Skip to main content

tv   Squawk Box  CNBC  July 27, 2021 6:00am-9:00am EDT

6:00 am
good morning welcome to "squawk box" here on cnbc i'm andrew ross sorkin and morgan brennan here with joe kernen we have a big show on hand we'll talk tesla earnings in a second futures here the dow opening off 148 appoin points. n nasdaq down. the s&p 500 looking to open down 13.5 points. treasury yields for the moment the 10-year note standing at 1.256. go get yourself a mortgage or refinance if you can we are watching the markets in asia that's weighing on us here
6:01 am
hang seng dropping another 4.2% today. after dropping 1.2% yesterday. alibaba and tencent among the known names getting hit. china's regulatory crackdown new rules forcing food delivery platforms to pay drivers minimum wage that hit down 17%. we will have more from eunice yoon she will come to us live from beijing in a bit morgan, it is fascinating just so see what is happening in the last 24-to-48 hours over there >> it is funny morgan, good to see you. >> good to see you guys. >> i don't want to preempt your debut read coming up here. a lot of times we don't use that thing that much. what's it called teleprompter >> all right i'll just settle in for a long
6:02 am
three hours. i'll get comfortable >> it's a little bit weird they are suddenly discovering these, whatever you call it improprieties across the board a problem there. a problem in property. a problem in education a problem in, you know, food delivery it's weird that it is so broad and it is like something bigger. it really looks like it is happening. we'll have kyle bass on later. it was the wild, wild west for the last 20 or 30 years, maybe, in china we know it is a state-controlled economy. i think if they feel they are losing control, they have to reassert things. is it that simple, do you think? >> to me, the question is, joe, is it a clean-up effort in order to assert more power on the global stage meaning, make the country more powerful by cleaning up the wild west or is it a tamp down of
6:03 am
people and individuals and businesses that they feel they c can't control that they need to control. i feel those are two different things. >> my guess is the latter. i argue, joe, this is not just coming out of nowhere. this is a slow-moving storm that is now gathering steam look at back at alibaba and jack ma since last fall you can make the same argument with other self-made home grown billionaires in china at other conglomerates that were not tech related. this has been happening quietly and slowly and now seems to be gaining momentum it does seem to be more of a tamp down given there is the flaring tensions which have not eased. they got bigger and stronger with china and the u.s. in the midst of the pandemic on the world stage. it is like we will help propel the companies and foster the
6:04 am
pseudo capitalism until it gets in the way of state control. >> i don't see how there's a big problem in after school tutoring business now they want to make it not-for-profit and make sure you don't charge too much. in the journal, it points out you are allowed to have more than one kid i don't know what the limit is now which is bizarre for us in this country to talk about now parents are worried. if i have three kids, i won't be able to afford tutoring costs. it is out of control in the for profit education sector. connecting the dots. we talked about it yesterday it is hard for us to figure this out because it is so different what is happening culturally and economically having the stake in it andrew, the government wants to assert more control over the private sector
6:05 am
i feel like we're getting that here we have our own brand of that going suddenly >> suddenly? i'm not sure it is sudden. we have been having lots of conversations in this country of regulation for some time there is a whole gray area of people who don't think there is enough. >> we have been working together for a while. i know all right. now we can go, i guess we'll talk -- you know we'll do this again in a second bitcoin is coming up we'll just ramble about that we do have three hours three hour tour. >> all inter conkinterconnected the big debate on the role of government and government can revamp in a positive way the socio- economic structures in place here in the u.s. or china? bitcoin gets to that, too. you can debate what works better well have a busy day ahead
6:06 am
in the u.s earnings and economic data concerned as well. let's start on the corporate side before the bell results from 3m and general electric and u.p.s alphabet and apple and visa wily the economic data meeting today from the chairman. and consumer confidence as well. we have another busy day in a busy week. the kickoff of the two-day fed meeting. we are following the crypto. bitcoin pulling back after topping $40,000 yesterday. the drop came after amazon de denied reports it would start accepting cryptocurrency for payments this year i wonder where there's smoke, usually there's fire if they put out in the classified section they are looking for someone that's an
6:07 am
expert on crypto that gets it started do you think this british media evntity actually spoke to someon who had the story right and they are walking it back? >> no. >> why would they make that up >> by the end of the year is the key phrase they didn't say they are not looking into cryptocurrency as a form of payment. they said not by the end of the year >> andrew doesn't like cryptocurrency you think it is totally wrong? >> that's not true >> you push back on the other side of things he's worried about energy use. >> i thought the report was capreious to begin with. >> $29,000 a week ago. $37,500 is holding on to good gains. >> joe, look at the timing i found fascinating.
6:08 am
i talked to max, our producer about this the initial report of amazon looking for that job came out on friday morning in fact, scaramucci and i were talking on the "squawk" afterra on friday morning. that move on bitcoin did not move until 48-to-72 hours later. i'm not sure it was the amazon report unless the bitcoiners were late. i think it was a washout and people decided at some point $30,000 was a nice floor and they would make the move >> you took the muccc up to the terrace? >> i took him up to the terrace. i'll bring scaramucci to the terrace. >> we took the mucc to the
6:09 am
terrace. >> he was up there >> he was up there, too. >> we're doing more on the terrace. >> i haven't been up to the terrace. we will do the dance together for the next three days. >> did you sign on for that? you signed on for nine hours >> i did i can't get enough of you, joe and you, andrew. we're overdue to hang out. they are moving us along >> speaking of bitcoin let's talk about tesla right now. the company posted better than expected quarterly results and phil lebeau has the highlights talk about bitcoin as well >> reporter: $23 million impairment charge. there wasn't discussion about bitcoin during the company's conference call. look at shares of tesla. the company did beat on the top and bottom line. listen to this its net income for the second
6:10 am
quarter. $1.14 billion. first time they topped $1 billion in net income. ten times greater than the net income of q2 a year ago this company in growth mode. you see that in the profit margins. it is the outlook that got a lot of attention yesterday they shifted a bit they pushed back the expectations for the rest of the year the model y will begin production in both berlin and austin this year notice the word is production. not deliveries, but production there may be some deliveries not a lot of people are expecting that cyber truck production is subsequent to the model y. will it happen this year or next year laying the ground work to be pushed back. that is built in austin. the tesla semi built in austin that is moved to next year here is elon musk talking about the challenges the company has gone through over the last three
6:11 am
months >> the huge efforts to make our factories run at full speed which is difficult we have had factory shutdowns due to parts orders. we hope those will be relieved in the coming weeks and months >> reporter: one of the primary parts shortages that tesla was wrestling with like the rest of the auto industry. semiconductor chips. he talked about that and the inability to get as many chips tesla needs to keep up the schedule they are still working on that they believe it is getting better take a look at annual deliverie from tesla they did not give guidance for full year deliveries anywhere between 850,000 or 860,000 vehicles this year the average sales price in the second quarter dropped 2%. not a surprise they did not sell nearly as many model s as well
6:12 am
as model x those are higher priced vehicles as you look at shares of tesla you have to talk about auto gross margins. 25.8%. that is stripping out the electric vehicle credits you add those in and north of 28%. strong margins stronger than q1 also you have them taking a $23 million impairment charge on bitcoin. there was no discussion of bitcoin on the conference call what will get some attention is the fact that elon musk said on the call, probably going to be my last call unless i have something important to say, you won't hear from me on the conference calls. that will change things over the next several earnings reports. >> obviously, phil, i have two questions. one is the tax credit. obviously this is the first quarter company profitable without the credit unto itself
6:13 am
what is the credit looking like the next two or three years in terms of the full profit picture for the company? this is a milestone for them >> reporter: right it is going to have a diminished level. $354 million in the last quarter. down 11% 17%. something like that. compared to q2 i think you will see it less and less remember, those electric vehicle credits are credits that they get for selling them to companies that need to buy them in order to come in compliance with regulations more companies will start building electric vehicles they will not need to buy as many that is the expectation for some time it would eventually become a smaller part of the quarterly profits. >> phil, the other question is maybe a little too speculative for years, many folks thought elon musk might give up the reins of the ceo of tesla. >> right >> under his contract, he could
6:14 am
be the chairman or chief creative officer or chief director >> reporter: software officer. >> you have a situation last night where he says this is my last calm. call. if you go online, there is speculation. is this the last call because he is thinking of changing the way he runs the company. what do you think? >> reporter: i think there may be something to that it is always going to be his company. he will always call the shots and have the final word. there's no discussion about that changing what i do think is changing is the fact that he's looking at his portfolio in terms of his personal involvement whether it is this or spacex or the boring company or neuro link i think he looks at the day-to-day operation of tesla and there are certain things you can tell he is just not interested in doing. these conference calls are a good example of that i'm not surprised. by the way, if you listen to
6:15 am
these calls, they are more muted than in the past he repeats the same language over and over. manufacturing is hard. it's tough to build a company. yada-yada-yada there is less true information where you say i haven't heard that >> okay. phil lebeau, i appreciate it morgan, what do you think happens to the tesla stock if you see an announcement he is handing the reins over, not that he is leaving, but somebody else with the ceo title >> it depends on who the person is look at spacex who is that person at tesla that if and when that were to happen? coming up, heighighlights fm the big olympics events check out the lucid company.
6:16 am
lucid will launch the air later this year. e ar you are watching "squawk box" on cnbc. >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most. ♪ there she is, miss america ♪ ♪ there she is, your ideal ♪ ♪ with so many beauties she took the town by storm ♪ ♪ with her all - american face and form ♪ ♪ and there she is ♪ ♪ walking on air, she is ♪
6:17 am
♪ fairest of the fair, she is ♪ ♪ miss america ♪ ♪ there she is ♪ i think you're going to like it here. umm, why is everyone... throwing things at me? look, as cfo it's my job to be ready for whatever's next. that's why i have my finance team, randomly hurl things at me. it's also why we use workday. it gives us insights, so we quickly pivot our strategy, people, planning, you name it. sorry, sir. i will aim straight at your next step. see that you do. would you like some coffee? workday. the finance, hr, and planning system for a changing world. ♪
6:18 am
6:19 am
♪ watch the olympic games on xfinity ♪ ♪ root for team usa and feel the energy ♪ ♪ 7000 plus hours of the olympics on display ♪ ♪ with xfinity you get every hour of every day ♪ ♪ different sports on different screens ♪ ♪ you can watch it anywhere ♪ ♪ and with the voice remote ♪ ♪ you never have to leave your chair ♪ show me team usa. ♪ all of this innovation could lead to some inspiration ♪ ♪ and you might be the next one to represent our nation ♪ ♪ this summer on your tv, tablet, or any screen ♪ ♪ xfinity is here to inspire your biggest dreams ♪ welcome back
6:20 am
we're going to go straight to some of the u.p.s. news, morgan. we have earnings coming up we'll wait for that right now. i apologize. we while talk olympic coverage first. united states now leading the olympic medal count. passing china with 22 medals 9 gold we have jabari young what's going on? what are you making of all this thus far >> andrew, thanks for having me. good morning listen, it is full effect. i tell you, the olympic team, the u.s. team are not as effective as we have seen them in the backstroke swimming they didn't win. the u.s. women basketball team beat nigeria men are struggling 19.8 million viewers yesterday a recover y olympics they did not have the opening
6:21 am
ceremony coverage. people are still wondering if people are going tune in at least the media analysts are wondering. we talked about that yesterday good to see 19.8 million people tune in for sunday's coverage. we will look at the week to see what they draw in. shoutout to the 13-year-old girl skateboarder one of them being from brazil. i don't know if i pronounce her name correctly 13 years old u.s. -- not u.s. brazil and japan winning the st skateboard competition so many sports i'm all over the place still g to see the viewership come in on sunday's coverage for nbc. >> what do you make of usa basketball how can we explain this away is there a way to explain what happened >> you know, listen, you have a
6:22 am
team that is coming together players that played in the nba finals drew holiday was good against france when you have teams that haven't played with each other and players that have not played with each other all the time they will struggle i thought they had the game against france on sunday now rumors that the team and running the spurs offense and players not necessarily on the same page with each other. i expect them to still pull out the last pool games to compete for the god immld medal kevin durant, this is his time gregg popovich this is his time you want to see the team compete for gold and not end the streak. i'm not concerned. the u.s. women's team beat nigeria on tuesday they are starting off in a good way. u.s. men's, it is not the end of the world. they have to win the final two pool games if they get sent home early, it
6:23 am
will be ugly. >> can we talk tennis? i'm disappointed in usa basketball and disappointed in naomi osaka getting beaten in the third round. >> she lost. i was expecting her to become the first japanese player to win a medal. i thought she had it you know, listen, it was good to see her back in the public spotlight. she came on in the olympic ceremonies i hope we see her for more competition in the near future it was good to see her out there and not miss the olympics. naomi osaka is a big name in tennis if tennis is going to, as they transition from the williams sisters and serena is still great, it is good to see her out there. >> jabari, i know you can
6:24 am
multitask. i have to bring you home big 12 i thought the earth moved a little bit oklahoma and texas those are two premier names. they want to go where the money is that will probably happen. if everybody is in the s.e.c., then everyone is special and no one is special it will happen, don't you think? >> listen, it is leading that way. texas and oklahoma are the two biggest football programs in the united states. they get money if you look at the landscape and the way with the nil now and players able to monetize off their name, image and likeness everyone is looking around saying what do we need the ncaa for? we can grab more markets football drives college sports these super conferences.
