tv Squawk Box CNBC August 10, 2016 6:00am-9:01am EDT
>> good morning, everything. happy hump day and welcome to "squawk box" here on cnbc. i'm becky quick along with scott. let's take a look at the u.s. equity futures this hour. you're going to see some very modest advances. this comes on the heels of very modest gains. yesterday the dow was up. s&p higher. nasdaq hit another new high. the dow is within spitting distance of that new high and this has been a rather quiet rally we've been watching. in the months you were supposed to sell in may and go away. we're going to talk about that with analysts. in the meantime check out what happened overnight in asia. you'll see the nikkei is down. closed down less than .20%.
the hang sang looked down. looks like the dax is the biggest decliner. cac is down .4. the ftse down less than .20%. let's take a look at crude oil prices. gave back a little bit of ground yesterday. continuing that this morning with the decline of .52 for wti. should point out well above $42. it's that $40 level that is the psychological level that makes people nervous. >> and here are the big stories we're watching today. delta continuings to recover from a computer outage earlier in the week that caused hundreds of cancellations and delays. leading to normal operations by
midday. bank of england running into a problem on the second day of new bond buying plan. fell 52 million pound short of purchase target. investors refusing to sell guildiguild i guilts overnights. on today's agenda, retailers take center stage before the bell. michael kors and ralph lauren report earnings. two food companies, wendy's before the bell and shake shack after the close. on the econ mortgage application, they come out at 7:00 a.m. jobs opening and labor survey for june out at 10:00 a.m. 2:00 p.m. we get the treasuries released on budgets. >> political news, donald trump on a campaign stop in will mington north carolina. starting controversy with his comments on the second
amendment. >> hillary wants to abolish, essentially abolish the second
amendment. by the way, if she gets to pack if she gets to pick her judges, nothing you can do folks. although the second amendment people, maybe there is, i don't know. >> clinton's campaign immediately condemning the comments. suggesting he was inviting violence, but a top trump adviser telling cnbc news he was talking about the second amendment
exercising voting power. holding campaign events today in virginia and florida. >> we're going to get a chance to talk to mr. trump himself tomorrow about this. he'll be on to talk about the economic policy he announced earlier this week. we'll talk about a lot of issues and he can give us his comments. >> i'll be here for that. look forward to that. house speaker paul ryan easily defeating challenger in wisconsin last night. donald trump has praised the competitor on the trail, but
late last week, as you know, he endorsed ryan. this was a run away vote for paul ryan. 85% of the voters voted for him versus 15% for his competitor. just shows you at least where he is in wisconsin. he still have a very close connection with the voters and they see his brand of conservativism his way. >> that was a blowout. >> yes. >> it was like 85 to 15 was the last i saw. >> disney reports profits in revenues better than expected, but the big announcement is about overthe top streaming for directv in a major investment in bam tech. that stole the show. here's bob iger on the closing bell yesterday. >> we think it's a good investment. we love the business model. we think in today's world having the ability to stream on a scaled basis live sports and live programming is a
competitive advantage and something that's necessary. we love the user interface. so overall we look at it as an investment, but as a partner, as a part owner and ultimately as a majority owner, we feel it gives us an ability to jump start not only espn, but our other business as well. >> and here was iger's response when asked about the impact of zika on the park's business. >> it hasn't. haven't seen anything we've been concerned about in terms of visitation or bookings. >> joins us now, stan myers. >> as we look at the quarter, disney reported decedent earnings. the studio literally outperformed all expectations. up 40% in the quarter. theme parks came in ahead of expectations as well despite the easter holiday moving into the
march quarter. and then finally, the media networks improved 2% as well. i think one of the big drooirs there was the controversial affiliate fees. >> what do you make of this bet on major league baseball and the streaming and the over the top. >> so the biggest announcement of the night is espn getting into this over the top business. creating the over the top therapy. >> what is over the top mean. >> it means the consumer, you're by passing the traditional bundle and you're effectively charging $10 a month for the service. so what's important here is there's going to be two phases to his plan. one he hasn't really revealed yet, but it's going to become a leverage tool for the next cycle of negotiations with the big traditional bundles so he'll say if you don't give me the pricing that i want, we'll go over the top. we'll go there at the consumer.
>> should the investors today feel better about disney than they did one year ago or not. >> i think so. the main thesis main reason we upgrated the stock in march is it's ability to generate or the grout to across the good 50% of the busy which is theme parks, consumer product and movies to really outperform the deceleration of the espn. >> where are you -- if you were to say okay. media -- the media landscape going forward for disney. are you more apt to keept your estimates where they are. cut your estimates? i've seen estimate cuts coming down on the street this morning. >> there are a few timing issues and people adjusting to certain guidance on the quarter, but in general, i think disney remains as the best play in media in this fragment market is able to monetize all the content across the a number of platforms.
>> i want to know if he's put behind him the controversy of last quarter. does this undo that. >> that's where i was going with should you feel better. >> you want to go there. >> i did go there. >> thanks for paying attention. >> i just want to by more direct about it. what if it doesn't get the $10. does that not undermine? is that not a risk. >> the big question weighing in if the new package cannibalizes the bundle which is the bread and butter for dizzysney. >> were you surprised by anything in the quarter? either the major league baseball announcement? it's a decedent size bet. the over the top announcement, was it earlier than you thought. >> earlier than we were expecting, but even then the announcement, the content that will be on that platform will be limited to cone tent that is not on traditional tv. it's not a replacement yet.
>> yet. >> what's your rating on the stock. >> overweight. >> that's interesting. good having you here. >> let's get back to the broader markets. deutsche bank david is head of strategy at deutsche bank. also joining us is christina hooper. u.s. investment strategist and head of capital strategy at a alley yans. >> i think when we get to secht and olctober and we look back a the summer we're going to say, that was kind of silly. i think the market is still facing significant challenges. >> so silly the markets have risen to new highs in the face of all these challenges. you think that's a head fake. >> yes, i don't believe the market is terribly overvalued. it's ahead of its. we're yet to exit the profit
recession. i even believe third quarter earnings will be down 1% or so. i look at the oil market. i see it well over supplied. what we learned during q2 is the energy sector barely breaks even at $45 oil and i think it's going to be a challenge to have $45 oil. >> are you concerned about energy prices and what's happening because of the exact of profits on energy companies. are you concerned because if you look at energy it tells you demand is low. >> mostly concerned about the lack of profitability out of the energy sector. if we don't get stronger profits out of the energy sector by q4 in 2017. we're not going to get 5% or higher. >> that's what we're counting on is strong comps as oil prices rise. >> exactly. that's what makes it years to get back to growth and healthy mid single digit growth. also capex remains very week for a lot of reasons. >> we have excess capacity.
even property development particularly in china slowing. when i look at weak capex and weak commodity prices, i believe the bank of england is having success in policies, but it's driving down sterling. it's probably going to lead to lower interest rates. that's a challenge for banks. so i think the earning situation is still weak. i don't think we get to better profits until q4 or 2017. i know long-term yields are low and that boosts pe multiples, but i think the market is a bit ahead of itself. >> christine, what do you think. >> we would agree. there's been an unusual rally. much of it generated by the brexit vote. there was excitement among market participates this would force the fed's hand to be more accommodative. as a result this is not a fundamental based rally. so it's one that has vulnerability. >> i would argue, it's not just
the brexit vote, it's reaction from central banks as a result. the bank of england, the ecb. bank of japan, all of them running full throttle with negative interest rates. that means as an alternative the united states looks pretty good. i can understand it not being a fundamental rally, but i don't see any change in that outlook any time soon. >> i would agree in some ways. it is the least bad alternative in terms of where investors can go. having said that, i would argue that if we were to have some kind of external shock, the stock market in the u.s. could be vulnerable. >> would you both be telling clients at this point to keep money on the sideline, wait for a dip in the u.s. stocks. >> cash is the alternative. >> you're just saying wait for a pull back here. >> that's what i'm saying. >> well, what we're saying is there's no alternative, but to take risk. you have though be very careful and discerning in the risk you
take. you want the be well diversified. in the, for example, focus on dividend paying stocks. that's an area while they've certainly had a nice run, at least your getting paid and typically, well historically what we've seen is less downside volatility in dividend paying stocks than in the overall stock market environment. we have need to be careful in the environment. >> let me push back a minute on the lack of fundamental reason the market has got on the writ is. you could make an argument that if you look at the data from an employment standpoint, job markets has rebounded nicely. two straight months. that's a fundamental reason to feel optimistic about the united states. some of the things happening around the globe are not as good as are happening here. if you think earnings hit the trough and their growing to improve. there's the fear of missing out
what could be a decedent move in the market. doesn't any of that count for anything? >> certainly counts for something. some of those reasons you articulated are reasons the stock market has gone up, but jobs reports don't translate into earnings. they haven't yet. what i would say is that can account for some of the run up. >> david, the headline in today's wall street journal, is that a reason to sell stocks. >> product activity has been weak. the slow product activity means we're probably going to have slow growth and nomar gin upside for profits. i don't believe that means we're heading anywhere near a recession. >> sorry, but slow growth and weak growth in profits are two reasons to sell stocks. >> particularly against valuations that are very dependent on low interest rates, but the point here sr. that i
don't believe low productivity is going to lead to firing or le session. i think what you see is a mixed shift in the economy from manufacturing towards. >> but does it bother you the u.s. has three quarters running now of weak productivity raising questions about oability to gro profits. >> absolutely. that's why the recent rally has been vulnerable. i would argue perhaps we need to measure v look at ways to measure productivity. how we approach it is antiquated in ways. >> jim asked the question yesterday, how can wages be rising quite so much. they've been going up quite strongly while productivity is falling. it suggests companies are being
irration irrational. >> that's misleading. i think what happened is companies are not doing something irrational. it's harder to get productivity versus manufacturing. . i don't think the data is wrong. >> that's an interesting point. with service you can't increase your output like you can manufacturing. >> as long as you make money, it's worth hiring people. >> folks, thank you both for coming in today. it's good to see you. voters who don't like donald trump or hillary clinton they're looking for a third option. doctor jill stein excepted the green party's nomination for president.
