Skip to main content

tv   Squawk Box  CNBC  August 7, 2017 6:00am-9:00am EDT

6:00 am
good morning, welcome to "squawk box" on cnbc we are live from nasdaq market site in times square becky quick with andrew ross sore kin joe is off, sitting in the next few days, mr. wonderful himself, shark tank's kevin o'leary. >> great to be here. >> great to have you we have been planning and plotting things for the last 45 minutes or so. >> looking forward to it i am a right wing voice of reason >> looking sharp are we going to do the blazer thing today? do you want to do the blazer thing? we could or take them off, roll up sleeves >> i think we should discuss the issue. point out there's always two sides to everything. >> i love this already. >> i don't think i've seen you without a jacket on. >> i wear a jacket now because at the end of the day, i am trying to look shorter and longer at the same time, jacket
6:01 am
stretches you. but really it is about weight. if you're in perfect shape like andrew, you get away with it i still need to lose about 7 pounds i am being honest. full transparency. this tailor pulls it in. lifts and separates. >> sounds like stuff i wear. let's look at equity futures. best week for the dow since may. ninth consecutive gain in a row closing another new high friday. let's check out what happened overnight in asia. friday after you saw better than expected jobs numbers, saw a pop of the stock market here, carried out in what we saw with the nikkei which closed just over 100 points.
6:02 am
hang seng was up, as was shanghai composite europe, early trading, at least now looks like things are relatively flat for most of the major indexes. big decliner dax down crude oil was flat, closing below $50, within striking distance this morning, decline of 1.5%. natural gas is slightly higher this morning, natural gas saw the worst week since june, down more than 5%. get you caught up on big stories this morning north korea is responding to u.n. sanctions the country's official news agency saying sanctions infringe on sovereignty and the country vowed to take righteous action saturday, you know council adopted a resolution that aims to slash north korea's annual export revenue by a third. it was drafted by the united states, would ban the export of
6:03 am
various metal, coal, seafood more coming up on north korea in a minute. and other big news apple supplier foxconn making another big dent on america. south china morning post says they'll open a multi million facility in michigan focused on autonomous vehicles. no details on the investment or amount news comes less than a week after foxconn announced they would open a $10 million plant in wisconsin worth noting michigan and wisconsin flipped for trump in 2016 when the wisconsin deal was made, people did the math, how much wisconsin was giving away in terms of subsidies to bring foxconn here talking about left, right divide, where you stand on things like that >> i was going to say, you can say that with amazon or anybody. >> they were looking at this,
6:04 am
looked at it, said they're giving $15,000 a worker on an annual basis and you have to make decision about whether that's a good idea. >> that goes back into the economy, and someone else is served with the dry cleaner, restaurant. >> all good. mr. wonderful. this is wonderful. and price of bitcoin surging over the weekend, topping 3,000 and climbing >> sec won't put it through as etf, i can't short it, i'm not buying. >> completely speculative. obviously it climbed and has gone up, but you're not making investment when you don't know anything. >> my son pointed out to me this is the biggest miss in my life could have bought it at $75. i don't know what it is in terms of being unable to be -- if we could create an etf, there would be price discovery, some could go short, some long, i would
6:05 am
know what the true value is. can't find it. >> the price more than tripled in value for the year. the software upgrade last weekend, expected to cause volatility, was relatively uneventful kevin? >> yeah. on this week's agenda on wall street, look for june consumer credit numbers at 3:00 p.m. eastern time wednesday, first look at second quarter productivity and labor costs. thursday, jobless claims, july ppi. friday, july consumer price index. on the earnings front, about 35 companies in the s&p 500 reporting results with retail and media front and center among names to watch, cbs, marriott, michael kors, disney, 21st century fox, kohl's, macy's talk about stocks to watch shares of rockwell collins jumping late friday after reports that united technologies made an offer to buy the company. rockwell is reviewing the bid.
6:06 am
reports say there's no certainty it will engage in talks with united tech. and fresenius paying $30 a share for the company which makes products to treat kidney failure. shares of toshiba jump nearly 6%. company auditor signing off on financial results after dispute over when they should have recorded losses from the westinghouse unit. the move could increase chances they're delisted from tokyo stock exchange. let's get to washington. president trump taking a working vacation in new jersey that's where we find kayla, she's down the street. >> reporter: good morning, andrew president trump is taking two weeks of a working vacation in bed minister while the west wing undergoes renovation
6:07 am
public schedule for the president is empty biggest development is nearby in new york where the u.n. security council adopted unanimous resolutions on north korea a relatively small number to us. the president tweeting after a phone call with president moon of south korea that the president was happy and impressed by the vote which included china and russia, two nations that previously balked at the sanctions policy. secretary of state rex tillerson for his part tried to signal the diplomatic channel would still be open. >> north korea can give us that they're prepared to talk to stop the missile launches we have not had an extended period of time where they have not taken some type of provocative action by launching ballistic missiles
6:08 am
u.n. ambassador nikki haley who was instrumental in sanctions is among names mentioned in a "new york times" report about so-called shadow campaigns emerging should trump decide not to run in 2020. the times cites conversations with 75 republican officials and donors, naming senators ben sasse and tom cotton, john kasich, and vice president mike pence whose packed public schedule directly contrasts with that of president trump. the vice president forcefully denying the report, calling it disgraceful and offensive, saying, quote, whatever fake news may come our way, my entire team will focus all efforts to advance the president's agenda anything that says otherwise is laughable and absurd back to you. >> good to see you. working vacation i like to do a working vacation. don't always get credit for working vacation, especially on
6:09 am
tv separately, the president of russia taking vacation time, posed for action shots as he likes to do throughout his vacation last week he fished, kayaked, snorkeled through siberia. cold waters didn't keep him from going for a swim accompanied part of the trip by the defense minister no shirtless photos of mr. trump's working vacation just yet. a broader look at the markets and economy. joining us, jim o'sullivan, chief u.s. economist for high frequency economics and david leibowicz for jpmorgan asset management saw better jobs numbers friday does that change how you're assessing the economy? >> obviously the numbers on friday were stronger than expected numbers bounce around a lot. when you average it out, net is
6:10 am
the same, pretty strong. getting basically 180,000 a month on payroll, 1.5% annual rate labor force growing 1% a year. it is a recipe for the unemployment rate to continue to fall >> people have been surprised that numbers have held in this high for so long as the unemployment rate continues to decline. should be looking at closer to 150,000 or less jobs why isn't it slowing down? >> the backdrop is very accommodating to financial conditions generally, not just the fed but equity markets this set of financial conditions is supportive of arguably above trend growth in terms of unemployment growth. it is above labor force growth unemployment rate is falling i don't see change to that >> continued to see markets setting highs on almost a daily basis. >> the key thing investors are watching is inflation, that seems to be what's moving the dial for the fed the most.
6:11 am
we're still seeing relatively subdued wage growth, relatively healthy payroll growth supports the idea of goldilocks economy, growth looks moderate, inflation remains low, and as wages remained subdued, margins continued to expand. it is the profit story giving investors confidence that the market can keep it higher. >> kevin, how do you feel about the economy of the markets >> thing i look at is wage inflation, that could me would trigger the fed, futures markets at 7%, do you agree for that hike in december >> our view is the fed will begin balance sheet normalization in october they'll announce it in september, start doing it in october. assuming inflation data holds in there, december is a possibility for rate hike. >> shrinking the balance sheet at the same time, that's the other question if you shrink the balance sheet and raise rates, what impact >> the market doesn't care at some point it has to weigh in
6:12 am
on it. everything works on -- unemployment now getting into full employment with no wage inflation. something is amiss there in my view by now and any other recovery, seeing dynamic change in pay, we don't have it. >> what do you think >> i don't think it is quite like that. productivity is weaker, inflation in general is weaker, look at real wages, they're growing. second, only when unemployment rate drops below estimated employment level that you get upper pressure on inflation. they put it at 4.6 just broke through a few months ago. >> show me wage inflation. >> i look at tax receipts for wages, they look stronger than
6:13 am
wage numbers as well ultimately you'll see more in the numbers. some may not show in basic wages, bonus type income, that ultimately is captured when they do full data again, it is only when the unemployment rate drops through full employment level you get significant upper pressure we have just broken through it >> how quickly would you expect something like this. >> nature of the u.s. labor market is more gradual more a question of if you extrapolate, unemployment rate down to 3.5% in a year and a half time, what does that mean if employment rates stop falling at 4.3, would we get a big inflation problem, no. if the fed thought we would drop for sure, stop dropping soon, they wouldn't be too worried the question they have to worry about is if they don't change anything, unemployment keep falling and left with 3.5% unemployment rate, and ultimately the economy is overheated that's what they're leaning, yes. >> are you watching things like
6:14 am
that, wage inflation war to show up, something that would make you lessen tlaled with stock prices. >> we believe in the phillips curve. to me, wages are key variable. they drive inflation which will move the fed wages are key from macro and micro standpoint it is something central to our view over the next 12 months >> any chance we are not calculating -- people that rent units, where is all that in terms of how the numbers are calculated >> structure of the economy has absolutely changed we continue to look at the unemployment rate as being realistic measure of unemployment in the u.s. we are looking in the context of
6:15 am
things of the rate, includes part-time workers, marginally attached to the labor force. this recovery was a doozy for the labor market it is lackluster haven't seen participation rate tick up the way people expected. we think there's shadow unemployment we think that's part of what's keeping things in check. also think it has to do with corporate labor. when labor is cheap, there's a bit of feedback. if you want to increase output, labor is cheap, why not bring in more labor easy way to do it, and keeps labor cheap. there are a number of things this time around which are a little different but expectation is that the labor market should continue to tighten, that should put upward pressure on wages. >> seeing very good earnings coming in? >> yes. >> sectors that are best places to put your money? question in "the wall street journal" raise today, value losing its shine and torrid growth era do you like growth stocks or value stocks >> we get that question all the
6:16 am
time one of the things i have been saying to clients recently these are not your father's growth stocks, not the 2000 tech level no earnings names. as of late, russell 1,000 growth index has negative correlation with interest rates. when interest rates have been falling, growth does pretty well people view it as more defensive asset, paying up for earnings and revenues, for example, big tech companies are generating, using growth as more of a defensive play looking into end of the year, i think you want to think about it in terms of cyclical and defenses, we continue to tack materials, industrials, financials, and gradually warm up to energy as you see that turn around. >> dave and jim, thank you for your time. when we come back, activist investor bill actman looking to shake up adp and programming note big lineup tomorrow.
6:17 am
jamie dimon joi james dinan, and then jamie dimon tomorrow on cnbc are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what?
6:18 am
haha...hawaii! you might have less coverage than you think. visit aflac.com and keep your lifestyle healthy. aflac!
6:19 am
that's why at comcast we're continuing to make4/7. our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service.
6:20 am
it all adds up to our most reliable network ever. one that keeps you connected to what matters most. news out from tesla. the car maker announced intention to rate $1.5 billion in a debt offering, wants to bolster the balance sheet trying to scale up production of its model 3. >> you missed the most important elon musk news this amber herd thing is over with >> shock. >> if you're following elon musk's twitter, has pictures of him and her going to australia, going on vacation. now us magazine says it is over. who knows.