6:25 am
s.e.c., acc, big ten maybe the pac-12 that is not looking all that strong it is not anything surprising. this is a new way the college landscape will look basically because of n.i.l when you have players who can monetize and not break ncaa rules, you are looking around and saying what do we need the ncaa for we can grab our media rights and markets we need and bring the players. if we have the media money and market and attention, that means more exposure for them it is not surprising it will upset things a little bit. this is a new landscape. >> jabari, were the women up by 12 at half against nigeria do you know? they should have been, probably? >> i have to watch the replay of the game i saw the highlights and score i did not see who was up at half it came on at 2:00 in the
6:26 am
morning. >> i was able to place a bet this is the only one i placed so far. it is not easy to bet on the olympics american winning the gold medal in golf. that's a good bet for 3-to-1 >> yeah. >> collin. >> i would say it. it would have been better if bryson was there >> a lot of good guys are there. sorry, andrew. >> jabari, you know what we will do it tomorrow i got a great question about betting on the olympics. we will do it tomorrow us our big tease. it is really on behalf of joe. >> if i get an invite to the terrace. morgan hasn't been there. >> get in line. >> we're working on it see you in a bit morgan has earnings news. u.p.s. with quarterly results. earning $3.06 per share.
6:27 am
beat estimate of $2.82 per share. held by the ongoing surge of ecommerce deliveries u.p.s. did not provide specific guidance due to market uncertainty. it did actually say that its capital expependitures would be4 billion for the year long-term debt repayment to be completed and effective tax rate for the remainder of the year of 23%. shares are down .40% right now it looks like the u.s. domestic package revenue numbers came in below estimates as international supply chain and freight beat the estimates. andrew. thank you, we have more coming up. the florida corporate tax give away how it is luring big companies to bring jobs to its cities. stay tuned on quk x"ig"sawbo rht
6:28 am
here on cnbc .. above everything? you put muscle over matter. and you make horsepower... a superpower. ♪ a superpower. we did it again. verizon has been named america's most reliable network by rootmetrics. and our customers rated us #1 for network quality in america according to j.d. power. number one in reliability, 16 times in a row. most awarded for network quality, 27 times in a row. proving once again that nobody builds networks like verizon. that's why we're building 5g right, that's why there's only one best network. what the world needs people.
6:29 am
people who see flight a little bit differently. so it takes less fuel to bring people together... and make faraway places feel a little closer... with engines that power planes more efficiently. because seeing a better-connected world isn't far in the future. we're building ge building a world that works.
6:30 am
new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit and get started today.
6:31 am
we have ge results just hitting. the stock is, as you can see, up 3% after the company reported the adjustmed second quarter of3 cents a share. revenue above $18.2 billion. the estimate 18.144. as far as the year forecast, positive things about individual se sectors. free cash flow they lifted the outlook of $3.5
6:32 am
billion to 5 billion dollars adjusted net for the year of 2021 comfortable with 15 to 25 cents. the street call is 20 cents. maybe somewhat conservaconservae they see industrial profit margin adjusting by 25 basis points 2021 industrial revenue growth in the low single digit range. health care revenue and power revenue and aviation all of the things we know about ge the headline they are giving is lifting full year free cash flow that target on hoping for a quicker recovery stock up 3%. i i think the ceo is on later this
6:33 am
morning. at 9:35, larry culp. general electric sharchairman ad ceo. >> power that year is long. rebounder and hope to turn around free cash flow is in focus for the industrial congl conglomerates. including 3m shares are flat as the numbers cross. it looks like a beat on the top and bottom lines eps coming in of $2.59 beating $2.28. revenue is better than expected. $8.9 billion versus 8$8.57 billion. we move out of the pandemic numbers we saw operating cash flow $1.9 billion.
6:34 am
adjusted $1.6 billion. in terms of the full year outlook. organic growth of 6% to 9% that is 3% to 6% previously by 3m that is against the prior range of 9.20 to 9.70. >> 9.80 estimate >> yes thank you. it looks like commentsabout inflationary pressures and supply chain challenges. a number of factors that investors will be watching with 3m this morning. right now, as we dig through the numbers, beat on the top and bottom lines shares are trading flat. andrew. taxes right now. they are up with robert frank. moving to florida for tax reasons, but not just for individuals. robert has the story of companies lured to the sunshine state.
6:35 am
ro robert >> reporter: good morning, andrew disney announcing a plan to relocate 2,000 jobs from california to florida along with disney world, the main attraction was tax breaks. disney set to receive $570 million in total tax credits over 20 years. about $250,000 per employee. florida has granted over $3.5 billion in tax credits to companies in recent years to add workers or relocate them to florida. the state will no, mat reveal te names of other companies who received similar benefits. disney returned 27 cents for every dollar runeturned to the state. every day, the state population grows by 845 people. a rate that is expected to continue until 2025. taxes are already low in florida
6:36 am
with no income tax and lowest corporate tax rate of 4.5% companies are moving people and operations to florida. including elliot management and goldman sachs. andrew, a lot of the financial firms in new york, basing some operations in florida and many helped by the tax breaks >> all right robert, thank you. i'm told we have to go love to talk taxes nice weather, too, obviously a lot of covid cases. coming up, big tech in focus. alphabet and apple and microsoft set to post quarterly results this afternoon we will talk about the high stakes and what it means for the broader markets of tech doing 'lbeig bk.esn't. wel rhtac >> announcer: executive edge is sponsored by at&t business our people and network will help keep you connected
6:37 am
let's take care of business. ere. oh, we can help with that. okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, asap! so basically i can pick the right plan for each employee... yeah i should've just led with that... with at&t business... you can pick the best plan for each employee and only pay for the features they need. retirement income is complicated. as your broker, i've solved it. that's great, carl. but we need something better. that's easily adjustable has no penalties or advisory fee. and we can monitor to see that we're on track. like schwab intelligent income. schwab! introducing schwab intelligent income. a simple, modern way to pay yourself from your portfolio. oh, that's cool... i mean, we don't have that. schwab. a modern approach to wealth management. the pursuit is on.
6:38 am
the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes, actively managing investments in the world's public and private markets. outscale, with the resources to serve 1,500 clients in 52 countries. and outlast, with long-term conviction that looks beyond today's volatility. join the pursuit of outperformance at pgim. the investment management business of prudential.
6:39 am
one of the weeks with earnings that are especially important, especially in the tech sector. after the bell, we hear from apple, microsoft and alphabet. investors hoping more solid earnings can power more record highs for the broader markets. joining us now is the chief investment officer at trip tabs asset management we know the numbers are probably
6:40 am
pretty good. the stocks have performed well already. do they need to beat bring a certain amount or is the outlook what traders will key off, bob >> good morning, joe thank you for having me on just a trimtabs, we are a boutique investment manager that was a suite cash flow being the free cash flow etf which would have exposures actually, we focus on in our process and how we're different than most other managers and we are focused on quality and free cash flow quality. we look at these earnings through the lens of a trimtab quality model. the most important factor is the
6:41 am
free cash flow profitability factor which is our proprietary look at versus what most people look at which is gap earnings which can be more easily manipulated and distorted. we are seeing and what we saw in q1 with the mega cap tech names is they beat their net income dramatically up some 198% versus 19% for the rest of the s&p 500. you know, free cash flow or operate aing cash flow grew nic, but not keeping up with the net income, thus creates spike in accruals we have a pretty significant underweight in the faang, including tesla space by 1,500 basis points
6:42 am
not bearish, but just not making the cut. we are focused on free cash flow tesla reported last night. increased net income tenfold operating free cash flow grew 1.5 times. from the profitability standpoint, they did quite well. quality of earnings, however, operating cash flow, not keeping up with net income you know, i would contend and again, we do interestingly enough have an overweight information on technology space where names like accenture and old tech names like cisco-ibm score better with the advavanta point. we are under weight this group which is rallying nicely, joe. i would contend is more of a function of what is happening with interest rates and risk
6:43 am
parity flows and performance chasing into the earnings. >> squawk goes way back to chuck peterman days. the founder. he looked at liquidity as well as how much stock bought back and how much was still available. that was so important at this point. if you had to look at free cash flow for the most key players this week, which ones would be most important for you to decide whether tech continues to lead or we get a shift to value at some point who should we be watching? >> look, i think the set up going into earnings is these names have been bought in anticipation there is a rotation. we also, you talked about unfortunately, some of the megacap tech rallies come at the expense of the broader market. there's just as we can see bred
6:44 am
bredth has been bad. you were talking about the chinese names earlier which proceeds the volatility. what i think is important is we rarely have seen them all report in such a tight earnings period. they are all coming out this week very high expectations apple, by far, is the best from our perspective whether cash flow has kept up with the net income we also, and that is our largest position we own microsoft and google. we expect to see cash flow keep up to a large degree with their net income names that we're looking and more cautious on are facebook, amazon and as i mentioned earlier, excuse me facebook, amazon and tesla which we do not own. having such a significant
6:45 am
underweight. >> we're taking hits on your mic. i think, at least i am we will end it there i appreciate it. we will watch all those. we'll check back again there it is again. are you hearing that >> i am. >> it's not just me. >> wake-up call. >> it is certain is thank you, bob see you again. trimtabs. >> thank you, joe. still to come, a busy morning for earnings we have the biggest movers, plus china stocks getting hit hard again overnight on regulatory crackdowns don't miss kyle bass at 8:40 a.m. eastern stay tuned
6:46 am
i'm evie's best camper badge. but even i'm not as memorable as eating turkey hill chocolate chip cookie dough creamy premium ice cream and chasing fireflies. don't worry about me. i'm fine. you can't beat turkey hill memories. (sound of people returning to the workplace) (sound of a busy office)
6:47 am
(phones ringing, people talking, meeting) the company we've trusted to keep us working remotely, is the same company we'll trust to bring us back together. safely. securely. and responsibly. so now, between all apart and all together, there's a bridge. cisco. the bridge to possible.
