep the buy rating they are low expectations for iphones in the quarter and later on this fall they say interestingly, that july and august, are historically, the best months to buy apple stock for three-month returns. speaking of the returnings, as of friday, 220 companies in the s&p, about 40% of them, if every company reports for the rest of the season, earnings will be up 1 1/2%, and both are an
8:47 am
improvement over expectations at the beginning of july. >> thanks. to look at key technical indicators in the markets ahead of the open, is katie stockton, founding partner at fairlead strategies i remember you being pretty constructive all along in our darkest hours. the s&p is above 3000. and you were constructive. you think the week might be ripe for a pullback >> that's right. downside volatility would be natural here we have a bbuy signal in the vi. that has implications for maybe two weeks. i want to focus beyond that. it's not overly bullish.
8:48 am
there's players, ready to see exposure >> i know we have gotten your levels that will cause problems. what's the next target >> the 2000 index because you know that small caps have lagged but the large cap indices have broken out to new highs. that's a bullish development those former assistance levels going forward, they are 2 to 2 1/2% below current levels. that tells me that downside risk is limited to a pullback or consolidation. momentum is positive, intermediate and long term and breadth is healthy, meaning that stocks are rallying on updays >> what kind of s&p 500 targets are unrealistic? >> the breakout we saw in 2016 yielded a measured move after
8:49 am
3280 that means that it will maintain its trajectory that seems realistic, within the next year or so. we had a bye signal in november 2016, from one of the long-term momentum gauges. this month, it is sending its first new buy signal since that one. that is compelling to me, too. mac d. that sounds like a musician. >> conovvergenceconvergence. >> earlier, we were talking about the disappointment, buying options, for pullback, that would be a great buying opportunity, setting up for the kinds of levels you're talking about. >> that's right. we had a massive oversold condition after that may pullback that was an intermediate term basis. you see that two or three times a year the proceeding once was in december of 2018 the market is favorable for the
8:50 am
interimmedia interyat and the long term >> big question has been whether certain other groups more cyclical groups, financials acting better. is there going to be a longer-term transition under way? or going to be of more particip the up side? >> well, i stay with existing trends and of course, technology, consumer discretionary and, i guess more recently, communications services, have really established themselves as the market leaders and have remained so when we're seeing the market rally the newfound participation and breakouts in the financial sector's compelling to me, and i think that's only a good thing for the broader market small cap underperformance to me is not a big concern it's not new it's been the case since february i would love to see it spread out to that region you know, it would show that we have more risk-on positioning under way. but i think on the sector front that we'll see more of sort of the same. >> can i ask the question the other way? if we were to see disappointment
8:51 am
from the fed this week and the markets started to recalibrate, how much fed easing we may ultimately see -- are there levels on the down side that would make you say, okay, this is not just a short-term pullback but something that calls into question my longer-term optimism >> there's always breakdown points, right? i think, hopefully, before we see any kind of major breakdown, say the s&p back below its 200-day moving average, something like that we would see a real loss of market breadth or that participation and also overbought sell signals. so, we have ways of getting ahead of that breakdown such that that's not in and of itself the only thing we're looking for. >> so it's not just any level if we fall below that it would make you think -- >> that's right. >> she does your stuff, too. i mean, what's that -- what's the ten-year indicating for yields >> oh, i was going to say -- oh, yeah, so -- >> tell us. >> you're asking about the stock market just go ahead! >> i was trying to look to see -- >> go ahead and ask. >> can i ask where ten-year yields could be? >> it's interesting. we're obviously in a downtrend
8:52 am
in yield terms and we have seen the ten-year stabilize around very important psychological support of about 2%. if we were to see them take that out, the next support is 1.4%, so that would be a really big deal. >> wow that's an air pocket. >> exactly we do see a loss of downside momentum in the intermediate-term gauges, but not until you see it clear about 2.3% to 2% on the ten-year do you actually have a reversal i would say neutral bias is probably appropriate as long as these levels are intact. >> and bitcoin, the next halving is may of t2020 and do you have an indication of $55,000 >> oh, gosh, is that right >> it's dropped now under 10. >> it's a major base breakout on the chart, so -- >> you look at stock flow -- >> i'm just saying bitcoin believers. >> yeah, yeah. >> maximalists but yep, 55 after the next halving, which would be around may of 2020. what are you laughing about? sounds -- >> i'm just laughing at how this
8:53 am
just seems like this is the rule it's just the way it goes. the cuts gets cut in half and then it goes up -- >> i was kidding about asking katie about that. >> then 10x -- >> i'll send you some stuff about. >> the best way to evaluate it is looking at the chart. it's in demand. >> it's highly correlated to the break -- do you know how long it would take to produce with what we produce of gold every year, it would take 62 years to produce that much gold. >> goodness. >> so, if you do the same kind of analysis using bitcoin or silver or anything, you can come up with some of these flow metrics that are highly correlated and -- >> gold has broken out, too. >> yes, exactly. silver i think is 22 years and i think gold is -- so, the next halving, bitcoin all of a sudden gets up close to where gold's -- we'll see. anyway. >> we shall see. >> katie, thank you. all right, beyond meat expected to report results after the bell today the stock has been soaring since going public earlier this year aditi roy joins us now with a preview. hi, aditi.