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he sticks with that economic theme, he should definitely win hand down. i don't know why you wouldn't vote for him. the archie bunker or the world. that was a great show. i used to watch it. those guys are going to vote for him because they're smart guys. they know they're getting screwed. >> mr. icahn not a member of the team officially. he does express the views to the gop team. by the way, donald trump himself will be on "squawk box" tomorrow. that's at 7:00 a.m. eastern time looking forward to that. >> i liked when you asked the question of ocahn why he wasn't on the list of economic advisers. we had speculated that too. people didn't want to be associated with it. conspicuously absent. somebody long been list eed adda as potential cabinet member.
he wants to make sure he could raise money. that cleared up some questions i had from before too. >> he wants to remain flexible on that. he made it clear he would be setting up some sort of political action committee. he would contribute millions of dollars of his own money to do that. >> i can't get my brain around this archie bunker thing. he was a racist, right? that's a good thing. what am i missing here. >> i went back at karl on that and gave him the opportunity to sort of further explain himself which i think he did. meaning regular joe. >> i think he meant regular average joes feeling a little disinfranchised. disgruntled. maybe unhappy with the status quo. >> thanks steve. >> good job, scott. >> it's your turn. >> hillary clinton's campaign is making a play for enthusiastic
bernie supporters. so is team trump, but will they go green instead. let's bring in doctor jill stein. officially accepting the top spot in the parties convention in houston. >> thanks for joining us. >> great to be with you. i've seen a lot of your talking out there how you don't get the time and exposure that other candidates get. i'm not going to talk to you about the political angle. i want the give you a few minutes here. we have an unbelievable viewer ship of wealthy people and people who want to be wealthy. would you explain why they should vote for you. >> we need an economy that's working for us. right now it's working for very few. as i heard your guest say this economy is not growing. it's not productive. it is not something that people feel we have a future in right now. and the truth of the matter is in fact it's dead in the water. when you have so much wealth
concentrate instead so few hand t economy basically works for no one and right now we have a generation of young people locked in debt. we have an economy largely growing sfts industry jobs. the jobs that have come back are low-wage part-time insecure. health care costs are going up. one out of three americans can't afford. >> time is limited and that's excellent critique of the economy. if you could give us things you will do. >> as the only candidate that is not poisoned by corporate money lo lobbyists or super pacs. i can stand up for what we need. we need an energy jobs program. i would create a green new deal that solves the money of climate chance. i would cancel student debt like we did for the guys on wall street.
we can do and liberate a generation to lead us forward to the economy of the future. >> those are three. >> we can get higher education and free and health care as a human right. and i would also change or militariary so we get away from the catastrophic wars which are bankrupting us and arguably making us less secure, not more secure creating. we can put those dollars into a true security here at home. >> i was going to stop you at three you went to like five ideas. have you costed these out. how much will it cost for example to cost the debt. how much will it cost to create a government jobs program. >> great point for the debt we call for a quantitative easing where the fed buys the debt and agrees not to collect the date. it's an expansion of the money supply in a way that unleashes enormous productivity. it's basically the stimulus
package of the dreams. we get so much healthy when we zero out fossil fuels and create a healthy food supply. we get so much healthier that the reduction in the health care cost alone is enough to pay for the transition. in addition by making wars for oil obsolete, we actually can bring enough money from our bloated and dangerous military budget which is over 50% of our discretionary budget right now. instead put those dollars back into paying for the green deal as well. it essentially pay r for itself. >> you haven't mentioned the free market. is that part of your plan for economic growth in any way. >> yes, absolutely. we intend to free the market so it is not subject to the hang ups of a crony capitalist type market where you have market dominance by very few
industries. we intend to ensure small businesses have a fighting chance. they're not having to face incredible monopolies that can exert their influence through government and lobbying and campaign contributions to actually steeply tilt the playing field. we want the give small businesses as well as workers coopives and nonprofits. we want to give the average american a place in the economy again. they should be the backbone of our economy. >> we are less than 100 days to go from the election. in the last polls i saw, it looked you were polling 5% which is a big improvement from where you were in the 2012. if you look at gary johnson who is running at a libertarian, he's closer to 9%. you need 15% to get into the debates. what's you're goal? what do you hope to accomplish with this campaign? >> let me say that we have come
up in the polls since you said from basically invisible to five and six and 7%. over the course of about two months which is really an incredible increase considering that we've had almost zero coverage prior to now by mainstream media. so it's basically word of mouth. there are 42 million young people and not so young people who are trapped in student loan debt without a way out because our economy does not have the jobs that allow people to earn their way out of that debt. those 42 million people as they begin to hear that i'm the candidate that will actually cancel that debt like we did for wall street, we can do for a generation in debt, that word begins to spread and 42 million people in debt is actually a winning plurality of the vote. we intend to get that word out. >> i want to ask you very quickly wharks did you think of donald trump's comment last
night. >> very irresponsible and show him to be the fare monger and hate monger that he is. and, you know, donald trump is a demagogue and says horrific things. on the other hand, i think hillary clinton's track record is not something we want. >> there are stories today about her using the clinton foundation or the connections between her secretary and clinton foundation that i think would have been the lead of the day if not for donald trump's comments last night. >> that's right. he's absolutely shooting himself in the foot and we're seeing people leave the republican party by the droves. many coming into the democrats at the same time that the p democrats have basically fragmented and many of the progressives in bernie's company are leaving. we're really seeing a realignment election. we're developing one party and it falls to the graen party in this election to actually be the vehicle for people who want a
different way forward for an americas and world that actually works for all of us. >> doctor stein, a lot of things you laid out are really issues that bernie had been talking about at that point. seem tots me like you're pulling votes away from the democrats, not away from donald trump. >> well, you know, the statistics surprisingly show people across the political spectrum are very supportive of a campaign that is not dictated to by lobbyists and big special interest money. in fact, you know, there's not this new entitlement out there that says that big establishments politicians are entitled to your vote. they have to earn it. trump and clinton are the most disliked and untrusted candidates for president in our history. so you know, who is to say that tell every day team that they should be good little boys and girls and support these establishment candidates who have been throwing them under the bus. people the deserve the right.
they have a right to vote and they have a right to know who they can vote for and we intend to get that word out and empower voters to make a real choice in the election on behalf of themselves and the future. >> doctor stein, thank you so much for joining us. >> great to speak with you, thank you so mump. >> a golding night in rio for team usa. highlights straight ahead. then equity zen offers employees a way to cash in. connect sellers with the investors on the secondary market. take a look at the s&p 500 winners and losers from one day ago. ♪ ♪ ♪ ♪ as you can see, i build the jet engines,
welcome back to "squawk box." we are all breathless what a golden night it was for team usa in rio. michael phelps. women's gymnastics team emedical personnel emerging as the very best in the world. jay gray has the highlights from rio. >> reporter: power, grace, and gold. >> i'm so happy to be a part of this team with the incredible girls. >> reporter: the final five dunned themselves they are no doubt the best in the world. while the most decorated
olympian ever added medals 20 and 21. then joining his teammates to take the 4 by 200 relay. >> drew smyit's great to see te racking up gold metals here. >> so also on olympic schedule, mens and women's basketball team to. i don't know why we don't make more of michael phelps. he's won 21 medals. gold. all-time olympian. you know who the next person is down. nine. by some russian gymnast, in the 50s and 60s.
he's sot dominant in the history of olympics. >> his sport only paid attention to every four years. >> that's i guess that's -- same with gymnastics. his dominance over the decades is absolutely stunning. >> i don't know too many methamphetamine who dondon't know him in case. >> relative to his accomplishments, why isn't he more of a darling of corporate america. >> last night watching, he's had some big deals. >> he's had some personal issues throughout the years. >> he's had some, but i think he is. >> relative to his accomplishments. >> i don't know. i don't have a list in front of me. >> watching him last night we were all talking about watching it live, you watched his competitor in the next lane who looked over. the race had been set up between the two of them throughout the entire lead up to this, the south african guy look over at
him repeatedly because he completely got turned guys head. wouldn't look at him when he walked out. turned his back on him. >> i got a media question for you guys. i have to turn off my news alerts. because i found out who had won the women's gold during the day. >> the team gymnastic's gold. >> so did i. >> is it possible to illness late yourself from that. >> no, you know how i found out, pbs news hour. >> when you work in this business and you're surrounded by so many different mediums and all this other stuff. >> then i might miss something that's important for my job. >> chances of you going into it completely blind are null. >> i still watched. >> time now for the executive edge, the average time to ipo for private companies has risen from four years during the.com bubble to 11 years today. employees can be left sitting with a lot of equity, but very
little cash for much long asser than they would like. inte enter equity zen. giving employees an opportunity to cash out a percentage of the stake without having to wait for the company to go public. joining us now is the ceo and founder of equity zen. >> we read this long int introdescribes how you work. give us a better idea as to exactly how you do this. >> the simple version is equity zen is a marketplace they can buy and share before the company ipo. the total number of companies is at a 40 year low. used to be around 8,00020 years ago. now it's 4500. so where to people put their money. most of these companies are now taking over ten years to go
public. you take a look at the way amazon went public it was four years old. a lot of value has been created in the private market now and we're getting investors access before the company's go public. >> several relevant questions just given where the ipo market has been and the freeze up and maybe that indwindow has starte crack up a bit. how do you value the shares when it's not public marketplace. >> we indicates where they would like to sell or buy. we get the company's approval. very few marketplaces out there that will get the company's approval. you walk into the front door of the company. get the blessing from the company to let the transaction occur at the prices the buyers and sellers have greed upon. >> what does that mean? have you had people saying no way, we're not going to let this person sell shares or we don't like the price. >> you think about the way the private company transactions
work. if you are going through a round of financing. >> right, i don't want my employees coming out and selling at a lesser price so it looks like any valuation has dropped. >> there's certainly that. i think there's also a matter of keeping things at an arm's length and reducing liability as a company. saying i don't want a price setting transaction to occur while i'm working on a three-month process. >> has that significantly limited the shares? i can't think of too many companies that would be thrill with this. >> nine out of ten times that has not been a problem. usually it's a company is a strong one gets financing from a large blue chip investor and they're in the middle of a transaction. >>ky ask you a stupid question. some of these are given under a certain lockup. >> all. >> and you're allowed to get around the lockup. >> no, we go through the front lines. we go to the company and say
here are the transfer restrictions. it's two pages worth of restrictions you're shareholders have to abide by. equity zen wants to make sure every boxes are checked. here are the buyers and sellers. these are people that are not going to call the cfo and bother the company. >> is it only for sale with equity zen or once that lockup is awhether or not you hllowed relaxed, yo why couldn't i go to another company. >> return capital back and we have two who want to pick up that investment. we would come to you, you would bless the transaction. now the next time the family office is going to hold on to it. they're the kind of investors that want to hold it and the angel investors are the
investors from year 0-6. >> a slower ipo market is better for your business, right. >> it's been a very business 2016 for us, yes. >> what happens if the window is mushed back open and some of these private, these unicorns as we've called them now, for months start to go public. equity zen has worked with three of the largest unicorns as we call them. as the window starts to open up, it's a great thing for us. the exits occur t capital that used to be locked up in a private liquid investment becomes liquid. more money goes back in the pockets and they are redeploy it. >> so as some of these unicorns come back to earth. these valuations get cut down in size and they've been repriced if you will over the last months. do you see a rush of these employees to cash in, cash out,
hover you want to frame it as a result of that. >> well, both sides of the market are getting smarter because there's just more realism in the environment today. after q1 what happened in the public market. slow down in the private market. we had shareholders saying it's better i take .90 today. >> or zero down the road in some cases. it's important to acknowledge that. in most cases the investors scioscia have been sitting on slooins saying these are a bit rich, i'm going to wait until market soften now see a great opportunity to come in. >> thanks for coming in. interesting stuff enchts when we return we have a list of stocks to watch including shares of a consumer review website. later the number of home grown zika cases is on the rise once again. doctor scott gottlieb will join us with everything we don't know about the mosquito born virus.