6:48 am
coming up here on "squawk box. why elon musk said he will not participate in conference calls and you are looking at ethereum down a little bit as well. we will talk more cryptocurrency here on "squawk box" as the ogm llon ♪ ♪ ♪
6:49 am
with a bit more thought we can all do our part to keep plastic out of the ocea. ♪♪ the ey entrepreneurs access network has a tremendous impact on my business because it's given me networks, access to capital, and access to opportunities. the level of coaching that i get has had a tremendous impact. it allows companies like mine and others to grow, and it closes the wealth gap in this country.
6:50 am
6:51 am
welcome back. tesla stock motoring higher this morning. here is what elon musk said last
6:52 am
night. >> right now we kind of have the baskin robins of battery situation. we have like 36 flavors this morning. this results in a drag coefficentishment where each variance of cell and form at requires a certain amount of engineering to maintain it and troubleshoot and this inhibits our progress. >> joining us now for more is te tesla. long been saying tesla's batteries are not the advantage they think they are. thanks for joining us today. i'm curious what you make of those comments, baskin robbins of battery technology. >> if you look at what they effectively said, they ef
6:53 am
effectively further delayed the 46/80 cell structure they've had the same problem that everybody over the years has tried to do this has had we believe last night they actually delayed this battery by at least a year. we've said this for a long time, they're going to have a hard time achieving this battery cell structure. they said that as a result, they delayed the cyber truck, the sechlt mi they effectively said fsd does not work that was essentially a quote from him all of these things that are being valued as a technology play, yesterday they pushed out. we think that will weigh heavily on investors' minds. >> you expect a top line beat and bottom line miss tesla did report better than expected earnings, billion dollars in net earnings, up ten-fold from a year ago are you reconsidering your at least near-term thesis, given the fact that we had stronger than expected numbers and given
6:54 am
a fact that not a lot of that came from tax credits and the like >> we don't know, right? here is what i'll say. the numbers are good there's no doubt about it. the quality of the earnings were poor in our view if we look at the rate of growth operating cash flow. the quality of earnings is actually getting worse one other thing to keep in mind is that if you look at the head-to-head competition of tesla versus new cars coming out, i want to look at my notes here, the kia ev-6, mercedes eq-5, they're beating tesla not only on ratings, but charging time i think that's important the other thing i'll note is despite the earnings being good, their cash balance fell roughly a billion dollars quarter over quarter this quarter after falling $2 billion last quarter. despite record net income they're still seeing significant cash burn. and their receivables are up and
6:55 am
their inventories were up. there's accounting going on that we need to see to really get a handle on. o overall, the numbers are good but the cash flow statement numbers were very questionable and all of the things that people are excited about, the s semi, fsb, you know, the cyber truck, all of those things were delayed last night 4680 battery that's something that people need to think about. these are promises that elon musk has made. he has been selling fsd since 2016, and effectively pushed out with fsd, said it doesn't exist. i think that's important here. >> you could say the earnings results were baskin robbins for inve investors, too there was something for everyone you just have gone down a list of things you didn't like in these results but i'll push back for devil's advocate the fact that those regulatory credits that sales only about 3.5% of that automotive revenue
6:56 am
came from those. and all of this, despite the bitcoin and paramount charge. >> i'll ask you, how much fsd revenue did they recognize this quarter? we won't know that i'll also ask, did they make significant accounting changes on their warranty accounting, which boosts gross margins significantly? these are things we don't know when you look at a company's financials, one of the key t telltale signs is if you report good results, are you increasin your balance with tesla, the answer is no the reason why, if you take these numbers, take the numbers they just reported, annualize that, the auto industry trades at eight times the reason tesla has such a high valuation is the fsd, semi,
6:57 am
cyber truck and all those things, the 4680 battery all those things were delayed and he said last night fsd doesn't even exist potentially that could be a big regulatory issue for them. with respect to results i'll acknowledge they're good we have to say that. how much fsd revenue did they recognize? that's revenue that's not going to repeat forever. these are things that we'll see with respect to what they do. >> gordon, thank you for joining us. >> thank you. coming up, the china stocks are getting hit hard overnight te rulorort from beijing on the lastegaty crackdown. we could do that story just about every day, it seems. stay tuned you're watching with ""squawk box"" on cnbc. workday. how do they make better decisions faster? workday. it's got to be something workday. i think i got something. work... hey, rob, you're on mute. hello! hey, rob, there he is.
6:58 am
workday. the finance, hr and planning system for a changing world. you have the best pizza in town and the worst wait times. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
6:59 am
matching your job description. at t-mobile we believe you should get more. introducing magenta max. unlimited premium data that can't slow down based on how much smartphone data you use. plus netflix on us and taxes and fees included. only at t-mobile. the leader in 5g
7:00 am
stocks trying to keep the record of breaking the win streak alive as jay powell. crackdown in china meantime heats up threat to equality, financial stability and the government itself plus a preview of what investors should watch when robinhood goes public later this week as the second hour of "squawk box" begins right now.
7:01 am
good morning i'm andrew ross sorkin along with joe ker nichlt n. we would open down, dow off about 87 points, nasdaq off four points couple of big headlines to bring you this hour. fed policymakers are kicking off a two-day meeting today. investors are waiting the latest thoughts as well as fed chairman in jerome powell's news conference which happens tomorrow afternoon. powell has been maintaining the view athat elevated levels of inflation will only last a few more months and we'll have a lot more on the fed from steve liesman. tesla reported better than expected earnings as well as its
7:02 am
highest ever profit. mitigate the impact of global chip shortages during the quarter but said navigating supply chain issues will be key in the second half of the year also didn't rely on the tax credits to get to that profit. a first for them meantime, amazon denying a report that it plans to accept bitcoin payments by the end. year that report by a london fpgs newspaper was partly responsible for a surge in crypto kurpsy prices monday. amazon did say it's exploring possibilities in this area but it has no plans that have been formulated, at least not as of yet. you can take a look at bitcoin this morning, down about 6% on that news. but after really flying from something like 30,000 to close to 40,000 or 40e,000 over the course of the last 46 hours. >> check out the reason is because we're getting earnings,
7:03 am
right? those shares are up 4% right now. adjusted earnings came in at 5 cents a share. top analyst forecast as well ge ceo will be joining the gang on "squawk on the street" later this morning plus 3m also reporting adjusted quarterly profit of 2.50 a share, compared to 2.28. revenue also beat analyst forecasts as well. those shares are 1% free market. u.p.s. reporting quarterly results earlier this morning as well, earning an adjusted $3.06 per share, beat the consensus estimate of $2.82 per share. revenue helped by the ongoing surge we've seen in e-commerce deliveries nonetheless those shares are under pressure, down 2%. >> did they pull guidance or
7:04 am
something? why do you think it's down i'm wondering. it was above on both top and bottom line, right did they have a yearly -- >> i don't see yearly, specifically yearly numbers. they reaffirmed cap-ex it looks like -- i don't believe vie it in front of me. margin guidance for the year. >> something. >> in general we see really strong forecasts from analysts and i think there's this view out there right now given just the incredible strength of results we've gotten so far in this quarterly debate around earnings a beat isn't good enough it has to be a strong beat, poe tepgsly a raise, given the quality of the results and bounce back from the pandemic. maybe that's what's at play here. >> u.s. domestic business came up short of revenue forecasts. >> yes, that's right. >> okay. all right. shares of chinese tech companies are in the crosshairs for investors once again this
7:05 am
morning as beijing's broad-based regulatory crackdown shows no signs of slowing down. technology and education shares have fallen for a third straight day. the five largest u.s. listed constituents of the kweb chinese internet etf alibaba, a combined $184 in market value this as s.e.c. are calling for chinese companies listed on the new york stock exchange to disclose the risks of chinese government interference, which seems to be -- would cover just about anyone we'll get a live report. pin duo is that pin duoduo
7:06 am
what can we call it? >> i think we'll have to go with pin duo duo. are we getting that right? i don't want to embarrass myself, which i do anyway. >> misery loves company. that's why i'm asking you. i'm throwing you in with me on that. >> thank you. >> i did p hhonics hooked on phonics. you have to change the actual pronunciation if you do it enough it could be a very poignant moment. >> poignant. >> yeah. >> investors will look for any insights on the economy and, of course, talk of taper. steve liesman joins us now with the results of this month's
7:07 am
survey steve? >> morgan, good morning. new results showing that the higher inflation coming, peak out about 5% they do not believe the fed is going to do much about any of it the outlook for fed action among the 34 respondets is fairly unchanged with the taper beginning january. $18 billion expected very modest. it would take several months to wind it down first rate hike in october 2022. fed funds rate ending at 0.41% that little change meanwhile the outlook for inflation as you'll see the second, it has changed drastically. 2% inflation call in january now above 4% for this year 2.4% average in january for 2022 now above 3%
7:08 am
it is seen peaking in november above 5% two-thirds of respondents do believe it will prove to be temporary. that said, respondents think that the fed is making a mistake in not reacting to higher inflation. 10% want the fed to react by raising rates now. 58% want to start tapering right now in response to higher inflation. chief investment officer at bleakley advisory group, says they should begin tapering as they have overmedicated the patient and results are being shown particularly in housing. but kathy bostjancic of oxford
7:09 am
economics says the rapid spread of the delta variant underscores the downside risk from a still unhealthed health situation. however we think the bond market is too pessimistic. >> does it actually give cover to the fed to hold steady at these rates as it tries to bring more people back into the labor force? >> there's some commentary on that exactly, morgan, that the fed will use the delta variant as like, hey, this is what we were talking about. we weren't sure we're out of the woods. that's why we didn't alter our course we stayed the course because we want to see how this all works out. some people think it's the right thing to do. some say it's a cover for the fed to keep their policy in place. >> are we going to see more meat put to the bone, so to speak, around taper talk rather than this week? >> yeah. and by august, you mean the jackson hole meeting. >> yes. >> i think there's an
7:10 am
expectation for that, morgan i think that's what you mean powell says he's going to tell us about something, then he's going to tell us about it. then he's going to do it it's very, very -- i don't know what you call it, shallow ramp upwards toward the taper they've begin talking about it they began in june, they're going to talk about it more this morning this week. no decision is expected on tapering or announcement yet right now the average says november that comes. little bit later than the prior months they pushed that down the road a little bit when the announcement comes. november announcement of a taper and january is where the execution begins then again the smoke downward in terms of reducing it is 18 billion. 18 billion each month they will reduce it by if it's 120, you can do the math it's about six months it will take them to wind it down. >> talking about talking steve liesman, thank you. >> yeah, thanks. >> when we come back on the
7:11 am
other side of this, pay pal and the anti-defamation league we'll bring you all the details after the break. before we head to that break, though, let's check on the markets right now. as we said earlier, we are on the red on the dow looking to open higher, eight points higher, s&p 500 off six points squawk returns after this.