6:21 am
>> got to get focused. bill actman setting sights on adp, has 8% stake in the payroll processing firm. we will get into that function within the markets with mr. wonderful, kevin oh lear oh is he -- oh le'leary they said why do we care what you say, meaning to mr. actman the question is sort of in this day and age when you look at where adp is, and where bill ak man's record is, you saw adp go after him. they say we do well, you don't do so well what do you have to say about anything
6:22 am
>> i am a shareholder. >> how long have you been? >> about six years, has been a great stock for me the reason i am intrigued is if there really is margin opportunity which is what his claim is, i see better margins ahead for this company, tell me more he has every right to use his platform to come out and explain what he sees that others don't you can criticize values or say herbal life was a disaster, and they were, but the fact that we're talking about him now, he has a platform, when he first came out with this last week, my ears perked up really what do you know that i don't know tell me more this fund has a huge amount of his own money. if he bought 8% of the company, it is a major holding of his own dollars. yes, i want to know what he knows. >> do you as shareholder want
6:23 am
him to run his directors after missing the deadline. >> i put the gauntlet out to him, sell me tell me what you know. tell me the plan i watched him do some magic in stock that was underperforming forever, cp, a rail company. i was an owner. >> that stock was a phenomenal performer, or was. >> came up to toronto, want to calgary, he pitched shareholders on his vision how the company could change in 36 months. he was 100% right. he whacked all the directors that were fat and sassy, doing nothing. replaced them with entrepreneurial canadians as he said he would, dealt with all of the regulators there, took the heat, all of the press, and delivered massive value. that's why he has my respect i didn't enjoy what happened to him on other names, but you capital get it right all the time >> i guess it goes back to the point, you think this is a company that's been a good performer, are you willing to
6:24 am
see half the board tossed out. >> in this case, he effectively wants control of the company without a premium, by the way. >> there are many people that don't like him because of a perceived arrogance. and to actually go to a company that outperformed the s & p for so long, say it could be better has a little arrogance to it out of respect to ideas, every ceo and every board should listen to shareholders, even if they're so-called activists and hear out the idea. let the market decide. >> no question i guess are you willing to let him throw out half a board. >> i want to hear the plan he certainly has a platform. if he wanted to call us and tell us, he could do it we would take the call and listen. >> would you give an extension >> no, no. this board nomination process has been on the board a year we know that as shareholders >> in the name of allowing ideas to foster. >> no, no, no. you play within the rules, okay.
6:25 am
and i am a shareholder i don't want disruption of my company just because somebody thinks they need an extension. the answer is no should have brought the idea forward earlier if that was the case i am still willing to listen to actually take a company that outperformed s & p, say i can do better, takes big cajone s. program note, halftime report at noon, live exclusive interview with leon cooperman. we will hear the other side of this one, former long time member of adp, has a lot to say about the activist campaign on the halftime report at noon eastern time today up next this morning, deloitte ceo cathy engelbert
6:26 am
and here are last week's winners and losers ♪ at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage.
6:27 am
fidelity, where smarter investors will always be. and at $4.95, you can trade with a clear advantage. when i was too busy with the kids to get a repair estimate. i just snapped a photo and got an estimate in 24 hours. my insurance company definitely doesn't have that... you can leave worry behind when liberty stands with you™ liberty mutual insurance. ♪
6:28 am
♪you are loved ♪
6:29 am
6:30 am
good morning, everybody. welcome back to "squawk box. look at u.s. equities. you see the s & p futures are indicate up by less than a point, dow futures up 11 points after the market closed at another record level on friday nasdaq had a rougher week, down last week the second week in a row. here are stocks to watch this morning berkshire hathaway second quarter profit fell by 15% results hurt by lower investment gains and loss in insurance underrighting business book value which is warren buffett's preferred method of net worth rose 6% for the year. shares of delta airlines look attractive after 0% pull back with aggressive plan
6:31 am
baron's says voya set to rise 30% or more. there are indications the core retirement and investment business is growing. automation, artificial intelligence will change the work force that's what everybody says over and over the next guest cathy engelbert good morning >> you want to reframe it. what's wrong with it >> you talk about the future of work, everybody's buzz word, it sounds intimidating like maybe there's challenges to that reframing it as work of the future, really talking about how to innovate at scale and speed, no one knows more about that than you, really talking about how public, private partnerships can help with this mismatch between the way our students are graduating and the 6 million open jobs out there, when i talk to ceos, you can't fill them. >> people talk about automation, think ten years out, say that
6:32 am
all of us will be replaced by avatars and robots do you think that's unfair to even contemplate >> we overestimate change in the short term long term, i think we need to think about that learning how to be a cobot >> what's that >> co-exist with robots. around automation and ai and really the millennials and digital natives coming into the workhorse, hired 17,000 of them in the u.s., they're a little worried about it, but look forward to using it as a competitive advantage, reskilg and retraining they all know they'll have different jobs. >> meaning more technical training along the way >> tech savvy, yes. >> i want to weigh into a controversial subject, you're nixing employee affinity groups, diversity groups big brou-ha-ha in the last 72 hours because of a memo inside google, i don't know if you saw
6:33 am
this, about diversity. a gentleman, i don't know if i should call him a gentleman, man wrote a memo saying things have gone too far he claimed there are differences between men and women and that's responsible for what's happening there. and that he believes everybody is being silenced because of all of this. you're doing the opposite. >> so what we're learning from polling people, especially our millennial, digital natives, we are learning they don't want to be part of one covert group and they want to look at diversity more broadly we are not nixing anything, we are doubling down and broadening they're not identifying with one covert group, they want diversity of thought of all groups, not just based on race or gender or whether you're a veteran. we are doubling down on the
6:34 am
inclusion council at the local office >> what do you think about the idea, i'm going to go there, white men effectively there's a bias against them. >> i think there are many by biases we introduced a new family leave program, for men and women, up to 16 weeks of paid leave. there are biases, not just any covert group that's the idea of inclusion councils, so you include everybody and not singling out one group. >> why fight it out on the sake of just diversity. why not make it about performance, regardless of what group you come from, i'll make a note of this i have a large portfolio of private companies as a result of being investor in "shark tank. 40 plus companies over nine years. majority of returns come from ones run or owned by women,
6:35 am
private companies, average size 25 employees, average sales 10 million. something about that adage, you want something done, give it to a busy mother, playing out in the real world. >> and you said that's basically what you're looking for. >> private companies, i find a team of women running it, set goals to achieve more often, better morale with teams, return of capital is higher this isn't about diversity, it is about performance >> so they have to be tied together one of the things we found as we promote more and more women and minorities is over 50% of promotions to leadership were women and minorities one thing we found is we still need sponsorship across the inclusive work force, but we found the more we look at it across the life cycle of an employee, the better performance is. >> when you mandate it, get the push back. somebody writes a memo, this is mandated, not based on merit,
6:36 am
performance, let performance be the driver, women would run the world now in small cap for me they would. end of the day, that's what the market wants, higher returns, lower risk that's an easy message to sell opposed to saying you must do it because i mandate it as ceo of the company which is having push back on different diverse groups let people perform it turns out it is an amazing outcome to see and delivers versus what your assumptions are. >> when did you notice that trend? >> five years ago. we have to do means tests. we look at the companies, see which ones need more capital to stay alive all the women based companies returned capital we invested and then some. we looked at it, said what are they doing i could show ones run by men to do the same. turned out they were setting goals on quarterly basis on revenue achieved 95% of the
6:37 am
time as a result they had lower staff turnover. >> and that culture as well, you have to have culture of courage to provide that environment to drive performance. >> one of the fascinating things about diversity, big workplace, small workplace, typically when a company starts, when you find a start-up company, for better or worse, people hang out with their own cohort if they will. some women may start a company together some men, roommates in college might start, so the origin story is very hard to find the origin piece of it to be diverse. everybody talks about diversity, it is not that they can't start at the beginning, but it is hard to start at the beginning. have to figure out how to get their waders >> i would say women, i have a case study, willing to fire her mother because they started as a
6:38 am
family business, but she wasn't helping the company. that to me, that's what i'm talking about. >> throw the mother out. >> it is not about kumbaya, it is performance and delivering, making sure the business is healthy. that's what it takes. >> out of curiosity, was she able to do that and salvage the relationship with her mother >> and her husband. >> fired him too >> no, the husband was an employee of the woman, they decided together the mother was a burden and that at the end of the day she had to go. >> did she salvage her relationship with her mother >> what goes on at thanksgiving. >> it wasn't perfect, becky, but boy did that company perform. >> company performed, thanksgiving dinner got harder thank you, cathy >> thank you so much. when we come back, tax reform and focus, steve forbes weighs in on tax overall bill by fall is session. they're working on it now, even though nobody is supposedly in washington. officials prepare to renegotiate nafta.
6:39 am
talk to former trade representative michael froman. angie oh political hot spots this is "squawk box" on cnbc at ally, we're doing digital financial services right. but if that's not enough, we have 7500 allys looking out for one thing, you. call in the next ten minutes to save on... and if that's not enough, we'll look after your every dollar. put down the phone. and if that's not enough, we'll look after your every cent. grab your wallet. access denied. and if that's still not enough to help you save... ooo i need these! we'll just bring out the snowplow. you don't need those! we'll do anything, seriously anything, to help our customers. thanks. ally. do it right.
6:40 am
at where instead of payinging a befor middlemen,em. we work directly with family farms to deliver higher quality ingredients for less than you pay at the store. get $30 off at blueapron.com/cook
6:41 am
6:42 am
welcome back to "squawk box," everyone time for the executive edge. you may soon be able to use your watch as a phone, according to reports, apple is adding lte support to apple watch that means you won't need the phone nearby for tasks that require a network connection you probably need to add the watch to your data plan. reports say at&t, verizon, t mobile plan to sell the cellular apple watch. new model expected to launch later this year. when i talked to kevin about it in the makeup room, he says i have a better one. want to show it off? >> i do. wearing it now it is a samsung. >> face on it? >> yeah. this is all that's on it that's why i like the samsung watch. has the ability to log into anyone's network i am not dissing --
6:43 am
>> i am curious about it it looks nice. looks like a watch watch >> instead of having that weird if he can look, i want to go to classics they have a thousand faces of all of the classics. i could just download that face. all these beautiful faces. i didn't find that easy to do with the apple watch they have work to do i am a big apple fan and samsung developed an app to put on the phone. >> apple phone >> and i have four samsung watches, i have gold, silver, sort of a sports watch, and i control them all from my iphone. they've gotten hip to the fact many of us want both technologies. >> that watch, is that lt or does that go to the phone? >> this does both. can be wireless to any wireless network or go to the phone, you decide >> what about battery life
6:44 am
>> i don't have to charge this except every day and a half. >> and it goes to the telephone network? >> goes to wireless network. >> but it is on all the time i don't have to wake it up it is there with the time. it has lesser bright face. >> memo there, that's what he is doing. got a little weekend box office news to bring you adaptation of "the dark tower" taking the top spot. brought in $19.5 million according to comm score. based on a series that melds genres "dunkirk" took second place after two weeks in the lead. the world war ii film earned $17.6 million. was it too nice outside this weekend? it racked up more than $133 million in north american ticket
6:45 am
sales. i should also say detroit, friend of mine working on "detroit" which i thought was everywhere, got like $7 million. i don't understand what's going on >> box office is dropping. >> we need to download movies, we have to be able to do that. charge me $100 first time i see it, because i have a family, have to take them there, costs more than $100 anyway. why not make me pay 100 and i will revenues go through the roof. >> directors will hate it. because the directors think a, it is art, b, supposed to be seen in the cinema, on the screen. >> they're going to lose at that >> i'm just saying they're making the film for you to watch on a big screen, not a small screen. >> last last time i looked you have to pay a director with
6:46 am
cash where does that come from, sales. who cares where it comes from, if it is me buying online, good enough to keep them happy. that's the way i look at it. >> makes sense workers at a nissan plant in mississippi rejected a bid to unionize this is a blow to united auto workers union which has never been able to fully organize an automaker in the south part of the country that's traditionally anti-union uaw lack of influence reduced bargaining power when detroit automakers lose market share and close plants sticking with a little auto news, gm recalling 800,000 pickup trucks for a steering defect the problem can potentially cause drivers to lose control of their vehicle. the recall, certain 2014 silverados, gmc sierra pick yucatan peninsula. if you have one, go to the dealer talking about the oil and
6:47 am
gas service industry next. and as we head to break, a check of what's happening in european markets now. "squawk box" returns in a moment when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.
6:48 am
6:49 am
6:50 am
becareally want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.
