welcome to "squawk box." i'm michelle caruso-cabrera. along with joe kernen. our guest host for the hour, joe terranova also with cnbc's halftime report. >> gcood morning. >> u.s. equity futures modestly positive suggesting that we'll have slight gains. actually hire now. dow by 36, s&p by 5 and nasdaq by 18. mixed session overnight in asia. yen influencing what happened with japan japan lower by half a percent. shanghai composite basically flat european equities were broadly higher hire by almost 1% across the

board. spine higher by half a percent treasury yields so interesting to watch the ten year 2.34. so backing off two year at 1.36 >> i'm thinking you're both blue, in the old days someone might say some type of sandwich reference, but i don't think that is appropriate anymore. right? >> 2017, no, can't do it >> i thought you were talking about the color blue >> that, too, but you have a joe on each side >> a joe sandwich. >> in the headlines today, we are watching oil prices. somebody is. new data showed another large

inventory drawdown so we're up back above 45. roirts was reporting that sawed gi arabia will cut crude shipments by more than 600,000 barrels a day. that would be the allowest level for saudi exports this year. earlier today, talking about we have to worry about some downgrades of the majors given where oil is they didn't pay off a lot of the debt and they had a chance to pay it down in 2014, did not do it and now we have $45 oil again so they may credit could be an issue. >> well, debt maturity and high yield comes in the middle of 2018 so we're not there just yet about that but i still think dividends are safe and i think that matters most when you talk about the big majors to the investors. >> reference this, on today's

agenda, yellen is testifying before the house financial service committee on the state of the committee also get the fed's latest read on the economy when the central bank releases its monthly beige book at 2:00 on p.m. and sticking with the fed, white house adviser gary cohn reportedly now the leading candidate to replace janet yellen as fed dhchair. seriously, i would never do this if i didn't have to. sorkin has been saying this, so this would be one of the biggest things he'd have been right for the last year about gary cohn. because he wrote are a piece on it and has been talking about it, but he will be so thrilled if it happens. politico says president trump is unlike areally to nominate yellen for a second term sources say that the job is cohn's if he decides he wants it he's also mentioned as potential future white house chief of staff. i like your conspiracy theory that they just want this

democrat out of the white house. there are certain -- >> people within the white house who don't like gary cohn >> i thought that was your idea? >> no, that is michelle's. >> so you're the conspiracy theorist did some russian lawyer tell you this or how do you -- why do you think you know -- >> only government connected one. >> gear is a great choice though i hope he takes it gary is a great choice for the markets. >> a trader versus a labor economist from berkeley? >> i'd rather have gary than janet yellen >> i think it's funny that a trader doesn't appreciate the bernanke/yellen party, the bernanke/are ye bernanke/yellen punch bowl you want more, there could be

someone better than those two in terms keeg t termses juicing all your markets making you look smart? how can there be a better more accommodative, more let the good times roll more don't take our medicine type -- >> because gary had a seat at the table in 2008 and understood in the world that we were in at that moment how to survivor, how to get out of it he navigated gold man sax through it again, he's credible he's an excellent joyce, he's a student of the markets he understands the markets and i would trust and i think the markets would trust that he will make the right decisions. >> you better be careful what you wish for because he might take away the punch bowl >> if he takes away the punch bowl, then i have confidence that he's doing it because the metrics of the economy suggest it's time do it. >> sometimes you have to take your medicine. three, four years ago they talked abo

talked about tightening what the traders would do they were big babies keep giving me my drugs. >> it was the same thick that they did yesterday between 11:30 and 12:00. how did that work out? >> you know what, that was very -- >> troubling, right? >> you were making reference to the mar a ket dropping 100 points when donald trump jr. put out the e-mails and then it all disappeared. >> looking back at it, that the market came back indicates that maybe the market still has good grip on what is a treasonable -- what is an action al constitutional crisis and what isn't. but in the past, markets have not cared until they care. so to see that -- one thing it did prove is that the markets do want trump i guess to stay president about and to get his policies through tax reform, obama care, all these things so probably market players want that and anything that throws as wrench in those works -- >> i just saw gary cohn, you know, we have all this --

>> we're supposed to be talking about the e-mails. >> let's talk about the e-mails. >> here we go. get to the big buzz stories ine. nonstop. this is one of those fire hose days where you can't -- fire hose trying to get a drink from a fire hose. >> yeah. >> i've had so many different thoughts about this over the last 24 hours. the journal i thought hood a couple good pieces just in terms of the as far as that the whole thing was and players involved, this russian pop star. >> pop star, publicist >> you couldn't trust a tabloid guy. did you see him? he's like a caricature who knows whether the lawyer has any-of-she's an adoption advocate more than anything. the whole thing is like -- and then you got don jr., you know, kind of wants to be a player and