7:12 am
7:13 am
7:14 am
pay pal to defund hit groups national director and ceo of the anti-defamation league to the program this morning why don't we explain to the audience what it is that you're trying to do here? >> sure. thank you for having me on this morning, andrew. as we've talked on your show before, it's the oldest anti-hate group in the country we've been focused on studying extremist individuals, organizations and movements literally for decades. and our experts are the best in groups across the spectrum paypal is one of the leaders in the online financial system. so together we're collaborating to better understand how
7:15 am
extremists exploit online platforms to fund raise, move money and enable some of their elicit activities. we've been working with paypal for years and help better understand how extremist groups and hate groups are trying to leverage the financial system so we can sxdisrupt those activitis and create a safer and more cohesive weapon. >> just to understand this, is this simply a research effort or is the ultimate goal, i imagine, to effectively defund them, which is to say paypal would turn off the spigot or at least turn off the ability to fund raise using paypal >> that's correct, andrew. certainly a big part of this is how can we disrupt the ability of extremists from those who maurauded through the capitol, to those who were beating up jews a few months ago, to other racist and hate movements, how
7:16 am
can we stop them from using is services like paypal from spreading their hate and funding their elicit activities? paypal specifically sees as a responsible company a need to try to put an end to this. they've been at this for years this isn't new our job is to monitor what these groups are doing to stop it once and for all. andrew, it won't end there the goal is to share what we learn. we need a whole of society strategy if we're really going to put an end to extremism and hate. >> jonathan, you may know that i've long thought about using the financial systems to confront issues we're dealing with in society. any time anyone has raised the idea of using the financial
7:17 am
system for the purposes you're describing, there's been huge financial blowback i'll give you an example there were a number of banks after the parkland shooting that decided they were going to effectively stop making loans and that became a huge political issue with several republicans saying they would make it very difficult for those companies, effectively in terms of how they were going to be regulated and the like so i'm curious about how you think about that they won't because there are people on the other side of the argument. >> that's a fair question. i admired your leadership and columns on the issue i think you're right in terms of
7:18 am
diagnosing that the financial system has a role to play now in the current environment in which they're living where everything is politicized and people seem so polarized you're right, there is some risk here there's nothing political about pummeling police officers on the steps of the capitol, right? there's nothing partisan about beating up people because they're wearing yamakas or facing black churches or some other activity we've seen. and i think people on both sides of the aisle can agree when extremists exploit these kinds of systems, we all suffer. now look, if you walk into a bank of america with a neo nazi arm band with a swastika and say i want to open an account, the company has to decide whether they want to work with you that's not my job at adl but they need to make sure their systems aren't used for illegal
7:19 am
services you were talking about bitcoin earlier. bitcoin is very ripe and vulnerable to be used by extremists because of the way those technologies work. but the mainstream banking institutions and financial systems, they are required to have a kind of transparency and owe it to their shareholders to make sure they're not allowing extremists to exploit them. >> one of the issues, and you've debated with me and joe, has been the issue, and becky over the years, is this issue of freedom of speech and what can be said, what can't be said. one of the things i'm curious about is whether you think the financial system should be getting involved beyond even some of the debates you're talking about where it's absolutely clear what the hate crime, if you will, is right now there's a hugely
7:20 am
controversial issue around vaccines what would happen if the bank cut off some of the organizations that are spreading this misinformation? they wouldn't consider it misinformation this information or misinformation, depending on where you stand. is that the right approach i ask it more in the context that there's a lot of business leaders in the financial industry and others that are watching us right now that i think are thinking about what their role is supposed to be in all of this. >> yeah. look, i think it's fair to say that ceos are being asked to step up in ways we simply have never seen before. people in the banking system, the financial system, andrew, as you know, have already been at the lead of trying to be more responsible and proactive. i think about what larry fink, just one example and dan schulman at paypal has been outspoken on these kind of issues for years i simply don't think it's a freedom of speech issue when you talk about, again, extremists
7:21 am
using systems like paypal or venmo or others to move money that the mainstream economy won't allow them because it's illegal. and it is extremist. so we've got, i think, to keep our eye on the prize this is about disrupting the ability of extremists from across the ideological spectrum. >> but those people who break the law, we've got to break their ability to use finance for evil we've got to fight hate for good. >> jonathan greenblat, always good to see you. we look forward to following your progress on this issue. thanks. >> morgan? >> all right, coming up -- >> lot of controversy there. >> an important discussion coming up, crypto sliding after yesterday's rally. we'll talk about that and some of the names that are moving the markets this morning you can see bitcoin at 37,598 after crossing back above 40,000 yesterday. etherium also. we'll speak to ftx founder and
7:22 am
ceo sam bankman-fried about the recent move in kurpsys, also leverage "squawk box" will be right back. or could things take a different turn? i wanted to help protect myself. my doctor recommended eliquis. eliquis is proven to treat and help prevent another dvt or pe blood clot. almost 98 percent of patients on eliquis didn't experience another. ...and eliquis has significantly less major bleeding than the standard treatment. eliquis is fda-approved and has both. don't stop eliquis unless your doctor tells you to. eliquis can cause serious and in rare cases fatal bleeding. don't take eliquis if you have an artificial heart valve or abnormal bleeding. if you had a spinal injection while on eliquis call your doctor right away if you have tingling, numbness, or muscle weakness. while taking eliquis, you may bruise more easily... and it may take longer than usual for bleeding to stop. seek immediate medical care for sudden signs of bleeding, like unusual bruising. eliquis may increase your bleeding risk if you take certain medicines. tell your doctor about all planned medical
7:23 am
or dental procedures. what's around the corner could be worth waiting for. ask your doctor about eliquis. [music plays.] ♪ ♪ ♪ ♪ ♪ ♪ girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads.
7:24 am
girls, i said “bedtime”! you packed a record 1.1 trillion transistors into this chip i invested in invesco qqq a fund that invests in the innovators of the nasdaq 100 like you become an agent of innovation with invesco qqq
7:25 am
shares of chinese tech companies are falling again. eunice yoon joins us from beijing to give us some color on this again i never would have thought after-school tutoring. got to get that all squared away, make sure everybody is on the same page there, eunice. >> yeah. i think it's going to take some t time, joe. after-school private tutoring companies like this one are normally full of kids at this time of day. but this notice says that they have suspended classes and aren't really sure when they're going to resume. that's because of the regulatory crackdown. schools around the capital have been trying to figure out how to survive. some of them had told us that they are switching to noncore classes, such as calligraphy, coding others, many, said they're going online and offering a one-on-one private sessions with their teachers and still others are looking into corporate training
7:26 am
or teaching adults these multiple regulatory crackdowns have been unnerving investors, including here in ch china. so much so that the state media has issued a number of articles to try to calm people down the communist party paper, the securities times, is suggesting people buy on the dips, shangha securities news says china faces no systemic risk and the securities daily is arguing that the chinese economy is sound so, there shouldn't be any problem. state media has also been interesting offering investment tips, saying people should put their money in new energy, high-end manufacturing, like semi conductors, and the military so, investors both in china and hong kong have been very nervous, just like other investors around the world, because they don't know which sector regulators are going to target next. also in hong kong, investors there are digesting the news
7:27 am
this landmark ruling under the beijing imposed national security law, protester who was f flying a flag has been convicted of secession as well as terrorism. this will likely send a signal to the city, if you fly the slogan liberate hong kong, revolution of our times, that could land you in prison for life joe? >> just trying to figure out exactly what the motivation is once we figure that out, we can figure out who is next do you have a feeling or have you heard about which industries might be ripe for some type of regulation where people are looking at it and saying, wow, this is crazy what's going on here we could probably figure out -- >> yeah. >> where their -- because it seems like they're not going to stop xi jinping is not going to stop.
7:28 am
>> what you're thinking is exactly what investors here are thinking, too. that's one of the reasons why we saw consumer plays drop. people are saying maybe consumer plays are going to be regulated. a lot of different sectors were hit. i think what's important is to look at what's happening in the specific sector. so, for example, you know, the food delivery companies, the regulations there are really aimed at trying to help the delivery workers if you look at the details and you kind of understand a lot of the delivery workers have been under tremendous pressure because part of their pay is by how many deliveries they make. and the algorithms of the companies have been cutting their time shorter and shorter and that's been putting pressure on people. there's a belief that there's a delivery, at least, that those regulations that the government has is really trying to stop those companies from putting too much pressure on their workers for after school, it's hard to
7:29 am
know. >> so, what does xi jinping want, 10% gdp growth or does he want control over the burgeoning private sector economy people are saying i don't know if there's an expression in chinese for the goose that laid the golden egg, but these are a geese laying golden eggs in china and it could come back to quantifiable depressing gdp growth in china and it doesn't seem to matter. >> reporter: joe, i think the answer is yes, that he just wants the 10% gdp growth and that he also wants to have the control. in a chinese context, the two are not necessarily usually exclusive. so, from a western perspective, you can't have all of this growth and the markets can't -- you won't be seeing private
7:30 am
enterprises innovating if you don't have a free wheeling market and you kind of let up, ease up on the controls. here in china, that's not how they think. >> right we still have politicians over here that haven't learned that, too, eunice. i made that comparison earlier we all have a lot to learn thank you, eunice. appreciate it. later in the show, kyle bass of hayman capital joins us to talkjing's policies and the crackdown. he may have some interesting things, sometimes comes up with the worst case scenario of how it will affect us over the years. bitcoin seeing six-week highs. pulling back this morning just under 38,000 we'll talk of the latest crypto news and how it might impact all of these different coins that's next. plus everything you need to
7:31 am
know ahead of robinhood's ipo later this week and the future of retail investing. you're watching "squawk box" on cnbc
7:32 am
7:33 am
7:34 am
(vo) introducing 48 square centimeters of earning potential. flawlessly designed. undeniably versatile. unlimited 2% cash back. this is the card built for... ...real life. (dad) she's gonna be a drummer. (cashier) yeah she is. that's gonna get loud. (dad) right? (vo) the new wells fargo active cash visa credit card.
7:35 am
unlimited 2% cash back on purchases. that's real life ready. i'm dad's greatest sandcastle - and greatest memory! but even i'm not as memorable as eating turkey hill chocolate peanut butter cup ice cream with real cocoa. well, that's the way the sandcastle crumbles. you can't beat turkey hill memories. the world's first fully autonomous vehicle is almost at the finish line what a ride! i invested in invesco qqq a fund that invests in the innovators of the nasdaq-100 like you become an agent of innovation with invesco qqq ♪♪ it was my dream to be an entrepreneur based upon the examples that i had growing up. and that was important for me because you can't be what you can't see. the ey entrepreneurs access network has a tremendous impact on my business and other african american and latino entrepreneurs across this country because they give access to networks,
7:36 am
business opportunities and capital.
7:37 am
moving crypto markets today. deidre bosa has the latest. >> the latest, according to bloomberg, could bring criminal charges against its executives, marking the most significant crackdown yet on the crypto economy. the doj probe into bank fraud reportedly focuses on when tether was not used as widely. it now depends on more than half trades and has a market cap of $62 billion. more recently, questions have been build ing as was earlier marketed majority by commercial paper last week i sat down in a rare interview with two tether executives and tried to get to the bottom of what that commercial paper included. have a listen.