6:51 am
welcome back, everybody. friday's employment report shows total jobs in oil and gas extraction dropped a little bit in july. but new data from api shows just how much the energy sector boosts the overall economy joining us right now is vice president for regulatory and economic policy at the american petroleum institute. and, kyle, dig down into the numbers a little bit how many jobs are responsible for things that are coming out of the gas patch >> the new data shows that there are 10.3 million jobs here in the united states that are supported by the oil and natural gas industry and these are good paying jobs, too. on average, oil and gas industry jobs, nonservice station jobs, pay about $101,000 per year. that's 90% more than the average u.s. job so there's plenty, good-paying
6:52 am
jobs, lots of them, and it's also important to note that analysis shows that there is about a 1.9 million additional jobs hiring opportunities in the oil and gas sector between now and 2035, with tremendous opportunities for many of those hires to go towards african-american hispanic women and importantly veterans, as well >> those 2.3 million jobs. those are all the high-paying kind of jobs that you were talking about? or that includes service station jobs that includes the industries that support those jobs? what is that number? >> the 101,000 per year that's the average salary for nonservice jobs -- >> the 10.3 million? >> the 10.3 million, those are direct, indirect, and induced skrobs so not only are you going to see about 2.8 direct, and 2.8 million direct jobs, but the rest are going to be indirect and reduced jobs throughout the economy. the 101 refers to the 2.8 minus
6:53 am
the service station jobs >> how many of these jobs, how much of it is a direct reflection just of where we see oil and gas prices head? every time gas prices head up we see more job data. and every time they go down we see jobs lost? >> well, right now, the u.s. has become the producer of the world, so as prices go up and down, we're starting to see the rate count go up with it right now what we're seeing is a certain amount of volatility but really it's been a steady gain in rib count and in jobs in the upstream sector of the oil and gas industries for the last six months or so >> in terms of the regulatory front, and i ask this because i know regulatory is in your -- the regulations are in your title as a job title, how does that come into play? how many federal regulations you have or don't have >> well, there are nearly 100. at the end of the last administration there were nearly
6:54 am
100 regulations, or guidance documents, pending administrative action that impacted the oil and natural gas industry and what we've seen with this administration is they're pulling back on some of that looking for smarter regulation, rather than more regulation. and we're certainly supportive of that. and obviously, regulations have the potential to add costs to the industry, and any time they're adding cost to the industry that increases marginal costs, and you know, makes each play, you know, that much more difficult to be cost effective >> kevin, i know it's a little out of your wheelhouse here. you usually invest indirectly in companies that you know something about, that you understand the management, but do you have any oil and gas investments? >> i do. and i have a question for kyle i'm assuming these 10 million jobs are primarily in texas, california, oklahoma now, my question -- >> actually not the case forgive me for interrupting. actually not the case. the interesting thing about this is that the oil and gas industry has been extremely deep value
6:55 am
chain. literally tens of thousands of companies that provide goods and services to the oil and gas industry so these jobs are really throughout all 50 of the states. >> well, that's good news. but here's the question, seven years ago when oil was considerably higher, a tremendous amount of debt was issued to a lot of companies involved in shale, and all kinds of elements where the jobs are created, whether transportation, or right from wheel to the well i guess. now, this debt's coming due in the next 24 months oil has been halved in price it's all trading on majority of it at "c" and "cc" which is really garbage debt. what i'm worried about, the job assumption is, this debt will eventually take over the equity of the companies that issued it. because they'll go bankrupt. the debt holders will get their assets, and there will be a turnover not necessarily a bad thing. but in the process are we going to see a little disruption in terms of jobs? are these companies that financially secure that they can weather $47 to $50 oil
6:56 am
are you bullish on that? >> i do think the industry, i am bullish on the industry. certainly when you're talking about paying off debt, you need that -- you need the revenue to do that. so i think production is going to remain strong in fact, dia's projection for production here in the united states is for it to continue to grow right now, it's about 9.3 million barrels a day that we're producing here in the united states and their projection is that's going to get over 10million barrels a day by the end of next year so, i think with that continued production, companies are going to have that revenue to pay off debt >> all right >> kyle, thanks for your time today. >> thanks for having me. >> okay. coming up when "squawk" returns, congress is on recess, and president trump is taking a working vacation in new jersey but, d.c. staffers are working to get a tax reform bill ready for this fall. we'll talk taxes, health care ghth steve forbes, strait ahead after the break. a big hour coming up on "squawk. it naturally begins to change,
6:57 am
causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. at the lexus golden opportunity sales event before it ends. choose from the is turbo, es 350 or nx turbo for $299 a month for 36 months if you lease now. experience amazing at your lexus dealer.
6:58 am
6:59 am
7:00 am
good morning, everybody. stocks look set to kick off another week in the green after hitting record highs find out what you can expect in the week ahead, after friday's strong jobs report new this morning, the secretary of state rex tillerson doubling down on north korea threats after the u.n. approved tough new sanctions. we will talk politics and the markets with steve forbes. >> and if you're getting married, the honey fund may be just what you're looking for the business of getting married. the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box."
7:01 am
good morning, welcome back to "squawk box" right here on cnbc, becky quick is already singing for everybody. live from the nasdaq marketsite in times square, we are, i'm andrew ross sorkin along with becky quick, sitting in with us for the next few days, kevin o'leary, mr. wonderful, chairman, shark tank investor, cnbc contributor steve forbes is with us, as with el we're going to talk to him in just a moment. the futures, see what's going on set up this monday morning you're looking at some green arrows across the board. dow looks like it would open up about 16 points higher nasdaq up about 6 points and the s&p 500 looking to open we'll call it just marginally up for now. here's what's making headlines at this hour tesla planning to raise $1.5 billion in debt to help it with its scale-up of that model 3 production and to shore up its balance sheet. ceo elon musk had said recently that the automaker was considering a debt offering but not considering issuing more stock shares to raise money. so this is the answer to that.
7:02 am
also, shares of metlife's spinoff brighthouse financial begin trading today. that contains what used to be metlife's u.s. life insurance business brighthouse is also becoming a member of the s&p 500 index, displacing auto retailer auto nation and brighthouse ceo eric stegwaltz and metlife ceo steven kandarian are going to join us to talk about the separation of brighthouse from metlife i want to talk to them about getting rid of snoopy. and berkshire hathaway reporting a 15% drop in second quarter drofts came below analyst estimates berkshire did see improved results in its railroad operations stocks on the move this morning, shares of rockwell collins jumping late on friday after reports said that united technologies has made an offer to buy the company rockwell is reviewing the bid but reports say there's no
7:03 am
certainty. it will decide to engage in talks with united technologies united technologies told cnbc it does not comment on rumors or speculation but you can see rockwell collins shares are up by about 8% united technologies, down by just about 1.25% general motors is recalling about 800,000 of its pickup trucks for a steering defect the problem can potentially cause drivers to lose control of their vehicle. this recall impacts certain 2014 silverados, and gmc sierra pickups. >> the big story out of washington today, north korea responding to new u.n. sanctions. the country's official news agency says the sanctions infringe on its sovereignty and the country vowed to take righteous action on saturday u.n. security council unanimously adopted a resolution that aims to slash north korea's annual export revenue by a third the resolution was drafted by the united states. it would ban north korea's exports of metals, coal and seafood. also some politics for you president trump currently on his working vacation in new jersey
7:04 am
meantime tensions with russia and north korea all at an all-time high. joining us right now to talk about that and more, steve forbes good morning >> good to be with you, andrew thank you. >> what do you make of what's -- you want to talk geopolitics first? or what the implications of that are and what's going on in washington to taxes? which is your favorite topic >> let's start with the geo. i think it underscores that getting this economy moving, getting the u.s. seen as getting its act together and moving upward is essential. 1980s, when the u.s. came back from the terrible 1970s, that was instrumental in winning the cold war so they all tie together right now we've been ignoring what's happening around the world -- how do we get any news? china and india are now at a military standoff in bhutan. got no coverage at all india and china had a war half a century ago in that part of the world. so the world is not a good place right now. >> in the america first world that we're living in, what do
7:05 am
you think about our role >> i think we're seeing that if the u.s. doesn't play an active role, we don't have to nation build, but if we're not playing an active role in keeping the bad guys in their place, the world goes to hell in a hand basket so the middle east, now a virtual 30 years war like europe had 500 years ago. absolute devastation so if we're not there, if we're not laying down markers, things start to fall apart. >> "the new york times" this morning, critics of tillerson say ceo skills are missing in his new role which is to say that he is known, renowned as a great ceo, but somehow in this role, they don't think that he's doing it you believe that or not? >> well we'll see one of the things he's learned from being in the oil business is you don't have to be in the headlines to be effective if you have access to the president, you can get things done and so the key thing is what are they going to do about north korea? they were very slow off the mark in making that travel ban. not until september 1st. they should have done that months ago sanctions are a good thing we're going to have to take other steps including beefing up
7:06 am
missile defense systems and making it clear to north korea at some point we're going to shoot those missiles down when they leave the launch pad. >> okay. as we walk in to the fall, the big issue du jour is your favorite topic, which is taxes are we going to get tax reform >> we're going to get tax cuts reform means redoing the code. it's too late for that they botched that. so i think what you're going to see, and the reason it's going to happen, the same with johnson, the inventor of the english dictionary said over 200 years ago the prospect of the hanging focuses the mind wonderfully. the prospect of a political disaster next year is going to get these guys to do what they should have done months ago. they will make change on the corporate said, get it down to 20% or so. on the individual side forget about doing away with tax reduction or local and state taxes and things like that i think you're going to see -- >> you don't think that's going to happen? >> no. >> they're talking about getting lower rates by getting rids of things like that and the mortgage deduction >> they're going to learn you don't have to worship the cbo. and you just make the tax cuts like reagan did in the early
7:07 am
'80s >> the dynamic scoring is the answer -- >> -- giving relief to farmers and generational issues that they sell their farms out of debt >> i think stuff like that, where quietly the democrats know that's a good thing, you can get that in. but on the big thing on the individual side, i think you'll see 10% to 15% across the board rates, tax rates like we did in the early '80s and save the heavy lifting on cleaning up the code after next year's election. >> you think we get down to 20% on the corporate rate, but then you don't get reform on the loopholes or you do? >> get as much on the loopholes -- >> it's very hard to do the math, even with dynamic scoring. >> what they should learn from the mid '80s when they did clean the tax code of all the tax shelters, if you go after one you have to go after them all. on the loopholes you can't do, i'll pick this one, forget it. you're either going to do them all or none of them. >> on the individual side, though, what do you make of what seems like at least internal intramural skirmish among people
7:08 am
like steve bannon who wants to tax the wealthiest among us even more >> that kind of a so-called populism reagan would have -- ronald reagan would have choked on what people want is a vibrant economy. they don't care if bill gates gets richer. they want to know is my pay check going up are my prospects improving >> right >> so that's why they've got to do a big tax cut and what they should do, since they've been so dill tory on this, make it retro active july 1st or jan 1st so people get a big refund in april. they see it in the next pay check. that will put people in a mood, you know, bill clinton learned a vibrant economy course a multitude of since you said something very interesting, when kevin asked about the farms, democrats will see that and they'll be able to do that. you think this is a bipartisan tax bill that gets put through >> no i think it's a tax bill where things like what kevin brought up will be done with a wink and a nod the democrats aren't going to be seen openly as cooperative they need an election loss again before they're going to seriously work with republicans. >> let me go back to the deal
7:09 am
for a moment, just to go to an issue the president talked about. he went to the american people and said the time for putting the cost of policing the entire world and putting that on the shoulders of americans is over let other people pay to police all of these zones around the world or at least up the ante for them now you're talking about all of these friction points, india, pakistan, china, north korea, are we back to where americans pay for all of it? or are we going to get some relief on this because that was a promise the president made and i'm wondering how that's playing out in those discussions? do we have to pay forever to police the world or is there a time when relief is coming? >> the time of relief is not for leadership in terms of paying, your nato, some of the nato countries are up in the budget japan wants to up their defense budget india is upping the defense budget so the pay side is just out of sheer -- and south korea, even
7:10 am
though they won't have discussions with the north, recognize they're going to have to beef up their own military. so the pay part is not going to be an issue. the real key part is leadership. are we going to take the lead in making sensible things happen to stop this deterioration of the world? we didn't under barack obama we saw that with the red line in syria. which the russians and others know, and took advantage of. so it's leadership not so much paying we'll spend 3% or 4% of gdp, not a big number by the post world war ii historic standards. but if we don't take the leadership, we're get it >> but you're running in to a problem that donald trump might run into if he wants to view the world the way you just laid out. andrew pointed out america first. that has been a rallying cry it's been something -- >> but america first can be not isolationism, which is what that phrase meant in the 1930s. early 1940s. before pearl harbor. but america first means -- can mean is we get our act together, as we did in the 1980s, we take
7:11 am
leadership in the world, but we expect others to do more, which they're now starting to do in nato and elsewhere so, how you define it. in the modern world. not the isolationism -- >> before we let you go from geo to very local mayor de blasio said the wealthiest in new york should pay for the subway he wants to raise everybody's taxes. if you make more than $500,000, he says you've got to pay for this you agree with that? >> no. if he wants people to leave the city, that's a very good thing but -- >> who should pay for the subway the subways are a disaster >> people who use it should pay for it >> so just ticket prices >> put the real price. the real price -- >> the real price? >> oh, that's interesting. because then you get into the utility question about, how you make a vibrant city work right? >> people that want to use services pay for them and you don't burden everybody with the cost of things they don't need or use that way you're very efficient in making your economic decisions on where you spend your money in infrastructure that's what we've got to do.
