tv Squawk Box CNBC July 14, 2014 6:00am-9:01am EDT
it is monday, july 14, 2014. and "squawk box" starts right now. good morning. welcome back to "squawk box" here on cnbc. i'm andrew ross sore kip along with joe kernan. becky is returning tomorrow. we have a lot to talk about this morning and we'll start with the markets. we have two big themes going on. earnings season and janet yellen's policy testimony to congress. citigroup is going to be kicking off their earnings parade before the bell this morning. the bank expected to earn $1.05 a share on revenues of 18.9 billion dollars. and in other news this morning, you'll see it in all the papers, the firm's mortgage settlement with the government will be announced today. the total price tag pegged at $7 billion to include $4 billion in cash to the department of justice, $2.5 billion in
consumer relief. and the story in "the times" are both talking about benghazi and that sort of led to a different settlement. did you see this? >> no, i saw jon voight talking about this. can we build some roads with this? >> i don't know, how are we going to build roads? >> both parties believe we need to raise the party on gas leap. didn't we collect like $50 billion? >> we are collecting a lot of money. where is all the money going, do we know? >> that's what i'm asking. get some bridges -- >> the tax thing. it's the whole tax thing on whether we should lower taxes or higher taxes for the roads. >> why wcan't we use the $50 billion that we just collected? >> i don't know how it works. >> what is the department of justice going to do with it? >> i think they are going to give some of it back or something. >> maybe a new computer system at the i.r.s. would be good. that might help. >> maybe the cloud.
>> tell me about what does benghazi have to do with citigroup? >> so they were about to settle at a different price. >> yeah. >> and then benghazi happened and the justice department said -- we can't even talk to you right now. we are in the middle of this thing. >> we are in the middle of the talking point for benghazi about the movie. >> that's how they came to the $7 billion. anyway, a flood of quarter results are said to hit the tape in the coming days including a number of major tech companies. of the ten s&p sector, the tech sector has the highest projected growth earnings rate at 12.3%. meantime, financials have the worst earnings forecast with a decline of 3.5% from a year ago. from earnings to the economy, fed chairman janet yellen is delivering the humphrey hawkins testimony. they will listen for hints on when the central bank will begin to tighten.
they released last week the buys. and also we are talking about what is in the papers. get a copy of "the new yorker" today with monday morning in a minute. but there's the first real long interview with janet yellen in a long time and we'll take little pieces away from that. >> the humphrey haw kkins tuesd and wednesday is delivering -- i don't know if jack lew -- that's what you're going to hang on? he may not say that much. >> stan druckenmiller will be on, chris christie. carl icahn will be on. and we have a mystery guest. >> right. >> toward the end of the day at 5:15. you're not that excited about this one. >> no, i'm not.
>> do you know who mr. guest is? >> i do. >> he's not a mystery to you. >> it's not. >> it's a mystery to me. and whiting company is buying kodiak to become the largest producer in north dakota's shell. and aecom company is acquiring urs for $56.31 a share in cash totaling $4 billion. a report on friday that urs had talked with rivals and buyout firms about a potential sale. the company is under pressure from activist jana partners to op enhance shareholders. it's a german company. anyway, another -- more tax dollars are headed there. and more tax dollars are headed to germany to build a soccer team. >> they don't need the money,
apparently. >> who is the sub, by the way? and shire is ready to recommend a new $53 billion takeover from abbvie. the two are in detailed talks. and chocolate maker lindt is buying russell stover. the price is not disclosed but this will make lindt the number three manufacturer in north america. you know, i just took my pen and i barely -- i touched it -- ow, the tip, oh! oh! oh! soccer, i've seen too much soccer. i've seen too much. >> i'm giving you a yellow card on that. there's a lot of flopping, there's no question. it's still a beautiful sport. >> it somehow started sometime where you were rewarded for
faking an injury. and it got to the point where everybody -- if you don't fake, you will never have anything happen. so no matter what, i'm watching and they do it in the replay. and seriously, i see the toe of one guy's foot barely touch the toe of another guy's foot and he falls down. and they are in agony. they show up for about three our four minutes and go to something else. and then i see the same guy, they never show him get up but the same guy tears by going by like nothing is wrong. this is one of the things, where did i read it? this is it now, the glow of it and it is finally going to come here and be just as popular. >> you will read that every four years. >> as long as they stay with the faking -- think of football. >> they have to score a few more goals. >> do you remember when joe thiseman and his leg split in two?
and he moaned and groaned and had less agony than your average soccer guy. i mean -- >> he was a true hero. >> it is beautiful, i watched all of it. okay, all right. it takes a village, i know you think that. >> but this is part of the europeanization of america that you're afraid of? >> no, but i'm just saying i watch how excited the crowds are and everything. and if they could visit and see some real sports, see some college ncaa hoops and watch a couple of those games -- >> hold on. that's like acting central. >> more in the nba, though. >> i'm talking about the excitement of march madness. >> i know, but in terms of the s.a.g. awards these guys get for their dramatic acting. >> faking is not unique to soccer. >> oh, please.
if there's anything soccer does great it's that. but really, i waited three hours. i watched the previous game, too, where argentina beat -- it is all mush now, but i watched a lot of 0-0 games toward the end. so we finally did get a goal. and everybody's really excited. you watch the crowds. it's like they wait a long time for that. i think if they were exposed to a sport where there was stuff happening. it happened the entire time -- i think that -- >> when i took the kids to the pool -- >> i went running and came back and didn't mess a thing. >> i went and did some yard work and didn't miss a thing. >> i saw all three of the great goals. the australian goal with a 90-yard pass. and i saw the columbia goal. they are good. >> germany got seven of them against brazil. >> if you can watch soccer, you can watch the first month of major league baseball and not be bored.
>> and all of janet yellen's testimony to the house and senate and not get bored. >> you are here. you look like a soccer player now. >> thank you. >> the one thing they have going for them is the demos. those guys are all handsome and happening, are they not? across the board. all of them. and they are very fashion forward, too. >> they look good. >> are we okay with the germans winning? they are whipping everything now. they have been borrowing money. they have low employment. they are kicking our spies out and still making great automobiles. >> i thought they imposed the argentinians most of the game and then they kicked them -- >> germany is not purely socialist but we are not wanting a purely socialist economy to win anyway. you should be able to pay off some of your foreign debts if you are going to win a soccer game. what a beautiful country brazil is, isn't it?
>> beautiful. >> they have some of the sets for espn -- >> that was not a hardship assignment if you are an espn anchor. >> should we officially talk about him? we are joined now with more from ben after his sports analysis. >> i'm happy to keep talking sports. >> we can talk sports but you put together your money morning this morning leading with two things. first of all the yellen piece in "the new yorker" that i mentioned earlier. is there anything valuable? >> there's insights into how she views financial regulation. she obviously takes the view that for a long time we have trusted banks to regulate more than we should. she wants more regulation. >> but there's nothing r revelatory. >> you get to know her. >> did you get your subscription to "the new yorker"?
>> i have a subscription to something called "the next issue" which is like the netflix magazine. >> i get "guns and gardens." >> that's an odd mix. >> not really. not in the south it's not. and have you seen that article over the -- >> what was that article about? >> just about having to do with summer barbecuing and things. i just -- i saw that article, you saw -- >> she sat down for a series of interviews. and this is her first opening up to a journalist. i personally wish that would have been me. >> what do you think of the qe? >> they are still slapping the labor market and believes there's more room for the fed to run with easing monetary policies. >> let's move on to another issue. xm bank, what is going to happen here? >> i think it will get extended and will probably get extended in a continuing revolution. the government has to get funding past september 30th and
it will come down to the last minute for that. democrats said they will tack on xm to that and dare democrats to knock it down. >> xm doesn't cost anything? >> it turned a profit of a billion last year for treasury. >> joe, are you on board with xn. >> the journal has a piece that you need to listen to. the journal now has a piece that says boeing does not need the xm bank to survive. >> they would argue that airbus gets all that support from -- >> from the far right field. >> and that's the koch brothers who feel that way and spend a lot of money with republicans. >> we have a big xm guy and i don't follow him on twitter but saw in re-tweets just captivating this. >> whether it will get extended or not, i think it will. it does lay bear to the division between the republican party establishment and the roundtable chamber folks who want it to be
extended and the tea party. i don't think it is crony capitalism anymore than other nations that support their capitalism. take it away from boeing and airbus has a huge -- >> i think i want to be supportive of the xm bank, don't think. >> liberals are supportive of it. >> but what about you? where are you? it is like you're pro-business and you should be supportive of it. >> unless you are pro-free market. >> i'm pro-capitalism. >> i am interested on your views, joe. >> i don't have a far right on why it is crony capitalism. if airbus has -- how many countries are represented? like three of them? and they are also -- their individual manufacturer's in all three of the countries are going to get support. >> the fact of the matter is $37 billion or whatever in lope guarantees and loans it made last year, a lot of it goes to small business. a lot goes to boeing but these
are mom and pops. >> they say it goes to rich -- i think they are worried about the dubai airlines. >> they buy it at a discount. we were talking about the treasury, this settlement that they will have with the benghazi thing and all this, where does the money really going? >> it's going to the justice department, a lot of it. >> what does the justice department actually do? >> i would hope that they would somehow get it back to the victims who bought these securities. >> jp momorganjpmorgan's settle lot of money now. >> it's a great piece to work on throughout the course of the day. how much of the $7 billion goes directly to the justice? it's in the piece that tells you a number. >> $4 billion is not in cash. so the rest is in cash. >> right. so $3 billion in cash. >> there's $3 billion in cash. >> that's a lot of cash. >> and he wants to do highways
with it. >> the highway trust fund is another big issue in washington. that's about to go bust. take that money and then you don't have to do the ridiculous pension smoothing. >> this whole xm thing almost reminds me of -- >> let's all sit and read the papers. >> that's what we are doing this morning. >> it just reminds me of the defeat of cantor and the s&p 500, that was a big setback for every company in the s&p 500 because he was pro-business. the far right libertarian wing of the republican party wasn't enamered with cap nada. the journal says in other words the private economy is ready, willing and able to provide trade financing for foreign customers to buy boeing jets. that boeing would be just fine without it. >> that may be true. i don't know if that's true. that's an assertion. >> the republicans should start -- if they are truly free marketers, they should start
embracing the free market in this case, too. that's the argument. >> okay. but say you were in north carolina with a business where you make pickles and want to sell them to consumers -- >> you heard about my costco jar of pickles? >> yeah. but you want to sell them to somebody in germany. >> now you are referencing germany again. >> or anywhere in europe. the customer on the end, are they getting the market to support share imports of u.s. exports supported by the xm bank? you can make the case from boeing that there will be free market solution to support that. i'm not sure you can make that case for small to mid-sized businesses in the u.s. >> if you are pro-business, you have to be supportive of the xm bank. >> why would you want to unilaterally disarm? >> i'm with the chamber. >> the question i have on it is it does seem like unilateral disarmament if the u.s. would get out of the export finance business. other nations are not going to
follow suit. >> they want us to unilaterally set examples for the world and other respects. you do that here yup laterally. and just because the euro socialists are supporting air s airbus, i don't know if that will hurt jobs -- >> of course it will hurt jobs. >> because i don't know it would. any time you see or hear that the government action is needed to support the jobs, i don't believe that's the case. >> if you are for taking all the money from the settlement. that never does support you. >> building roads and bridges makes perfect sense. but if the government spends the money on roads and bridges, that's employment that will follow from that. so the idea the government doesn't support or create jobs is not true because it does. you may not like the jobs or
think these are great jobs but they are jobs nonetheless. >> i guess that the new york state other than illinois and the top states for business and the public to see. kansas had some tax cuts and they found something a problem in kansas but said it is clear that all states need to use every tool of government to nurture growth. and that these tools require money. so that was the conclusion. >> the problem is the kansas cap is where they were to the point where they didn't have enough money yet. and there were a few things the economy needed to do. seven is a good number, not 50. are you leaving? >> i guess i am. >> you can hang out if you want. >> i feel sort of odd sitting in becky's seat over here. i'm more used toll -- >> it's okay.
you may do whatever you want. you have the darker shirt and the lighter stripes. >> it was dark. i don't like to wake my wife getting ready for the show. as much as i want to look my best, it is early. >> so she didn't cook you anything this morning? >> no. >> you haven't gotten things quite squared away in the white household yet. >> we have a separation of church and state. and authorities. >> the morning is also -- a lot of people think that at night -- >> it's a good time for good conversation and catching up on -- >> that's what i was talking about. >> at 3:30 a.m. you are very aware in the morning, ready and raring to go. i have read these things but never experienced it, clearly. ben white, thank you. the former air show is taking off. i'm telling you. phil la brebeau is there with ae of guests.
join us at 6:30 a.m. eastern time as i'm going to press the right buttons. and earnings season is kicking off with citigroup today and tomorrow jpmorgan and gold man sa goldman sachs. and on wednesday we'll have stan druckenmiller, one of the greatest investors live. we'll have more "squawk" in just a moment.