7:38 am
>> when you say international commercial paper, are you willing to give us any more details, chinese commercial paper is thought of very differently as canadian commercial paper. >> as retail facing entrepreneurs, and we believe we've given transparency into that. >> $62 billion market cap may make it one of the largest paper h holders in the world and fitz ratings has warned it could destabilize short-term credit markets and many have said tether could be the weak link in the crypto economy back to you. >> we've seem like we need to get cracking on this don't you think, deirdre we're behind we lead in everything else in crypto, regulation and rules,
7:39 am
it's holding us back 25-year-old billionaire. first thing i saw. o okay, we can have him on but i don't know if i can be very nice to him crypto topping -- i'm just kidding. falling this morning coin base rallying 9% after the crypto exchange. ftx announced it would cut down on the leverage it offers users on its platform, setting the max at 20 times here the aforementioned 29-year-old gazi gazillionaire, sam bankman-fried. i love you i'm just jealous nothing against you. before we even get started, when did you realize the potential? did you look at it and say this is math? it's going to be there no matter
7:40 am
what people do to try to stop it >> honestly i first got into crypto without knowing what i would think of crypto. i got into it. i really didn't think that hard about what crypto long-term role in the world would be except when dealing with crypto i had to send a wire transfer. it was the first time myself i had to interact in a personal way with transferring funds around and, i mean, anyone who has tried to send an international wire transfer will tell you they regret it. and the more that i dug into it, the more i realized a lot of the payment rails right now are there's a lot to be added and the second realization i had is
7:41 am
when i started to think if you don't happen to come to a country with a global reserve currency, the idea of having an external currency that is immovable and cannot be disturb bid outside sources looks appealing. >> utilitarian uses of bitcoin haven't been used yet. someone working their tail off in south america watching their currency a week later, watching what they have earned be worth h half all they need is a phone to -- >> exactly. >> preserve and save what they v that's why a billion users doesn't sound ridiculous what do we need to do, sam, to get ftx fully like you can use
7:42 am
other places, what are regulators missing and why is it going so slow in a country that usually leads in everything else that involves technology >> it's a really good question there are a few pieces to it you look, that looks basically the same everywhere. crypto and the leading venues are all doing it and have been for a while. when you look at the security side, s.e.c. has been slower and that is holding up part of it. there is clarity on the largest cr crypto currencies. frankly you can still get three-quarters of trading volume by tokens that are pretty safe from an s.e.c. perspective, you know, i think -- i know i've said before there's been a lack of clarity on what the -- you know, what the regulatory environment looks like in the
7:43 am
y united states. i think that's being a little imprecise. there is a futures regime in the united states. it's very different than the crypto regime. when you look at how crypto exchanges have developed, they developed very differently, places like cme work and develop. looking at the interfacing of those two, it's holding back volume it is doable but is trickier than what's been tried so far. >> i know you want to tell us about some climate initiatives you'll not be able to convince andrew that you're -- every time there's a bitcoin transaction, i can see the pain on his face, on the energy that's used. >> yep. >> he has all these facts about 800,000 as dirty todo bitcoin than it is to do american express or something take it away tell this guy what he's doing to -- >> sam knows about the challenges he's trying to address them.
7:44 am
>> yeah. >> even with each transaction? okay tell us what you're doing, sam you're getting to carbon zero. go ahead. >> yeah. so, step one here is just offsetting the impact of the transactions that we do have it's not free to do that it's not prohibitively -- >> still being done. that's like bill gates buy carbon credits. >> yeah. >> $7 million means nothing to him. that doesn't make his 400,000-square-foot house and two people on a boeing 747 flying around, that doesn't make it okay when he decides he will give $7 million to buy carbon offsets. that's bs. >> i don't think that's a long-term answer but i do think that's a piece of it that's the first right step, right? it can't be the full answer because at some point you run out of other people's carbon to offset. >> exactly. >> but i still think it helps. i think it's a responsible thing to do, to mitigate to the extent you can the short-term impacts the other side of this is that when you look at the energy uses of crypto currencies, there are
7:45 am
only two major crypto currencies that have large energy usages, bitcoin and etherium they are the biggest proof of work currencies and proof of work is where all the energy usage comes from. over the next few years, it will make it down to just bitcoin as a big energy user. and so the other piece of this is when you look at the frequent transactions and payment rails, using chains for those, which have massively lower energy footprints, and already you're starting to see that transition toward faster chains, and other chainses that are just built without energy consumption being the standard of measuring rewards. >> sam, it's morgan. from 20 times to 101 times, given the fact that this is such a key focus for folks and institutions that trade and invest in bitcoin and these crypto currencies, why are you
7:46 am
making that decision to cut leverage now what longer term do you think it does for the volatility we see in these cryptos >> totally i don't think it has a huge impact on the industry very few people are using high leverage in crypto having market is really, really important. every industry has this. crypto is not alone in that. it's really important to efficient markets. it makes these massively more popular and makes hedging way easier i do think that that's very important. that being said, you know, what we did is we got rid of very high leverage. on the platform. and frankly it's harder to use it in an economically efficient sense i still think that market is crucial for the industry. i think there's a limit to that,
7:47 am
it does -- i think in some cases not super healthy. i don't think it's going to match if we decrease volatility, though. >> yeah. finally, you're joining us from hong kong right now. talking about the crackdown on china in so many different industries we've seen it on crypto currencies as well we've seen the crackdown politically and socially in hong kong as well how are you thinking about the fact that your company is based there, a and, b, everything we're seeing in china, is that playing a role in crypto currencies in the moves we're seeing recently as well >> yeah. our company isn't really based in hong kong we do have some people here. but, you know, i totally get the question i think that like, you know, we have seen a real impact on the industry
7:48 am
offering to chinese users and another piece of it, interestingly, has been not the most sensitive we've seen long term, i don't think that has huge impact as that can move ove overseas where the right place to be is. >> okay. sam. they're playing music, telling me to wrap enjoyed having you on. a programming note first on cnbc interview tomorrow with senator elizabeth warren coming after today's senate hearing titled crypto currencies, what are they good for? we know how that song goes after
7:49 am
t that, right? absolutely nothing and i think that's what she thinks we'll be right back. that needs to change. so, i did something. i created a black business accelerator at amazon. and now we have a program that's dedicated to making tomorrow a better day for black businesses. ♪ ♪ i am tiffany. and this is just the beginning. ♪ ♪ ♪ ♪ i had the nightmare again maxine. the world was out of wonka bars... relax. you just need digital workflows. they help keep everyone
7:50 am
supplied and happy, proactively. let's workflow it. then you can stop having those nightmares. no, i would miss them too much. whatever you business is facing... let's workflow it. servicenow. team usa is ready for the olympic games... ...and so are mike and eddie! show me the olympics. they easily catch every single event with the award-winning xfinity voice remote. show me bmx racing! show me swimming. track and field. shot put. skateboarding. water polo. climbing! discus. surfing. dressage. dressage? it's horse dancing. magnificent. with the best of the olympics, and everything else you love, it's a way better way to watch! cheer on team usa with xfinity x1. say "show me the olympics in 4k" so you can watch in stunning 4k ultra hd.
7:51 am
show me the olympics. learn more today. [ "bugler's dream" playing ] ♪ ♪ ♪ ♪ ♪ ♪ welcome back to "squawk box. robinhood trading on the nasdaq. joining us now, co-ceo who knows the retail group well as founder and ceo of think or swim, one of the first brokages later sold to
7:52 am
a ameritrade it's great to see you this morning, tom you know, there's been lots of debate around what this offering should be and, more importantly, how to value it. so for the investors out there, what do you think? >> well, thanks for having me on, andrew you know, it's going to be very interesting, because i doubt that the investment bankers and i doubt the street is going to make some of the same mistakes they make with the coin base offering but i think the robinhood ipo is going to go -- going to be pretty aggressive and it's going to go quite smoothly i think they did a good job with -- i think they're going to do a good job with pricing it, not making some of the mistakes again that coin base just made i like the way that they kind of allocated stock to their retail customer base. i think it's a smart marketing move. >> i want to talk about that allocation in a second you now referenced coin base a
7:53 am
bunch of times what do you think their mistake was? >> i think their mistake was that they let the price get away by doing so, by doing so, you k know, whenever you leave kind of institutional investors and the street holding the bag on an ipo, it is very difficult to get back to levels that make it like a good deal, good taste in people's mouth you can't bring a stock out at 350 and have it lose 50% of their value, almost instantly. that's a brutal offering so, i think robinhood learned a lot from that ipo. i don't think they'll make the same mistake. >> are you planning to buy in? >> it all depends on price so i am a competitor, obviously, of robinhood at the same time, i am impressed with their ability, their virality and their ability to maintain superstar status. that's all impressive to me. i'm a trader so if it's cheap enough, i like it if it's too expense ive, i think
7:54 am
it needs to be sold. >> and how do you think the retail reddit community, if you will, that trades on robinhood that are getting this allocation should think about it? >> i think it's a happy meal philosophy by robinhood. most people will get one share it's really more of -- it's kind of like a goodwill gesture it's not much more than a share or two shares or something like that i don't think it's meaningful in a way other than it's a show of good faith i think people generally are going to want to believe in the robinhood offering and i think robinhood -- you know, we have to see how robinhood performs based on the fact that their business -- remember, their business is primarily options and crypto that's where they make their money. you have to think that business over the course of the last quarter, has really fallen off
7:55 am
the options business is down 30% across the board and the crypto business could be down as much as 60, 70% over the last quarter. it's really a question of if they can maintain their momentum and maintain that, as i called it before, superstar status. >> i was going to ask you that you touched on two of the money makers for them, crypto and the options market do you think long term that's a sustainable market when you look at crypto or sustainable to grow at the same levels they have you have this doge coin phenomenon, which they even indicated am their own filings was a huge part of the story in the quarter prior and then, of course, as you indicated the options market as well but at the same time, you look at coin base or any of these crypto -- anybody in the crypto business, you would say this should be a long-term growth play. >> so, i think that -- although
7:56 am
i think doge coin is -- you can pretty much write off doge coin at this point. i think robinhood, for whatever reason they morphed into this model. don't think of them as a stock firm because they're not i love -- remember, i'm in the same business. i build option and crypto software i love their business going in the direction of primarily and strategic underlyings like options, asset and high-volatility asset holds like crypto the future of digitization and tokenization is huge i love the zreks they're going robinhood's problem is their limitations. they don't offer all products or all strategies they don't offer all account types. they're very limited in what they actually offer. when you think about the competition out there, ourselves and all the other firms that are looking at robinhood going, you know what? this is app based technology we can compete with this we can blow their technology out of the water that's their biggest risk.
7:57 am
options and crypto is where every firm should be right now. >> tom, thank you so very much for your perspective we will, of course, watch for the offering later this week. >> have a great week thanks, andrew. >> you, too. joe? coming up, mick mulvaney and john hope bryant debate the latest infrastructure plan and how to pay for it. then later hayman's jon kyl will join us. check out tesla shares this morning. if you are superstitious, it just -- i don't know about superstition that's the sign of the devil 666. .66. it had five of them moments ago. threes bad i know that. u' wchas on damien's head. yoreating "squawk box" on cnbc orkplace) (sound of a busy office) (phones ringing, people talking, meeting)
7:58 am
the company we've trusted to keep us working remotely, is the same company we'll trust to bring us back together. safely. securely. and responsibly. so now, between all apart and all together, there's a bridge. cisco. the bridge to possible.
7:59 am
i've spent centuries evolving with the world. some changes made me stronger. others, weaker. that's the nature of being the economy. i've observed investors navigating the unexpected, choosing assets to balance risk and reward. and i've seen how one element has secured their portfolios, time after time. gold. an element so agile and liquid. a proven protector. an ever-evolving enabler of bold decisions. an asset more relevant than ever before. gold. your strategic advantage.