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this morning. revenue shy of street estimates, but bottom line better than expected. eunice from beijing joins us now with more. >> reporter: the numbers for jd generally came in line with expectations and in terms of the quarterly loss figure it came in at .03 a shire. this is on revenue of $9.8 billion. the gmv is amount of material and goods that actually go across jd site is up 47% at $24 billion, but what was interesting is that investors were really focusing on the nongap income number, which was finally positive. what we have seen here in china is jd.com really trying to fashion itself as the anti-alibaba and by that i mean they are where alibaba has been criticized, jd is all about quality of life.
that is their big campaign both here as well as in the united states. and quality of service as well as quality of product. so another area of focus of investors was the fact that they were able to increase their active customer accounts by 65% to 188 medicillion. they're going to asked about profitability as well as their new partnership with walmart. >> thank you. eunice life in beijing. >> when we return this morning, we'll get a read on the energy market. the company has had a rough run since the oil dropoff. in fact, stocks down more than 80% over the last two years. ceo robert phillips will join us next. right now as we head to a break, take a look at what's been happening in the european markets. some declines. dax is down half a percentage point. "squawk box" will be back after a very quick break.
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dramatic fall over the last two years took a dip between producers and oil consumers. we're joined now by bob phillips of crestwood equity partners an energy company in the bakken and other regions across the country. so many things i want to ask you about. the first thing i know is this. has volume declined and by how
much coming out of bakken right now? >> steve, the bakken has declined a little bit due largely to the slowdown in drilling. we have many fewer rigs active in the region right now. but i might say that the technology improvement we're seeing from the producer segment is nothing short of amazing. they're keeping volumes relatively flat out there in north dakota. from a peak of about 1.5 million -- declined for sure. >> but that's what's so extraordinary about this recent decline in oil prices. you just said volumes are down only a little bit. is there more to come or have they found a way in bakken to make money and continue producing at these levels? >> well, most of our producers on our pipeline systems and producers that store in our facilities and use our crude by rail facilities are continuing to make a profit at current
price levels. now, there's a significant amount of the bakken in north dakota that is probably not economic at current prices. certainly if we saw an increase in prices, that would bring back an increase in drilling activity and probably more volumes to the market. but we've been amazed at how well the volumes have held given largely to the technical improvements. >> so is it right to say that you as a mid-stream company, you're not so much price sensitive as you are volume sensitive? >> that's right, steve. our business is largely a fee for service business. the majority of our contracts and our storage and transportation segment which the bakken assets fall into are what we call take or pay contracts. oftentimes we get paid for utilization of the facility regardless of the actual volume that goes through. as a result, our cash flows have been recently stable through this downturn. >> so you beat on revenues, but
you missed pretty badly on earnings. what happened there? >> well, most of the mid-stream companies out there are structured as a publicly traded partnership. so the real measure that we look at for performance is earnings before interest, taxing, and depreciati depreciation, or ebida. we don't look at this downturn because with stock prices falling correlating to oil and gas prices over the last couple careers, there's been significant writeoffs in good will and appreciation. bottom line earnings have been lower than we expect. but cash flow is the real measure of performance in our industry. >> i want to give you a quick couple seconds to talk about the new deal you have with con edison. >> it was on the leading edge and we've seen many of our competitors including the larger
guys like kinder following the same model in their best growth region. that's exactly the strategy we followed with con ed. i know it has interest with your viewers. con ed is a great partner. which connect the marcellus shale supplies with the growing northeast natural gas markets. i couldn't have picked a better partner. they have a regulatory feel for the market up there. they certainly understand the needs of utilities and power plants and the growing need for natural gas. >> okay. bob, thanks for joining us today. interesting stuff. >> thank you, steve. all right. coming up, our guest host for the next hour is a pulitzer prize winning author jim stewart. he joins us after the break.
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magical numbers from disney. the media giant beating expectations and announcing a deal to stream espn directly to consumers. we run through the numbers and find out if bob iger has hit a home run. our guest host for the hour is columnist and cnbc contributor jim stewart. the market's next move. with earnings winding down and markets sitting at all-time highs, what will be the next catalyst to put money to work? keith banks and gabriella santos are here to weigh in. meet the donors. >> i like to be in the game. it's fun. >> a new documentary on how the megarich contribute to the presidential campaigns on both sides of the aisle. documentary film maker and daughter of nancy pelosi alexandra pelosi joins us to
talk politics and the game of giving as the second hour of "squawk box" begins right now. live from e the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box," everybody. this is cnbc, first in business worldwide. i'm becky quick along with scott wapner and steve leisman. the futures are relatively flat. yesterday the dow was up by hundr hundredths of a percentage point. this has been a stealth rally. we have seen things moving higher throughout last month and this month. even for august we are looking at gains for the markets. steve? >> thanks. here's what's happening at this hour. democratic presidential candidate hillary clinton set to give a speech on her economic proposals later today in warren, michigan. that follows an economic speech by republican candidate donald trump earlier this week in detroit, michigan. trump meanwhile finds himself at
the center of controversy once again. in a speech yesterday, trump remarked that second amendment supporters could do something, end quote, about clinton rolling back gun rights. the campaign said he wasn't inciting violence. just talking about the power of votes. donald trump will join us tomorrow morning on "squawk box." the energy department releases its weekly numbers on gasoline and inventory. crude has been under pressure amid ongoing supply concerns. disney posting a huge profit helped by box office hits like "finding dory." and "captain america." hoping to offset sales at its cable unit which slipped below expectations. julia boorstin joins us with more. hi, julia. >> hi, scott. i sat down with bob iger on the heels of the reporting better than expected top and bottom line results. he addressed some of the
concerns of analysts that had been weighing on the stock over the past year. >> we had a very strong quarter. in fact, on an adjusted basis, it's our 12th consecutive quarter of double digit growth. the studio was up over 60%. we had great theme park performance. i think it's a good quarter and i think it's a quarter you can look at and assume -- >> iger also explaining how the digital future announcing that the seven main networks will be included in all of directv's streaming bundles which are in the works. and disney announcing it's buying a third of bamtech for a billion dollars. it's also partnering with bamtech to create more streaming sports products. this lays the groundwork for a range of over the top digital products from a number of disney's brands. >> we love their business model. we think in today's world, having the ability to stream on a scaled basis live sports and
live programming is a competitive advantage and something that's necessary. >> as for concerns that disney's orlando parks could be hit by zika, iger told me that the company hasn't seen any impact from zika on visitation or bookings. though he says the business in europe is soft from everything from brexit to terrorist concerns. find more from my interview on cnbc.com. >> i think one of the big questions we've been kicking around today is the prospect of over the top espn. if you're paying $10 for that, can you get consumers to cough up that money? what does it mean from a cannibalization point of view? and what did you hear not only from iger last night but from the street on this? >> well, here's the key thing. what they're working on for the near term is the idea of partnering and bringing together the sports assets that bamtech has. which includes baseball and also hockey with bringing together the sports assets that espn has that are not live linear
networks. so that might be college sports games or some content like cricket. some of the niche content. what was really interesting to me about what iger said about the sports product they're working on for right now is the idea that it's not going to be a traditional, you know, flat fee once a month for a particular bundle. that it's going to be customizable. if you're a big hockey fan, you could pay just for hockey just during hockey season. so you'd be able to add and subtract and make it very personalized and customized and flexible. when it comes to the basic regular espn that's on our television sets and part of the traditional tv package, he's leaving the door open to bring that product direct consumer down the line. we have to remember that regular old espn, that's locked into these distribution deals. so they're not bringing that over the top right now. but he said when the time comes if it makes sense financially,
he's definitely open to doing that. and this investment in bamtech lays that groundwork. >> how long will that take? this cable distribution contracts often run for very long periods of time. any idea a five-year process, seven-year process, ten-year process? >> he didn't land on an exact timeline. the issue is a lot of these contracts expire at different times. i think the year 2020 is when some of them expire. i don't think they're going to be letting go of the cash cow that is espn on, you know, traditional paid tv -- in traditional paid tv bundles too soon. i think it will be a number of years. but they're definitely monitoring it. it sounds like they could test the waters by trying out the different bundles with bamtech. and i think it's worth noting that they have the option to buy all of bamtech which would of course accelerate this time of thing. >> thank you very much. for more on disney and some other topics as well, let's bring in our guest co-host for
the next hour jim stewart. columnist and cnbc contributor. he is a prize winning reporter and author of "disney war" about iger's leadership at disney. let's start off with where julia left off. what do you think of these latest developments? it's something the street has been trying to figure out for over a year. >> i think it's really fascinating. i think this move into, you know, direct streaming technology for the company is a recognition that there is a future where the cable set top box is no longer the nexus with the consumer. they're clearly moving in a consumer friendly direction which i think is inevitable. i think it's smart of them to get out ahead of this. but they are never going to have a cash cow like the cable situation. i've done a lot of work on this. i haven't written a whole lot on it yet. but there are people on wall street and elsewhere who have done sophisticated modeling on what disney can actually charge subscribers, sports fans for sports viewing privileges.
and it's a decent number. but it's nothing like what they generate in revenue with the cable system as it is now. because the cable system is not consumer friendly. they're talking about letting you pick your niche sport and pay for it. that is so the opposite of the existing thing. because what they've got going now is people who pay a fair amount of money every month for espn who do not want it and don't even look at it. it's part of the bundle. that's the best business model of all time. >> never is a very strong word. if you figure that, you know, studio businesses cyclical you can have a hit, you can have a miss. does that mean and are you saying that investors and just people in general need to sort of revalue the way that they look at disney shares? the way that this stock is going to be valued in the future as a result of dramatic changes to the media model? >> i think there are going to be dramatic changes but it's not going to happen fast or overnight. i don't think it calls for any drastic revaluing of disney.