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all right. we are taking a look at what exactly is happening in the northeast today. we have quite a lot of moisture in place. new york city, you could be seeing some thunderstorms. let's break down exactly what is happening in these severe ingredients because that's going to be a big concern for us. lots of moisture just trucking out of the south. this cold front, this is the one bringing that polar plunge. all that cool air to the midwest. and eventually into the northeast. but first we need to keep an eye on the front because that's where we'll be watching for the potential of severe weather today. in fact, new york city, the capitol, you have a risk of seeing damaging winds, hail or even an isolated tornado as we go throughout the day today, especially through the evening. lexington through paducah and memphis, we have the risk as well carrying on through arkansas.
so we have a large swath of storms here. let's break down the timing of exactly what to and 'tis pate. this morning most of the rain is through kentucky and west virginia. but look what happens getting into your afternoon. whenever you're headed home from the commute, watch the storm approach philadelphia and d.c. where we could see again the very gusty winds that could be damaging. and there's that potential for an isolated tornado. it's a small one but it is at least in the forecast. here's what we are looking at overnight. look at new york city up next as we go throughout the evening hours with dinner plans tonight. make sure to stay on top of the forecast so you're prepared for the storms that we could potentially see. and we're going to be watching this through tomorrow as well, joe. great. kate, thank you. we appreciate that. have you been on "squawk" before, kate? >> i don't think i have been on "squawk" before. i'm a newbie. >> a life-long dream, basically? >> clearly. yes, a lifelong dream established. i was not here working at the
weather channel as a meteorologist. i wanted to be on "squawk." >> run with the bulls, appear on "squawk box." >> i got it. >> thank you. >> it's downhill from here, folks. downhill. >> great to see you again. you can't go back to the farm now. a big wave of quarterly results this week. what should investors expect? joining us is the director and head of the global market. financial, citigroup, what to expect? goldman sachs, a tough environment, huh? >> it's a tough environment. >> no trade and volatility. >> that's part of it. you'll have some of the settlement issues impact the earnings. >> what do they do in interest -- what do they do with the bond division? >> it's tough. it's tough. that's absolutely right.
we just put out a piece about that. if you take a look at, for example, the cycle right now where people should be investing, you have the largest demographic in history. the boomers are trying to find yield and are forced to stay in equities because they can't live off of what they get in fixed income markets. and i think you have to look -- there's a series effect but you do have to look at what the fed has done over the last several years. you have over $4 trillion in the balance sheet and basically the market doesn't dictate interest rates anymore. the market is out of -- the federal reserve dictates interest rates. we don't live in a world where -- >> for price discovery, you are not sure what weird things are happening because of that. >> and that's interesting because the genesis of this is you were basically taking and solving the real estate problem and keeping people afloat. and, you know, but the other side of it, now you're still kind of punitive to people who need to have a more normalized
yield curve to try and basically make ends meet. but it's like the 70-year-old person that still has to be allocated into equities which helps support equity evaluations. you have a lot of misappropriations because there's a better risk of return in relationships. >> that's good stuff in your case. here we finally have the s&p to earn $117.90. so we can get an exact multiple for where we are because some say the multiple won't be going up anymore. so it will be all earnings. what is earnings? we'll start with the bottom line, what is that supposed to be? >> we are looking for 6.5% from the analysts but you'll probably get close to 9. >> 9%. what about incoming quarters, do they continue to do that? >> you have to because the expectation for the year is double-digit quarter at 10%. >> we don't have to.
you say we have to to support the market where it is today. >> that's right. that's where the market mentality is. >> and revenue is going to be up 4%. you actually think that's good. >> well, it's certainly -- >> better than before with the long-term average of 6%. >> it's moving in the right direction. we've had negative, anemic top growth. we are moving up. we are halfway to where we should be. we have gone from 2 to 4 and hopefully we can continue to see it. now the problem is a lot of that comes from the consumer. the consumer, the downside of that is consumer prices on things going up. if you look, consumer discretionary is a large contributor to the earnings growth. >> the materials and energy growing 38, 12 and 11 respectively. so that's telecom, materials and energy, right? >> that's right. >> the only one we have talked
about is financials declining 1.1. >> that's important. >> that is important. still a big component but not as big as it used to be. so far 22 companies reported 64% of the expectation. >> that's correct. >> and you expect 64 to be the number for tho the quarter? >> it's early, but there's something going on here. >> the revenue is even better at 72. >> i don't think there was a lot of sandbagging last quarter. so when i say there's a boom coming, probably not but it supports the view that you have a general economic, you know, progress forward and so people who are worried about, you know, the weaker gdp numbers, this is kind of going back and favors the unemployment number. >> but you -- but this is and important earnings season. >> i think it is. >> for the bull market. >> i think it is. if it doesn't, we have a problem. >> thank you. >> you're welcome.
>> if i were you, honestly, i would take the p out. >> yeah, but i don't work for those guys anymore. there's a price for everything. >> it looked like it had been your company and now you went on to another company. now thompson without the p is just another name, right? >> but it is s&p capital like you. >> i'm a guy like you. >> me, too. >> for one of the best services in the history -- do you not use them? >> no. >> it is mind-blowing. >> it blows your find? >> yes. >> you need a life. >> i do need a life. coming up, e-bay could soon be partnering up. and town and country travel is going to join us with the hottest luxury trends. is that you or me? and phil lebeau is going to join us from the air show.
ross sorkin. becky will be back tomorrow. futures indicate a nice jump this morning where we could conceivably be back above 17,000 on the dow which we tried to hold last week. it could have been worse, but it was a down week and we ended below 17,000. still below 2,000 for the s&p. a deal has been struck for a portfolio of drugs. mylan will get a few drugs from abbott labs. >> one thing about this, i'm looking through this and they don't seem to be referring to anything here that would suggest that this is a possible aversion. >> from mylan? >> potentially because these are
your products. there was talk prior to this announcement that this would be structured as an aversion. they are not suggesting in a statement that is a structured version. they don't talk about that but i just want to put that out there that people were talking about this over the weekend. >> i don't understand. by buying the drugs they would -- >> the drugs were over there. reuters reported over the weekend that these guys were in talks and one of the issues was about restructuring as an aversion. they don't seem to be indicating that they are doing the aversion, but there's a call later today. pfizer never came out about the aversion piece until they got two conference calls in. >> they didn't mention a thing and now they are like, sorkin -- >> we could be wrong on that. and maybe the reason it doesn't say anything about the aversion is -- >> they are like, shh.
and here you are. >> i e-mailed a source and they have not admitted to it in a statement, but i have been e-mailing somebody that is involved in this transaction. >> you are trying to reign on their parade today. no one would have known. >> the ceo of mylan, heather, i love. she's terrific. however, it is less terrific she's up veinverting the compan. >> you are judging and assuming. >> i say it makes it harder for her to compete. she's an advocate of tax reform. as a good citizen, we need to figure out a system. we need to figure out -- >> you just want to -- >> what i would like to do is get real tax reform. that's all i want. you want it, too. we both do. >> you have come around. we can hold hands together. >> no. but i wouldn't hold my breath
for that. in the meantime, what if -- what if they have more money to develop more drugs instead of -- >> these are generics. >> i know, but even that, generics is helping with the overall cost containment efforts for health care. it's a place for generics and -- in general, companies would probably spend the money better themselves, right? reuters would avoid shareholders. >> i don't disadpree with the intent of what you're saying but i'm also saying we have to hit the roads and pay for schools. somebody has to pay for the stuff. >> citizens do. but instead of -- as long as you're watching carefully the way it's spent, because every dollar should be spent as if it was your own. >> and the government misspends money atrociously. >> i'm not going to blame heather. >> i love -- >> you said you liked herless. >> i didn't say that. i love heather.
she's a remarkable ceo. i'm frustrated that she would feel compelled given the situation to have to go abroad and structure an aversion. >> you are tip-toeing there. >> okay. we'll talk about other stuff this morning. business leaders at the farnborough air show in hampshire, england, is where billion-dollar deals are being made and relationships are starting. phil lebeau is joining with us the latest. good morning to you, phil. >> reporter: good morning. there's always a big announcement at the very beginning and this year it goes to airbus. as expected airbus announcing lit launch the a-330 neo to compete in the wide body segment. you're talking about planes between 250 to 350 passengers. they are going after the 787 dreamliner. earlier we had a chance to talk the to the airbus ceo about how much demand there is in that
segment given the fact that the dreamliner racked soup many orders. and you have the 835 there and he says they would not have launched this if they didn't have strong demand and an indication of strong orders already. >> this is very typical but after ten days or two weeks of active marketing of this product, we get all of the big names of the company to select this aircraft it will really be a big success for us. >> reporter: the news was not lost on boeing which today will be flying the 787-9 dreamliner here at the farnborough international show. boeing says it has more than 1,000 orders that it racked up since the plane was first announced for the dreamliner and it believes there's not only enough demand the dreamliner market but overall the ceo does not believe we are looking at a
bubble in commercial airplanes. >> the numbers say we are not. i mean, you look at our -- we track deferrals and cancellations below historical averages right now. there have been some other deferrals and cancellations in the industry. i think others would have to answer to those trends, but we see ongoing strong demand. and we're going to produce to it. >> reporter: one other story getting a lot of attention, the f-35 from lockheed martin was supposed to make its public debut here at the farn borough international show. it will thought be flying today, not flying today. and there's questions as to whether it will fly earlier this week. earlier in an exclusive we talked to the lockheed ceo after the engine fire in late june, there's questions on when the f-35 will fly. she says it will fly at the end
of this week. >> i'm certainly confident they are going to go through a discipline process. they always do. this is normal for any aircraft development program. they will go through a discipline process and get to the root cause and we are hopeful it's in time for the aircraft to be here. >> reporter: so those are some of the stories that are getting a lot of attention here. one other thing, andrew and joe, our audience is interested in the export/import bank and whether or not it will be extended. we talked to jim mcnerney about this and he said if it is not extended boeing could lose orders. if export very import is not extended, there's a chance customers around the world will say they go to airbus because they can get financing through that. back to you. >> phil, thank you for that. appreciate it very much. joe, one little thing. i just got the first take of the press release on this mylan deal off dow jones. we didn't get the rest of it. and you said in the structure
they are setting it up this way, but think about this after the break. these guys get huge amounts of revenue from medicaid and medicare. us taxpayers are paying this company. this company is a beneficiary of you and me and everybody else and now they are leaving the country. think about that one. >> i'm not that interesting in that but i'm more interested in if they are buying a couple more specialty drugs that allows them to -- >> this is -- >> they are based in europe, the drugs are based in europe. what about the drugs they get from here? >> they will pay taxes on those here in the u.s. >> but only on the drugs where the revenue -- >> no. what ends up happening in these aversions is, we'll talk about it after the break, people move where the debt load is so they can basically take a deduction in it. technically, yes, mylan is -- there it is. >> talk to your democrat friends act tax reform. >> talk to your friends about
tax reform. why don't we go to 20? >> we'll get to something reasonable and do it. >> fat chance. coming up, the hottest trends in travel. if you are super rich, where would you go? and startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. thanks to startup ny, businesses can operate tax free for 10 years. no property tax. no business tax. and no sales tax. which means more growth for your business, and more jobs. it's not just business as usual. see how new york can help your business grow, at startup.ny.gov
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when we come back, the hottest trends in travel. some of the hot spots where money is no object. and coming up on wednesday, we have delivering alpha. many big guests at the conference this year including nelson peltz. that's wednesday, the 16th. joe will be interviewing stan. we are back in just a moment. "squawk box" returns.