7:12 am
>> you wouldn't argue that that's regressive >> no. i predict at one third of every dollar raised in taxes is wasted in this country. completely wasted. one-third. >> hold on hold on. everybody -- but let's say it's a cleaning person, a housekeeper, whatever, trying to get around new york city, you think they should -- >> user pay. >> user pay? >> everybody uses a clean street everybody should pay if i don't use the subway, i don't want to pay. but make me pay if i'm using a car somewhere. user pay it's the success metric. >> interestingly you don't pay or you pay very little if you come in in a car to new york city, you pay very little. you pay on -- you could do -- >> and then it's 50 bucks to park >> parking in new york city, you need a mortgage. >> -- do it in -- >> i'm paying $18 to go across the george washington bridge >> i rest my case, your honor. >> i don't understand who's going to pay for all this in the end? you say you're just going to raise the ticket price >> if it costs a fortune to
7:13 am
bring a car into the city you don't bring a car into the city. you find some other way of coming in and you pay for that service. >> but subways, we've never charged what it actually costs >> and that's a mistake andrew it's got to be fixed this morning. right now. >> okay. >> it's not going to happen, $5 or $6 toll one thing that has to happen you start to get real pension reform that's what's eithering up remember 30 years ago the subways fell apart they put in sales taxes and other things, raised those to finance a refurbi refurbishing, they did it and let it fall apart again. they can't let that happen again. so what i think you're going to see is finally, in a few years, even pension reform will be on the table. you can't keep this thing having pensions consume so much of the tax dollars. they've got to change. 401(k)s for new subway workers >> okay. >> that's what's going to happen >> steve forbes, everybody thank you. >> a grandfathered system, though where people who have already been promised things get paid that and the new people coming in get a second tier >> politically that's the only way you can do it. >> steve, thanks for being here. >> thank you >> when we come back this
7:14 am
morning, stocks finishing last week on a high note after the economy added 209,000 jobs in july we will ask if the momentum will continue next. and later we're going to be talking trade ahead of nafta negotiations with former u.s. trade rep michael froman also a programming note for you tomorrow on "squawk box," don't miss an exclusive interview with blackrock's mark wiseman he is the driving force behind the shift from active managers to technology driven trading rise of the machine. stay tuned you are watching "squawk box" right here on cnbc. who knew that phones would start doing everything?
7:15 am
7:16 am
entertaining us, getting us back on track and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that.
7:17 am
see how much you can save when you choose by the gig or unlimited. call or go to xfinitymobile.com. xfinity mobile. it's a new kind of network, designed to save you money. welcome back to "squawk box" this morning the futures right now we are looking like we are in the green this morning dow looks like it would open up about 14 points higher nasdaq up about six points and the s&p 500 call it unch but we like to say it's a little higher because it's green. let's get ready for the trading week ahead joining us right now is charles campbell, trading desk specialist at nkm partners peter brookbar is here, chief market analyst at the lindsay group and cnbc contributor over the weekend there was a piece that seemed to get a lot of traction on twitter saying we were in a market bubble, and that we had to be in the eighth or maybe ninth inning and this was all going to end and end in tears. that's like the high sign that actually maybe there's more room to run >> almost by definition, market
7:18 am
bubbles aren't commonly recognized ahead of their existence. if there's a bubble in the market, it's really in the bond market we've had a 36-year bull market take place i mean you think about where the 10-year treasury is. you look at where negative interest rates in switzerland, 47 basis point yield on 10-year bund portugal, spain, lower rates than our treasury. and this isn't longer-term as economies improve, the qe becomes quantitative tightening by central banks around the world. and inflation does ultimately return the bond market, bull market will realize >> when is that? >> who knows >> well, i thought back in cement, october, after the post-brexit plunge in interest rates when $12 trillion of bonds were negative yielding to me that was the top how this unfolds from here,
7:19 am
obviously remains to be seen because there's this push and pull between, at least in the u.s., modest growth, but at the same time you have central banks that are no longer your friend that is obviously tightening european central bank will start to further taper and i mean, just look at the german 10-year bund yield basically doubled in about six trading days and mario draghi hinted that they were going to taper. so that could be a drag. up in yields with the negative impact on growth being a drag down so it's going to be a war. but in terms of valuation, on a price-to-sales ratio, so putting aside earnings that obviously can be manipulated by multiple things, outside of three weeks in march 2000 the price to sales ratio in the s&p 500 is at a record high. now valuations don't matter until they do. the question is, now that central banks are pulling back, do valuations start to matter? do investors say you know what instead of paying 23 times, 24 times earnings maybe i only want to pay in the high teens that's going to be a major factor >> i know you're a "squawk"
7:20 am
watcher. becky interviewed alan greenspan on friday. what did you make of what he had to say he's been bearish for quite some time though. >> i agree that we have an epic bond bubble, particularly in europe he made it seem like it's just going to be contained there. if you think that we have a bond bubble and equities are priced off interest rates, well, by definition you have an equity bubble, too. >> you're making faces >> you don't need to have an equity bubble to have a bond bubble the bond market rally took years to form and it's going to take years to unravel now, the equity market, you've had 10% earnings growth, this earnings season. you had 16% first quarter. this is the first time since third and fourth quarter of 2011 where you had double digit sequential, year over year earnings growth. earnings are coming in better than expected. the president likes to say stocks are at all-time highs technically he's correct but it's not because of the administration it's in spite of the administration's inability to get legislation passed it's because of the corporate
7:21 am
results, and corporate performance, corporate guidance. >> it's definitely bolstered by the corporate performance that if you look at when the stock market surge started, it started the day after -- the day he was elected. >> he did but that's changed over time. if you look at other asset classes and you put the stories of these asset classes together, it tells a very different picture. since the beginning of the year, the u.s. dollar is the weakest of 17 major currencies the president doesn't talk about that if the u.s. economy was going so gang busters you wouldn't expect to see the u.s. dollar coming in last >> i love the fact that the s&p, 47% of the sales international now being powered by lower dollar is a good thing >> it is >> it's the critical variable that's driving the corporate results to being better than expected the corporate results are better because corporations have been planning for quarters, probably years in many cases, to implement cap-ex plans, to implement business strategies which are providing a better return on investment than they
7:22 am
had previously >> let's go back to your bond level, are you talking government debt or credit? elon musk just went to the market for a billion five of credit, he must be saying, it's cheaper for me to do credit than equity do you buy into that >> i'm not sure i would take tesla as representative of the corporate -- >> it's a credit equity decision i mean when you've got a capitalization for an equity, which produces, what, a tenth of the vehicles of your competition, yet your market cap is 50% larger than your competition, doing a billion five bond deal i don't think is a big statement about bonds being more attractive in terms of temporary financing than permanent capital. >> okay. final word to peter, charles says this is not a trump rally what do you make of the -- put aside what hasn't happened in washington what do you think of just the deregulatory stance, if you will, and whether you think that has impacted earnings?
7:23 am
go there >> well, it's going to -- deregulatory approach is going to be a huge benefit but the problem is that it takes years to play out and in the short-term it's very difficult to quantify. there's almost $2 trillion of annual laeger to costs you return that by just 1% that's a big deal. but that takes years for it to flow through so i have to quantify in the short-term >> okay. we're going to have to leave it there, charles peter, thank you when we come back, if you're getting married, guess what? there's a crowd funding site that could help you pay for some of the big purchases maybe help you fund your honeymoon, as well we're going to meet the ceo of honeyfund. the company happens to be an investment in our special guest today,s kevin o'leary of shark tank fame. this has been a great performer for him. he's going to tell us about the business we'll meet with the ceo. "squawk box" will be right back.
7:24 am
♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.
7:25 am
7:26 am
welcome back to "squawk box. guess what today is? not just monday. it is also national lighthouse day. of the many lighthouses from sea to shining sea in the united states, there is only one that has an elevator. of the 400 plus maritime
7:27 am
markers, the state with the most lighthouses doesn't even border an ocean that would be michigan it boasts over 150 lighthouses framed by three sides of the great lakes. establishing a federal system of lighthouses was one of the earliest acts of the first gathering of congress passed back on august 7th, 1789 >> okay, coming up when we return the first round of nafta negotiations are about a week away we're going to talk about the president's goals. the former u.s. trade representative michael froman after the break. and in the meantime check out the u.s. equity futures this morning. monday's looking good. dow los ke ioklit would open up higher nasdaq up about 5 points s&p 500. not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready,
7:28 am
because we're helping leading companies see it- and see it through-with digital.
7:29 am
or a little internet machine? [ phone ringing ] hi mom. it makes you wonder... shouldn't we get our phones and internet from the same company?