thinks how great it could be and the whole thing is as far as cal, isn't it? >> i think people are focusing on his reaction.as cal isn't it >> i think people are focusing on his reaction. would did the son of the president do with it is the question let's start with the e-mail exchange that you're referencing that will get a lot of attention today and has been getting a lot of attention over the past 20 hours or so. and that starts with this publicist that you mentioned reaching out to donald trump junior with oig saying he has something possibly on hillary clinton that he wants to on give to the trump campaign. he write this is is obviously very high level and sensitive of information but is part of russia and its development's support for mr. trump helped along with aras and emin and those are a russian onlily gark and his son who is a major pop star in russia they are close with the trump family over the years. so there is the offer there of help from the russian government directly donald trump jr. responds to that e-mail and here's what he

said in response, he writes seems we have some time and if it's what you say i love it especially later in the summer so a lot of focus now on that response when offered information about your opponent by a russian government entity, how do you respond in american politics typically the response is not i love it, let's get together, but in fact trump jr. on sets up the meeting with the go between, also bringing paul manafort then the campaign manager, and jared kushner the president's son-in-law and donald trump jr.'s brother-in-law, all three of them ended up having this meeting at trump tower in which it's not clear what exactly was discussed. they say it didn't amount to ever of anything, that the russian attorney came in and had a bunch of information, started talking about adoption, information wasn't real, didn't make any sense to them, so it's not clear that this particular effort ever went anywhere in terms of the wikileaks and hacking that we know came later in the summer.

the president issued a statement in support of his son yesterday. here's what the president said he said my son is a high quality person and i applaud his transparency nonetheless, even republicans who had been supportive of the president as recent areally ly couple days ago starting to possibly look at this one republican from new york tweeting the following said new e-mails from donald trump jr. contradict a rot lot of priorer to from yesterday and before this is not the same thing he says i voted for potus last november and want him and usa to succeed but that meeting given that e-mail chain just released is a big no-no so we'll watch today to see where are republicans who supported this president through thick and thin go with this, if this e-mail exchange makes them wary that there could be more to the potential collusion story than they thought initially. >> so many different facets and

angles to this whole thing kind of looks like a willingness to company lekocompany collude happened this was right in the middle of the russia dossier about trump and the hookers.this was right the russia dossier about trump and the hookers. both sides were looking at russia to provide opposition research >> the dossier was being compiled by a private investigator -- >> and she works for fusion. doesn't this lawyer work for the same a firm as the opposition research people? >> she might have a connection to the opposition research firm, yeah and that is something that we will need to report out a bit more so those guys were clearly digging into all of this dirt. i think you hit the nail on the head when you say that it looks like a willingness to collude but not actual collusion but this is an administration and white house that has said

there is nothing to this and we would never have done this >> this is not the "new york times" fault this time this is not fake news. this is not enemies fault. this you can't -- and also after all the there is nothing to this whole thing, nothing has ever happened, that sort of what is disconcerting if you take that at their word. a lot of people put their faith in the notion that it took a year, where is the collusion, you hear so many people say that, it's been a year well, now it's like you knew about this and you were still able -- that is the thing that might be kind of troubling >> kushner knew, trump jr. knew, some question about when exactly the president knew about this. but the trump campaign held a me meeting with a russian be person that they thought was bringing them damaging information on hillary clinton from the russian

government and that is what is so disturbing to a lot of republicans on capitol hill and a lot of democrats on capitol hill are starting to say that this investigation is now about a lot more than potential obstruction of justice, it's thousand about was there collusion. you've had democrats over the past 24 hours throwing the word treason around >> and that is where you can count on the democrats to -- tim kaine, i mean, that got -- that is hysterical sort of. can't you be executed for -- can't you get a lethal injection for treason? >> i don't think it's happened in about a while >> but you can count on them to take it always fit a little far. and it reminded me a little bit of kass bcasablanca oh, my god, there is gambling going on, oh, my god, somebody is thinking about taking opposition is research from a foreign entity >> that is a big thing >> i know, but you have foreign lobbyists, the whole city is thick with them trying to pursue

their own interests and their country's interests with everybody across government. >> and that is why there are laws that say those lobbyists have to register and disclose meetings >> if in a perfect world, you would have told the fbi immediately about that you that didn't happen when the democrats tried to help ukraine. but this is war, it's opposition research and also the whole discourse of politics in this country is in the gutter at this point anyway by the media, by both sides >> it's a fascinating moment in american history and we're living through it. great for the hyperventilating media types, but probably bad for the country. >> you're one of them. >> i'm one of them i'm highway veyperventilating. >> we need to hyperventilate

about retail sales >> and this intro is very interesting. amazon prime, the day after, courtney reagan joining us with the aftermath from the online shopping are we talking about the destruction? >> people's fingers being totally exhausted? i don't know we're about three hours pass the end of prime day it lasted for 30 this year late yesterday, amazon says they are already on pace to be the biggest global shopping event in amazon history amazon says u.s. prime members ordered more than 6,000 deals every minute some of the most shopped four themes, home chefs for the home, techies, amle son itself said it sold two times more echo family devices in the u.s. this prime day versus last year's prime day. three times more echo devices worldwide than last year other top selling items include dna test and bluetooth