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welcome back. >> with the travel season now in full swing what are the years hottest trends in luxury getaways for the uber elite? on your set this morning is talent and country travel editor at large. she's also overseeing the revival of town and country travel this magazine, travel the best magazine this fall.
they're going to do it twice a year now. it's terrific to see you. we've got to go through some of the things folks do and the super elite wealthy supposedly are doing. >> you love the name town and country. >> they've had a huge resurgence. >> and a disnantz new yorker. >> i will get you a subscription to guns and garden. >> what about guns and ammo. >> don't go there. >> i do want to go with something called give and go. this is a new sort of travel trend apparently, joe, when you sort of do philanthropy while you're on the 1% vacation. >> well, so let me just give you some background. first of all, travel is really booming and even some of the merely affluent are spending an average of about $10,000 on a trip and they're doing this several times a year. >> is that two people? >> two people. >> or a family. >> i think it varies. i can't speak in such detail to it. and then the truly affluent are absolutely pushing the envelope
on, you know, they're really setting the demand for truly specific experiences. >> what kind of price tag is that? >> the sky's the limit. >> right. >> and your 10,000 is not flying private. >> no, it is not flying private. that's more normal travel. but you asked about the give and go. >> yeah. >> so one big trend is nonprofit travel. people want to feel good about their luxury. they want to spend the money -- >> this is like guilt vacation. >> no, this is incredible experiences some of them. but for instance some of the money might go towards a charitable foundation or here in africa, in a very luxe safari camp. some of the money could go to educating children about the importance of conservation in the local villages so they don't grow up to be poachers. so you can feel really good about this. >> is this about giving money, i thought -- i know people who have gone on these vacations. they go on the vacation and do some kind of public service while they're there. >> there are various ways to
look at it. that's volunteerism. one has to be very careful about companies one chooses because there's a lot of green washing involved. but sometimes it's just choosing a hotel company that you know does the right thing. >> when we teased this segment we talked about the brando. what is that. >> oh, my god. that's where i want to go next. so, it is a new resort. >> yeah. >> marlon brando's private island. there's now been turned into a very sustainable resort. 35 villas. it's about 16 miles from tahiti. you have to take a charter plane to get there. it's essentially the dream of the south pacific. >> what's the -- what's the nightly cost? >> it is about $2500 per person to $74 pund per person. depending -- >> per night. >> how many rooms you have in your villa. they're from one bedroom to three bedroom. >> can it be too remote and too quiet? >> never. i think that is actually -- >> wait a minute, i think the
tom hanks when he was castaway might say there's a little bit too little here for me. have to take his tooth out. >> so there are the luxury -- >> i mean, that looks too small for me. you ever heard of island fever. that might be the place you get it. >> two or three nights never. >> do we know what the staff to guest ratio? >> i don't know exactly. it's usually very high. like four per person. >> walking on the beach with a sherpa next to you. >> i know what you're looking for. who greeted marlon brando in mutiny on the bounty. you'd like about 800 on your staff, right? >> thank you. i just like -- >> the ratio is ski. we had two issues, glamping. >> we have glamping. >> you know about glamping, joe? >> like gloaming? >> it's a terrible word for a wonderful experience. luxurious camping. glamour camping. and then finally you need to weigh in on my favorite issue. >> what's that? >> first class travel or business class travel, should children be allowed --
>> babies, toddlers. >> babies be allowed on the plane. that's all i need to know. >> yes. >> they should be? >> yes, because increasingly people travel with their families even on business trips. >> it inconveniences andrew. they're loud. they might throw up. >> well you just have to go into first class or fly emirates where you have a pod essentially where a door that closes and you can be in your pjs. >> i agree with the door i think that's a nice way to go. >> the malaysian airlines doesn't allow toddlers. >> right. >> malaysian airlines -- >> they also say people be hung upside down and feet beaten. >> there's -- >> can they survive in steerage with the animals. >> i don't think so. >> i think that's the wrong attitude. >> this was klara's premiere on "squawk" and on tv. you did fabulous. >> thank you. just call me when you travel tips, i'm the girl. >> all right. stocks that performed better
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welcome back to "squawk box." the dawn of a new week on wall street. earnings about to shine bright upon the markets. which stocks are ready to win this season. the game of global risk. hot spots. shock waves. and tests of economic strength. how worried should investors be right now? and kaiser permanente is the largest nonprofit health provider in the country. a first on cnbc interview with ceo bernard tyson about the future of health care. the second hour of "squawk box" begins right now.
good morning. and welcome to "squawk box" on cnbc i'm joe kernen along with andrew ross sorkin. becky is off today. she'll be back tomorrow. we have results -- the set ment. >> the citigroup settlement, $7 billion. that's official. >> we're also expecting some results, as well. attorney general holder in calling a mortgage conduct egregious said citigroup knew about, concealed serious and widespread defects in its precrisis mortgage business. the justice department and citi announcing a $7 billion settlement today, and we're seeing it right now. it will be a total of $4.5 billion in cash. and $2.5 in consumer relief as a
result. it's going to take a second quarter charge of $3.8 billion pretax, pretax, and the cash portion consists of $4 billion civil monetary payment to the doj and the consumer relief it agrees to provide it by the end of 2018 which is actually the smaller part of -- now citigroup has resolved substantially all of the legacy issues regarding the rnbc and cbo investigation the company's been under. we're waiting for results from citigroup. the stock is up 20 cents on this news on the bid. 4720 out of 47.40. i like that chart. i like that chart because if you think it's at 47, you need to see that chart to remember it's actually at $4.70 is really where it is. >> did you see there was a piece
in the f.t. at lunch with vikram pandit. >> when was that? >> over the weekend. friday maybe? >> friday? >> friday -- >> friday i did get an f.t. but no i had to leave right after the show. >> sorry. >> let's tell the viewers about some takeover deals. we should just call them inversions. like another day, another inversion. british drugmaker shire says it's will to recommend abbvie's latest takeover bid to shareholders. the improved bid worth about $53 billion and coming just four days after the talks between the two companies. the company that spawned abbvie also in the news this morning. here it is. just happened about a half hour ago abbott labs selling a portfolio of non-u.s. drugs to mylan for $5.3 billion in stock. there's been a lot of speculation this could eventually turn into another inversion deal. it's not even speculation, it is what it is where mylan would move its tax home out of the united states. as you know i have problems with
this. and the other piece of it is all of us taxpayers, medicare, medicaid we're paying this company and now they're deciding to leave us. and they will ultimately figure out ways to pay less taxes. they will pay taxes in the united states, but on the stuff they sell here but clearly not nearly the same amount, and then all the shenanigans that people use back and forth about how to move that money. so, i don't know. i know you're fine with it. i don't know why you're fine with it. >> i'm fine with it because it's all legal and under the law. and if they want to prevent this from happening, obama, instead of -- >> the government needs to do something about it. >> -- grandstanding on all these issues that seem to me of lesser importance. >> i agree. we need tax reform. >> i would be using the bully pulpit to load on corporate tax reform. >> i'd have done it five years ago before i did obamacare. >> i probably would have led on corporate tax reform. >> the economy would be better off. if i can get you the rate down to let's say 25%. i don't even think he wants to go -- he's not going -- you want to go to zero.