i think a lot of this is in the stock price now. we can talk about other growth opportunities for them in a moment, but it's going to be a very slow process. i notice the number of cable subscribers to espn had gone down by a few million out of almost 90 million subscribers. frankly, i thought that number would be bigger. i mean, that -- you know, it's pretty easy to get out of that bundle. >> a few million out of 90 million is still significant. >> and the number is moving in the wrong direction from disney's perspective. but it's not collapsing. >> an inefficiency in the market right now. >> absolutely. >> people are paying for something they don't want and disney is the beneficiary of that. essentially the cable or subscribers are over paying. so my argument to that would be that can't persist forever. and won't persist forever. so you're saying that for sure disney and i guess by extension other content providers are
going to be on the losing end of where this development is going? >> yes. i mean, the more it's consumer friendly and really it's amazing it's taken them so long. but technology, the internet -- it's not just this industry. look what happened to newspapers. you start giving consumers more control over what and how they get -- and everybody says we want to the consumer to be able to get this any way they want. that's the mantra in the media business. that is handing power including pricing power from the producers of this content to the consumers. it's becoming a much more competitive environment. now, it's true that disney still has, you know, a quasi-monopoly over the rights to a lot of these sports. and that price ultimately will affect what they earn from it. but nevertheless, you're going to lose the people that don't really want this. and the modeling i've seen on this with aggressive pricing, the actual number of people who watch most of this stuff on
espn, the ratings are pretty low. much lower than you would think. >> and they are watching -- i wouldn't care if i didn't have it in my house. however, my husband does want it. when you look at households who would pay for this, i think it's different than just consumers. >> i don't think disney or anybody else knows yet, for those who want it, how much will they pay for it. >> i know how much he'll pay for it. it's a high number. but they're watching a few things. if you come in say you want to watch hockey, come here instead of there. i don't know they're going to continue to pay any amount of money for a bigger bundle full of stuff we don't want. >> what do we pay now for red zone now? 20 bucks? we get that in the house. i don't know. >> you get the ticket. >> i think my dad just did it. >> i think it's like $300 a season. worth every penny, i might add. >> and how price sensitive is this market? you know, sports fans in
general. there's tons of work being done on all this now. the questions of the old system nobody cared that much because it worked so well. i think that world is going away. going back to your question, does this require a drastic evaluation of disney stock? no, not now. it's like all the cable companies are dealing with this big transition. >> maybe one of the reasons for that is the way that iger has been able to sort of navigate this and the benefit of the d t doubt that many are willing to give him, you've been the most insightful in the way you viewed the way this company has been run over the last many decades. how would you characterize iger's ability to navigate this changing landscape? >> i think iger has done a remarkable job. frankly better than i expected. i thought it would be an improvement over the old regime. he came with a very different management style, very focused
on empowering creative people. he's done an amazing job with that. i think his work with the studio revenue -- it was amazing this quarter. and his ability to take those franchises and make them, you know, actual, you know, business friendly models for generating revenue and profit has been astounding. i can't think of anyone else in hollywood who's ever achieved this level of consistency. not that they don't occasionally have a miss. they're always going to have that. wall street doesn't like the movie business because it's like rolling the dice every time you bring one of these things out. they're so expensive. but it's pretty consistent. look at the big hits. "captain america," "finding dory." these are their franchise property. >> "star wars." >> it's not like they've reinvented the wheel here. "finding dory" is a good example. to take a movie like "finding nemo" and make it a franchise, i
tip my hat to them. iger oversees all that. the theme park, expansion to china, it'll be interesting to see how that develops. but he's managed that incredibly well. >> i heard somebody yesterday describe disney as the best monetization machine out there by far and it sounds like that's kind of what you're saying. >> yeah, absolutely. >> the ability to take the franchises but monetize them in a way that others may not have been able to do. that wouldn't have the foresight to see the opportunities that potentially exist. >> and i think one thing iger maybe doesn't get enough credit for is he's a very good manager of people, that sort of thing. but this is very smart. you know, he's thought this through. and he has a consistent approach and he can make decisions from consistent set of principles. and i tip my hat to him for that. he's going to be hard to replace. which by the way we don't know who will replace him.
>> or when. >> we want to discuss that with you before you're out of here. but you're going to stick around. >> we've got that, what's happening with viacom, what's happening with fox and roger ailes. jim's with us for the rest of the hour. >> i'm concerned for matt. you just got rid of espn for him? what a terrible thing, becky. he loves his espn. >> we keep it. >> you're really going to keep it? >> yeah. we pay for everything. coming up, the beef with beef prices. who's benefitting and who's hurting from lower prices at restaurants? we get the details on shake and shack earnings that are out this hour. take a look at the futures. turns romantic, why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain,
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and voice mobility so your calls find you wherever you are. get some of our most advanced products at a great price with over $500 in savings. call today and ask how to get these savings plus a $250 prepaid card. comcast business. built for business. welcome back to "squawk box," everyone. we've been watching the futures this morning and they've been mostly in positive territory, relatively flat. right now dow futures up about nine points. s&p up by 2.5 and the nasdaq by 4. price of beef has been on the decline, but are fast food and hamburger chains like shake shack benefitting from the lower cost? susan li joins us with that. >> restaurants, yes, the short answer they are benefitting but the question is are they passing it onto the consumer? well, they are offering deals like wendy's four for $4 or
mcdonald's pick two menu. getting customers in is the key for them. once you're there, you might want to buy something else like larger fries. typically even when places like shake shack are paying less to make their burgers, they still raise their prices each year by 2% to 3% on average. and analysts say the traditional menu items are almost always going to go higher. this year beef prices have fallen 7% since 2015. and declines 4% on the year. but they're not forecast to come back up that much next year in 2017. the reason for that, beef prices are falling because of lower international demand and also lower feed prices have provided cattle producers to feed them longer and hold them for herd expansion. it's not just cattle. egg prices are set to fall this year. that makes all daybreak fast a little bit cheaper to make which helps the bottom line at places like mcdonald's. they need right now since
restaurants are seeing slower foot traffic. shake shack earnings should be up 44% from a year ago because they paid less for their input and charge you and i a little bit more for their burgers. wendy's should see earnings fall. but revenue should be up a little bit. >> you know, we talked to the ceo of walmart yesterday. one thing he pointed out is you have so many different factors going one way or the other you can never get them going the same way at the same time. while food deflation has helped walmart this year, they've faced higher currency issues and also higher wage costs too. >> same thing at restaurants as well. steve and i have had this debate, right? in terms of dollars spent, it's actually going up in the u.s. at restaurants. but foot traffic has not grown at all in the first quarter into the second quarter. people are calling it a restaurant recession. the reason why the dollar spend is higher is because they are having to pay higher prices because the restaurants have to cover higher costs for rent and
wages and the like. >> i've been doing this show for a long time -- >> wait a second. go ahead. >> the only price anybody cares about on this show is bacon. what's happening to bacon prices? >> well, pork is going up. there's a shortage -- >> that's the only thing anybody cares about. bacon is -- it's the bacon news we do. we have a special segment here. hold on. i've got my price indicators open here. so bacon's going up. >> chicken prices have come down a little bit. maybe 1% or so on the year. >> susan, thank you very much. when we come back this morning, with earnings winding down what will be the next for the market? gabriella santos and keith banks will join us with their take on what investors need to look for including the possibility of a fed rate hike. but don't hold your breath on that. up next, pokemon go turns to japan to help their business.
welcome back, everybody. we have some stocks to watch this morning. solar city posting a smaller than expected quarterly loss on better than forecast revenue. company says its takeover talks with tesla resulted in longer than normal delays in closing new financing projects, commitments. you're on set so i've got to ask you about this. you've been writing about tesla. the deal at solarcity, what have you found? >> this is fascinating. either you believe in the musk vision or not. the shareholder rights activists are upset because musk is the chairman of solarcity and tesla. that's what it's about. this is about the musk vision which is much bigger than just
building cars. i have to hand it to the guy. this is vision with a capital "v." he wants you to have the tesla in the garage, the battery he makes in the car, and the solar panel he does on the roof. >> we had an analyst say yes. even when musk stands aside and doesn't vote his shares, that you have all these other shareholders something like 25% of the remaining base that owns shares in solarcity as well. >> i deliberately sought out share shareholders not in solarcity. there are ordinary people that get the votes. let's put that aside. don't own solarcity therefore have know conflict are excited about it. because they believe in the vision. how do you put a dollar value today on this vision which is long-term with a capital letters also. it's impossible. this mostly a faith thing.
but i have to say that as these things go, and somebody said it's not blind faith. it's faith, you know, with your eyes open. he has done a lot. >> leave it there. we've got more from jim coming up. coming up also, market sitting near all-time highs. is a correction coming? we're joined after the break. and a programming note. tomorrow on "squawk box," donald trump will be joining us to talk about his economic plan and the race for the white house. that's tomorrow morning. "squawk box" coming right back. to buy tha
all right. among the stories front and center, earnings out this morning from michael kors. the company did beat on the top and bot top lines but comparable store sales fell more than expected. according to new figures from the mortgage bankers association. both refinancings and new purchase applications rose as average 30-year mortgage rates rose slightly to 3.65%. sony announced a playstation
event for its console. you remember the people's court, right? >> right. >> judge wapner. >> now you get it, right? >> right. >> never gets old with us. the popular pokemon go game is going to help four japanese quake stricken areas attract tourists. officials in areas in fukushima and miyagi to set up gyms and poke-stops in those areas. and also characters you can only catch in those areas under consideration. hoping to increase tourism. >> wow. >> good luck with that. >> it is a stretch. >> i don't know if it's a stretch. do you have kids who are crazy about pokemon? >> yeah. but i'm not going to fly to japan to catch these things.