7:30 am
that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. see how much you can save. choose by the gig or unlimited. call or go to xfinitymobile.com introducing xfinity mobile. a new kind of network designed to save you money. good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square among the stories front and center at this hour, a $2 billion buyout deal with the medical device industry. germany's fresenius medical
7:31 am
care, a provider of dialysis services buying u.s. based nxstage in a cash deal the transaction worth $30 per share. nxstage closed friday $23.14 we all wish we were in there then sales of municipal debt are tumbling new figures show muni debt falling 1 3% for the first seven months of the u.s. compared to a year ago analysts put that blame on rising rates though they still are low on a historical basis. sony's the dark tower topping the weekend box office but only making $19.5 million in north american ticket sales. the weather perhaps good outside. stephen king edged out dunkirk dunkirk sold $17.6 million in tickets. the russian president taking some vacation time vladimir putin posing for action shots throughout his vacation last week. according to the shots he was fishing, he was kayaking, he was snorkeling his way through southern siberia
7:32 am
a kremlin spokesman said the cold waters didn't keep the president from going for a swim. he was accompanied for part of this trip by his defense minister >> and cameras clearly. the economy adding 209,000 jobs in july that report stronger than expected steve liesman joins us now he's got more on the numbers and how wall street is reacting thus far. steve? >> good morning, andrew. the jobs numbers coming in better than expected once again, and wall street starting to think maybe it's time to change what it expects. most economists and fed officials believe trend growth somewhere between 100,000 and 150,000. let's look at the reality. the last several years, by the way, we have been the three-month average is 195 the twelve month average 179 24 month average 192,000 five of the last seven jobs reports have been above 200,000. goldman sachs writing over the weekend, quote, we have made a sizable downward revision to our forecast by the end of 2018 to
7:33 am
3.8% from 4.1% previously. as good as the jobs numbers are, the question is whether or not they could be stronger a report from the national federation of independence business shows 87% of the small businesses are looking to hire says they couldn't find workers. why not? take a look. we call them resume problems lack of job skills, 26%. poor work history, 16% employers responded why they didn't hire an individual. poor english and math skills, and also legal status. those are things you call personal problems. wage expectations were too high. social skills and appearance, 8% and then one other thing that's getting a lot more attention these days, 10% reported that they didn't hire due to drug use. so in limited ways, employers are responding to this tight labor market wages in the friday jobs report a touch higher the nfib data, 27% small businesses actually raising compensation in order to secure those new workers. but when we keep doing 200,000, after 200,000. five of the last seven jobs
7:34 am
reports without creating inflation, only minimal rises in wage compensation, maybe that trend number should be higher. >> you know, steve, does this tell you that maybe the unemployment figure is wrong maybe it's not taking in effect how many people are out there coming back into the jobs market >> well, yes and no. the unemployment rate is not designed to tell you who will come back in, who has told us they've dropped out. we asked a simple question the labor department does. did you work in the last month did you try to find work and if you didn't try to find work in the last year, you're not considered part of the workforce. there's no particular measure that says, if wages get to be "x," or the job will offer you is "y," or if something else happens, will you come back into the workforce. but i think you're on the right track in asking the question, we don't know what the labor supply is we have been continuously
7:35 am
surprised by how big that pool is and i'm the first to say i was wrong about this, along with a lot of folks, that there's more and more people that seem able and willing to come back into the workforce. >> i have to ask you, steve, 3.8, goldman's forecast, that is full employment. by any type of measurement >> but what did becky just say who knows. who knows. >> but then, against that there's no wage inflation. >> right >> does that mean america has no productivity anymore >> that is a part of it. the productivity numbers are down i think that's a temporary thing. i think eventually employers will find ways to get more out of their workers one of the new things we don't talk a lot about is the number of jobs, the domestic jobs in america whose wages are arbitraged by overseas competition. and i think that keeps a lid on wages here in the states i also think that there is a rise in low wage skill jobs, as well as low paying jobs.
7:36 am
plus you're bringing in a lot of younger folks. they come in on lower salaries that brings down the average wage growth. but the question becomes for the fed, how long will they let this run? and i think there's an argument to let it run for awhile let's see if we can bring these people back into the workforce the reason it's very important from a social standpoint, you can never get back in your life a year of lost employment. >> okay. >> and that -- it's a binary story. you are either employed last year, or you weren't and getting that year of employment on your resume -- >> back into your savings, back into your resume >> for your future job earnings is so critical, i think it may be worth the risk of a little bit inflation, if it's wrong, and a lot more employment if it's right >> if the fed sees things that way, you're going to see this -- >> i think that's right. ben bernanke was on that story
7:37 am
>> you probably have a 70% chance of a rate hike in december -- >> i said that during the break. you're the one making -- >> full transparency what happens in the break is public >> you're telling me that only 35% and i say that's great news. >> take a look at what the probabilities are here, folks. you look at almost no chance of a hike in the next meeting there's 2.5%, 8.4. you do not get above the 50% rate until march >> wow >> now that could change that's the fed futures probabilities according to reuters. the cme might be a little different but it's not a whole lot different. now look i think that's a little bit on the low side. but i think you ought to be able to -- if inflation comes back, if you show stronger wage growth the fed will hike rates in december >> steve, thank you. great to see you folks we are just a little more than a week away from the start of the nafta talks and while that issue hangs over the administration, in the meantime you have china trade policy starting to heat up, as
7:38 am
well joining us right now is former u.s. trade representative ambassador michael froman. and ambassador, it's great to see you this morning >> thanks for having me. >> let's start talking about china first. because that seems like it is the much more pressing story at this point everything that we've seen with north korea, china actually helped us out over the weekend on this u.n. vote but what happens next >> well, i think the administration head some difficult choices. it clearly wants to go after china's intellectual property rights practices, and technology practices, which is the right thing to do. we made some progress on that in the obama administration but there certainly is further work to be done but at the same time, clearly we need their help on north korea, and on other issues and the administration has shown its willingness to support when it need's china's help on diplomatic or national security issues that issue is -- >> would you say that's the right move, though i mean north korea is a pretty big and pressing issue >> well, it is a very big and pressing issue
7:39 am
it's in china's interests, as well it's not that they're doing us a favor. it's very much their national security interests, that situation there not implode. we always try to keep the issues on separate tracks make sure that we're pursuing our economic interests as well as our national security interests. but it's going to be a tricky dance for this administration to play going forward it talks about launching something called a section 301 investigation. that's a sort of a study of what's going on in china in this area the big question is what happens at the end of that process do we raise tariffs on china which was put out in violation of our international obligations? give china an excuse to retaliate against us or do we take some other measure like keeping them out of our market in terms of investment which could hurt our job growth here in the united states, as well a lot of difficult choices ahead. >> let's talk a little bit more about the intellectual property. as you said that was something that the obama administration followed up on and was very concerned about, as well you can't start a new venture in china without thinking of a local company that's going to
7:40 am
co-partner or co-founder with you. and a lot of people, a lot of companies here in the united states see that as a way of losing their intellectual property they have to hand over these trade secrets, and then eventually the partner can choose to do these things without the american company that brought them there in the first place. how do we battle that if we don't start an investigation like this? >> well, i think it's a real issue. we put a lot of pressure on them to abandon something they called indigenous innovation. which is requiring intellectual property to be developed or registered in china. we were successful in doing that we also got them to back off a series of regulations that would have prevented banks from using foreign equipment because they wanted to make sure it was used in chinese intellectual property and chinese encryption and by putting pressure on and raising the issue at the highest levels, you can get them to back off the other issue that we did, and didn't get much attention is, we quietly were negotiating a bilateral investment treaty with china. which has a whole series of
7:41 am
rules about this in there. that if somebody's going to invest in china you cannot require them to transfer their technology, or to register their ip we made a lot of progress with china on that. the trump administration has not yet picked up on those negotiations but there are a lot of tools at your disposal. including all the enforcement tools going to the world trade organizations, building a case against them where appropriate and i think the administration's going to have to wrestle with all the various paths. >> ambassador reading between the lines it sounds like you are saying that china responds better, you think, to quiet ways of pushing your agenda rather than loud, up front. is that your message >> well, i think particularly at a time like right now, when president xi is heading into a party congress, and he can't afford to be seen as backing down in front of the united states, i think there's a risk these kind of moves could lead to something close to a trade war. but i think putting pressure on china, on these issues, is absolutely appropriate and getting at these practices
7:42 am
is very much in our interest >> ambassador froman, want to thank you for your time. we didn't even get to talk about nafta but we've got another week before that comes up hopefully we'll see you back here very soon >> thanks very much. when we return, a crowd funding site that's made for newlyweds. we're going to introduce you to the honeyfund. a kevin o'leary investment the ceo is going to join us right after the break and then later today on the halftime report a live and exclusive interview with leon cooperman. he's going against hedge fund manager bill ackman's bid to shake up adp as a former longtime board member of adp cooperman has a lot to say about ackman's activist campaign you don't want to miss him he'll be limp on the halftime report at noon today hi. i'm the one clocking in... when you're clocking out. sensing your every move and automatically adjusting to help you stay effortlessly comfortable. there. i can even warm these
7:43 am
to help you fall asleep faster. does your bed do that? oh. i don't actually talk. though i'm smart enough to. i'm the new sleep number 360 smart bed. let's meet at a sleep number store. your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.
7:44 am
7:45 am
three years ago i took a chance on a company carving up the crowd funding space. joining us now is sara margulis, co-founder and ceo of that company, the newlywed cash gift registry honeyfund oh, yeah, we do divorces, too. hi, sarah. >> hi, kevin listen, the first thing i want to talk about, which is so interesting about your company, and one of the reasons i invested was, you figured out how to use the shark tank
7:46 am
platform to reduce your customer acquisition cost in a huge way you're probably one of the most shining examples of that how did you do that? >> you know, the best thing about honeyfund is that it has a built in viral marketing component. so everybody who uses the site invites 1 50 of their closest friends and family to visit the page so, when you put that on national television and amplify the number of people coming to the site you also exponentially magnify that >> i had a friend who used it. it makes a lot of sense for people who aren't familiar with it if you're looking to raise money for a honeymoon rather than register for gifts, this is how you go about doing it. >> really the honeymoon gift list is like a traditional wedding registry and millennial wedding couples are valuing experiences over things much more than previous generations. >> when you look at the value, in other words, the component here is you're gifting somebody well wishes on their wedding, do you go into the market and go find those opportunities and what percentage take the opportunity versus getting the
7:47 am
cash >> so the way our site works the couple really ends up with the cash however, you know, what they're doing is buying experiences that will last a lifetime and we find that most couples will go ahead and spend the money on the actual experience >> that's what i was going to say. i've used your service not for our own -- i don't think you existed back then. however, in fact, we had a producer, do you know who i'm talking about, guys, who used this i think i bought three or four nights at the hotel. but i'm not sure whether they actually ended up going to the hotel. so what percentage actually do it >> like 90%. i mean, and you should have gotten a thank you card. we'll talk to that producer after the show >> right >> so that you knew that they actually did have that experience >> oh, no i think i got a thank you card but i don't know -- thank you from your service? >> no. just telling you how they used your gift. >> do you really care? the well wishes matter, right? >> no, so what percentage do you take >> so honeyfund doesn't have a platform fee much like other
7:48 am
crowd funding sites. same with our sister site that people use for divorces as kevin mentioned. really it was intended for baby fund, anniversary funds, and we talk about that a lot on our shark tank episode >> how is this guy going to make money, then? >> it's a great question >> let's talk about the originations that's a good way to measure what dollar volume you put through on an annual basis >> about $1 15 million is going to be given through honeyfund each other growing every year as we know. and we're nearly half a billion over the lifetime of the company, which is 11 years >> how do you make money >> we have several different revenue streams. one of the things we did with kevin's investment was to create some new ones. the honeymoon industry is a $12 billion a year industry and a lot of the couples who sign up for honeyfund come to us looking for travel advice. so we've been able to partner with a lot of the nation's top travel providers, delta, princess cruises, hotels.com, booking.com, to bring best deals we can and we're doing exclusive deals.