there are republicans who want to go to zero. >> larry wants to go to zero. i would go to 20 pop >> would you take 25 at this point? get rid of all the loopholes? >> 25 puts us in a better position. we're one of the highest in the world. >> i'm not sure 25 would stop myran and that's sort of the rub on all of this. you've got to go much lower and figure out how you're going to pay for the roads and everything else. >> back to earnings season. dominic chu has been getting up early and coming on the show and running the numbers and he's ready to talk expectations. dominic. >> you know how much i love you guys, right? >> we love you. >> that's the reason why i do the earnings reports for you guys early. let's start off with the top five. we scanned the s&p 500. look for over the past four quarters and the companies that perform the best on average the day after earnings. these are the ones that give out big earnings pop right after the earnings report comes out. so number five on our list is chipotle mexican grill. it's up on average about 8% over the last four quarters. now remember, a lot of these
have one or two big earnings reports that skew things. chipotle last fall reported revenue was up 18% from the same time last year. it opened 37 new restaurants in that quarter alone. so a growth story helping to drive one or two earnings reports there. helping to really push those numbers. number four on our list here is electronic arts, the video gamemaker. it's up on average about 9% the day after earnings. back in may, electronic arts last may surged more than 20% in one day on investor confidence, and at least a turnaround for this particular company. those shares up big over the past four quarters. now facebook, this stock soared after earnings last summer posting strong results, investors got more ambitious, and more optimistic about their mobile ad business that means on average over the last four quarters it's up 11% the day after earnings. number two on our list, pitney bowes, old world industrial type services company, in january, pitney bowes said that revenue was driven by strong
performances, digital commerce solutions and enterprise sector. that stock on average up almost 12% the day after earnings just in the last four quarters. and our number one s&p 500 earnings standout the day after earnings is green mountain coffee. now known as keurig green mountain. it was up 26% in february. remember that was the time that coca-cola said it was buying a stake in the company. it reports earnings so this stock green mountain coffee on average, andrew, joe, the best performing s&p 500 one the day after earnings at least over the past four quarters. >> thank you, dominic. we also got to talk this morning about bardier just announcing a new customer for its highly anticipated and delayed c series. it is chinese airline boom places letter of intent for 20 c-100 aircrafts. phil lebeau joins us with more. good morning to you. >> good morning, andrew. and loom placing that letter of intent, if you will, for 20
c-series aircraft with bombardier means that they're up to almost 500 orders and commitments, letters of intent for the new c-series. bring in the coo of bombardier, and you said you were going to get up to 20 customers hopefully by the end of this year at you're at 19 how. how optimistic are you as continue to slowly but surely bring in these orders? >> phil, we're very, very excited with the announcement we made this morning. as we said we're looking to have about 20 customers by entering service and about 300 firm orders. as you just mentioned we have 495 commitments now. 203 firm orders. 19 customers. so, we're very confident that we're going to achieve our goal. >> you've heard the criticism that there have been a lot of issues with the c-series. the most recent of which is the pratt & whitney engine, and the issues with the c-series engine. >> what exactly went wrong there and how confident are you you found the problem behind that
engine failure? >> first of all we have found the problem. we've been able to determine the root cause. working with pratt in collaboration right now. we put in some modifications in the engine and we're testing as we speak. the engines are in testing right now and we're validating the solution to make sure that everything is okay. >> of course safety is our primary concern so we want to make sure that we found the correct solution to the problem. >> still on target for the first delivery in the second half of next year? >> absolutely. our entering service is targeted for the second half of next year and we feel confident we'll be able to get there. >> obviously airbus and boeing get the lion's share of the attention here. what you're doing with the c-series is trying to go into the lower end of the market in terms of size and passengers. are you finding robust demand there? you have a lot of letters of intent but do you believe that market can grow as quickly as some of the larger areas? >> absolutely. our market forecast says there will be about 7,000 airplanes sold in this segment over the next 20 years. we feel it's an underserved segment, and that's why you
optimize an aircraft for this segment. we absolutely feel confident it will be there for us. >> guy hachey, the coo of bombardier on a day they get another relatively large letter of intent commitment from a customer out of china. guys, back to you. >> okay, thank you, phil. phil's going to be back with us live from the air show in the next hour. coming up at 8:00 a.m. eastern he's got an exclusive interview with the coo of united technologies. bringing high tech to the hospital experience. kaiser permanente the country's largest nonprofit health plan just opened its new oakland medical center and the coo is going to be making his cnbc debut after the break. delivering alpha is this wednesday. "squawk box" will be doing the show from the conference live. many special guests, including lee cooperman. ♪ ♪ ♪
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the fastest lunch. turkey club. the fastest pencil sharpener. the fastest elevator. the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. welcome back to "squawk box." making head lines, ebay reportedly plan to announce a partnership today. "the new york times" says under the deal, sotheby's will be broadcast live on a new section of ebay's website. the partnership is expected to expand to eventually include things such as online-only sales, and teamed auctions from other sotheby's houses. can you say it? >> lock your jaw -- i can't do
it. i can't do it. >> lock your teeth and say sotheby's. >> s.a.t.bies. >> to me sotheby's doesn't go with ebay for some reason. it does because it's an auction. >> not really. seems downmarket. >> if this is the auction spectrum it seems like ebay is over here and sotheby's -- >> does this raise ebay or lower sotheby's? >> i think it lowers sotheby's. >> okay. >> we got filings -- i can't do it. regulatory filing shows a group of 27 top executives investors in alibaba can appoint another two directors to the company's board once it goes public on the new york stock exchange. the group includes co-founder jack mau. it would expand the board from 11 members to 9 to help the group strengthen investor control of the board. so best control for the shareholders. more control for the board. i don't know what we want to make of that. let's talk about health care, kaiser permanente is the country's largest nonprofit health plan and just opened its new oakland medical center which
integrates high tech into the hospital experience. with us now first on cnbc is bernard tyson the chairman and coo of kaiser permanente. you spent a billion bucks on this thing. >> yep. >> the question i have is actually less about oakland itself, and more about what you guys are doing with technology. i see you're wearing the jawbone on your wrist. >> absolutely. >> you have electronic health records that are shared. >> yeah. >> can what you're doing actually be integrated across the country? meaning it works in a closed system but the holy grail for health care is to get this to work everywhere. >> good morning. absolutely we believe that it can for the entire country. we have almost 10 million members on the electronic medical records that's all integrated across the country. we're able to aggregate data up to look at how we're performing against health outcomes. we've demonstrated that you can improve quality of care with good information in front of our providers. and we're also working on
lowering the costs. and so, we're a big believer -- >> what is the capital cost to make that work, though, initially? i mean you put a huge investment in. >> it was a couple of billion dollars. but, it's worth the investment. what we are seeing now in terms of the returns are higher quality care, and we're lowering costs. we can look at outcomes. we can deal with the individual and with the population. so absolutely, it's worth the investment. >> what's holding us back from your system being integrated with a cleveland clinic and the mayo clinic and mount sinai here in new york and nyu? >> well, unfortunately, most of the health care industry is still in stovepipe type of arrangement. what was unique about kaiser permanente is that we integrate all parts of the health care delivery system inside of the four walls of kaiser permanente. so we're able to bring everything to the. >> we could have done kaiser and skipped the aca if we could have somehow instituted that nationwide.
i like what you say here bernard, i'm not sure what you mean. we asked you about obamacare and you go we are a law-abiding company. therefore you're working to implement it. what if you weren't law abiding you wouldn't want to implement this thing? >> we've been a long-term supporter of access to care for everyone. >> that's not necessarily obamacare. >> well millions more are covered today. >> i understand. >> because of the affordable care act. >> as you pointed out we needed to transform -- >> absolutely. >> and it's doing it on its own. it's not doing it because of obamacare. >> but in fairness we're talking about the first year of the implementation. so we think it is headed down the right path. there's a lot of work to do. for this thing to get -- >> there's some things that can -- there are still some things that pay very careful attention to, in the future here. and we'll see, obviously, where we got our fingers crossed for how it's going so far. but -- >> but i think we're demonstrating at kaiser permanente that in the 21st century you need a 21st century health system. and that's what we're building.
and, to the extent that people now have access to care, to get inside of systems like kaiser permanente, through the front door, we think that's a good thing. >> tell us though just about the cost. i'm looking at there's a report in colorado you have a big business in colorado. you've had double the sign-ups that you planned. >> yeah. >> means there's -- "a," there's a lot more hands on deck to do this. but, what does the cost look like for you? >> well, you know, we still have work to do to better understand the costs, obviously. because in most cases this is a new population, in which they haven't had coverage before. now, in the kaiser permanente system, it doesn't take us long to start really gathering the information, because of the technology that we use. and so it will probably take us a couple of years to really understand the risk profile and the cost of -- >> that's what i'm talking about. when you think about the risk profile and the cost for you and the cost for the system and i think what joe's referring to is how much are we ultimately going
to be paying as taxpayers? >> what's scary is how are we going to tell -- >> for much of it you're paying already. if someone gets sick, they get care. but unfortunately it's in the most expensive part of the health care system, the emergency department. >> as we found out because of one of the unintended consequences of obamacare, it's caused a shortage of doctors, which has caused more people to utilize the emergency now than even before. so, what was supposed to bring people away from the emergency room is actually caused more visits to the emergency room, where it's more expensive. all these things can happen, right? they're unintended. how are we going to tell people that they can't have certain drugs in the fight your or procedures because not everyone can get the best care available because there's no way to afford it? how are we going to tell people that? >> well, i'm not sure we're at the point where we're saying we're going to tell people you can't do that. i think that we have to look at how do we deal with all these issues in a very integrated way? we're right now having these kind of debates, as you know,
with specialty drugs. on one hand it's a wonderful thing. because we have the opportunity -- on the other hand it costs too much. >> how are we going to get -- you saw the situation at the v.a., and those aren't bad people and no one wants to treat our veterans like that. but you know there aren't enough doctors and the reason there aren't enough doctors is because the demand has far outstripped the supply available at the v.a. how do we keep the entire system from going down the same road? how do we get doctors to come in and -- >> well, in the 20th century, the doctor was the centerpiece of everything. we're demonstrating at kaiser permanente in the 21st century, is that there are other wonderful health professionals who can actually help to provide care as needed. second thing is, we're demonstrating at kaiser permanente that the venues of care can be very different. last year we had over 14 million doctor office visits virtually. it was done through the computer. these are members who have
voluntarily said i prefer to talk to my doctor through the secure messaging system. that's made available because of the electronic medical reports. and the ability to have the information. >> be nice to finally find one of these things that can transmit, you know, pacemaker data and all kinds of stuff. >> oh, that's coming. it is coming. we have a center in oakland, california, we're experimenting with that. that is coming. >> you need to invest in sensor companies. >> you do. the question is how far behind -- these guys lead by a square mile are the leaders relative to everybody else. the question is how do you get everybody else to the same place that you are with the capital that you've spent? >> well, i think if this -- if the citizens in this country continue to keep the conversation in front of us, the health care is unaffordable, and we, kaiser permanente, can demonstrate change, we will bring the rest of the industry along. >> but back to joe's earlier question though about all these specialty drugs and the cost, who is supposed to make the final decision? >> well, right now, it's in the hands of the american people, and all of us. >> but what's the right answer?
>> the right answer is that we have to solve, too. we cannot leave populations out because they cannot afford $85,000 worth of drugs so we have to solve it together. >> right. >> and that's what we're working on. >> bernard we got to run but just because it's in the news 'tis morning, talking about tax inversions, all these medical companies leaving the country to get lower taxes. do you have a view on all of this? >> i stay away from that. i do have a view that specialty drugs are too expensive and hopefully we'll continue to work with pharmacy industry to lower the price. because there is a price challenge. >> and should there will be price controls? >> i don't know what the right answer is yet but i know that it's priced too expensive. >> a politically correct man, bernard. thank you for joining us this morning. appreciate it very, very much. >> coming up, comedian and tv star tracy morgan recovering from a deadly accident involving a walmart truck. now he is taking legal action against walmart. that story is next. and wicked weather expected from the midwest all the way to the
east coast. a closer look at the this so-called people ar invasion. going to be so cold, you know why, because it's so warm, wreaking havoc on the summer. "squawk box" will return in just a moment. being able to pay as we go was crucial for a start up. having to fork out a lot of money up front was risky. you can launch a feature really quick, and if the feature doesn't work, we haven't lost anything and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month. ideas can be tried and tried again on the ibm cloud. the ibm cloud is the cloud for business.
welcome back to "squawk box." comedian tracy morgan has been released from a rehab center following a critical motor vehicle, a crash involving a walmart truck and his lumpo bus left him critically injured. now he's suing walmart saying the retailer knew or should have known its truck driver was not in compliance with regulations designed to avoid driver fatigue. shifting gears, you a mets or yankee guy? >> mookie wilson was playing for the mets, i was a mets fan. >> the mets have won eight out of ten. >> i nope. >> have you seen the reds? >> not seen the reds. but they've been doing okay. >> you know what's happening on wednesday? right? >> the all-star game. >> so we're at the break. the reds have now cut their margin, where they're between milwaukee 1.5 games. they enter the all-star game 1.5 games out. and you know who -- what they're
doing friday, saturday and sunday? >> they're playing who? >> the yankees. >> friday, saturday and sunday? >> this week. i'm going to go. >> you're going? are we going to the? are you not inviting me to come with you? >> do you suggest that i root for the reds and wear- >> absolutely. only so you get heckled. >> i'm afraid. >> more "squawk" in just a moment.