8:00 am
futures pointing lower we got improved from the worst levels today could we see a repeat of yesterday as we kept multi-day
8:01 am
winning streaks alive? earnings rolling in from america's biggest companies. results from ge, 3m, tesla and more plus we get you ready for tonight's critical reports from the u.s. tech giants and what lesson should u.s. investors be taking away from china's latest crackdown it's intensified just this week. the always outspoken hedge fund manager kyle bass will join us with his take as the final hour of "squawk box" begins right now. good morning, and welcome back to "squawk box" here on cnbc i'm joe kechlrnin along with anw
8:02 am
ross sorkin. and morgan, becky quick is off we can count on you? >> you can count on me. >> just want to take your temperature, make sure everything is okay equity futures this hour are negative but not too bad remember yesterday, it looked horrible early in the morning. as it happens so often it had nothing to do with the trading in the day or by the end of the day. you can see the nasdaq is actually in the green. lot of tech earnings after the bell treasury yields, we don't even raise an eyebrow somehow we're not at 2%, not at 1.75%. we're at 1.25 and act like that's okay. still not sure no one has given us a real satisfactory answer. maybe it's covid fears, global growth fears or the differential between what we offer here and what the rest of the world can get. it makes more sense if you're not worried about the dollar the spread is still there.
8:03 am
crypto currencies playing into crypto's decline moments ago it was back above 38,000 it was 29,000 a week ago amazon is denying a report from a london newspaper it might accept bitcoin for payments by the end of the year. we talked about it, morgan they said, you know, we're looking into it. they were just denying it would be -- >> so soon. >> it would be so soon but i don't know what finally happened that's a long word there, isn't it, cryptocurrency, lot of letters. >> say it three times fast. >> i can do that becky has one that's impossible. something about sea shells but you say a dirty word when you say it. >> oh. >> be careful. big slate of corporate earnings also posting positive cash flow, that was a surprise. quar quarterly revenue got a boost at ge's aviation and power divisions, also upped guidance
8:04 am
do not miss ge's ceo larry culp around 9:30 a.m. eastern time on "squawk on the street. 3m posting better than expected profit and revenue the company roadwayed its full-year outlook as its various businesses recovered from the pandemic logistics giant u.p.s. is actually lower after posting its own set of quarterly numbers the company beat overall revenue and profit forecast as the pandemic fueled surge in e-commerce shipments continue, though domestic revenue was a bit light. those shares are down almost 2.5% right now in premarket trading. i would also note, joe, raytheon technologies put out numbers whether it's ge, raytheon or boeing results before the bell tomorrow morning, big focus right now, aerospace and aviation and the beginnings of
8:05 am
this recovery. we saw it last week with honeywell, beginnings of this recovery as people get on more pla planes, airlines start to order more aircraft and fuel efficiency, et cetera, all of that is starting to come together to increase the numbers that some of these industrials focus on that. >> i wish you luck i hope we're not jumping the gun on reopening that's the fear, obviously, with the delta variant. if i were delta, i would be really unhappy here they are try ing to -- right? first it was poor corona. >> unfortunate name choice. >> exactly one person pointed out to me, morgan, some of the gains in revenue that u.p.s. was able to put up had something to do with pricing and not as much to do with units so maybe that might be part of it, too. >> u.p.s. and fedex in general has been capacity constraints. they've been able to raise price s, implement surcharges and the like on different types of shipments and really speaks to how many things are moving
8:06 am
through these transportation efforts and this say longer-term story, one we've been talking about for years, but why amazon is building out its own transportation structure as well and also all the recovery e efforts we see starting to play out, starting to play out at the postal service, too. people are getting more and more stuff online shipped to their homes and there's just not enough capacity for it the pricing power is there, even if the volumes aren't. >> we continue with earnings theme. tesla getting a profitable milestone in the second quarter. phil lebeau joins us with the details now. hey, phil. >> hey, joe, analyst reports, words like impressive, strong, nice start could be an impressive second half of the year second half of the year, it's all about production on that front we did get news from tesla yesterday first off with the tesla semi. this will be built down at the
8:07 am
giga factory outside of austin, texas. they are pushing that out to 2022 it was supposed to start production this year the model y texas production will begin this year unclear if we'll see any delivers and the cyber truck, which will also be built in austin, that comes after the y unclear whether or not that will happen this year or pushed out into next year elon musk on the conference call, he did indicate the lack of semi conductors is impacting produ production. >> on our output it's difficult for us to say how long this will last because we don't have -- this is out of our control essentially. it does seem like it's getting better but it's hard to predict. >> all of this raises the question, what will be the full
8:08 am
year deliveries from tesla keep in mind that this company delivered 385,000 vehicles, roughly speaking, in the first half of this year. they'll easily blow by the half million they delivered last year will they hit 850 or 860,000 vehicles delivered this year that's the consensus there was no guidance from the company yesterday. it's unclear of what we can expect from them in terms of more definitive number on second half deliveries. the gross margins, 25.8% once you strip out the ev credits and that was better than many people were expecting also they doubled their operating profit margin sequentially from q1 to q2 you see a company that is growing here and that margin growth is getting a lot of attention on wall street that's why you see a number of notes where analysts are saying this is fantastic. this is what you want to see with this company. now can they continue it in the third and fourth quarters and
8:09 am
then in the years to come? >> when will i see one of those funky looking trucks, phil >> cyber trucks? >> yeah, yeah. >> look, if they begin production this year, given their language, i'll be surprised. they still could they haven't changed their guidance formally. it will begin after model y production, and the model y production in texas will begin before the end of this year. with that in mind, joe, i don't think you start to see the cyber truck out on the road until the first or second quarter at the earliest next year and then you really don't see it in numbers until the second half of next year and ethose numbers will be smal. >> for evs being such a small number of cars on the road, there's a certain neighborhood where every car is a tesla, phil. >> that's true. >> they're the nicer neighborhoods where you see that lot of those smaller ones. >> yeah. >> everywhere. >> and, joe, that's part of the
8:10 am
challenge that everybody is talking about. how do they bring their pricing down to the mass market level? and spare me the song and dance where people will say, well, yeah, they've got mass market vehicles they're on the fringe of it because the average price is close to $50,000, maybe over t that you're not looking at true mass market yet. >> all right, phil thanks phil lebeau. >> i like that cyber truck, though making it with the starship rocket system, swi fun we're going to shift gears here, haha the fed kicks off its two-day policy meeting microsoft and alphabet after the bell tiffany wilding, north american economist at pimco and liz young at sofi. liz, let's kick it off with you.
8:11 am
we've got a bebevy of industrial names. what does this do for broader markets as we hover near record h highs? >> good morning, morgan. earnings season, if you look at how they moved through the quarter they moved upwards by 7.4% usually those move downward. we're seeing now that the bar got higher and we're still beating. the last time i checked 85 to 87% of companies were beating estimates. earnings season is going great here is the thing. we're now transitioning into a period where companies have to prove that they have durability, that they have growth prospects without further stimulus quality matters. fundamentals matter. and mo movements in markets will be more muted based on movements in markets based on momentum and
8:12 am
expansion. the important piece is that we don't disappoint on earnings. >> tiffany, we've seen hotter than expected inflation ratings. we're certainly continuing to get that inflation and pricing rhetoric out of companies that are reporting the results right now as well. does this put any kind of pressure right now on the fed, as it gets into its two-day meeting? or given the fact that we're seeing the emergence of this delta variant and increase in cases, the fact that you still have millions of people that are not actively in the labor market right now, does that give the fed cover? >> yeah. well, i think that's a discussion that federal reserve members are going to have today and tomorrow during their meeting. it's really about tapering is the focus, and when they're going to start we think there's three questions. how do you taper do you do treasuries or mortgages first? what is substantial progress and you kind of alluded to the inflation side of the mandate. i think it's very clear we met
8:13 am
substantial progress federal reserve members will be talking about what it means on the labor market side. then there's this third question we'll have to address which is when and how to provide advance notice which chair powell has sort of promised so we think you're absolutely right that inflation is going to put some pressure on them. but at the same time, some of the forward-looking indicators of inflation, we've seen oil prices start to cool off demand has peaked. actually, our suggestive inflation will come down we think it most likely happens in december that you get a tapering announcement. >> let's talk about how that's playing out in the bond market, tiffany. 1.25 right now for the ten-year, treasury note yields, lower or higher from here, given the fact that taper is -- or at least talk of taper is on the table in the next couple of months? >> i think the interesting thing about -- if you look in the past, when the fed has stopped
8:14 am
its purchase programs, what have bond yields done interestingly, bond yields have tended to rally, because the market starts to get worried about, you know, growth prospects. it thinks that the federal reserve has pulled back on its accommodation, maybe a little too quickly. and you actually see a rally in bonds. so i think it's very uncertain obviously, markets do what markets do i think the federal reserve here will be very focused on broader financial conditions so not just the bond market. look at equities look at the dollar their bottom line is although they're taking their foot off the gas pedal a little bit here, they still want broad er financial conditions to remain easy. >> liz, quickly, how should investors be positioned, given all of these big cross current we're talking about right now? >> i think the most important thing for investors to do right now is evaluate whether they're
8:15 am
overly concentrated in some of those big tech areas and the areas that have done really well to this point because as we move through the rest of the year, and i know this is a tale as old as time but the ten-year does start to move up cyclical assets should benefit from that. >> thank you for joining us. markets right now are poised to open basically flat for the s&p if we stay at these levels andrew coming up, we've heard a group of senators is now close to an infrastructure deal. will it be able to cover america's list of repairs and be paid for responsibly we have a debate on the way that you don't want to miss plus hedge fund manager and china hawk kyle bass will join us on the growing fallout from beijing's latest crackdown on big business stay tuned we're right back after this.
8:16 am
8:17 am
♪ watch the olympic games on xfinity ♪ ♪ root for team usa and feel the energy ♪ ♪ 7000 plus hours of the olympics on display ♪ ♪ with xfinity you get every hour of every day ♪ ♪ different sports on different screens ♪ ♪ you can watch it anywhere ♪ ♪ and with the voice remote ♪ ♪ you never have to leave your chair ♪ show me team usa. ♪ all of this innovation could lead to some inspiration ♪ ♪ and you might be the next one to represent our nation ♪ ♪ this summer on your tv, tablet, or any screen ♪ ♪ xfinity is here to inspire your biggest dreams ♪
8:18 am
leslie picker joins us with more leslie >> call it ipo fomo, stocks soaring on their first day of trading. who gains from these situations?
8:19 am
it's those who get allocation at the ipo price. historically that's been largely institutional investors. with the recent rise of the retail investor, it's poster child, robinhood, is looking to narrow that gap. loo looking to sell up to 35% of its multibillion dollar offering, far higher than is typical that could go one of two ways, if the stock pops, it could help enrich account holders who bought in. if it drops, they upset a wider variety of stake holders that means it's imperative that they price this deal to perfection there are fewer institutional investors out there, retail investors. traditionally, bankers who allocate deals to a smaller group of fund managers are supposed to have insight into how much stock they're willing to buy and at what price retail is also seen as much more fickle holders of ipos, more likely, for example, to flip on momentum i've spoken with several
8:20 am
investors. they're a bit nervous about the potential volatility as a result but who knows? maybe this is the deal that proves conventional ipo convention wrong we'll find out on thursday, joe. >> okay, leslie. thanks. coming up, can lawmakers seal the deal on an infrastructure package worth hundreds of billions of dollars? i think -- depends which number you're talking about can you start with a t really. it's a trillion. we'll get into the nitty gritty of how to pay for a nationwide asset upgrade. all the things, all around you... where you learn, work, and fly... we help make them healthier. we are the people of abm. for more than 100 years, we've been a leader in making spaces cleaner, from the things you touch to the air you breathe. today, more than 100,000 of us are innovating to ensure spaces are more efficient, healthier and safer. abm. making spaces healthier for you.