8:54 am
>> hi, mike. beyond meat shares have been on a tear, up a whopping 840% since it went public, making it the best-performing ipo this year, despite the skyrocketing stock price, short interest in the company is high and many traders will be keeping an eye on the numbers after the bell today, which could be a make-or-break time for short sellers short interest in beyond meat is 16% of the float, but keep in mind, that figure is likely inflated since the company's still in its lock-up period. still, that puts the firm near the top of the list for short interest in the major companies, which have gone public this year ahead of pinterest, lyft, and uber, but behind zoom. data analytics firm s-3 partners put out a note recently saying short sellers are getting squeezed by three factors -- the rising stock price and stock borrow costs, which the note says are up 80% since may 31st, and increasing stock recalls the note says if beyond stock price continues to rise after
8:55 am
earnings, some believe we will see a quote epic beyond short squeeze in the near future back to you guys. >> okay. meantime, we want to get down to the new york stock exchange where our good friend jim cramer is. we have so much to talk about and a very big week of earnings, and of course, the fed what's your take, my friend? >> well, look, i think the fed's built in a quarter -- thank you, janet yellen, for giving fed chief powell a little cover. yes, i know it's a big week for earnings, but i'm really focused on apple because there are a lot of thought that maybe apple, people are so bearish about it that it can rally even on a subpar number. that would be interesting because that's been the theme. when you have this better than feared like illinois toolworks last week, better than feared mcdonald's, much better than feared starbucks, the stocks go higher and i think that even though we see these numbers which says that earnings year over year aren't that big and the bump and the sales not that big, it's all about better than feared people really feared this earnings period, and it turns out that that fear was not justified.
8:56 am
>> and what do you think the fed's going to do? where are you? are you on the janet yellen version of the world >> quarter point with a good statement, blaming tariffs if you blame tariffs, then powell's able to say, hey, i am really independent of president trump because what i am is blaming tariffs. now, i have to tell you that i think that's true, but i also think that that's kind of comes with the territory the president wants very much to be able to stop china. he's got great unemployment. this is the time if you're ever going to do it, do it now. >> and pfizer/mylan. you want to own pfizer this morning? >> well, mylan -- no. >> no? >> pfizer offloaded some stuff, but i don't think pfizer's that great. we have so many good drug companies reporting this week. eli lilly is good, merck is really good, but good for milean, because they have mylan was in a permanent downtrend it's kind of a wake-up call. but pfizer, i thought if they offloaded this, people would like it, but no one seems to care. >> okay. jim cramer, we'll see you in just four minutes from now. >> thank you. >> and don't miss "squawk on the street" tomorrow we'll be joined by mohamed el erian, chief economic adviser at
8:57 am
allianz, on set to discuss much with him tomorrow. back in a moment t not when to u. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at
8:58 am
8:59 am
final check on the markets, flat
9:00 am
up about 2.5 on the dow, the s&p down a little over a point, nasdaq down 295. a big week in terms of corporate reports. we've got the big jobs number on friday and the fomc meeting on tuesday and wednesday and then as you heard cramer talk about, we have apple's earnings, which people will be watching closely. make sure you join us tomorrow thanks, michelle, for being here the whole time >> thanks, michelle. >> "squawk on the street" is next ♪ ♪ good monday morning! welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange david faber has the morning off. quiet futures, but don't let it fool you, it is a big week with a fed meeting, u.s./china trade talks resume, a jobs number on friday, a third of the s&p reporting, europe mostly green the ten-year's right around 2.05 our roadmap's going to begin with earnings, fed, trade and jobs wall street in waiting mode ahead of a major market-moving


info Stream Only

Uploaded by TV Archive on