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good morning. welcome back to "squawk box." it is official. citigroup agreeing to pay $7 billion to settle u.s. government investigation into mortgage-backed securities. that bank, they're going to take a related pretax charge of about $3.8 billion in the second quarter. citi set to post quarterly results before the bell this morning. also, we got a bit of deal news. acom technologies will buy urs corporation for $4 billion in cash and stock. urs stock holders will get $33 per share in cash and about three quarters of aecom shares for each share that they now hold. another deal would create the largest oil producer in north
dakota's shale region, whiting petroleum will buy kodiak oil and gas for $3.8 billion in stock. that deal will lift it past the current production leader continental resources, which of course is controlled by billionaire harold hamm. and we didn't talk about all the inversions going on this morning but this mylan deal with abbott labs is something else. also the violence escalating in gaza. eamon modine joins us with more. >> good morning, guys. as it has been for the past several days overnight tends to be the most intense time of the day for that israeli shelling of gaza. yesterday some serious developments are having humanitarian implications on the ground. the israeli military began warning thousands of residents that live on the northern part of the gaza strip that they needed to leave their homes or risk facing injury. israel is stepping up its campaign to stop palestinian rocket fire out of gaza into israel. and so that sent people very much running for their lives.
17,000 palestinians have now taken up shelters at u.n. schools that are being converted into these types of refugee camps or makeshift shelters. u.n. officials say they don't have enough resources to cope with as many as 300,000 people in terms of what they expect to be displaced as a result of a ground invasion. this morning some significant military developments. hamas' military wing claim to have launched three drones into israel, over israeli airspace before the israeli military shot it down. and on the northern border between israel and lebanon, lebanese sources there say that two rockets were fired deep into israel before the israeli military responded. so it gives you a sense that as this conflict drags on there could be the concern that tensions spill over across borders elsewhere. here the death toll continues to mount. 170 palestinians killed in the days of fighting and there have been a few that are able to get out as a result of the u.n. evacuating foreign nationals.
guys, back to you. >> ayman, thank you. let's get more on the situation in israel. plus the challenges ahead for china, brazil, portugal, and more joining us now is vice chairman at kissinger associates and former goldman sachs international vice chairman. also a former state department undersecretary for economic growth energy and the environment. also with us, michelle caruso-cabrera our chief international correspondent. both of these people love hillary like -- who do you think loves hillary more you or -- >> he does. >> probably you. >> i'm a great admirer. >> and you are -- >> i admire her, as well. >> you do? >> i have different issues on policy. >> if she is elected, where am i going to be sending my postmark date? where will you end up being ambassador? what's your job? >> i have no idea. >> what do you want? >> i'm not lobbying. i'm not asking. i just want her to be elected. good for the country and good for the world. >> and good for hormats, you're
not going to say anything. you like to go to malta? >> you and i will consult when the time arrives. >> the "journal's" piece, an arc of instability, unseen since the '70s. it was like david lenhart's piece last week, andrew. the president unfortunately, through no fault of his own, has got this economy that's not cooperating. and, through no fault of his own, has got this arc of instability. he got in at the wrong time, and a lot of things just started going wrong through no fault of his own michelle. >> can that head line in the "journal" today really struck me as well. an arc of instability unseen since the '70s. ouch. >> what else happened -- how come both things are happening, it's weird, isn't it? >> coincidental? >> it's very unfortunately. >> ayman gave us a heads up on what happened in israel and gaza over the weekend. let me show you in general foreign policywise it wasn't a great weekend for the united states. the deal with iran looks like it's on the verge of failure when it comes to their nuclear program. the israel gaza situation continues to be very, very hot.
it looks like iraq is still getting ever closer to disintegration at this point because it looks like the kurds are trying to pull out as we long suspected they would. maliki won't leave despite everybody telling him to do so. finally what i was struck by, putten in the western hemisphere. russia going to visit cuba? argentina striking deals with christina concernner, something that 20 years ago was of course, inconceivable. i think he feels so emboldened he can come into our backyard and do this and thumb his nose at us. >> that's one of the interesting parts of this that he now feels confident enough in his own area that he's going out and trying to develop these ties. and of course he took advantage of the opportunity to have a talk with chancellor merkel, and our relations with the germans, as you know, particularly with the chancellor, have not been very good. so putin is now feeling a much stronger position. on the other hand he still has a lot of issues in ukraine. >> sure. >> and he doesn't want to push further in ukraine, in part because he probably doesn't feel he has to. and in part because he doesn't
want tougher sanctions. because their own economy, the russian economy, is in poor shape. but he is very pro-active. and we shouldn't forget the fact that they've put military planes into iraq. america pulled out. they have now these su-25 planes that are going there to help the iraqis in dealing with isis. >> what do you make of this head line? an arc of instability unseen since the '70s. >> i think it is true. >> why is it true? >> i think it's true because first of all, for different reasons you have different types of problems. the south china sea issues. korea. >> you know the spirit of my question, is it a failure on the part of the united states to not take a more leading role in the world? >> i think there are certain areas, for instance syria, where the united states did make some major mistakes in the way we dealt with the issue early on. >> ah-ha. so that's where hillary wanted to be much more activist. >> and i think -- >> whenever it goes off topic -- >> i think it also goes to credibility. that's the second point. the other is a lot of these things, iraq at some point was
going to have a problem. the united states had to pull out. and the kurds wanted to establish a much stronger entity there which they're going to do. there's this radical movement isis that's billing up. and then you get the bombing of israel by hamas. why are they doing this? in part because believe it or not the iranians have cut hamas off -- >> tom friedman had a commentary. is it beyond our control? meaning, we keep saying are we to blame? so, you know, are we to blame? or are there so many extraneous and sort of exogenous factors that we -- >> i think it would be a great mistake to assume that we're to blame for all this. i think there's specific mistakes that are made. but i think -- >> no one's really saying that. they're just talking about there's a vacuum in the world -- >> but the question is, what role are we supposed to play? >> not every single one. you don't think we could have had a positive effect on any of these situations if we had a more -- >> possibly. no, no, possibly. but we have this sort of ego
maniacal view that everything that happens over there -- >> the american competitionalism thing -- >> -- has to do with us. >> thank god we learned we're not exceptional. >> iraq, no one wanted to stay in there. iraq had its own internal forces that were at play and when we left, that gave strength to those forces. you have isis. i don't think there's much that we could have done -- >> it's not just that we left though, right? president obama from the beginning when he makes the big speech in the middle east and says we're a different country and basically says we're taking the gloves off, everything -- it emboldened anybody who had been suppressed for decades. >> he always says -- >> times when we're going to be out and they have to wait it out and they know exactly when -- >> setting deadlines was, i think, insisted upon by the american people but of course when you do set the deadlines some of these other groups figure we have an opportunity -- >> did you like our 5 for 1 swap? >> i was very surprised at that. very surprised. >> does that mean you liked it or you didn't like it? >> i wasn't -- no i didn't
particularly like it at all. >> so there are some -- >> i didn't think the timing was good, either. it gave a very bad -- we wanted to get this guy back. it gave a very bad signal. >> finally you would say there are -- you may have made a few mistakes. >> not may, did. but i don't think you can blame this whole series of events on that. i think there are a lot of internal forces in the middle east. countries have tried to steer that area in the direction they want for decades. the problem is the united states needs to remain involved to a degree, but it really doesn't have as much influence, and in the past we haven't had a great deal of influence, either, over a lot of foergss. there are internal forces that are bigger than us and bigger than other countries that try to influence them and we're seeing isis is one of them. and you're seeing also it makes strange bed fellows but there are opportunities here. >> totally strange. >> we don't know what to do. >> these terrorist groups are a problem for china. they're a problem for russia. they're a problem for iran. they're a problem -- >> if we had helped the syrian
rebels, we'd be now hearing that those are the guys that are isis anyway. so -- >> that's what happened in afghanistan. we helped rebels, and what happened to them. >> can we -- >> real quick, can you explain why stocks, i mean, are as immune as they have been? >> no, he actually can't. >> no but i'm just curious -- you might have a take on this. >> the fact is the interesting thing is, if stocks were to be affected largely because the impact of all this on energy, and it's had so far very little impact on energy, living in production, believe it or not -- >> but it's remarkable that the market has not cared about any of this. all of this instability, and nobody seems to -- >> i think because collectively the market can look back and say we've got through the '70s, the '80s, we've seen israel over and over again. >> if it does hit energy, the market will not be so immune. >> the fed is still in emergency comization mode with the economy -- >> you've got the fed moving in the right direction. energy, because most of the oil in iraq is in the southern part of iraq not yet affected by
this. and libyan production is up a little bit. so if this spreads, i think it will have an effect. but so far, remarkably little. as bad as it is, and it's not going to get any better. >> someone, andrew, tweeted in a video. >> yep. >> of if in the office if it was a soccer game. and there's like normal office workers and they're walking by and one guy just barely brushes a person's arm and they go down, and they're in agony. and they're screaming. can you imagine in normal life if there was soccer flopping. like i was reading, i got a paper cut earlier, i would have had to leave. i would have had to leave the set. you would be all -- >> we do this every day. >> and the paper would have been given a yellow card. >> a yellow card. >> or a red card. >> this is hilarious. it's about a six-minute video that someone sent in. other people have noticed. i think they need to -- >> acting? >> yes, the flopping. it hurts the game. it's constant. it's -- >> are you suggesting while bob hard mats has been telling us all this interesting information you've been --
>> you're outing me on not listening to everything a guest says andrew? you think that works? >> i know you pay rapt attention. >> i am. >> so he can do two things at once. >> i can. >> and i've been e-mailing. i actually paid all my bills. >> okay, bob, thank you for being here. >> thanks for having me. >> i can't -- >> practice pronunciation. >> you know me, a polar invasion is on the way in the heart of summer. it's a bit unusual, yes. and we are going to talk go the science behind the weather event that apparently is going to grip the nation over the next couple of days. tomorrow on "squawk box," pimco chief economist paul mcculley is our guest host. plus earnings from goldman sachs and jpmorgan. the cadillac summer collection is here.
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welcome back to "squawk box" this morning. see how the market is setting itself up. we had a couple of earnings reports plus some merger deals this morning. dow looks like it will open up higher about 75 points. s&p 500 up closer to 8.5 points. the nasdaq looking up, as well. >> we're going to be getting -- getting citi but we also had a number of mergers already so the
analyst spirits are out including some inversions. making head lines 2 1/2 years after it crashed off an italian island the cruiseliner "costa concordia" is being refloated today. removing the 112,000 ship has already cost nearly a billion dollars. air being pumped into large metal boxes attached around the hull of the ship to slowly bring it to the surface. that process will take about a week. the wreckage will then be towed very slowly to genoa where it will then be scrapped. a major cold snap making its way over to the east coast this week right at the height of the summer. let's get more on the science behind from a industry expert. joining us is william happer a physics professor. so many different things to talk about. a polar vortex has to be really cold. i don't even know what -- i never heard the term polar vortex until this year just sort of to explain how a cold winter can fit into the overall notion of a planet that's warming. it almost seems made up to me.