7:49 am
>> and that's where the money is in all this? >> there's a fee based on the transaction, it's really an infrastructure play when you think about it you get bids on every dollar i love the business model. one thing we have to talk about here, you started this company in california, one of my favorite places, and you moved it to florida. tell us why you did that >> yep so we located honeyfund to clearwater, florida, just about a month ago. and i was just telling andrew before we came on that it was really a growth tax. we were looking to employ more software engineers at a lower cost being in northern california, in the shadow of silicon valley, that's very hard to do we're also looking to expand into other revenue streams and we need talent that can come in and bring expertise in the travel space, in advertising, and we felt like clearwater with about a third of the cost of living, as silicon valley, was a really great choice. >> did taxes play into this, state taxes? >> state taxes are another reason why the cost of living in florida is so much lower you don't pay a state income
7:50 am
tax. so yeah, it does play in >> sara, you're one of the group of companies that invest in women ceos majority of my returns have come from those companies any speculation in terms of what you're doing in managing your business that makes me more money than the ones i invested in that guys are running why does that happen >> one of my thierrys, kevin, as i told you, is that you know, busy mothers we just get stuff done >> agree 100%. the most efficient people on the planet are working moms. >> but we also really are in tune with our intuition. so if we feel like something's not quite right we'll sit down and really tweak that apart and say, okay, what is it i'm feeling nervous about? what is it that's not working here for me and then you dive into the data and the analysis and the information, and the insights that you need to make business decisions but you've really got to pay attention to your gut. >> can you tell us about the divorce site chris pratt announcing he's getting divorced today use your site for what >> people are using plum fund to
7:51 am
raise money for all the costs associated with divorce. it's really interesting. a lot of the accounts we see, of course, handling legal fees and things but we're seeing registries for furniture and things that you would get when you get married because you've got to now make two households out of one >> have you had people who used honeyfund and then turned around and used plum fund >> i'm not aware of one just yet but it could happen. >> you could get some pretty interesting analytics on that. >> i could i love analytics that would be a whole other service. mr. wonderful. >> wedding that -- marriage and wedding data >> i think it's important to celebrate the union and then support the decoupling very important >> you're just looking -- >> absolutely, becky i love this woman and her business >> you guys don't see eye-to-eye on one issue and that's in terms of what charitable giving you should be doing as an organization >> kevin was recently speaking to forbes about corporate social
7:52 am
responsibility and he really feels like, your eye has to be on the prize when it comes to business one point for business, which is to return capital to shareholders i agree with kevin, but i believe that you can actually do that better if you have a mission with your company, and or even just you know a program that supports charity or giving back in some way in fact, 80% of adult americans expect companies to have that kind of component, and will even pay -- half of those people will pay more for a product if they think it has a charitable component. i think that should make a good argument to kevin -- >> i would counter that beautifully. sara, thank you very much. >> thank you >> i want to give -- next hour we're going to get the counter >> when we come back we've got some stocks to watch ahead of the opening bell on wall street. in the meantime check out the futures this morning right now the s&p has just turned negative. just barely. dow futures and nasdaq futures slightly higher. we check our phones 85 times a day.
7:53 am
7:54 am
7:55 am
so it only made sense to create a network that keeps up. introducing xfinity mobile. it combines america's largest, most reliable 4g lte with the most wifi hotspots nationwide. saving you money wherever you check your phone. yeah, even there. see how much you can save when you choose by the gig or unlimited. call, or go to xfinitymobile.com. xfinity mobile. it's a new kind of network designed to save you money. welcome back let's take a look at some stocks on the move this morning horizon pharma, 41 cents per share well above consensus estimates of 10 cents. revenue driven by a 70% surge in sales. also dupont's spinoff was raised
7:56 am
to neutral from sell at ubs. that firm says it is more confident in the chemicalmaker's growth following the earnings report and tyson foods beating estimates by ten cents with $1.28 per share. tyson beat in segments helping to drive revenue north korea vowing to bolster its nuclear arsenal and launch thousand fold revenge against the united states to respond to the tough new sanctions. former defense undersecretary of defense paul wolfowitz will join us to talk through the latest threat and then we'll talk health insurers and health reform in washington with the ceo of metlife. "sawbo wl rhtacquk x"ilbeig bk. your insurance company
7:57 am
won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. switch and you could save $782 on home and auto insurance. call
7:58 am
for a free quote today. liberty stands with you™. liberty mutual insurance.
7:59 am
the north korea threat the country vous to take action after the u.n. approves tough new sanctions. >> the best signal that north korea could give us that they're prepared to talk would be to stop these missile launches. >> softbank wants a ride we're going to tell you what masa son told investors about uber and lyft straight ahead >> plus the start-up that wants you to ink a deal without a pen. >> the holder of the pen that i hold in my hand is blue!
8:00 am
>> docusign plans to take its business public. the ceo makes his pitch as the final hour of "squawk box" begins right now >> live from the most powerful city in the world, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square i'm becky quick along with andrew ross sorkin joe's out this week but shark tank's kevin o'leary is sitting in with us for the next few days kevin's been here and he's bringing us guests and investments that he's made along the way. >> enjoying it immensely i've been watching the show for 20 years being here is an honor, becky. >> it's a pleasure and an honor for us >> thank you i always feel that somebody has to be the right wing voice of reason i say it all the time. and i'm just a little bit right of attila the huh. i'm very proud to be representing -- >> thank you mr. wonderful
8:01 am
>> we've got a lot more to talk about with kevin take a look at the futures we've seen the s&p turn slightly negative dow futures barely hanging in there. but remember it's been nine days in a row of gains for the dow. set a new record yet again on friday just turning negative itself the s&p was just about a point away from the new record at the close. nasdaq is seen two weeks in a row of declines. this morning it is indicated up by about six points. also let's take a look at the treasury market. after those better than expected jobs numbers that we got on friday you can see that the yields on the 10-year this morning is sitting in at 2.78% >> want to get you caught up on what's going on at this hour alibaba teaming up with marriott in an effort to expand e-commerce the giant online travel foot print and its consumers will be able to use alibaba's travel service now and ask to book rooms in more than 6,000 properties that are operated by marriott the hotel company will also accept ali pay that's a big deal. also softbank ceo masa son
8:02 am
telling analysts that he does want to invest in the u.s. ride share market but has not decided between uber and lyft yet. he made the comments to analysts following japanese tech company's earnings announcement. of course the big news -- let me just tell you what he said masa son said, quote, whether we decide to partner, and invest in to uber or lyft i don't know what will be the end result. this comes after rumors that the company could be pursuing a deal with uber, and perhaps by suggesting might make an investment, playing the two off of each other. there's also an argument to be made that travis kalanick would like masa son to come in because he might be able to reassert control. >> -- would be buying the shares from other people trying -- >> in the secondary market it's a very complicated structure. but it's pretty interesting if it were to take place. separately softbank topping estimates for the quarter and profits rose more than 50% also, apple supplier oxconn, this is big news, reportedly making another big bet on america. the company will open a
8:03 am
multibillion dollar facility in michigan to be focused on autonomous vehicles. there's no details on that investment amount in terms of how much it will be. but the new company just after two weeks when foxconn announced it will open a $10 billion manufacturing plant in wisconsin, both michigan and wisconsin flipped for president trump in 2016 election north korea's foreign minister making a statement at a meeting of southeast asian nations saying north korea will respond to the u.n. sanctions with what they are saying strong follow-up measures and acts of justice. he also says the country will never put nuclear weapons or ballistic missiles on the negotiate table. and that they are ready to teach the united states what they are calling a severe lesson. nuclear strategic force, if military action is taken all of this comes after the united nations security council unanimously adopted a resolution that ames to slash north korea's annual export revenue by a third. that resolution was drafted by the united states. it would ban north korea's exports to various metals, coals, and seafood
8:04 am
for more on the north korea threat let's bring in paul wolfowitz. he is a former deputy secretary of defense and former u.s. ambassador to indonesia and now an aei visiting scholar ambassador, thank you for being here today >> good to be with you >> what do you make of these latest threats from north korea? does this mean that the sanctions that we worked so hard to get but through are not going to be met with any sort of, let's say goodwill from the north koreans? >> look he's declared an unwillingness to negotiate unfortunately that's not new that's been their posture over many years where we have vainly thought we could negotiate them out of their nuclear program unfortunately, our options are quite restricted because negotiations have been proven not to work, and the military options whatever they are are extremely dangerous particularly to our friends in south korea. so i think what we have to do is
8:05 am
put great pressure on china, because china has enormous influence in north korea and might be able, i think, to bring about a regime that would be more amenable to a reasonable approach >> did you say bring about a new regime you're talking about regime change -- >> no i'm not talking about regime change. i'm just talking about a different kind of leadership we're stuck with the moment of the grandson of kim il-sung who himself was a terrible killer and started the terrible korean war. it runs in the family. what you need is somebody from outside the family >> but that sounds like a different regime a regime change. >> we're arguing about words there's a very big -- we're not talking about eliminating -- we're not talking about what happened in iraq and afghanistan. we're not talking about a military action to remove the regime, and replace it with something entirely different it's more the kind of change that took place in china under the leadership of deng xiaoping when china became oriented toward reform and open to the
8:06 am
outside world and not so interested in flexing its power and its muscle >> do you see north korea not having nuclear weapons do you see that as a potential future when the current leader is saying there's no way, that's not a negotiating point? >> look, i think a north korea that was oriented on economic reform and interested in improving the condition of its people, instead of constantly demonstrating its ability to bully people and demonstrate its power, is a north korea that would negotiate many things because they would have a big interest in opening to the outside world, just the way china did 40 years ago >> i'm intrigued that the markets aren't reacting more to this there would have been a time 20 years ago when this kind of saber rattling would have been very destabilizing to global markets. nobody seems to care who's right? the markets? realizing this is a tiny little economy, with a dictator at the top. really isn't going to do any damage
8:07 am
or are we all getting it wrong >> i think -- it's a good question i think what the markets are probably to the extent they're thinking about this at all, and they may think it has little to do with them, are thinking this is just more talk and bluster. and in fact there is substantial deterrence against north korea, and it's important for us to keep reminding people. and i think we've been doing that well lately, to say that, look, you can do some terrible things potentially, and it's going to get worse in the future, unfortunately. but, if you do anything like that it's going to -- that will be the end of the regime however bloody and horrible it will be, we have the capability to deter but i think it's also important to remember that the markets will react very differently if there's an actual crisis when it begins to look as though they're really about to do something quite terrible and almost irrational >> from an investment standpoint, isn't this a binary
8:08 am
situation that most investors can't really wrap their head around and you say to yourself, you know what? until and unless we're there, there's nothing to do about it >> historically, and you could definitely look to many, many cycles, where there was concern anywhere in that part of the world, the market would draw down cash to wait it out that's not happening here. this leader has no impact in finance markets at all which is extraordinary which tells you how much people don't care about him he makes great headlines, the dr. no pictures of these rockets going up with guys in white outfits on in front of screens but it's like a movie. it's not real. >> ambassador -- >> look the thing to worry about, at some point he decides look i'm not making enough of an impression, i have to do something more threatening, and more serious like, i think if he were sinking south korean naval vessels, as he did a few years ago, or his father did -- no he did it was this guy who did it. then i believe the markets would
8:09 am
react in a much more concerned and nervous way. >> ambassador, also wanted to ask you about this a very critical article on the front page of "the new york times" about secretary tillerson. as a former ambassador, how do you grade his role thus far? i'm not in the grading business i left the university awhile ago. but i do think that there's an important problem that has been -- many people have commented on i was not only an ambassador, i was also the assistant secretary of state for east asia under secretary schultz. schultz made enormous use of his assistant secretaries. it was a way of expanding his reach, being able to delegate in a way that other countries took seriously, and basically tillerson had none of the assistant secretaries of states, and i think that makes a big difference in his ability to operate. i understand he wants to change the management structure at state. gut in the meantime he ought to
8:10 am
have people who can act in his name in critical parts of the world. he doesn't have that now >> while you're not grading, can you rate trump on foreign policy between one and ten? where does he sit with you >> good question a little bit i'm not going to give you numbers, a little bit better than what i feared, because i feared as i said at one point that it would be obama on steroids with a tendency to withdraw from everywhere in the world. he's confused me and confused a lot of people. he's more engaged in the persian gulf, with our saudi allies and our sunni arab allies than one might have expected. on the other hand there's the hesitation about making a commitment in afghanistan. he's right, we need a strategy there. the strategy has to include a way to deal with pakistan, which is exerting a very disruptive influence in afghanistan but you can't walk away from afghanistan without having consequences, both in the struggle against terrorism, but also, for example, with india
8:11 am
that currently faces a real challenge from china and looks to the american position in afghanistan as a measure of how serious we are >> ambassador wolfowitz, want to thank you for your time today, sir. >> pleasure to be with you thank you. >> okay. still ahead this morning, metlife's going to try to sell its spunoff insurance operation to wall street, brighthouse financial is going to begin trading when the market opens. we're going to talk to metlife chief and the head of brighthouse financial next plus the department of veterans affairs doubling down on technology we'll talk to v.a. secretary david shulkin about innovation health care reform and the trump agenda that's at 8:30 eastern time. later an e-signature company valued at $3 billion docusign could one day make pen and paper obsolete we'll talk to that ceo you're watching "squawk" on cnbc i think that she's a very nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think
8:12 am
and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital.