i get it if you live by there. >> maybe domestically it will bring some people. >> domestic ii ially from others of japan. >> fair point. >> it's all i've got, scott. trying to do something nice -- i'm trying to say something nice about people trying to do something nice. we've watched the markets make new closing highs and intraday highs. question is are you due nor a correction? joining us is keith banks and also gabriella santos. welcome to both of you. >> good to be here. >> this is a debate we've been talking about all morning. the idea that markets are sitting at new highs or right within striking distance of new highs spp it justified here? what do you think, keith? >> we think the market right now is around fair value. we do think there's a reasonable fundamental underpinning that has helped drive the market
higher. we look to the second half of the year, becky, to see stronger economic growth, not dramatically. but that will create a backdrop for earnings to continue to roll. and we think very importantly we have at least another two or three years left in the economic expansion. so one can argue the markets should have legs. we may have got an little ahead of ourselves here, but not dramatically. >> what do you think? >> we would agree that the economic and earnings fundamentals have improved. justifying the rally in the market. to me the most interesting aspect is not going to be looking a t the market overall but is going to be looking within the market. right? we've seen a shift over the last month or so away from a very defensive-led rally. that was the story in the beginning of the year. toward cyclicals beginning to out perform. and that's something i think can hold water in the second half of the year as well. we're making sure our clients are positioned well within the market. >> you two both seem to think that the earnings improvement will come. we saw some of that in the last
quarter. you think it's going to continue in the second half. we had two analysts this morning saying not so fast. and if you watch oil prices below $45, you're not going to see better profits from a big sector of the s&p 500. >> and their argument was, to your point, is that this wasn't a fundamentally driven market at all as becky's laying out. >> i think if energy prices do stay lower than we had initially thought, it will take perhaps to the fourth quarter to see earnings turn positive. i don't think the energy story is the only one here. it's a big dollar story as well. it is a big economic story domestically and externally as well. what i think we'll start talking about is 2017. right? what gets us to that $130 for earnings? are margins going to start getting eaten by an increase in wages? rather than the story for the second half of the year. >> and i'd argue, look. the story to this point has been
just comparatively speaking this is a place where you can get yield. this is a place that looks better than a lot of places around the globe. and you have central banks around the globe doing everything they can to print more money. and create more stimulus. that's a scenario where we've been talking about this for awhile, but there's no alternative but what you see here in the united states. >> i think that's right. and i think what the brexit vote did after that downdraft was the search for yield went on steroids. that drove people, i think, number one, back into equities. and number two, back into u.s. equities. but to gabriella's point as well we have a strong consumer. we have 13 million jobs created over this expansion. i think we'll see and steve would know better than i, an inventory restocking over the second half of the year. >> keith, i mean, i listen to what you guys are saying. and i've been optimistic for a long time and it's paid off. the latest round of data has me
kind of nervous. when i see gdp has only been 1% for the last three quarters. i can excuse one. i can excuse two. we did three and it wasn't an inventory thing and maybe inventory has built back. i see capex down for three quarters in a row. now the productivity down for three quarters in a row. i'm feeling more like -- >> recession? >> not recession. i'm not ready to go there but where i am ready to go is this notion that maybe potential growth that we thought was lower at two compared to three may be more like one now. >> stagnation? >> i mean 1% -- look. if you're growing 1% you're still growing. but the idea that underlying growth -- you see there, the last three quarters. i don't know. maybe that you have the inventory rebuild but also the consumer come off the next quarter that keeps it at 1%. that's a different stock market outlook at 1% than 2%.
>> doesn't slow or no growth mean no fed increase which keeps the interest rates super low? >> so it's a strange market. >> we're not talking about measuring things the way we always have. it's only part of the story and i would argue it's a smaller slice of the pie than all of these other external factors that are really wreaking havoc when it comes to bond markets, currency markets. >> you want to hack at that? how do you deal with the uncertainty and the recent run of weak data? >> i think to your point, what is the real growth over the u.s. economy that's something the fed is wrapping their head around. what bernanke wrote about yesterday. so maybe they are rethinking the path and the ultimate rate they want to get with to with the short-term rates. right? but i think that it's still very hard for us to sit here and argue that everything is terrible and that we should have rates at 0% and that the market is due for a big fall.
i think things aren't perfect, but they're not necessarily as dire as sometimes we hear. >> but there's a difference between terrible and the market not needing to be at all-time highs. right? so the story on the economy isn't terrible, but is the market still justified with the nasdaq and the s&p hitting intraday all-time highs yesterday? >> i have to say it's barely at all-time highs. it's not, like, going through the roof here. i don't know what you guys think. it makes me nervous that so little volatility, it just doesn't feel that great. >> but you're speaking to something that's been in existence for the last so many years of this rally that's just underappreciated -- >> it just creeps. >> and by the way has left out of a lot of americans. they have not bought into this. it's gone up. we do polls how americans are invested in the stock market, they're not participating in this. i want to push back on what jim
said -- we've got to go here, but the market when i watch the way it trades on the data versus the fed, i want to say it's 5 to 1 wants growth more than it wants fed easing. and that's really the value that it has. that fed easing or fed not tightening is not an offset. >> i would agree to that. and to your point earlier, steve, the disconnect we have, we've seen consumer spending which accounts for -- >> 4% annual rate second quarter. >> and we've seen the first half up 11.5%. we do see a slow uptick in capex ultimately. so there is a disconnect which makes us believe when you look at the underlying data, we do think the economy is stronger. >> i want to be wrong about this. desperately want to be long. >> we'll see. >> thank you both for coming in today. >> thank you. coming up, olympic megadonors funding candidates. why they're pouring millions into the candidates.
and alexandra pelosi joins us when they look at some of the big players. "squawk box" is coming right back. used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. ♪
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400-meter freestyle. meanwhile a stunner on the tennis courts. serena williams has been knocked out of the olympics. the defending gold medalist was defeated by elina svitolina in the third round. and finally the women's gymnastics team tumbled to gold last night defending their title for the second straight olympics. the final five as they've been nicknamed defeated russia by more than eight points. "squawk" will be right back. at citi, our business isn't gymnastics. we don't measure proper hydration, or create training programs. so why do we sponsor team usa? because our business is enabling americans everywhere to keep moving forward as they compete on the global stage. citi. proud partners of team usa. proud sponsor of progress.
close behind with $82 million raised. let's take a look at the players writing the big checks. documentary film makers alexandra pelosi has a new project on hbo called "meet the donors." she's with us on set now. i want to start with an overall question. as an economics reporter, i've never quite understood the returns to these investments that these guys make. is part of it vanity? is there actually a dollar and cents return? if i give a million, do i get back a million and a half? >> i think it's more like protection, right? that's what haley barbour says in the movie. it's about protecting your company. if you look at "the wall street journal" today, the bible for you people so i don't come off as a dirty film maker. you see the smoking gun e-mails that show the quid pro quo. it's not i'm going to write a $10 million check to get this law passed. >> what they were doing with donors while hillary clinton was secretary of state. by the way we'd probably be
talking more about this if it hadn't been for some unforced ere ro fors and other issues on the campaign trail. but this is a big deal. you've been saying for a long time, why? >> i've been saying there isn't this quid pro quo. i've been giving everybody the benefit of the doubt. saying these are patriots of america. and they feel it's their patriotic duty to write these checks. many said it hurt their business to be aligned with a presidential candidate. because if you're running at the hyatt hotels and you're aligning with a party the nra may not want to stay at your hotel. so there's always been this i'm not doing it for my own self-interest, i do this for ideological reasons. that's what all the billionaires say. now it's becoming clear -- >> but it was always clear. >> no. we were taught at journalists follow the money. jim, you know this well. follow the money, you see what's
there. if you've given massively to somebody's campaign, it probably means -- even if you can't put an exact dollar term on it or anything else, they're just less likely to come after you when it comes to regulatory issues they can decide to enforce or not enforce. >> absolutely. i mean, it's good for your business to be writing these multi-million-dollar checks. i would be naive to say they write $10 million checks and get nothing in return. >> it's good for your personal business and good for your business business. i mean, right? if you write a check, you want to get invited to the state dinner, maybe. you want to have an opportunity to visit the white house. >> and the clinton thing -- clinton stories in the paper today from the e-mails show exactly what it's worth. the ability to pick up the phone and help yourself or help somebody else get a meeting with somebody. it's access. you found that there's a hundred families that do almost all of this? >> well, that's always reported in "the new york times."
there's always this list they print they say here are the top hundred families that write the biggest checks. >> the other bible. >> you're not going to get me going on cnbc criticizing any multi-million-dollar donor. >> you know, rich families can be weird and even regular families can be weird. i just want to know -- >> families are weird. >> give us some of the color of the people you met in this process? and one of the more interesting examples of why people give money. >> i think the weird ones are the ones that write to both sides. you can say it's obvious they're protecting their own. but john cast is one you know in new york city. i'm going to give $10 million to both sides. >> donald trump said the same thing. he said before he got into the business for politics, he gave to both sides because it made sense. he said openly he was buying influence and it worked. >> i do love america and this is my way of giving back. and the transactional donors that say i'm doing this --
>> so i want to talk about -- >> hold on. what would you say the percentage of transactional versus the, oh, i love america? that sounds like nonsense bhop is giving money just because they love america? they all want something in return. >> there are many of them who think they are doing what is right for america. >> they may say that. >> i do think a lot of them believe it. but they have different ideas of what's right for america. >> i want to just -- you want to answer that? >> no. i want you guys to talk amongst yourselves. because i am not going to be -- this is like walking into the land mines. everybody in this movie i wouldn't go on cnbc and say look at these jackals who are so vain that need to write this. >> we will talk quietly because this is journalist to journalist thing. why do they talk to you? >> you wouldn't talk to me? >> no. why would you talk about this? >> citizens united said it's your free speech right to give as much money as you want, so they're exercising their free speech. they're giving money because
they want to be heard. it's a way of being heard. and i hand them the microphone and flip it the other say and say why wouldn't they talk to me? i've got 30 in my documentary. i can say that's shameful that 70% were so undiplomatic and wouldn't give me the time of day. because if it's your free speech write to write the $10 million check, why wouldn't you want the microphone? >> after this process, how do you feel about the way we finance elections now? do you feel like these families and people you met with have undue influence? >> absolutely. >> and does it need to change? >> we're trying to get everybody off to a good day here, i don't want to be the one that spoils it for everybody. but i feel pretty dark. i don't check that little box for the $3 -- do you? >> i do. >> you do? you give $3? >> i don't. i should, but i don't. >> why do you? >> because i'm in favor of public financing. >> but where is that money going to go? none of the candidates for president are going to take the public financing. >> well, hope springs eternal. >> steve's utopian vision of the
world. >> jim, what do you think? >> well, i'm happy i'm a journalist and conflicted so i can't give to anybody. so i've never had to think about it much. but i'm glad i don't have to write a big check for something. which, this is a democracy, why do you have to pay to have all this influence? i do agree with you. you know, there is some ideology. i know a few billionaires who give and they do want to change the world in their vision which thing will be better for america. i think that's more of a vanity thing than being a patriot. but there is no question this is the ultimate networking opportunity. it's similar to what i see in the charitable board area. why do people give so much money to the metropolitan opera and don't even go to the opera? they hobnob to those on the board and get deals on the side. there's ego from that. but to be able to call up the white house and go to the state dinners and get the president on the phone and tell somebody you got them on the phone even if they didn't do what you said, that's huge. that's worth a lot of money.