but what's happening right now with this cold weather? >> well, this is a very normal outbreak of cold air. it doesn't happen every year, but it's by no means unprecedented. there have been many years in the past with summers just like this. >> well, we haven't -- there hasn't been anything that's been unprecedented, professor. and i was reading some of your comments about now that we have satellite data we have a lot more knowledge in the last, i don't know, 30 or 40 years of weather events than we ever did which makes it seem like they're all more frequent or unprecedented when we're able to notice them. one thing that i noticed was in the typhoon that was over in hainan, remember that, we called that the strongest storm ever because satellite data showed that it was 200 miles per hour but none of the ground stations in the philippines that had monitored that typhoon, and all the previous ones, none of them got above about 150 or 160 miles
an hour. so the satellite data caused all the major news services to call it the strongest ever when, in fact, on the ground it was no more than a garden variety typhoon. >> yes, that's one of the problems we're facing. is that we've only had satellite data since about 1980. and so we're making all sorts of generalizations on the basis of data that's not correlated with anything that we've had in the past. >> let me get right to the crux of the matter, because, you are a physicist. you were one of the physicists early on that described the greenhouse effect of carbon dioxide. and that eventually it could cause an overall warming in the climate. but the models that were designed at this point have not really accurately predicted what was going to happen. do you still -- have you changed your hypothesis on co2s, and i
do always stress that it's carbon dioxide. because they constantly call it carbon to conjure up that picture there, of black smoke. but how do you explain that if co2 is at 400 parts per million that we're not seeing the same type of inyees in global temperatures? >> well, i think that people have grossly overestimated the ability of co2 itself to cause warming. of course it will cause some warming but if you look at the models they have all sorts of positive feedback built into th them. they don't take into account clouds very well. so a slight change in cloudiness can completely compensate for anything that co2 can do. >> so the models themselves, what were the feedback? because they've heard that they use the water vapor as a feedback. that's the biggest greenhouse gas, and they use that to try to forecast -- do they have a vested interest in the models
having, you know, higher warming prediction? >> yes, of course, they have a vested interest. because, if there's not very much warming, co2 is very clearly a benefit. if you look at the past history of the earth over most of the time since the higher life there's been much higher co2 levels than now. >> they point out -- you constantly hear since man has been around co2 levels have never been that high. although man's only been around for 11 seconds out of a 24-hour day if you date the length of the earth. the models at this point have not accurately predicted the last 18 years. is that safe to say? >> oh, yes. they've been terrible. i mean they've overpredicted warming by factors of five to ten. >> five to ten. so how much confidence at this point do you have in models that show a 2% increase in celsius over the next 100 years?
i don't think anyone has any confidence in them. i certainly don't have confidence in them. >> i'm immediately going to get mail that you're funded by exxon or by the hydrocarbon industry. do you have any vested interest, any conflicts that cause you to have these views that many people would say anti-science or at least against the scientific community? >> well, you know, i consider myself part of the scientifenie community. >> you must get a lot of flak, don't you professor? don't you get a lot of flak? >> yeah, of course. so what, you know. that's been true forever. you know when galileo had his tiff with the church he got a lot of flak, too. >> go ahead, andrew. >> professor, i have
some issues with all of this, obviously, because you don't believe in climate change, at all. you made a comment -- >> just a minute. just a minute. just a minute. i believe in climate change. shut up. >> sir, i'm open to all ideas. you made a comment back in 2009
comparing climate change to the holocaust. and my question is, are you suggesting, when you made that comment, that climatologists and climate scientists are the equivalent of hitler and nazis? i mean that's what seems like you were trying to say. >> you know, you know, i get called a denier, and anyone who objects to all of the hype gets called a denier. that's supposed to make me a holocaust denier. you know, i'm getting tired of that. and the comment i made was the demonization of carbon dioxide is just like the demonization of the poor jews under hitler. carbon dioxide is actually a benefit to the world, and so were the jews. >>
how much money did you take from exxon over the years in the offs -- >> i haven't taken a dime from exxon. i have not taken one dime from exxon. >> the foundation that you worked for didn't take money from exxon? you weren't paid by them? >> i don't work for the foundation.
i'm a trustee of the marshall ins tight and i'm proud of it. the marshall institute for example stood for missile defense, which have saved a lot of lives in israel over the last two weeks. >> i mean i get -- >> no thanks to many of its opponents. >> all right, professor. we appreciate your time today. i get accused of -- i have no -- i put gasoline in my car. therefore, i -- that's my vested interest in i do use gasoline. i do use -- >> i'm open to all these views. >> do you think that any of the alarmists have a vested interest in this working out? >> i think a lot of people have a lot of vested interest in a lot of things. but i wanted to make clear he has a vested interest in this as well. a big week on wall street. lots of economic news to digest. plus earnings from major dow components. plus farm from the farnborough air show including an exclusive interview with the ceo of united technologies. ♪
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take a look at some stocks to watch this morning. apple is upgraded from overweight to equal weight at barclays. the firm says the ceo has solidified a strategy and regained the confidence of shareholders, presumably with that excellent buy of beast which everyone seems to like now, even the people that didn't at first. and what now you like it? and tripadvisor downgraded to neutral from buy -- have you seen tim lately? >> i might have seen tim. >> the analysts citing valuation
noting that the 30% year to date gain in the stock right now. >> right. >> that's about the most you can say. exclusive interview with the ceo of united technologies and the ceo of alcoa klaus kleinfeld is going to join us live from farnborough. kid: hey dad, who was that man? dad: he's our broker. he helps looks after all our money. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. kid: what if you're not happy? does he have to pay you back? dad: nope. kid: why not? dad: it doesn't work that way. kid: why not? vo: are you asking enough questions about the way your wealth is managed? wealth management at charles schwab we're changing the way we do business, with startup ny. we've created tax free zones throughout the state. and startup ny companies will be investing
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citigroup, the big bank that we wait for every quarter, is reporting results. and the company's better than expectations and the stock is immediately trading sharply higher on the news. up about $1.25. the company reported $1.24. the estimate as you can see was $1.05. the revenue estimate was about 19.366. and it looks like the company beat the revenue estimate as you can see. 19.34 billion versus the 18.92 billion estimates of 300, 400 million ahead of that. the sources of the revenue beat the markets in trading wasn't as bad as the company had expected. consumer banking, though, was flat. cost of credit was a little
better than expected. and for the first time recently, citi holdings was actually profitable. no comment anywhere at this point. i haven't seen anything on the settlement on the mortgage settlement that the company talked about. assets now at $111 billion. the second quarter net number includes a pretax charge of $3. billion which we talked about based on that legal settlement. post-tax probably isn't one of the thing people sometimes argue about. they get some tax benefits when they make these settlements. legal charge related to the cbo and the rnbs settles all claims. the loan loss reserve $641 million the results. now we've got it at up $1.55 right now. up 3.5%. >> still want to know where all the money goes.
>> for the settlement? >> yeah. $4 billion goes back to >> $3.5 billion goes to people, $4 billion goes to the justice department. salaries, expenses. hard drive destruction at theers. irs. >> we've got some other stuff to talk about including a flurry of monday morning deals. if it's a monday it's an inversion is what's going on really. mylan labs buying a portfolio of drugs from abbott labs for about $5.3 billion in stock. company says this further allows it to diversify its assets outside the u.s. the ceo of mylan will be on closing bell at 3:30 eastern time this afternoon. the important part of this transaction, heather leaving the shores of the united states to go find a lower tax rate elsewhere. white petroleum buying kodiak oil and gas for 13.9 a share in stock or $3.8 billion. that creating the largest producer of north dakota's gas and shale.
and aecom technology acquiring urs for 56.31 a share in cash and stock total price tag about $4 billion. ura has been under pressure from activist investor partners to enhance shareholder value. the other inversion, shire saying it's ready to recommend a new $53 billion takeover offer from abbvie. the company entering talks after abbvie made a fifth bid. again taking the headquarters, and everything else, the two are now in detailed talks. also let's talk about swiss chocolatemaker lindt is buying russell stover. price not disclosed. that would make it the number three chocolate manufacturer in north america. earnings season is in full swing. joining us is charles biedermann founder and chairman of trim tabs investment research, the trim tabs float shrink has beaten the s&p by 15 percentage points since inception in 2011.
andco? >> it has nothing to do with the market. people think earnings are important. but prove it. earnings have academically prices. knowing future earnings. all there is in the stock market are shares of stock and money. and since ten companies have been reducing the number of shares outstanding institutions own 80% of the s&p 500. so when institutions get cash in exchange for shares they have to replace their holdings. more money chases few ear shares. let's see, what will happen then? >> so it's as simple as that. >> the government really believes in free money. your good buddy paul krugman says so. >> you're talking andrew now charles. >> yes. i was being facetious.
>> oh, it's me. >> we haven't talked in a long time. so i could -- you know. >> exactly yeah my good buddy. so does this mean though, charles, without question that there's a day of reckoning coming or is this okay? >> well, supposedly this bridge created by free money to boost the wealth of americans who own assets and also to give free money to the poor people to bring up their level, so that, you know, the poor are doing better now and the rich are doing better now with all this free money. hopefully all this was done to at some point u.s. economy would
start greing more rapidly and the government wouldn't need to do this. unfortunately we're seeing income after inflation, wage and salaries of 139 million americans with jobs subject to withholding is growing under 3% the last few months. we're seeing another slowdown in growth. it was 4%, slowing to under 3 so we're going to have another second half economic slowdown. the market doesn't know this. but the market doesn't care as long as companies keep shrinking the float. >> what does this say about the individual investor? i'm looking at some numbers, $100 billion added to equity mutual funds and etfs in the past year, ten times more than the previous twelve months?
>> 100 billion. oh, etfs. >> yep. >> well, etfs are there's no knowing how much money is going into etfs is from individuals and from institutions. you should know that after inflation earnings are below 3%, individuals are not make iing enough money to generate money for investment. no real money has been going into the market over the past few years from individuals. if you look at your ratings, if you look at individual flows into the market, it's not there. >> our ratings are tied to volume and volatility. you're right there's a lot of different ways to measure this. did you -- you probably saw that piece that kevin warsh piece, former fed guy about this is a balance sheet recovery that's been orchestrated by the fed au. >> joe, do you -- do you believe the government numbers? >> i don't believe the -- i think that -- >> it's a survey.
it's a survey of 15,000 manufacturers, once a month. it's a survey of 125,000 manufactures, you know, not manufactures, employers, once a month, with lots of locations but there's realtime data available, bureau of labor statistics doesn't want to look at. that's income tax payments. they don't want to analyze that. and determine how many people are working, how much they're making in realtime. that would be like why do we need to know that? >> we need you it's been too long. we're going to have you back, charles, because -- >> well, i appreciate it. you're one of the few f and n people that i remember way back in the day. >> i know all the way back. i know. we don't want to talk about that too much because that was like -- it was in the '80s. anyway, thank you. charles biedermann, we appreciate it. i got there in 1990. >> 1990. >> when we return, reaction to citi's earnings out just moments ago. we're going to find out what one analyst is saying about the stock after the numbers. check out the "squawk box" market indicator.
up next united technologies, showcasing a number of new aircraft systems today in farnborough from commercial aviation to high-tech defense, the company's ceo joins us to talk business. the global economy, and the future of flight. being a keen observer of the world has gotten you far, but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.