8:13 am
8:14 am
welcome back to "squawk box," everybody. tesla is lowering the price of its model x suv by $3,000 to $79,500. the electronic carmaker noted improved profit margins on that vehicle. also tesla announced it's intending to sell $1.5 billion in a debt offering to bolster its balance sheet while it tries
8:15 am
to scale productions of the model 3. and elon separating, you guys got to get to the real news we got some other news to bring you, metlife spinning off its retail life and annuity business as brighthouse financial the separate stocks begin trading today on the nasdaq replacing auto nation in the s&p 500. we should ask mr. auto nation about that last week can't be happy about that. steve kandarian, metlife's president, chairman and ceo. also joining us is eric steigerwalt, brighthouse financial's ceo. good morning to both of you. and we've got to talk about getting rid of snoopy. we talked about earlier this morning. what is this about why are you doing this >> well, andrew, as we look at our company some time ago, went through a review of our strategy and we decided that, within that life there was a component, the retail business in the united states, that really was impacting overall valuation of
8:16 am
our company. differently than the rest of the company, which has a group insurance business and a national business, asset management business. so we decided that those two entities would stand on their own two feet better than combined so we decided to take this action to separate the two out enable our shareholders to decide themselves what they want to hold of these two different companies because they have different risk profiles associated with them >> this is not a cost free transaction. in fact in terms of your estimate it's going to cost a little more than people had anticipated early on correct? >> there's always a cost when you separate out two entities of this size. but we think the value of the shareholders over time, has been greater than the cost. >> kevin's a shareholder >> i am. i've been a multidecade shareholder. i've ridden the line for a long, long, long time. and my question here is, when you're doing this, and i'm trying to not be a skeptic, i have to assume youractuarial
8:17 am
science on the life business has to be the best in the world. you've nailed it you must have. for years and years and years and years. is it because you now think interest rates are going to stay perpetually low you want to spin off this asset you can't really make any money on? because if i thought rates were going to go up 200 basis points i would not want to sell this piece as a shareholder and i certainly wouldn't want to pay $1 billion to exit it. because that's what it's costing you. i'm a little bit of a skeptic here you're telling me that this evening i'm getting shares in is a dog. >> no we're not saying that. so we're saying is you have a choice now as investors, and we have other investors, unlike you, who said i like this part of your business i don't like this part of your business and that's impacting the overall valuation of metlife we didn't ipo brighthouse. we are spinning it so you have a choice now you either like the theory of brighthouse, where interest rates might rise over time, strong equity markets will be a
8:18 am
tailwind for brighthouse, brighthouse is likely to go off at something like a 70% book value price. today, starts trading. if you think rates are going to rise, if you think equity markets will stay strong, then you be a candidate to be a long-term hold of brighthouse. >> eric, what can you do, that you couldn't do under him. >> focus on one business we are a domestic only, life and annuity company. that's it. and i can tell you, out in the marketplace, that has really resonated with advisers. matter of fact, i've been pleasantly surprised as to how much that has resonated with them >> eric, am i getting a pure play on long-term interest rates with you is that why i should stay in the stock? >> you're certainly -- it's certainly play on interest rates. i'd say it's more a play on equities >> what do you mean? >> we need equity markets to rise, generally, right our base case scenario has equity markets rising.
8:19 am
if equity markets slow down a little bit, that puts some pressure on us so if you take a look under the hood in this 600 page document that we have out, you'll see that we're really leveraged to the equity market. >> how long should i give you? should i give you two years? i've got to make a decision. sell your stock by more of the original mother lode than i had for 20 years or do i give you how long to prove? >> you have to think through, you know, how you want to tie the macro economics to us. >> i'm just -- but you're holding my financial portfolio do you add risk to it or increase risk? according to spinoff i'm assuming you derisk the mother, and brought a little bit more risk out into your own name, and i raised the beta, or the risk in my portfolio. >> have i? >> i think that we are very well capitalized. we've got solid ratings. we've got all the capital we need we will be building capital a little bit but not to keep our ratings. our ratings are in good shape. i don't think this is risky. i think it's an opportunity. >> but eric you just said that you're more leveraged to the
8:20 am
equity market. >> yes >> what are your assumptions or equity market growth over the next ten years >> so base case would be 6.5% for market so that's about 8.5% equity, 3.5% bonds >> that's not crazy. >> yeah. >> that's not crazy. >> so we talk marketing for a second i miss snoopy already. i do >> well, we -- snoopy and the peanuts characters were part of our marketing for 31 years >> right >> and the reason we brought snoopy in was to make our company more approachable at a time when people looked at insurance companies as being cold, distant, so on snoopy accomplished what the we tried to accomplish over those years. but now, when you survey our customers and potential customers, they want a trusted partner. so a new tag line is, never getting life together. >> that's the new metlife. >> it is >> and did you ever think about using snoopy >> i didn't. we were in the same boat steve and i discussed this --
8:21 am
>> new business? >> we discussed this no we're heading in the direction of this is important stuff, in clients' lives we love snoopy but we're going in a different direction, as well as a matter of fact our direction starts with brighthouse financial established by metlife >> where is dental staying metlife keep a dental insurance? >> yes dental is part of metlife. >> why didn't it go over to life >> what? >> why didn't dental go over there? >> dental is part of the group insurance platform so that's part of what stays with metlife, is retail, annuities and life and it goes off to brighthouse >> just to define what metlife now is, it's the global business i mean, it's the international piece. it's also -- you have a lot of asset management now >> it's the group insurance business >> right >> with a market leader with the large companies. it's the international businesses, a lot of growth markets, such as mexico, chile, uae, china it's also asset management, we
8:22 am
just made acquisition. >> how big a business can that become, by the way >> it can become big over time it will take some time growing organically and potentially by some acquisition >> what's the strategy there in terms of what made you think you could be in that business? >> we're trying to balance the risk on our balance sheet. a lot of risk on the insurance side we want some risk on the fee based business side. just to balance -- >> are the margins higher than in that business >> it's low intensity. so you don't need much capital insurance business requires a lot of capital depending on how complex the insurance product is >> are you going to break out the revenues from that when you report because you've got me interested that's a higher margin lower risk business -- >> as the signal grows we'll have ways to show our shareholders >> final question, state of play on the big lawsuit over whether you're a sifi or not >> the d.c. court after peels just came out with a statement last week on wednesday, giving us an abeyance through the end of the period, when the
8:23 am
president had asked the secretary of treasury to report on the designation process >> and this is systemically important financial institutions >> that's right. we won in lower court. the judge in lower court said the process was fatally flawed, quote/unquote. we agree it was appealed by the former administration the last administration to the d.c. circuit court of appeals. so there's an abeyance while the study goes -- >> and i imagine this administration should be or you'd like to think more friendly to you in terms of taking on that appeal? >> the things they have said publicly would suggest that. >> all right >> never stop fighting i thank you for doing this as a shareholder. thank you. just because the government said it's right doesn't mean it is. thank you, thank you >> steven, eric, lots of luck with the new company >> thank you >> good luck >> kevin what did you decide what are you going to do with your investment? >> i'm going to give them 24 months i think that's enough time to prove it out, right? >> thank you >> a lot of my guys in the shop think it's a higher risk, sell it, bit more of the mother and i say let's wait and see your assumptions about market
8:24 am
are not crazy. >> terrific. >> okay we're making deals here on the set >> when we come back this morning, why one california town will be seeing a lot of green. uh-oh. there's the type of green we're talking about. we'll talk more in just a moment right now as we head to a break a quick programming note for you. don't miss wilfred frost's exclusive interview with jpmorgan ceo jamie dimon tomorrow at 11:30 a.m. eastern time quick nod to chris pratt's news with this song "squawk box" will be right back. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory.
8:25 am
prevagen. the name to remember.
8:26 am
8:27 am
still to come this morning technology meets health care secretary david shulkin will join us to talk about the department's e-health push also the trump agenda. "squawk box" will be right back. you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it?
8:28 am
news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.
8:29 am
and i'm an arborist with i'pg&e in the sierras. the drought in california has killed trees on a massive scale. any of those trees that fail into power lines could cause a wildfire or a power outage. public safety is the main goal of our program. that's why we're out removing these hundreds of thousands of hazard trees. having tools and technology gives us a huge edge to identify hazard trees. my hope is that the work we're performing allows that these forests can be sustained and enjoyed by the community in the future. together, we're building a better california.
8:30 am
good morning, welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square among the stories that are front and center at this hour, want to check in one of the big winners. that is hoar ririzon pharma they were far above consensus estimates. revenue well above forecasts thanks to a surge in sales of their rare disease medicines another big winner this morning is fxstage medical agreeing to be bought by
8:31 am
germany's fresenius for $30 a share or about $2 billion in cash and shares of tyson foods are rising this morning after the food producer reported quarterly profit of $1.28 per share. tyson's quarterly profit was driven by strong performance in beef and pork businesses >> tomorrow on a special edition of the profit, marcus goes to california to profile america's fastest growing business marijuana. recreational pot becomes legal there on january 1st marcus met a former church minister who is now the ceo of a company that is looking to gross $75 million a year from weed >> dean osborne is the owner of clc brand labs i met up with him. >> how much money have you invested in the business so far? >> about $6 million. >> $6 million >> and this year we're going to spend $10 million. >> so you have 16 total? >> yes >> included in his spending
8:32 am
spree, $3.8 million for just 3.8 acres of land. no need to calculator for this one. >> you pay a million dollars an acre >> yes >> is that -- >> that's a lot -- >> that's a lot. that's a lot >> are you not just good at real estate >> no i'm good at investment >> the profit marijuana millions premieres tomorrow night at 10:00 eastern and pacific time right here on cnbc the department of veterans affairs announcing new efforts to use technology to try and help veterans get care joining us right now is v.a. secretary david shulkin and secretary shulkin, thank you very much for being here today >> good morning. >> we know that you have a new way that you're bringing a lot of people in to try to see some of the latest technology where is the greatest move when it comes to the v.a. is it for mental health? >> well, certainly mental health is an important issue for us but we're a comprehensive medical system, so providing
8:33 am
mental health in the context of total care is really what we're doing at v.a >> you have a demo day that you're launching this week and that's designed to do what >> well, most people don't realize that the department of veteran affairs is one of the most innovative organizations in the world if you measure the number of presentations and patents and licenses that we put out. many of today's american technologies that we rely on for health care came out of the v.a. and so what we're doing is, we're continuing that innovation by bringing researchers from around the country to demo their most innovative products >> the v.a. has had some troubles in recent years some very well publicized troubles of trying to make sure that it can get care to all of the veterans who need it in a timely manner. where do you stand right now in that process >> well we're doing much better at that. we're making sure that all veterans who have urgent needs are being seen in a timely fashion. but, we're continuing to struggle in areas, particularly
8:34 am
in rural parts of the country, where there aren't health care professionals, and it's very hard to find people to take care of anybody, let alone our veterans so what we're doing is we're using technology to address that issue. and we announced a new program that's called anywhere to anywhere, where we can use telehelp technology to offer to our veterans >> which is kind of like going over the computer screen and talking to a doctor on your iphone or something? >> absolutely. using noble devices, using people's home computers, being able to deliver health care where they want it, when they want it, and this is a program that we're beginning to roll out nationally >> in late july the house approved a senate measure that would give additional funding for the choice plan. that's something that allows veterans, if the government wait for the v.a., if they want to find their own health care provider they can do it. you had warned that if additional funds weren't given this program would be in real jeopardy where do things stand with that program right now?