>> i don't want to be a bomb thrower, but can capitalism and this coexist? the people writing the checks are winning the game of democracy. they are the ones getting access to all of our elected leaders. so it's a darker kind of question that you have to ask yourself. because there's so much money. >> but it's not just the individuals who are giving. you could say the same thing about unions and other money that comes into it. is there a way to stop the pacs, the unions? to limit it that a vote is a vote? because a lot of the people who give think their vote should be worth more than the average individual. >> right. but that's the thing. okay. let's try and be positive. your vote is the same. right? your vote is the same as people -- >> but as we just discussed, the money can seep in in from all kinds of places. >> and it will continue to seep in. the thing that kills me is when they're saying we need to get
money out of politics. everybody likes to point to that. >> like that's the first time money came into politics. >> there was tons of money in politics before citizens united. and there will be even if it's overturned. it will find a way into the system. >> i will say for democracy, a lot of this money seems to go right down the drain. >> that's a great point. they lost tons of money in the primaries. >> tons. look at all those republican donors and the big money that went up in smoke. >> and the media gets rich off of it which i'm in favor of. >> and who's winning? >> you. cnbc. nbc networks. where is that money going? jeb bush, good example. he raised all that money and you can't force people to buy a candidate you don't want. >> that's why people say donald trump isn't spending enough on television ads. >> it's interesting the small donors are giving him so much money. who would give a billionaire your $10?
because this is his religion, waking up to you in the morning. >> cnbc? >> i want you to know if nothing came from this, you made me -- you made my father proud. >> i think we have to go, but thank you. >> tell your dad we say hi. >> say hi to my dad, people. >> what about your mom? >> she's busy. >> hi, dad. coming up final thoughts from our guest host jim stewart. and also the stra tee gas research partners head of policy research will join us to talk more. of our largest banking clients. the face of their business was tellers. then atm's. today it's their mobile app running on the ibm cloud. across every transaction, the hybrid cloud helps their data move quickly and securely. our clients are building out features and pushing updates faster, on five continents.
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welcome back, everybody. jim stewart is here. he's been here for the hour. i want to thank you for being here. >> thanks. it's been fun. >> come back. we love you. and we'll continue to watch the columns in "the new york times." when we come back, michael phelps makes a splash in rio again. a live report from the olympics is straight ahead. plus the story of one company fighting zika with gmo bugs. genetically modified ones. dr. scott gottlieb out with another warning about the complications zika might cause. stick around. "squawk box" will be right back. 3w4r57
. earnings central. the consumer in focus. quarterly results from disney, michael kors, ralph lauren ahead. the revenge of the mosquito. one company fighting zika with gmo bugs. and dr. scott gottlieb with everything you don't know about the virus yet. 21 and counting. michael phelps striking gold with two more medals. the final hour of "squawk box" beginning right now.
♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with scott wapner and steve leisman. joe and andrew are out today. we've been tracking what's happening in the markets. you can see the futures are still indicated higher. but not by much. dow futures up by about nine points. s&p up by 2.5, nasdaq up by 5. as you look right now at the european markets, the dax has cut its losses. it was down by 0.5% earlier. right now down just under 0.25%. a new report, opec says saudi arabia's oil output hit an all-time high last month. crude prices right now, they were down a little bit now they're down just about 17 cents
to $42.60 for wti. mortgage applications jumping 7.1% in the last week. and disney reporting better than expected earnings and revenue. the company also announcing a $1 billion investment in a streaming company formed by major league baseball bamtech. down about almost a buck and a half. $95.20. china-based online retailer jd.com posting a surprise profit for its second quarter. the company getting a boost from a substantial improvement in profit margins. michael kors reporting better than expected earnings and revenues. but comp store sales fell more than forecast. and the retailer offered a soft outlook. wendy's beating the street on the top and bottom lines in the latest quarter. the chain is cutting its same store sales forecast.
wendy's shares down in the premarket by about 4%. let's get back to the broader markets this morning. dom chu is walking the wall for us. what's caught your attention with these sort of stealth rally moves we've seen? >> you put it really well there. because the volume we've been seeing in the marketplace hasn't been all that fantastic. we do have all three indices at or near record territory right now. we want to look at analyst strategists on wall street feel the heavyweights are in the markets. here's the reason why. if you look at s&p 500 sectors, we kind of went up there and polled a number where they thought the overweights were in the marketplace. technology is important. it's the biggest sector in the s&p. among the strategists that think this is an overweight sector, you've got analysts at citigroup all feeling like technology
should be where you put more money behind that sector. meanwhile, another one to do here is what's happening with health care. and goldman sachs, morgan stanley among the guys there. as for where the underweights are, check this out. materials, goldman, merrill lynch all think materials are places you want to stay away from. then you look at consumer staples. citi, ubs, deutsche bank all saying that's one to stay away from. i will say this, check this out. there may be a reason why technology and health care are important. according to thompson reuters, for this earnings season with almost all companies in the s&p reporting, you've got the best at least beat rates technology and health care. those two sectors have beaten estimates over 75% of the time. perhaps relative earning strength propelling those sectors. we'll see if it lasts.
>> we certainly saw people changing their opinions on technology as we got through the earnings season. thank you. i'll see you soon. right now we're going to switch to pliex. new polls this morning shows hillary clinton leading donald trump in three battleground states. john harwood joins us with the details on that. good morning. >> good morning, becky. it's more than just polls that are a problem for donald trump this morning. you know a presidential candidate has trouble when the secret service goes from protecting him to taking note formally of his comments. that's what happened yesterday after donald trump made some remarks in north carolina. he said he was simply exhorting his followers who believe in the second amendment to vote. other people heard
a joke about political violence. listen to what donald trump said. judge for yourself. >> hillary wants to abolish, essentially abolish the second amendment. and by the way, if she gets to pick -- if she gets to pick her
judges, nothing you can do, folks. although the second amendment people, maybe there is, i don't know. >> now, comes at a very difficult time in his campaign. new bloomberg poll out this morning showing donald trump leading --
excuse me, trailing by 50% to 44%. poll after poll has shown him trailing nationally. we've also got numbers from the nbc/"wall street journal" marist poll. in iowa donald trump trailed by four points. in ohio by five points. in pennsylvania by 11 points. all of those are critical targets for donald trump. and what makes the remarks about the second amendment so difficult for him right now is that trailing as he is, getting criticized by so many republicans as he is, these comments are something that may cause the majority of voters who are not with him and the majority of voters now are not with him to say there's something wrong with this guy. and cause other republicans to
move away from him. paul ryan last night after winning his primary called this a joke gone bad. but he says this is on a topic that should never be joked about, guys. >> we've heard a lot about this. and certainly some of trump's official and unofficial advisers told us they wish he would just stick to the economic message. that they think this is a more winning message. everyone from larry kudlow to carl icahn telling scott this yesterday. but at the same time, john, you're talking about two candidates that have very high dislike levels. there's a story in "the wall street journal" today, conservative watch dog group that released new e-mails going back and forth between the clinton global initiative and the state department when hillary clinton was secretary of state that show that there's maybe a little bit of pay to play, almost, that was going on. things like where they were trying to put donors in touch with an ambassador some way. and requests were granted.
just some back and forth that doesn't smell right there. i just wonder how big of a problem this is for both of these candidates as we continue marching towards election day? >> well, the difference between trump's problems and hillary clinton's problems are huge. that's why he's losing in the race and trailing in all these polls by substantial margins. now, those e-mails do show some overlap between the work of the clinton foundation and donors of the clinton foundation getting in touch with people at the state department to try to make connections. no actions have been shown to have been dictated by donors but this does feed into the pay to play idea. >> we just had nancy pelosi's daughter here saying she was shocked. she just did the "meet the donors" campaign. but things like this don't help my case. >> that's right. and so it shows that overlap which is logical in some ways when you consider the clinton
foundation was working around the world and hillary clinton was secretary of state. this is why people warned against this before she took that job. and they clearly did not do as thorough a job as they said they were going to do in separating the business of those two things. so, yes, hillary clinton has big problems. most americans don't trust her as they don't trust donald trump. but her problems are of a different and much smaller order of magnitude than donald trump's problems right now. >> right. john, thank you very much. we appreciate it. by the way, folks, donald trump will join us live tomorrow morning. that's coming up at 7:00 eastern time. now to the election effect on the markets. investors are hoping for a fiscal policy package that can kick start growth. but are plans already baked in? joining us dan clifton. who's going to win the election and who's going to control which house of congress? what's the relationship going to
be like between congress and what will be their ability to pass tax reform? >> that's a lot there, steve. >> right? >> but if you look at your conversation with john harwood just now, the market is increasingly saying that hillary clinton is likely to win the presidency. we're 90 days away so that may change. but you're starting to see this consensus build in that the democrats win the white house. they have a small majority in the senate. and that the republicans keep the house with a smaller majority. so we're going to be more divided next year than we've been in the previous years. so we're still in divided government. and the big question is can that divided government deliver on fiscal policy and start giving relief to monetary policy which seems exhausted at this point? >> so what's your answer to that? is there any sense at all that -- i mean, donald trump in his speech yesterday was clear about his need for tax reform. we had a chance to talk to his economic advisers and they seem serious about tax reform. is hillary clinton? >> so, steve, i think the market has been saying since brexit
that fiscal policy not only in the u.s. but around the world has to become a more important part of the policy mix. the u.s. is expected to go second. and the key question for hillary clinton if she has a republican house is will she be willing to compromise after having a very big election victory where she wins. interestingly no tax bill can start -- can pass congress without starting in the house of representatives. so if paul ryan is the person who is running the house, there has to be a compromise between the two. and steve, i would remind you that obama went alone in 2009. he suffered big in the 2010 midterm election. bill clinton went alone in 1993. they suffered big losses. so having compromise, sharing in this together could eliminate defeat if growth is not there. and while hillary and her advisers have been saying they're less interested in corporate tax reform, they want infrastructure, the price of that infrastructure may be having to do something on
corporate tax reform with the republicans. >> that's interesting. so you meld those two issues together. i think hillary's number was 275 million for infrastructure. donald trump wanted to do double that. but one of his advisers larry kudlow dialled that back and said it was somewhat less. what wst a good number to bank on and how does that matter for the economy? >> that's a good question. $250 billion is hillary's number. that doubles the amount that the federal -- by the way, that's over five years. that doubles the amount that's going to be spent on infrastructure. we spent $50 billion this year. she doubled that to $100 billion. when trump spoke, he wants to go to $150 billion. we don't have that many projects and it takes a very long time. so if hillary was to do $50 billion, where is she going to get the money from? is she going to raise taxes? is she going to do it unpaid for? what's interesting is that repatriation becomes an interesting dynamic. we have about $2.5 trillion
overseas. if donald trump was talking about putting a 10% tax on those foreign earnings, that et gs you $250 billion. you start to see the pieces of the puzzle fitting together. i don't want to make it sound easy. it will be very difficult. it will be a lot of compromises. but that's why you're starting to see the tax reform. >> is there any chance hillary clinton would glom onto that yed? i like this idea of one-time lower tax repatriation. you bring investment back to the united states. you can fill the treasury coffers. what's wrong with that? >> i think there's issues there. you're giving pfizer a big tax cut break. what are you going to do for individuals? are you going to do something on the earned income tax credit and minimum wage? as you go through the pieces, you'll need a bigger compromise and it gets much more complicated. steve, one other point. paul ryan really wants to stop inversions. he believes you need a permanent change to the u.s. international tax laws. do you move to a territorial tax
system? that may be a step too far for democrats. that's where the flash point in the debate is going to be. if you look at infrastructure stocks, they're up this year. you look at companies will large cash holdings overseas, they are really starting to outperform the s&p 500. so the market is starting to bet on this type of deal coming through as we get through the election cycle. >> dan, thanks very much for your time on this. i've been talking to two of trump's economic advisers the last couple days. they make the connection between the differential and the tax rates and the trade issue. and that could be a way to get public support that one of the problems is our companies really have unfair competition with foreign companies because of the tax rate differential. and if you could make that into a way that you could get public support for easing the corporate dax in the united states, maybe he's got a chance. but they make a compelling case about the effect of that on trade. coming up, michael phelps going for the gold. the most decorated olympian of
lauren. the apparel maker earning $1.06 per share. revenue also above forecast. same store sales down by 6%. >> probably worth pointing out that ralph lauren designed the olympic uniforms that were worn for the opening ceremony. they've had a lot of advertising that's gone into that too. >> did i say it wrong? >> no. you said it right. you did. speaking of the olympics, it was a big night last night. carl quintanilla is in rio and has the highlights. carl, there were so many to choose from last night. what do you want to start with? >> where do you begin? i think in the words of sports illustrated this morning, becky, michael phelps is still pretty good at this. he adds to his record count of olympic medals. he's now at 25.