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welcome back to "squawk box" this morning. take a look at futures right now. we did have that earnings report from citi. >> 92. >> dow looks like up 92 points. s&p close to 10 points. nasdaq up close to 20 points. also we should say that citigroup shares getting that boost this morning. earnings of $1.24. beating the street by 19 cents a share. revenue topping expectations. the company taking a $3.9 billion pretax charge in the second quarter for the mart settlement we talked about with the government. we're going to talk to a banking analyst in the next half hour to run through some of those numbers. you're seeing the stock up 4%. >> maybe our guy's got a running now. maybe it's happening. it's tough to turn that -- that's like turning around --
>> look at that chart. >> maybe this is a time. united technologies, major supplier for two of the biggest stories coming out of the farnborough air show. this morning the high price tag f-35 and the much delayed c-series. phil lebeau joins us with an exclusive interview of the ceo of united technologies. hello again, phil. >> hey, jaw i want to bring in louis chenevert the chairman and ceo of united technologies. you guys have a big role to play here and a couple of big story lines. let's start with one that gets a lot of attention alcoa announcing a $1.1 billion deal with you guys. when you're looking at the aircraft engine market right now, you believe that there's no slowing down at this point, correct? >> phil, first of all, thank you very much for the opportunity to be here with you. again this afternoon. if you go back a year ago, we had 3500 engine orders for the gear turbo fan that goes on different platforms. we show up starting 500 engine
orders. by the time the show gets done we'll probably have 6,000 orders. the supply chain and strategic deals that go announced today with alcoa are very important to support the ramp-up of the production that we're going to have in the next couple years. >> yet two of your engines are at the center of questions people have. let's start first off with the c-series. you had a very public c-series engine failure. a pratt & whitney engine, you believe that you guys have found the root cause there and you're close to getting it certified again. where do things stand there? >> well, first of all, in development program it happens that you have a few things that these three address and the c-series engine is certified. we have basically an issue that we have done root cause on, and i think with the customer bombardier, we're very comfortable that there we're now developing the testing. finalizing the testing so they could return to flight very quickly. >> within a couple of weeks potentially? >> within a couple of weeks absolutely. and bombardier, i think, shares our passion to make sure we sell
these airplanes that have 20% better fuel burn. lower emission. >> meanwhile you've got the f-35 which also has a pratt & whitney engine. you had the fire in florida in late june. it was supposed to fly today. it's not flying today. may not fly at this show. what happened there and when will you feel that the dod is confident it's ready to fly again? >> first of all the dod is one of our large e customer. we always work very closely with them. the f-35, you know, i'm still hoping that it shows up at this show. i think there's still a chance. bit you got to look at it from the macro level. it's going to be a very successful platform. you got eight countries part of the program. all services have agreed to buy the f-35. it builds on a core. the pratt/whitney core comes from an airplane that has over half a million hours. it's a very mature core. when you design such pushing the
envelope with the pro-pugs and aircraft sometimes you encounter things, and you want to find those things now, and we have and i'm very comfortable working with the customer, return those issues, return the aircraft to flight shortly. >> louis, joe's got a question for you. go ahead. >> thank you, phil. louis, two things we talk about a lot is corporate tax reform and inversions. we had a couple today. i'm thinking, if utx ever tried and inversion, i think congress would probably -- i think something would happen if we were going to lose something like a utx that you would domicile somewhere else. even though we pretend to allow the flow of capital, and assets, freely in this country. i think that might raise enough eyebrows where we'd actually do something. do you agree with that that you couldn't do it. would you be motivated to try? is you nighted technologies at a competitive disadvantage because of the tax rate and the territorial system we have here?
well, joe, first of all, i'm the chairman of the business roundtable tax committee and that's the reason why i took that responsibility is to make sure that we're at the forefront working with congress, working with senate to try to get tax reform which is really needed in the u.s. i think we have very good alignment amongst key leaders of the global businesses in america to do tax reform. and in my view, you know, all these speculation on inversions, et cetera, there's this false impression when you do an inversion also you go from things, the current tax rate to not paying any taxes. it is not true. in some cases the benefit is low single digit and rather i mean i think what americans need is true tax reform and that's why i'm sheerheading the whole effort on behalf of the business roundtable. >> louis, what do you make of the debate over the xm bank, and some of the people on the right who suggest that this is crony capitalism at its worst?
joe, again, a very important point the exem bank discussion what the industry needs is a level playing field. every country has different formula to support exporting their own product in the case of america it's done through exem bank and i think they help create the level playing field and i know there's a strong coalition with several players to make sure that we have the reapproval of some of the regulations that support the aircraft for sales on exporting our products. >> louis we talked with jim mcnerney this morning and he said if we don't get exem reauthorized boeing potentially loses orders. you talked with all of players in the aviation industry. what is the likelihood an airline in asia, europe or the middle east would not go with boeing and instead go with airbus or somebody else if they don't have exem, the exem bank there? >> i think this is why getting the approval for exem bank is
critical and as you mentioned perhaps by jim mcnerney the manufacturers of aerospace product benefit from the financing that's offered through its customer by exim and i think customers have come to also expect that this is kind of what's normalizes, equalizes the sales of aircraft around the world. >> so they could go else where? >> they effective could go elsewhere but if the same support is not available from other countries. >> louis chenevert the chairman and ceo of united technologies. you're the man in the middle of a lot of action at the farnborough air show. >> thank you. >> great, phil. >> good start to the show. >> awesome, great. thanks for bringing us mr. chenevert who we wish -- we always seem to talk to him at farnborough. i wish he'd come in. >> it would be great. he's welcome any time. coming up, great. coming up, my impersonation of flopping. soccer flopping at the office. i was reading the paper and i
got a paper cut and i'm still here. i just want you to know that. that i'm still here. unlike -- actually that one guy got hit in the face and was bleeding all over the place. he got a stitch he came right back in. you didn't watch the game. >> i was on an airplane. >> with a screaming toddler. >> actually with two screaming toddlers. my own. >> so that's okay? >> in coach. sitting in coach. >> okay. >> plus citi's -- i don't want you sitting in coach. it makes us look bad at the show. you are -- >> man of the people. man of the people. >> plus, citi stock isn't flopping after quarterly results. we'll hear from an analyst in just a bit. still to come, alcoa ceo klaus kleinfeld on the company's recent deal with airbus. and how the company's aerospace business is taking off. he joins us live from the farnborough air show right after the break.
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ran and came back, but the games i watched toward the end, i am a soccer fan. i'm kind of sold now, and i'm looking forward to watching it. but i do think that the sport has to do -- what can we do about the guys when they look like it's a very minor, like they barely get touched by someone, and it just -- >> they get an oscar for this. >> what is this? >> aaah! >> are you -- >> hold on. >> come here. come here. i got a yellow card right here. here you go. >> and you're getting a yellow card for just bad drama. >> yeah, i can't read. i mean, he -- -- you got to take us out. they got to do something with that. don't you -- yeah, that's nice. >> coming up, this was the yellow card. this is the best we can do. it's a business yellow card. >> did my slow motion work or --
there was -- >> you think there's a sag award in this for you? >> their acting is bad. i deliberately acted bad, because per game someone should count the number of times the game is stopped. that's why they have to add minutes at the end. the number of times that the game is stopped for a totally faux injury, right? and they have to do it because it's the outcome of the game can be dependent on whether you get a yellow card or a red card or something happens. so they all have to do it. the level keeps going higher and higher and higher. >> we've got to give you acting lessons and them, too. anyhow when we come back a ceo -- does he know how to act? alcoa. at the farnborough air show. >> i tried to act and my instrument is clogged. >> the largest supplier of aluminum, the planemaker giving us his assessment of the industry and the overall economy. as we head to a break take a look at u.s. equity futures. can get a $1,000 rsou turbocharged
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welcome back to "squawk box" this morning. in the news, citigroup hosting better than expected earnings and revenue earlier this hour. the company's ceo said the firms businesses were resilient in the face of an uneven economy. also we should tell you about apple this morning. it's been upgraded to overweight from equal weight at barclays. firm says ceo tim cook has solidified his strategy and regained the confidence of shareholders. also, intercept pharmaceuticals is rising in premarket trading. isi group names intercept as one of several potential takeover targets for gill at-sciences which it says has an abundance of cash to make deals. that however would probably not be an inversion and allergan just filed a new investor presentation. check it out if you're paying attention to this transaction. which it continues to rebuff buyout over valeant's pharmaceutical. future business prospects are unsupported and that its own businesses would be at risk under valeant ownership.
we saw the ceo of that company on with jim cramer on mad money just last week defending its decision to try to block that takeover. and then we got sotheby's. >> lock your back teeth. lock your back jaw. >> sotheby's. >> and ebay. >> yeah. >> you want me to read that? >> it says your name next to it. >> i was trying to figure out what exactly that chart was weird and we didn't explain it. sotheby's and ebay reportedly plan to announce a partnership today. "the new york times" says under the deal sotheby's new york auctions will be broadcast live on a new section of ebay's website. it's kind of interesting. they are auctions, right, and ebay you figure online. you'd farm that out to them instead of trying to do it yourself. partnership expected to expand to eventually include things like online only sales and streamed auctions from other sotheby's houses. i wouldn't just try to sell the $40 million stuff. i'd want to be in the auction business if i were sotheby's if
i were running that company. wouldn't you? >> i thought you said it was going to make it seem downscale. >> what was what i said at 6:00. >> you changing your view at 8:00? >> i have a lot of different views. depends. a regulatory filing shows a group of 27 top executives and investors in alibaba can appoint another two directors to the company's board once it goes public on the nyse. the move would expand the chinese ee commercial company board to 11 members from nine. it will help them strengthen control of that board. >> okay. up next, i'm looking at this by the way, i'm looking at the mylan deal. i want to talk about that when we come back. we had a lot to do. oh, we should also tell you about citigroup. citigroup reporting second quarter results just a short while ago. let's get a little more reaction to the numbers. join us is david helder, banking analyst at drexel hamilton. good morning to you, david. >> good morning. >> give us sort of your quick head line view on what you see here. >> well, of course, the big news is the settlement. and i think it's very important
for citi that they get that out of the way before going in to the capital and the fed's approval process next year. in terms of earnings they were a little bit better than expected if you exclude the settlement. investment banking was strong up 3% year over year. equities more than fixed income. and they're still in a very good capital position. their common ratio is over 10%. >> in terms of the settlement, though, much worse than you expected? better than expected? there's a back story in "the new york times" and the "journal" about how benghazi may have affected it? >> i think the $7 billion number had been pretty widely reported by the "journal" and "the new york times" and bloomberg over the past couple of weeks. so i don't think the $7 billion number was a surprise. and i think the $3.8 billion pretax charge was probably a little bit less than some had
expected. i was thinking that the inkreemtal charge for the settlement might be as much as $5 billion so $3.8 is fine. >> what is your target price on the stock now? >> target price is $58. >> how are we going to get there? what has to happen? because it seems like a lot has to happen to get you there. >> one thing -- citi is the only major bank trading below tangible book value, about 15% or 16% discount to tangible book value. i think as we see the losses in citi holdings, which the mortgage and other related assets that are being run off, as we see that turn from losing a billion dollars per quarter to making $244 million ex the settlement i think that's very important. i think over time citi stock will trade more toward tangible book value and like other banks eventually trade at a premium to tangible book value. it's mostly about getting the roe up and having the ability to
distribute say $6 billion, $7 billion in excess capital next year. >> can you give me a grade on michael corbatt's performance so far? >> i'd say "b plus." he was belt a very difficult hand and i think his current focus on getting through the capital planning process will be a success. and i think at that point we could move him up to an "a." >> should we care about what's happened in mexico? is that over? the losses are what they are. it's kind of extraordinary to lose that much money in a secured lending business. but clearly citi was the victim of fraud. and it looks like it was not only one or more citi employees, but fraud at one of the borrowers, as well. so the investigation will take awhile. but i think the economic consequences of that are done. >> okay david we're going to leave the conversation there. you're watching that stock up in the premarket this morning.
coming up next, alcoa striking a deal with united tech earlier this morning at the farnborough air show. ceo klaus clean field is going to join us after the big. delivering alpha conference will be taking place on wednesday. interviews and live look-ins all day. we're going to kick things off right here on "squawk box" with leon cooperman, former white house chief of staff bill daly. "squawk box" returns right after this. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan.