8:35 am
>> well the program was authorized by congress for three-year period of time. and that was to end on august 7th of 2017. and you know, as you know, we now approach that time fortunately both the house and the senate passed legislation to add additional money to that program so that we could continue to see veterans in the community, and that bill is now headed to the president for his signature. >> and i'm assuming you expect the president to sign it >> i do. >> and that will mean what how many more years will this program be able to exist >> well, this is funding for about another six months that will give us time to work with congress to make sure that this program is designed in the way that it works for veterans the old program was overly complex and bureaucratic and we have ways now to streamline it because we've learned from the past, so we have about six months in which we can work with congress to get that right >> what's the greatest need at
8:36 am
the v.a. right now >> well i think the greatest need right now is to continue to modernize the v.a. i think everybody that i speak to feels that our vet advance deserve the very best that the country can provide for them and in years past we just haven't been doing that. and so we're going to continue to make sure that our facilities are world class, that our technology is really up to the very top level, and that's going to take a year-long, many years commitment to make sure that we're putting that in place. >> secretary, do you feel like veterans are getting what they need right now from the v.a. >> well, i think we're working hard to do that. there are areas of the country that we still have much more work to do, and i've been very clear that i'm going to be open and transparent about where the problems in the v.a. exist, because if you don't begin to talk about the problems, you can't find the solution. we have a lot more work to do. but i am confident that we're headed in the right direction, that we're making progress, that
8:37 am
the president's commitment to this is genuine. my commitment to this is to make sure that we're going to push as hard as we can, as fast as we can, to get the veterans the very best care they can. >> mr. secretary, while we have you here, on friday wells fargo announced it was going to be paying the u.s. government $1 08 million to settle claims arising from the issuance of loans they made to military veterans. do you have any comments on that >> well, the gi bill, and our loan program for veterans to get homes are really some of the most important programs that we have we rely upon the private sector to work with us to do that we're going to make sure that they mr. the program the way that it needs to be done so i'm confident that this program will continue and will be strong for years to come. >> secretary shulkin, thank you very much for your time today, sir. >> thank you >> okay. when we come back, signed, sealed and digitized we're going to talk to the ceo of docusign about the e-signature business and his plans to take that company public
8:38 am
it's next, right here on "squawk box.
8:39 am
8:40 am
docusign is a digital transaction management company is expanding into international markets. it recently made a big investment in canada through a partnership with microsoft azure. the company is also ranked a cnbc disruptor 50.
8:41 am
joining us now is dan springer, ceo of docusign, and for full disclosure, i'm on the advisory board of this company because i think it's so cool start by telling us what you do, dan. >> sure. so docusign has two core functionalities. for consumers like you or me buying a house or leasing an apartment, docusign creates an incredible way to sign and create a digital signature for buying a house or leasing a home but for businesses we help drive digital transformation that's companies that are saying we want to move away from paper and move into the digital economy with all of their internal processes >> when i first saw your service i wondered to myself are why have you not been acquired by adobe or microsoft you basically let me sign documents on my mobile device. i use it every day so do all of my private companies. that's why i got so interested in it. why are you still independent?
8:42 am
how is it possible you're still switzerland? why aren't you simply a feature on the microsoft platform? >> i think the answer is a lot of companies are interested in what docusign provides, and to your good point we have partnerships with so many of the largest technology companies if you think about folks like microsoft, s.a.p., you think about salesforce.com you think about google not only are they all partners, but they are all investors so they've got the toeth of docusign but we believe the right answer is to continue to be switzerland >> dan, that makes a lot of sense. but does that mean you haven't gotten offers? or does that mean you've gotten offers and you've turned them down >> well, we don't disclose specifics of m&a activity but i can tell you that there are multiple companies over time that have expressed interest in docusign for the good reasons kevin articulated. but it's such a strategic part of the digital demand. >> dan, i don't know if you saw -- i'm sure you've seen on the apple device, i guess maybe it was the late last iteration on notes, for example, you can sign with your finger on the screen how worried are you about competitors building this into
8:43 am
their own operating system in a more meaningful way >> sure. we take competition very seriously. we're pretty much clear leader as you know, e-signature was really created by docusign and over the last dozen years we've continued to innovate to keep that leadership position so we're pretty comfortable that we're going to continue to be the leader we have 300,000 customers and we have 200 million users on our docusign digital trust network which gives us a very strong leadership position compared to anybody else >> so at google and microsoft were to just try to build this feature into their set, could they do that >> yeah, i think -- i'm not sure what, you know, they could or couldn't do. i can tell you both of them are strong partners of ours. and at this point in time they seem to prefer to work with the digital leader than fill that capability themselves. part of the reason is that growth where we have every week another 2 million people coming onto the network i think it would definitely be a challenge for someone else to compete with that. >> dan, i was speaking to
8:44 am
financial ceos at a forum recently one was in switzerland, one was in canada, canadian bank, and they both talked about the justice department domestically forcing thome have the nexus of their documents in their own countries. now, are you supporting that if i'm a canadian bank, and i want all of my signed documents on canadian soil, or the swiss bank and i want to know domestically i have it on my soil, for the reasons of just jurisdictional issues, can you support that on your platform? >> yes so data domain is a big focus area for us. we have built significant data infrastructure across north america and across europe. but to your point specifically about canada, we recently announced with microsoft a partnership to leverage their azure platform we do think increasingly financial institutions are one of our biggest is exsegments they're going to require more need for data domain microsoft will be rolling out at the end of this year the ability
8:45 am
to keep all data domains resident in the country. >> what does that mean you just have a server in the country, and then it's -- it counts as being there? >> yes we'll be rebuilding our platform on the azure platform. so in that case it would all be resident in canada >> i suppose you're not going to tell us what your cash flows are this year. but i'm begging to ask the question, $3 billion market value. are you worth that is that where the ipo target is? >> yeah, i think you know, valuations are tricky. i think we're creating a tremendous amount of value for our shareholders and i think we'll -- we're able, excuse me, to continue to increase that valuation over time >> when is the ipo coming? any idea when you'll actually list >> yeah, we don't have a date set. i think if you think about the strength of the company and the growth we referred to earlier, this is a company that will have the ability to be public but we have not set specific date at this point >> i also love to ask this
8:46 am
question on pre-ipo, is it just another way to tease the buyer to pay the full price? because i'm still stuck on the fact that, you know, shouldn't you really be part of adobe? shouldn't you really be part of microsoft? and by going towards the ipo route, are you kind of sticking a pencil in their eye saying, if you don't do this, we'll be public >> my view is that this is a strong, independent company. again, i don't see anything that would prevent them from being able to continue as a strong, independent company. and eventually a public one. obviously we'd have to, you know, entertain any appropriate offers in the future but at this point in time i think we're pretty focused on staying independent. >> thank you very much, dan. >> you're welcome. when we come back, jim cramer's going to join us live from the new york stock exchange and tomorrow on "squawk box," an exclusive interview with your capital management ceo jamie dimon. he's going to joinon us set tomorrow 8:00 a.m. eastern time.
8:47 am
we'll be right back. because, when you really, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies see it- and see it through-with digital.
8:48 am
8:49 am
couple stocks to watch this morning. berkshire hathaway's second quarter operating profit fell
8:50 am
15%. results hurt by lower investment gains and a loss in its insurance underwriting business. book value is warren buffett's preferred measure of growth. 6% in the first half of the year and shares of delta airlines look attractive after a 10 with an aggressive plan to turn cash to share holders and ample profit mar jins delta could rise 35% in the next month or two that company reported sub par earnings last week but their indications is core retirement and investment business is growing. want to get down to the new york stock exchange to hang out with jim cramer what do you think of those calls? >> there's a note out this morning about how united air lines continues to cut price the note says american is the most exposed but all of these guys are no longer in a position where they're raising prices
8:51 am
they're in price wars so i'm not crazy about that and mastercard visa, just keep thinking about those. those are the two great companies. >> what do you make of tesla now it sounds like there's going to be a $1.5 billion bond offering. >> he is the master. he knows exactly how to play it. people that love tesla love tesla anything any piece of paper the guy puts out and have to tell you, he is, he's a miracle >> do you make any call out of issuing equity versus debt in this situation does this mean that debt is overvald ove overvalued or at least krcredit >> he can get an incredible rate there's no problem the guy is going to get an incredibly reasonable coupon and
8:52 am
you're right this is what he wants to do. if he does the stock i think he wags on the stock, he wants the stock higher what i can tell you, he's brilliant. he plays the financial markets well. >> final question you want to weigh in, we had the ceos of metlife here, the spin off. >> met life. >> you said that without any uncertainty. >> i listened to them and i said i like met life. bright house is everywhere terrific, making a big campaign. metlife is say cheap stock i like it. >> love seeing you we'll see a lot more of you in a couple of minutes. also later today on cnbc a live and exclusive interview. leon cooperman is going to join the gang on halftime report. she going to be speak because he's against bill ackman's bid to shake up adp. he has a lot to say about it
8:53 am
squawk returns in just a moment. i like russo. his on/off splits are the best here. yeah, but his offensive win shares didn't even break 4. come on, check out that stop-and-pop! what do you think? my trade-off analytics indicate no one creates more space on offense. this allows him to nail a jumper from a densely populated urban area. what you're trying to say is from way downtown? i am still learning. i can see that.
8:54 am
8:55 am
i am still learning. mikboth served in the navy.s, i do outrank my husband, not just being in the military, but at home. she thinks she's the boss. she only had me by one grade. we bought our first home together in 2010. his family had used another insurance product but i was like well i've had usaa for a while, why don't we call and check the rates? it was an instant savings and i should've changed a long time ago. there's no point in looking elsewhere really. we're the tenneys and we're usaa members for life. usaa. get your insurance quote today.
8:56 am
the company now plans to make all 80 acres of the city the country's first energy independent and weed friendly hospitality destination. we should note there's already a city named weed in northern california so guys, too late, that one is taken. >> starbucks is shooting down a rumor that it's coffee shops will give discounted drinks and food to undocumented immigrants. advertisements promoted the so call dreamer day but executives say it is completely false promised 40% off any menu item for undocumented immigrants. it was a very strange story. also another fascinating story this morning about all the billionaires giving money to these viral internet outfits that are producing sometimes fake news or things they're hoping to go viral to influence
8:57 am
the discussion online. also former nfl players. >> memes tomato, tomato it's early in the morning. former nfl players have until tomorrow to register for up to $5 million in competition for brain injuries resulting in concussions in the game. 100 million in pay outs have been approved. more than 18,000 out of the roughly 21,000 football players already registered for that. >> google executives are responding to a 3,300 word manifesto written by their employees. the engineer suggested that google doesn't have more female engineers because men have a higher drive for status. also arguing that google's elect bias created a politically
8:58 am
correct mono culture that has discussions of this issue. it's something we have been talking about this morning with our guest host. >> i like the idea of using performance to advance anybody from any culture and that should work anywhere. this google story to me is a rogue writer, an individual. and doesn't represent the them in anyway. i would suggest this person has a limited opportunity going forward. what company would hire someone. >> you're suggesting he get
8:59 am
fired. >> these are just facts and i don't know why we have to talk about diversity as something that has to be mandated. >> for anybody that missed this conversation earlier you have seen this in your own portfolio. >> i invest in women because i get better returns particularly capital when you're in a private company and earn 15 or 20% you don't have any control other than getting distributions back women distribute more capital back to me that's why i invest in them. >> let's take a quick look at the futures. the dow ended at another record level on friday. 9th gain in a row. s&p futures have turned positive nasdaq up by about 7.5 >> the business insider has an interesting story called coasters these are people that
9:00 am
they effectively fire but they don't fire he stay on in that room you're talk about waiting to vest their stock. >> i predict a bad outcome >> this was a good outcome we're thrilled that you were here. >> i enjoyed it. >> we're going to hang out with you. >> one more time with feeling i think. >> one more time with feeling. make sure that you join us tomorrow with mr. wonderful squawk on the street begins right now. >> good morning and welcome to squawk on the street i'm david faber with jim cramer live from the new york stock exchange and what do you know? carl has the day off which i just realized. let's give you a look at futures. full week of trading as you see we are looking at least for a some what higher open off of those strong employment numbers on

44 Views

info Stream Only

Uploaded by TV Archive on