2-5 with 21 golds. he anchors the 2 by 400-meter freestyle relay. the americans win that. but the 200-meter butterfly up against his nemesis chad le clos. >> we're competitors. neither one of us wants each other to -- i don't want him to win. i'm sure he doesn't want me to win. you know, but he -- i will say he is somebody who is a very good racer and, you know, he's not afraid to put it on the line. the kid's got talent. so it was -- i knew exactly where i was most of the race. i knew kind of going into the last wall as soon as i saw where he was, i was like perfect. >> unbelievable. he's now the oldest swimmer to
win a gold medal at 31 years and 41 days. then there's the final five. women's team gymnastics team competition. they win by the largest margin in the history of the current scoring system. there's simone biles. absolutely amazing performance. gabby douglas and aly raisman are the only two u.s. gymnasts ever to win two goals. and they have the chance for more. serena williams lost out in doubles with sister venus. then loses in straight sets to elina svitolina. svitolina won this gold in london. she is the first female top seed in singles ever to lose before the quarterfinals. here's the medal count. u.s., 26. china, 17. japan, 14. more to come tonight men's gymnastics, men's divings, and
some table tennis china versus japan. these asian rivalries in table tennis are pretty fierce. china has not lost a gold medal match since '88. and i know one very good table tennis player named andrew ross sorkin might be playing some of this next week. >> better that than beer pong. >> have you played him? >> no. >> he's amazing. >> carl, that is the first time that -- i didn't realize that phelps knew exactly where le clos was going through all of that. because he got all these pictures even watching it live last night, you saw his competitor look up at least six times. there are pictures of him caught with his face turning. i thought phelps completely shut him out and didn't know he was there. he turned his back before they got in the pool. it's good to know that he knew where he was. >> yeah. this is -- i think, you know, we're going to take a look in the next couple of days because
phelps is going to compete again later in the week. to what degree is his endorsement value changed by the fact that he is obviously in his last games? because he is so dominant. even though he's so close to retirement. it's an interesting issue and question for companies that sponsor him. and just overall, what does it mean when someone this good is so close to the end of their career? >> and what's it mean with the mutombo finger wag that everybody keeps doing? why is that a thing? >> ledecky got it started. now everybody is like, yeah, i'll show you. >> carl, thank you. we'll see you again soon. >> okay. coming up, disney beats the street and announces a big bet ofr streaming. we're going to hear from ceo bob iger coming up next.
welcome back to "squawk box." among today's stocks to watch is julia boorstin catching up with bob iger. >> better than expected results on the quarterly beat at its theme parks. particularly those in the united states thanks to higher guest spending. but bob iger said overseas the picture was not so pretty. >> our business in europe is generally soft. meaning our theme park in paris because of everything that's going on in europe from brexit
to the economy to some of the recent terrorist attacks. hong kong has strengthened. japan is still strong. >> but for disney's orlando parks, there could be another threat. zika. with more cases reported in florida just yesterday. i asked iger if it's impacted bookings so far. >> no, it really hasn't. we've had a few calls on it, but we haven't really seen anything we could be concerned about in terms of visitations or bookings. >> you can see more of my interview on cnbc.com on why disney is investing a billion dollars in bamtech. back over to you guys. >> thanks. coming up, folks, the number of locally transmitted zika cases in miami climbing and new research shows that the mosquito
this morning. >> do you know who that was? >> i have no idea. >> is it justin bieber? >> no idea. >> yeah. >> it is justin bieber? >> yeah. >> thanks. >> a couple of his songs are pretty good. >> i asked the musician in the group -- >> anything done before 1979 or after 1979 is probably not any good for me. >> anything before that you can't remember. you want to do this now, wapner? because i'll do it. >> go ahead. >> two economic reports ahead today. the measure of jobs and labor out at 10:00 eastern. and the july federal statement is out at 2:00 p.m. eastern. meanwhile southwest calculating the exact cost of its own computer outage following its july 20th outage that canceled more than 2,000 flights. expects revenue to drop 3.5% to
4.5% in the quarter. mortgage applications rising 7.1% last week according to the association both new purchase apps and refinancing activity jumped the average. 30-year mortgage falling to 3.65%. now to the zika threat. four more cases spread by local mosquitoes in miami. that brings the total of local transmissions via mosquito to 21. on a tour of a miami health center, hillary clinton calling on congress to act on zika funding. >> i would very much urge the leadership of congress to call people back for a special session and get a big passed. get a big that is focused on combatting zika passed. >> so where are we on tools to fight zika-carrying mosquitoes? meg terre rll joins us with mor.
>> one thing in miami with local transmissions via mosquito is the control efforts there haven't been working as well as they wanted. so one new and some say controversial method that is being worked on is genetically modified mosquitoes. now, this is by a company called intrexon. and a self-limited male mosquito. it's genetically modified to be released in the wild and then produce offspring that can't survive on their own in the wild. and they hope to overpopulate the mosquitoes that carry ch chikungunya and dengue fever and zika. in another trial they found that they decreased disease prevalence as well. they took down cases of dengue as well in a test in brazil.
where are we in the united states? they have been talking with key west, florida, about doing this for a long time. the fda just published its final environmental assessment finding no significant impact on the environment. however, there is some local pushback to doing testing of genetically modified mosquitoes there. so the area of key haven, florida, is going to vote in november. when they vote for president there will be part of the ballot on whether they can do this test of genetically modified mosquitoes. that is a non-binding vote. so the board could presumably decide to do something different. but as more and more people are concerned about zika, there was actually just a study that came out last night showing that more birth defects may be linked to zika than we even realized, than just microcephaly. joint issues. >> having an awful vision that your report is like the opening scene of a horror movie. one of the apocalyptic movies.
>> yeah. there are going to be environmentalists who -- and the argument has existed for some time. people who say, look, you can't mess with nature and there will be unknown consequences of wiping out this population. but it's not just zika. there are a slew of mosqui mosq bourne illnesses. that's why they're looking at key west, florida, because you can contain and look at it as a real laboratory test, almost, to see how it affects the local population. >> they don't travel very far. they don't go very far so you're not worried about creating one of these gmo mosquitoes and having them buzz all around. >> the question is if you wipe out an entire population of the mosquitoes. what does it do to the birds or bats feeding on them? i'm less concerned about that.
>> give them birdseed. >> but you don't know what happens -- >> they'll deal. >> and the argument in favor of that has been, by the way, this was not a local mosquito in the first place. this is an invading species anyway. >> and there are broader discussions on whether mosquitoes in general should be wiped out. some leading public health experts have said birds and bats can eat other things. mosquitoes cause too many deaths. we've got to take care of this problem. >> it's an interesting debate. in the effectiveness of some of the sprays we haven't used in awhile has not been near what we thought we were going to be able to achieve. >> well, our pesticide -- we have a huge pesticide problem with resistance. and we haven't been developing new pesticides at a rate to keep up with that resistance. it's actually a huge issue. >> meg, thank you very much. >> thanks. while zika has been linked to microcephaly which is a birth defect where the babies are born with small heads and brains,
researchers have now connected the virus to another problem causing joint deformities in infants. joining us with more on this is resident fellow dr. scott gottlieb. scott, when we talked to you last week, you warned that there's still so much we don't know about zika. that this report sheds some light on some of those issues. >> right. this is an observational study of women who gave birth to baby who is were infected during their pregnancy and found a correlation between zika infection which is basically babies are born with contractures in their muscles and joints. so the joints are deformed. so this is a finding -- it's unclear what the cause is because it's believed that perhaps damage to motor neurons as a result of zika infection caused this finding in babies. it's an observational findings. it's seven babies in all. so it's not evidence, it's not proof positive there is a
correlation. but certainly suggestive that it could be causing other things. >> i read the report, scott, and it's escaping me right now. but there was a lot of other ways that they ruled out other factors that could have been -- what are other factors that could cause this? i think they worked hard to try and rule those out? >> they did. and so, again, it's pretty suggestive that the zika infections having an effect on motor neurons have been going on. to cause these findings that the babies in utero aren't having the muscles and joints developing in a normal way. that's what's believed to be going on here. a couple of the babies who also had this joint con also had microcephaly. so it's not -- it's plausible that any condition that can cause damage to the brain, damage to the motor neurons is also going to cause this. >> i remember they ruled out something that was actively affecting it within the joints. >> right. >> the calcium deposits that were in the brain. and so as a result they thought it was not joint damage but
brain damage. that's why they think it comes back from zika. what we're seeing now -- what meg was just talking about -- is that, look. the sprays and insecticides that have been sprayed here in the united states to try to deal with this outbreak in miami have not been nearly effective as we thought they might be. where does that leave us? >> well, we're starting to do aerial spraying which is probably going to be effective. you know, this is a fairly recent effort in terms of trying to spray to destroy these mosquito mosquitoes. we have the capacity to do it, but it's going to take a sustained effort probably over multiple years. you're not going to suppress it in one season. but we know how to do this. i think the genetically modified -- you're not going to be able to spray in less densely populated areas. but for places where people live where you can go in and spray, spraying is still the most
effective means to try to destroy this mosquito population. >> also in another report this morning targeting puerto rico where the outbreak has been substantial and they are looking at 30% potentially more of the population being infected by the end of this year. that's a situation where some of the -- there's been a lot of skepticism from people on the ground who haven't wanted the united states or the cdc coming in and offering some of these recommendations and have gone against it. they don't necessarily think it's as big a deal because chikungunya was a bigger problem for them in 2014. what happens in a situation like that? >> well, look. this is a much bigger problem in puerto rico than it's ever going to be hopefully in the mainland u.s., but i don't think we'll ever have a problem in the mainland united states like they're dealing with. so i think it's important for local officials in puerto rico to think about taking steps that
might be in excess of what we would do perhaps in florida. where it's not as big of a problem, there aren't as many imported cases. i think puerto rico needs to be aggressive in trying to wipe out this mosquito. and they have environmental concerns that is superseding some of the steps they might be taking. >> like aerial spraying like they've already done in miami. all right, scott. it's always great to talk to you. appreciate your time today. >> thanks a lot. coming up, a mega-real estate deal maker has been called one of the most powerful women in new york city. she joins us to talk how the election and brexit will impact the property market. you're watching "squawk box" on cnbc, first in business worldwide. you know what, guys? there's a lot of tree branches and dry brush over here.