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the farnborough air show outside london this morning. the steel giant announcing it is -- the aluminum giant announcing it signed hey $1.1 billion deal to provide engine parts to united technologies. did i say steel? did they really right that? >> i think they did but we meant aluminum. >> phil lebeau joins us now. is he talking about the world cup, phil? he must be -- they're probably unbearable, isn't he? has he mentioned it at all? has he brought it up or do i need to do that? klaus kleinfeld, chairman and ceo of alcoa. has he mentioned it? does he play soccer? >> we'll talk about germany and the world cup in just a little bit. believe me everybody over here in london has been talking about it. we'll ask about that in just a little bit. let me bring in klaus kleinfeld, chairman and ceo of alcoa. very happy not wearing german colors. let's talk about this $1.1 billion deal between you guys and united technologies, pratt &
whitney, when you look at the aircraft engines, and the drive for fuel efficiency, where are we on that scale in terms of being able to wring out more mileage fuel efficiency from the aircraft engines? >> i think we're still going to have a lot to go forward. the a380 is just starting and we've got a little bit of dust here. so, the deal we sign today has a whole group of things. we're now moving into the fan blades with aluminum. with very modern aluminum. a new version of aluminum. we are going with our metallurgical solutions where no man has gone before and it helps directly in the efficiency because it's going to be less weight, 36% less weight than a titanium blade and on top of it it's going to be cheaper. that's one part of the answer. our acquisition that we announced about three weeks ago, that's another one where we go
straight into the engine, where we go straight into the hot part of the engine, right? we is going to >> see our producer cleaning you up. people don't believe we're at an air show until they hear it and see it. >> exactly, yeah. >> all of that fuel efficiency. it is coming through not only in the demand for new aircraft but in the demand for new engines. >> nine years of auto backlog at 77% growth in the next probably ten years, tell me any industry has numbers like that. right in the center of innovation, leaders in engine technology components you know. we're bringing it to the next level. i'm very, very excited. >> how much aluminum still remains in the fuselage of let's say your average wide body plane out there? i know there's a number of varieties. >> right. because the viewers don't know. the engine there is really almost no aluminum other than what we just talked about on the fan blade which is a new thing, right? most of it is nickel alloys.
right. so, the fuselage when we came out with aluminum allies you saw when boeing and airbus made the decision for their work horse planes, they decided to go for all-aluminum planes again and that was two years ago. so i think we're pretty competitive. >> you're competitive but in terms of there has been so much focus on composite aircraft, and composites being the future for lightweight and more fuel efficient aircraft. but the aluminum's not going away. >> no. and on top of it when you look at the amount of material that we have on a 787, the composite plane is actually twice the size on what we have on the chip set of the 737. it's also because we are material agnostic. when you put composites to the with other materials you need to make sure you keep this things to the. lightning strike. to have a fastener that leads lightning strike through it. it is unique. we came up with that solution and it's solving a big problem. >> we were just talking to louis
chenevert and i said how much longer does this boom cycle, if you will, or this upcycle for the aircraft industry, go, and he says at least the nextive to ten years. do you agree or do you think it goes beyond that? >> i do agree. one of the growth of middle class in the emerging countries and people once they have basically the ability to feed themselves, get a house, they want to travel. second one is the efficiency you mentioned. also in the west people are going for new planes that are more fuel efficient. the engine had 50% better fuel efficiency. and the components that we are making are directly fitting into this. klaus kleinfeld, chairman and ceo of alcoa. real quick what did you do last night to celebrate germany's win? >> i got on a plane to come here. but i saw the game until the very last point -- >> did you see the goal? >> i saw the goal. and i have to say that i thought it was a great championship. we saw more fantastic teams. it was a great competition and it brings the world together like almost no other event. you know, i was very proud, and also the speed and a guy like
messi, you can't keep up with him. >> best piece of advice? our photographer's from britain he doesn't want to talk about the world couple. guys, that's the latest from farnborough. we'll send it back to you. >> you've got to start thinking the way i think, phil. not immediately start talking to klaus about that. i mean i guess you're just all about, i don't know, substance or something. that's the first thing i thought of. i knew he would be -- >> joe we're trying to keep the dust out of our eyes. >> i knew -- >> it's an air show. it's busy. >> tell him i just knew -- you know the germans are on a roll. and i don't like it, actually. everything's going so well. they got no debt in their country. they got low unemployment. they got all these great things happening. now they conquered the americas, north and south in the world cup. and you know, just don't get too cocky, klaus, all right? just -- >> wait a second. the americans are on a roll, too. if you look at where we are investing. we're investing. we've invested in just the last 18 months in virginia.
we've invested in indiana. we've invested in ohio. and all of these investments are around aerospace. and aerospace has a net export, exported in the last year $71 billion from the u.s. this place rocks. i can talk about advance manufacturing where there's no other country that leads more than the u.s. does. you know, so there's a lot of great things to say about what the u.s. does and alcoa is helping on that. that's what counts. >> okay that's nice. that was nice. you're lulling me -- you convinced me. all right. thank you. thanks, klaus. >> that team. really was -- you know, he was just talking about messi. messi had a couple of points, you didn't see it. there were a couple of times where he did get a chance to show how fast he was. and how he could handle it. he was amazing. anyway coming up, jim cramer live from the new york stock exchange. as we get ready for a big week on wall street. "squawk box" will be back right after a break. tomorrow on "squawk box," pimco chief economist paul mcculley is our guest host.
plus earnings from goldman sachs and jpmorgan. "squawk box" starting at 6:00 a.m. eastern only on cnbc. ♪ ♪ ♪ [ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end july 31st. share your summer moments in your mercedes-benz with us. offers end july 31st. for that moment, where right place meets right time.
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♪ don't cry for me argentina the truth is i never left you ♪ ♪ all through my wild days my mad existence ♪ >> let's get -- i crack myself up. mac bumped into me. jim, let's get the new york stock exchange. mac bumped into me when he was handing me the script, and that was the -- if i was doing a soccer flop, that's what i -- don't you think they need to clean that up a little? you know in the nba you can get fined if they do a -- they, you know, look in slow motion after the game if they see that you're just totally full of it you can get fined. soccer needs that, don't you think? >> i think the yellow card has to go to the guy who is acting not to the guy who did the hitting. because we all see the -- when we see the rewind, we know that
the guy was definitely not nearly bumped as much as you were. >> exactly. >> clearly you're in a lot of pain. >> i got a paper cut earlier reading the newspaper. yet i'm still here. am ihere. >> did it bring -- did they bring out that red gurney? >> how many guys -- the nfl, i mean -- one thing, jim, when both guys going for a header and they -- they really do crack their heads, i worry about that stuff and i'm wondering, concussions and stuff like that, they hit heads so hard that make me worry, they need equipment -- they do the ridiculous stuff on their ankles and put them right back in after they get totally like a couple of coconuts. >> didn't you sense a lot of the guys who had concussions were walking to the wrong side of the field after they got up? >> yeah. one guy, they put him back in he was leaving later he was like -- what's my name? where am i. >> how many fingers.
no, when you hold them up, i'm ready. germany, argentine na i don't know, which side? which side am i playing for? manchester united. i forget who i am. >> citigroup, corbat, give extra credit give eman "a." >> i look at, $10 billion increase in equity for basil. one of the things i like, out of nowhere the citi holding swings from negative to profit? i mean i'm -- this thing has been a drag for the company and now it's positive. a lot to like here, book value, true book value $7 under. i can see the stock going higher. amazing wells fargo get downgrading and citi acts great. major turnaround for bankerser. >> we've got to put that 10% correction on hold again, at least for today, jim. not sure it's starting here. we got a lot of people say it's got to happen.
but the market doesn't listen to anyone, does it? >> listen to klaus kleinfeld, a mixed security deal on friday. he does this thing, i'm united states guy and united states looking good. my tribute to klaus, he seems to understand exactly how well the world's doing. it makes it hard to look for 10% correction when he's doing the talking. >> jim, how upset am i supposed to be about the mylan deal, this inversion? >> i thought abbott did well. i'm tired of inversions. obviously inversions are the way to go. i'll be talking to jack lew, delivering alpha, they say in the treasury it's the republicans' fault. look, we're losing jobs. we're becoming uncompetitive. it's a natural to fix. who would be against this? it's ridiculous! >> i want to fix it. >> it has to be fixed now. i mean you know --
>> it's got to be fixed now and it's not going to be fixed. >> it's a major loophole. now if i'm in any other company competing, we talked about this with joe last week, you've got to do a deal, too. it's like you've got to call -- >> the problem -- jim, if you think everything's so deadlocked in washington, the question becomes, do you do a carl levin and block it, temporarily or not? >> yes. >> i mean -- >> i think that jack lew will go along with that. >> i'm sure. >> i've got tell you, sometimes you have the irs make a rule and sue the irs, good luck. >> i know. tell me about it. jim, thanks. see you in a couple of minutes. >> coming up on "squawk on the street" later today, reid hoffman, on squawk alley, preview of the major league all-star game. cal ripken jr., special guest. preview of the big delivering alpha events. "squawk box" live look-ins and interviews, guests including
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investors delivering alpha confres, taking place wednesday. the biggest names in business and politics on hand. kate kelly. >> we're two days away from the annual hedge fund confab and should be plenty to talk about end of quantitative easing, trouble making money with global macro, and where to look for rushes in the stock market. keynote speech business jack lew, having the treasury secretary kick off the day's proceedings. carl icahn, hopefully will shed light on his latest plans for family dollar, among other investments and governor chris christie, speaks to us after a tumultuous year, accused of settling political scores by closing lanes on the george washington bridge. looking forward to talking with ken griffin, always news maker, in addition to managing $19 billion in hedge funds and running a major market making business, griffin has strongly
held views about the banking business including a desire to see them broken up, that he shared with andrew at last year's deal book conference. >> glass-steagall actually makes a tremendous amount of sense. it's not appropriate for the securities trading operations in our country to enjoy the taxpayer support implicit in fdic insured companies. so the first thing i do is i pull the securities businesses out of the banking system. i would, in a sense, debank goldman sachs and morgan stanley. >> that notion becomes interesting in an environment where the credit suisse is considering spinning off a piece of its business and banks across the board, including citi, are seeing flagging revenue amid higher capital requirements. citi, by the way, a major holding of citadels for some time, citadel trades in and out
frequently, they're always in the market for compelling, longer-term investments. >> we don't try to profit from calling the direction of the stock market. we troy to profit from picking individual companies that are going to outperform expectations of success. so we're really in the single stock story. which companies are going to have winning products, winning value propositions, that are going to create wealth for their shareholders that the rest of the market's not anticipating. >> hope to hear more how they're doing in the environment on wednesday. >> we should also -- joe's talking to the one and only stan druckenmiller. >> you don't need to tease me. >> stan, i don't need to give a last name, it's like madonna. >> you picked icahn. >> i thought it was druck. >> stan. the greatest investor alive today. >> he's got a fantastic track
record. he basically opted out, exhausted by the draw down, but never had a losing year, not running public money at duquesne. >> he was soros, really, when soros was great. join us tomorrow, "squawk on the street" is next. ♪ i'm on top of the world eye i'm on top of the world♪ >> on top of the world, right. congratulations to germany on its world cup victory. angela merkel in rio. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. what a week, first full week of earning, 55 s&p companies on the deck, yellen on the hill. boatload of news. ten-year yields around 2.53. housing starts, industrial production, and more this week. and as for your mostly in the green and, yes, that includes