8:21 am
healthier and safer. girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”! young woman whispering: hey, did you bring the... the condoms? young man whispering: what's up? young woman whispering: condoms father: condoms charlie. she wants to know if you brought any condoms. young man: yeah i brought some. ancr: eargo a vitually invisible hearing loss solution with high quality sound and lifetime support. eargo 5 is here. our latest device that allows you to personalize your hearing experience. get yours today. and if you're and active or retired federal employee you may qualify to get eargo at no cost to you.
8:22 am
jerry is here! j! mate, how are ya!? it's so good to see you. good to see all of you, yeah! why is jerry so... popular? it's been like this ever since we started using workday. what do you mean? it makes it easier to develop great relationships with our suppliers. now everyone, everywhere loves jerry. they sure do. they do. they really do. mmhmm. workday. finance, hr, planning and spend management for a changing world.
8:23 am
welcome back to "squawk box. chuck schumer tried a test vote, which republicans defeated still we heard a deal was close. maybe we would even get one on monday well monday has come and gone and still no agreement senators are apparently still struggling with how to pay for the nation's physical upgrades joining us to talk about footing that bill for instruct, mick mulvaney, former omb director and white house chief of staff under president trump, and founder of axios capital, and john hope bryant, founder of hope capital where do you think the state of
8:24 am
play is, specifically on the republican side, which is thus far, i think, blocked this bill? >> morning, andrew maybe. keep in mind the introduction you gave is not entirely true. that bill failed on wednesday, it wasn't a specific bill. it was quite literally a blank piece of paper i don't think it does anything for or against the bill to vote against that i don't think it's fair to say that the republicans are bl blocking they're having difficulty trying to figure out a way to pay for something. this probably doesn't surprise anybody if they're actually interested in paying for it. pay fors in washington, d.c., are easy because they aren't real if you want to do it for real, you have to reduce spending some place else, which nobody wants to do, or raise revenues, which nobody wants to do i told you five weeks ago i thought we were moving towards a deal because republicans said they weren't going to allow the pay fors to stand in the way of the deal now they're insisting on that pay for. until you hear that language
8:25 am
change, go back to discussions about not having to worry how to pay for it, i think this will tip to face headwinds in washington, d.c. and make it more difficult to get a deal done. >> john, you're a guy who cares about pay fors, right? >> yeah. well, of course. you have to pay for everything in life. i would rather be netflix right now than blockbuster look, blockbuster could have bought netflix for $50 million and they threw their nose up and said no, we have to know all the facts and where is the revenue coming from? you're a new technology. we don't think so. blockbuster is bankrupt and netflix is worth billions of dollars. china is try ing to eat our lunch. we're at war -- i'm sorry, there are folks in the world who are at war with america. and they are making trillion dollar investments a couple of years ago in physical
8:26 am
infrastructure there and around the world and in human capital infrastructure look, mick knows, he's a smart man -- first of all his guy, the former president, had a $2 trillion proposal that wasn't nearly as well thought out as this one so let's put that on the record. let's put on the record, andrew, every time there's an investment at the bottom of the pyramid, including infrastructure, republican and democratic presidents for 70 years, economy has popped let's also put on the record that 70% of the u.s. gdp comes from consumer spending where is this going to come from if we do it right? increased mobility, better jobs, which wcreate more revenue because you're paying more into the system you're going to reuse some of the unspent covid money, unspent ininsurance money. irs is going to do their job, et cetera this is not complicated. my friend, stevie wonder, can see this and he wouldn't mind me saying that this is the future of this
8:27 am
country on the table and i'm betting, like i did on the olympics, on america. >> mick mulvaney, he just threw it down. >> listen, john and i could do this for an hour and sometimes i would appreciate to do that with him face-to-face it would be a lot of fun fundamentally the way that john looks at the world and i looked at the world, that's fine. you can agree with most of what he just said and ask yourself, who is going to do that better, the government or the private sector all the things john just listed out were happening in the trump administration the money was flowing to folks at the bottom of the period. unemployment was down. we had no inflation. all of those things were happening in the private sector. that's a longer discussion for another day. right now in washington, d.c., if you look at what's happening, whether or not they've got deal fever or not keep in mind the house leaves washington on friday and are not scheduled to come back to washington, d.c., until,
8:28 am
i believe, september 20th. the senate, i think, might stay an extra week or two in august but aren't here very much for the next several weeks you have a deadline the end of september because the fiscal year ends. you've got a debt ceiling you have to deal with. the debt ceiling technically expires on the 31st of july. i think they should do some of will depend on whether they have the time to do it. just saying they have a deal, as they did five weeks ago, doesn't mean they have a deal. while it's easy to do and stevie wonder could see it, to use john hope's words, it's hard to get it done in washington, d.c., and that's why you're seeing such difficulty moving towards what everybody seems to think is a good thing, and that's infrastructure. >> john, let me ask you two questions. one is, do you believe that there are elements of this infrastructure plan that should be effectively pursued by the private sector rather than the
8:29 am
government and the other piece of it is that a lot of money, as you know, has been spent over this last year and a half, 18 months now, and whether you think that -- depending how much more we spend, that we might actually create our own economic problem? >> yeah. an andrew, of course, you're asking the pressing questions this is between spend and investment when you're trying not to fall into a hole that's called spent. that's what happened during covid. 2020 was an unprecedented year for the last 125 years never in the history of this country, health pandemic that rivalled the spanish flu reckoning on black america, economic crisis that rivals the great depression a crisis of our democracy, economic crisis, health crisis, it was younprecedented. we had to throw money into hole to seal it, including on wall
8:30 am
street everybody watching this knows that that's true that's why stocks and wall street is stabilizing and done so well. we're also talking about for the ma masses right now that work for the classes. as i tell my rich friends this my rich friends, my poor friends do better only if you stay rich. we have to start investing at the bottom of the pyramid. a living wage. not a minimum wage a living wage. i actually think it's in everybody's best interest. this is another debate for another time we have proven it can be paid for by even small business it can be offset with things like earned income tax credit, which republicans and democrats both agree on, by the way. by the way, mick, six out of ten republicans agree on this infrastructure and infrastructure is necessary. and even the things you mentioned that are so-called my ideas, investments in human capital, in women's ability take care of their children we really don't have time for
8:31 am
this larger conversation but i basically believe, yes, internships, apprenticeships, retraining, entrepreneurship and that will boost gdp, too. >> john, mick, we have to leave the conversation there it's a debate. i know we will continue it appreciate both of you good to see you both joe? rick santelli is standing by at the cme in chicago. rick, the numbers, please? >> yes durable goods orders, joe. preliminary up .8% on headline this follows what was a solid up 2.3 that now moves into a positive 3.2 so they ramped it up higher. so .8, look at more as an averaging fits and starts on the reopening. if you strip out transportation, it drops down to up .3%. last look was up .3% on the final read but it was upgraded to up .5%.
8:32 am
nondefense aircraft, proxy for capital spending by business, super important component, is up .5. sequ sequentially, and lastly we switched to shipments versus orders, up .6. it's the only revision that went the other way from 1.1 to up .9. to summarize, the numbers were definitely a bit weaker on headline all the other numbers were around as expected when you factor in the revision s, especially on the headline number, it really does give you this notion that things aren't going badly, it's just month to month there's a lot of volatility interest rates were 124 down from that 128, 129 level listen, we could all debate fundamentals nobody sends anybody a memo saying this is exactly why the market moved yesterday however, there is a bias for buying to keep interest rates low. in my opinion, we could all take
8:33 am
the easy route and say, it has something to do with inflation i don't necessarily think so i think it has more to do with flows and logistics. joe, back to you. >> thank you lies-mania, steve liesman joins us now any color to what you heard rick saying, steve? >> i want to talk about something maybe we haven't spoken about maybe you guys have, but not with rick anyway he's absolutely right that in a lot of ways this is about inflation. what i have been impressed with is the investment numbers, capital goods ex-aircraft, proxy for business investment. we saw strong investment planning numbers yesterday in the name survey. what we haven't spoken a bit about, joe, is the connection of this to inflation. the idea that companies have costs rising they have supply shortages and all kinds of problems in their supply chain what appears to be happening,
8:34 am
and i don't know how much all of this is connected to it. companies are investing in technology in order to get around labor shortages, get around supply shortages and deal with inflation what do you do when your prices rise you try to do a couple of things first thing is you try to pass them along we talked yesterday about how companies have, indeed, been able to pass along pricing and found some pricing power that maybe they didn't know existed the other thing youdo is look at your expenses what we're seeing, for sure, joe -- and this is like you wouldn't think about this necessarily, but you have this inflation surge and that seems to be helping tech and i think wall street has figured this out but the idea that rising prices, look at your productivity, and see if you can find some answers in the technology and companies look to be doing that right now. >> okay, steve we've got to move. we've got kyle bass coming up. so we'll go abroad as soon as we can, and we'll definitely return all these issues tomorrow or in coming days. there he is. sorry, morgan. you need to say that
8:35 am
you emphasize it. >> all right. coming up, hayman capital's kyle bass, china's crackdown and what it anmes for investors. this is an interview you do not want to miss "squawk box" will be right back. sales event. get 1.9% apr financing on the 2021 rx 350. experience amazing. on the 2021 rx 350. ♪ ♪ ♪ digital transformation has failed to take off. because it hasn't removed the endless mundane work we all hate. ♪ ♪ ♪ automation can solve that by taking on repetitive tasks for us. unleash your potential. uipath. reboot work. there's interest you accrue,
8:36 am
and interests you pursue. plans for the long term, and plans for a long weekend. assets you allocate, and ones you hold tight. at thrivent, we believe money is a tool, not a goal. and with the right guidance, you can get the financial clarity you need, and live a life rich in meaning, and gratitude. to learn more, text thrive to 444555, or visit
8:37 am
8:38 am
coming up, jim cramer's first take on the trading day ahead. and kyle bass, cio of hayman capital, and the crackdown in beijing. biggest companies that report quarterly earnings this morning are indog in the market right now. stay tuned you're watching cnbc
8:39 am
millions of vulnerable americans struggle to get reliable transportation
8:40 am
to their medical appointments. that's why i started medhaul. citi launched the impact fund to invest in both women and entrepreneurs of color like me, so i can realize my vision and give everything i've got to my company, and my community. i got you. for the love of people. for the love of community. for the love of progress. citi.
8:41 am
>> china has taken the last few months to increase scrutiny on some of its big businesses let's spread to dp global, well below its ipo price. and just yesterday -- just today and yesterday, temporarily suspended registration of new accounts the reason the company told reuters is to align with relevant regulations and laws in china. talk about after-school tutoring and that got out of control. let's talk with an influential investor who has been paying close attention to china and the country's government for years kyle bass, hayman capital management founder and chief investment officer we know china wants to compete on all levels, economic. now we're hearing about another nuclear silo plan. new missile base for china i don't know if you saw "the new york times" report
8:42 am
that's the second one in recent weeks, capable of having a lot of missiles, whether they put them there or not, it seems to be leaving the minimum deterrent strategy it had in joining the arms race with the u.s. and russia does this make sense to you, part of your overall thinking with what china is trying to do? >> one of your prior guests said even stevie wonder could see what was going on. i'm going to tell you, it's easy to see what you understand fundamental ideology of the communist party in china all of the things that are happening today are impossible to discuount they're easy to see coming at some point in time again i think when we think about investing, first of all, chinese companies won't submit themselves to covered audits like all u.s. companies do now you have to discount xi jinping or communist party risk.