welcome back to "squawk box," everybody. the s&p barely budged yesterday. they did manage to post slight gains this morning with the futures. right now the dow futures up about 12 points. s&p up by three and the nasdaq up by six. yelp shares soaring after the consumer review website operator posted a surprise. quarterly profit. it is now raising it's full-year revenue forecast. check that out. the stock is up by almost 14%. sunpower getting crushed this morning though. the solar panel maker warning of
near term challenges. plans to cut 15% of its workforce. that's about 1200 jobs and the stock has lost a third of its value this morning. a decline of 30%. all right. our next guest has been named the most powerful woman in new york city by cranes and was the first female in history to chair the real estate board of new york. she's had a hand in transforming the face of manhattan and has been behind some of the city's biggest leasing deals including 1 world trade center and moving "the new york times." so far this year she single handedly leased over 3 million square feet of office space. that's three chrysler buildings stacked up back-to-back. as if 3 million isn't a big enough number. >> definitely not single handedly. with many, many colleagues. >> you're being modest. joining us now on the state of the new york leasing market is mary ann tighe.
it's great to have you here in your building. >> yes. >> got to give you props are we treating it okay? >> yes. you're an ornament to this wonderful building. >> how is the market here in new york city? >> actually, it's been strangely steady. i say that because we're seven years into what has been a steady run-up in rent. >> a bull market in rents? >> i wouldn't call it a bull market in rents. we're still looking to reach in mid-town the same top number we were at at the end of 2007. >> wow. >> and we're just shy of it now. however, mid-town south which is 30th street down to chambers treat and downtown have blown through record rents. if you look at manhattan overall -- in fact, manhattan overall is at the highest numbers. >> there's somebody that moved out to have mid-town south to mid-town because it got too
high. >> i love the meat packing district. when i was growing up in this district, you did $8, $9 rents. i hate dating myself but that's the truth. now at that market, you're talking somewhere between $70 and 100-something a foot. when you say where's a good market, i say third avenue. i think third avenue kind of represents a different era architecturally. emory roth, this great architect built many great buildings on third. but what people want to do is something either new or they want something that is -- has character that has been retrofitted so it feels like it's new. >> i think we've been really trying to get our arms around the state of the corporation today and how they're feeling about the economy. we've mentioned the most recent gdp report. the lack of business spending, capex. are you seeing a month to month decrease in demand?
rent softening at all here in the city? >> so no. we haven't seen rent softening. i'll tell you the other part of this. we haven't seen sales prices softening. on the contrary, i would have said to you last year that cap rates couldn't go lower. the average cap rate last year was 4.5%. we're actually at a lower cap rate this year. talking about it in manhattan and what's happened is so many buildings had been reset that there's a tremendous reluctance to reprice even if there's a suggestion that you might. >> but that speaks of a bubble. that speaks of a fed-inducing, cheap money. >> the fact that rates have been so low and the prospect for rates going up seems more distant at the moment than it might have a year ago has kept real estate very strong. particularly in the gateway city. >> and what about the supply? it seems like -- i went and talked to a bunch of real estate
guys and talked about building stuff. they told me to shut up. nobody wants anybody to build anything. because -- >> there's no lack of supply in the city. >> let's talk about that. >> right now it looks as if cranes for new york that cranes are everywhere. and by the way, we're also building our fourth business district in manhattan. some people would want me to say -- it's really brooklyn that we're seeing explode. the reality, however, is that land price -- land trades. if you said to me where is the market as a whole? i would tell you that land trades are frozen right now. there's so little being sold because people -- the seller/buyer expectations are completely out of whack. if you're not selling land -- the second thing is construction financing has really dried up. i don't know if you saw a recent construction loan given by bank of the ozarks. i always say when someone is coming into this market from somewhere else, it's telling you a lot about what's actually
happening. i think after we have the hudson yards and the world trade center -- and remember the trade center is virtually built except for tower 2. the yards are coming on and spectacularly unsuccessfully. and then we have, obviously, midtown. >> there's not demand out there? >> there is demand. i'm saying once all of those come on, i don't know where the new product is coming on unless you're building in midtown by bringing down a building. something we've traditionally never done. >> right. so what worries you when you look at all this and how things have built up, what would be a signal to you that maybe this run is getting a little long in the tooth? >> you know, i'm beginning to feel that this run is going to replicate the 1979 to 1989, '90 run where you watched rents stay flat for a long period of time. i don't think we're going to see anything like what caused us to
come out of that run. gave an incentive to build on the west side and you watched everything that we now think of as -- remember that sixth avenue used to be the boundary. everything west of sixth came on in that '87 to '89 period. and that's what really put it into that. >> part was donald trump. you can't work in new york real estate -- >> actually, no. donald trump was before that time. >> how do people feel right now about renting and being in donald trump's buildings? >> well, there aren't -- there's really only one building that donald owns in the city office building. he has minority interest in neighbors -- >> he's got his name on a lot of buildings. >> that's not his? >> it's amazing because his brand is all over the city. but his holdings, he owns 40 wall street which is a million square feet. and which he bought brilliantly out of bankruptcy. a phenomenal deal. and that's it. that's his full office building. he owns the retail at trump tower. incredibly valuable retail.
and he owns a minority interest as i say in 1290 avenue of the americas. >> his run for president, how has that impacted his brand in terms of what you see for demand for the retail or the -- >> well, the retail long-term leased up and well. >> what about the apartments and the office space? >> i have to tell you, he is not really engaged with those buildings anymore. i think it's a question of, do you want to live in a building that has a trump name on it and given -- >> i think that's what becky is getting at. >> given how tight housing is in new york, i would think that it would be just fine to live in a building -- >> you would think. what are you hearing from clients? are they demuring or saying yes, put me in donald trump buildings. >> clients i deal with are not the residential clients and i can envision people saying put me in a donald trump building because they're not donald trump buildings, they have donald trump's name on them. >> what would happen if the stock market, we're right at sort of record highs, all-time highs, and setting them even
though incremental moves they are, almost, you know, weekly, what's the correlation between the stock market where it is and your business? >> my business is about jobs and so if, in fact, there's a severe correction and that results in less jobs you can see for absolute certain, you can say for absolute certain, there will be a correction. interestingly by the way, a market that used to be dominated by financial service is increasingly becoming a technology, media -- >> we have to ask you about retail, a big story out there be, that we don't -- way more retail space than we need because of the internet and other developments. is that true in the city? >> if you said to me, where are we experiencing pricing, retail is the number one place i would look. what's interesting about it is, we still have a great demand for retail. you can't have 58 million tourists in a year and not need stores. okay. that's -- and again, i'm sure that brexit and what's happening in europe will cause -- >> sure.
>> england is our number one, 12 million -- >> still a lot of millions. >> still a lot of millions. we still need the stores, but i can tell you is people pushed pricing beyond. down madison avenue, a prime shopping distrikts for us today, you will see signs for rent all over because the pricing needs to correct. the interesting thing is, where is pricing holding and where is pricing growing? times square, heaven help us, is holding these phenomenal rents because the volume of people coming through times square and downtown and brooklyn, both of which have been under retailed, are now experiencing real growth. you will see westfield's transit hub is going to open next week and you will see boom, it's going to be great. >> yeah. >> great having you. >> thank you. thank you so much. >> fascinating. >> a tour of new york. >> thank you so much. >> up next, jim cramer joins us live from the new york stock
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it's not much to write home about, but at the same time, it continues and that whole sell and go away may not be the right one. >> we've had a rolling bull market, quarters that have been reported nice move in the technicals, takeovers, seems like consumer package goods stocks have stalled, utilities stalled, rolling into a market that's indicating there's increasingly better global growth and there's been a bit under the banks almost every day. it's just been in new places this market finds to love. i think that's a great characteristic of a quiet stealth bull market. >> all right. jim, we will see you in a comminutes. >> jim stewart's stuff was fabulous. >> we don't have enough time but dying to get your take on the tesla stuff he talked about and the tesla shareholders are the only one who thinks the solar city is a good deal. >> it's brilliant analysis.
the best there is. >> he is. thank you, jim. >> yep. >> when we come back we have more of this morning's market movers and tomorrow, don't miss a big interview right here on "squawk box," republican presidential candidate donald trump will join us live at 7:00 eastern time. stay tuned. you're watching cnbc, first in business, worldwide. ♪ ♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20.
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welcome back. check out the futures a little higher, dow futures up by 15, s&p up by 3.5, nasdaq up 6.5. scott we'll see you today and tomorrow morning. join us. it's time for "squawk on the street." ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer, we are live from the new york stock exchange. carl quintanilla is live at the olympics in rio and we will hear from him momentarily. give you a look at futures this morning as we're a half hour away for the opening of trading this wednesday. call it a mixed open, maybe a bit up on the dow jones industrial average.