8:43 am
how can you pay a multiple, huge multiple of earnings with all of those things in front of you this is going to be a panacea for plaintiffs' lawyers and individual investors when they start bringing arbitrations against their fund managers, brokers, r raas. >> what's the end game we talked about it obviously state-controlled businesses, if the state feels like it's losing control, they're going to come in and assert themselves. maybe that's it. but we've talked about that this could dampen gdp growth down the road that part of the last 20 or 30 ye years, the miracle in china has been innovation in what is a pseudo private sector. why clamp down on that and kill the goose that's laying the golden eggs? why is this more important to xi
8:44 am
jinping? >> i think it's bigger than china, believe it or not given the financial global crisis in '08 and the viral crisis of the last couple of years, you've seen central banks around the world extend their balance sheets aggressively. we all know in the u.s. alone, there's 35% more money, more broad money in the system today than it was a year and a half ago. what's happening, right, we talked bin inflammation. but the differences between asset values moving up and the p poorer becoming more poor because they're having to pay more for food and energy and the basic staples of life, the middle class can't reach up. asset prices are moving too quickly. this is fundamentally core to what china is struggling with today. they have 400 million people supposedly in the middle class, which we define it differently here they still have a billion people in abject poverty. when that gap widens too much, china has to clamp down and figure out how to stop social
8:45 am
unrest because that's their worst fears as a country and so i think all of this is actually rooted in the amount of central bank expansion globally. and now what you see china doing is the government has total control. it's impossible to discounty they went after the food companies yesterday, they went after for-profit education the day before it all started with financial, now it's moving and attacking. what's next, health care i talked to a bunch of my friends today that are big global asset managers and they are finally starting to materially pull out of china and hong kong. this is just the beginning. >> whether it's for -- to maintain control over the masses or to try to bring more people into the middle class, that's almost -- you could almost say regardless of their intentions, that could be a good thing over time but what does it mean for the united states and for tension and for what looked kind of like a new cold war at times in the
8:46 am
way we're dealing with -- and maybe it's an economic cold war or a financial industry gold car. but it's definitely increasing tensions with the rest of the world. >> it's now easy to see the chinese communist party has shown you who they are and what they care about. as an investor, it's unconscionable to think about how you could invest in one of these chinese companies without audits, without the ability to discount risk. but as far as what their end game is, you look at what they're doing with their u.s. listings and at the same time, they're expanding their ability to bring companies in to hong kong, and they're saying that hong kong is going to adjust its listing requirements to make them much easier for chinese companies to list. beijing's hopes here are that people are going to stop investing in chinese companies in america and start investing in chinese companies in hong
8:47 am
kong i think it's a grave miscalculation on beijing's part. >> kyle, curious whether you think the american investor is now supposed to think that the numbers and audits from chinese companies is more reliable or will become more reliable or become less reliable as a result of what we're seeing. >> yeah. i mean, you know, they don't submit themselves to cover audits like all u.s. listings from every other country so in 2013, the s.e.c. gave china a pass. that pass last year was revoked. although they have three years to comply. in 2013, the agencies that are supposed to be protecting u.s. investors gave chinese -- they basically declared open season on u.s. investors. and so i believe that chinese companies won't submit
8:48 am
themselves to covered audits and what you're seeing happening now is china saying we're not going to list in the u.s we'll list over in hong kong now that we control hong kong. and i think that's their end game. >> but, kyle, the reason i ask is whether you think that the numbers are going -- to the extent there will be companies still listed here, whether those numbers effectively become more credible because of this crackdown or less credible. >> look, i don't think they're cr credible at all, just to start i think if you're not willing to submit yourself to a western-style audit, then who knows what those numbers are andrew, come on. no one believes china's numbers are real and i do dv i think people -- if people do believe that, they will continue to print fake numbers and it will look like growth but i think now the game has changed, given, again, trying to discount the chinese government risk on the audits themselves, there are no audits.
8:49 am
they still have two more years to comply with the legislation that came at them last year. so to this day, andrew, there is no audit that's reliable on any chinese-listed firm. ag again, you need to assess the risk and if you believe the numbers, you should keep your money in china if you don't believe the numbers, and i don't know how you invest -- >> kyle, it's morgan just to dig into that a little bit more, why then would this be a grave miscalculation for china, from china's perspective? as all this light is being shed on the variable interest entities, these vies, that are basically the spider web of pseudo ownership that investors in the u.s. are taking part in and are basically getting burned by as china calls these structures illegal here. >> we all know it's actually illegal in china for a foreign investor to own a chinese tech company. these vie structures are -- the
8:50 am
best analogy it's a fantasy football structure they set up an entity in the cayman islands if you own one of these shares you have no claim to their asset. if things go south or the company endss up filing bankruptcy, you could lose all of your investment. is a fantas share and a vie and that's problematic in its own right. >> well, there was -- this -- you know, some of the most incendiary and controversial things still involve the coronavirus and its origin we recently saw that we're not getting anywhere the w.h.o. is not getting anywhere france, we now find out, warned that wuhan lab was lacking in temples safety back -- years ago. three, four, five years ago. in your current thinking, what actually happened, and
8:51 am
accidental i assume you'd think, escaped from the lab was accidental, but it certainly influenced the entire world and -- and even the economic structure of the entire world. where are you on that? >> yeah. i mean, i think -- i think john stewart said it best on his stephen colbert appearance when he said what do you mean there's an outbreak of chocolatey goodness in hershey, pennsylvania that's essentially what happened here it's obvious to see. now, knowing -- >> the most obvious thing, where it's from and it is a messy detail we found in some research, i would think. >> yeah, but if you look to science and talk to the geneticists, worth their salt, any of them, including head of cal tech early on said we've looked at this virus, and the --
8:52 am
the makeup, the genetic makeup of the virus, and the spike proteins are non- -- are non-natural. again, i'm not a scientist, but the scientists that aren't paid by china that are the best geneticists in the world said it early. they said, this is definitely man-made and the fact that the chinese won't allow us in just to help them figure out who patient zero was and where this all began, we've essentially given the criminals a year and a half to clean up the crime scene and they still won't let us in and that is not being a responsible global actor we always want to give china the benefit of doubt i know on wall street a lot of people are chasing a lot of phantom profits in china, but they are not acting as a responsible global actor they still have a closed capital account. they only allow money in very difficult to get money out, yet we all can't wait to talk about investing in the next new chinese start-up
8:53 am
it's lunacy, and at some point in time we'll look back at this and say, all of the facts were on the wall, and yet we decided not to pay attention to them, and we either had fomo or couldn't wait to try to, our greed and aftveist took over. so surprised how much money people are going to lose as china cracks down on its private sector. >> if we had more time i'd ask about that maybe xi jinping at some point goes what was i thinking we will see. it's hard to understand and i made the point that we're kind of -- i don't want to keep using the stevie wonder analogy. i couldn't believe we used it the first time, but i'm not sure everything we think that we're seeing is what's actually happening. kyle, more going on here appreciate it. thank you. >> thank you. >> and we'll see you again soon. andrew meantime, down to the new
8:54 am
york stock exchange and say hello to jim cramer. so much to discuss with you, jim. thoughts on tesla from last night. i saw you, comments, you thought the call was a metss, but look where the stock is trading not such a mess. >> people like it. just saying kind of a disjointed call doing well i just think that what i was looking for was more of a, kind of a view of what he's doing instead evolved into talk about how he has supply chain problems lie everybody else i don't want to hear about that. i want to hear about greatness just excitement! it's like the -- >> you can't get it. >> no. i didn't get it at all i mean, yeah, i just -- netflix and tesla, they've become -- they've evolved into causes. might as well be making i don't know, tool and dye machines. where's the excitement where's all the great things that are going on in berlin?
8:55 am
where's what's happening in china? instead, hey, semis. you know worried an semis. >> old up. earnings reports from companies you make some tools and dye and other things like that -- ge is one of them. 3m is one of them. what's the takeaway? >> those are different i mean, these guys are trying things over a very difficult situation. ge, cash is better 3m, every single line is better. raytheon is extraordinarily strong and united parcel now, i had -- we have to have a talk kyle and i have to have a talk take your stock down, say what was said that's not a chinese stock, by the way'sthe chinese government isn't in there saying listen, we want you to be nonprofit you've got to give us more of a story. went to an analyst meeting wasn't that great. now this we're going to flush that out and find out what the story is,
8:56 am
andrew, because we -- >> and going over time but i -- >> no, you're not. >> 20 seconds. >> with the journali ism gods with who >> bitcoin what do you think did you believe these -- >> how do you like the way they lied about the amazon thing, got the short squeeze going. don't you just love that can someone go to jail just for doing the wrong thing? >> explain what you mean so everybody gets on the same page. >> a guy short obviously maybe a big short guy, and everybody, everyone played along with this lie that carl correctly said at the opening, you do not have sources on this that can possibly verify this. that didn't matter. >> i'm with you, jim i'm going to get in trouble. wep have to go see you in a couple minutes. >> your mommy is going to, grandmommy, who's 100 llwi call you and just lecture you. it's the sound of a thousand sighs of relief and of a company watching out for you.
8:57 am
this is the sound of low cash mode from pnc bank, giving you multiple options and at least 24 hours to help you avoid an overdraft fee. because we believe how you handle overdrafts should be in your control, not just your bank's. low cash mode on virtual wallet from pnc bank. one way we're making a difference. competition beat us again. how? they have a better finance system than we do. i feel like they might have a better finance system than we do. workday. how do they make better decisions faster?
8:58 am
workday. it's got to be something workday. i think i got something. work... hey, rob, you're on mute. hello! hey, rob, there he is. workday. the finance, hr and planning system for a changing world. this couple is working hard on our state's recovery. you see, they live in california and keeping their vacation in california
8:59 am
supports our small businesses and communities. which means that beautiful baby gherkin atop this charcuterie masterpiece is like another brick in the rebuilding of our economy. job well done friends. calling all californians. keep your vacation here and help our state get back to work. and please travel responsibly. final check on the markets, which are now, you see red on the s&p and dow. dow down about 90 points nasdaq, up about eight or so and the ten year, which we watch quite a bit, but, you know, once it got under 13, hasn't been quite as active. 1.25%. all bets off, probably. in the, after 4:00, in all of these big tech earnings come in, and then more tomorrow and more the next day and -- morgan, andrew, just
9:00 am
saying how excited can't believe, said i'm looking forward to every day -- >> so excited. >> this week really nice. >> ipo -- >> i mean being on here with -- >> and that. >> and that other stuff. and that other stuff. >> give me this, straight to the bank. >> flying. make sure you join us tomorrow "squawk on the street," coming up right now good tuesday morning welcome to "squawk on the street" i'm carl quintanilla with jim cramer, dave faber at the new york stock exchange. big show ahead ceos of ge and raytheon tech, earning from the industrial sector like 3m and u.p.s. roll in apple, google microsoft on deck tonight. home prices bottom of your screen and futures off the early lows as the major indices are on a five-day win streak. road map begins with tesla the record quarter blowing past expectations


info Stream Only

Uploaded by TV Archive on