headphones boomerang commerce says that amazon offered on average a discount between 31% and 45% deals offered by third party sellers actually had on average a greater discount of around 45% versus a discounts of 35% for items shipped and sold by amazon itself beauty products as a category had the great he is discount levels but some shoppers may have been a little disappointed by the prices on products most popular over other day of the year bomb boomerang commerce says normal best sellers weren't discounted and in fact they were slightly more expensive on prime day than on a nonprime day. >> courtney, don't move because we'll talk about this more with an analyst amazon introduced food items into the prime day deal mix for

2017 joining us now to break down the impact on on the retail sector is hard line retail analyst at ub sflt. good to have you here. >> thanks. >> so amazon tells cnbc yesterday that it's on pace to be its biggest day ever. what does that it mean to you as stock analyst and financially speaking >> it means there continues to be a lift in retail moving away from more traditional retailers toward the online channel. amazon is doing a nice job of pushing this trend and we think that it will continue. with that being said, the market is at near peak panic and is quick be to collapse multiples at any signs of existential risk at this point. >> so peak near panic. if i am trading a stock sends off all kinds of signals to me

that maybe thousand is tnow is o buy because maybe they will bounce off on the bottom >> i think that's right. i think you have to take advantage of thieves opportunities where there has been violent swings in retailers. it's difficult to price in the risk and you have to expect that there are mispricings. we think the best way is to stay away from the fray with retailers like home depot which have proven to be more insulated. or dollar general that serves a community of customers that really hasn't shown a propensity to want to buy products online so we think those are some good opportunities because they have been caught in the phrase. but you have to be very selective. >> i agree home depot, lowes, best buy, big ticket purchase, customers want to talk to the sales representative on the big ticket purchases but there seems to be a dialogue

about the need for consolidatio in the space i don't know if we're talking about m&a here where you are seeing dominance ever oof one re buying up others, is this more about retail square footage taken down to smaller levels >> you're right. the fundamental issue with traditional retail is there is a mismatch between the demand to buy goods from physical locations and supply until that becomes better in balance, we will see certain trends retailers will have to proactively close stores and we'll see smaller players and those who conditions survive and that will provide more share to those who are able to survive. so they have to grab a bigger share of a smaller profit pool over the long run.

>> nmichael, thank you so much for joining us >> you have a screen there you don't watch twitter? >> i haven't set up everything yet. was i not here a half an hour before the show started? >> get all your ducks in a row the reason i'm asking, this guy addressed you, too love this -- >> joe sandwich wit >> yeah. let's say that you have a sandwich if you have whole wheat, you don't call it a whole wheat sandwich >> i'm the michelle sandwich that's right. >> you don't call it a bread sandwich >> but definition it's a sandwich if it has bread >> it's a breakfast special. cup much joe wiof joe and sandw. jaent yenet yellen will tes

today. what if you had to sit there and listen for three hours what would you do? >> i do. i actually do have to listen >> mark grant will join us next from the central bank's impact on the markets and why you can't fight the fed. that's a good with slogan. at fidelity, trades are now just $4.95.

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the president tweeting four minutes ago, my son donald did a good job last night. he was open, transparent and innocent this is the greatest witch hunt in political history sad! i love the last -- because every time there is either -- there is a comment at the end >> my long time favorite headline recently when twitter had the really bad earnings report, it just said twitter, sad explanation point. >> everybody uses it now wild ride for the markets. a great guy to talk about that action yesterday if you saw it, the dow was up and i looked down and down 100, suffered a trim

digit loss midday. and blue chips recovered to end with a slight gain joining us mark grant at hilltop securities and our guest host is joe terranova. mark, you were coming on to talk about yellen, but i have a couple questions as a wisened but very young person, but who has watched the markets for a long time, i watch them and there is a couple you things to watch for with the markets number one, if something happens to derail the trumped a yen toda agenda, the market usually goes down i think it would be a bigger se selloff if there was a true smoking gun. let's say you had, i don't know, snag shows true collusion. a constitutional crisis. do you think the market would know when to go down based on

what is real and what is just hyperbole? >> well, to answer your question, it's getting more and more difficult these days to know what is real about anything and i think that it is an excellent question but yeah, i think the market would figure it out. i think what took place yesterday was fluff. just fluff and the market will concentrate on fundamentals, it will concentrate on what yellen said. and unlike the number of other observers, i don't expect the fed to raise interest rates again this year. and as a matter of fact, as trump puts some people on the fed, i think we'll come to a standstill and maybe even read verse course as the united states government want to the build out infrastructure and military spending.states govern build out infrastructure and military spending. so i'm fairly sanguine about any problems >> the reason i ask, because depending on where you sit in this whole political debate,

there is no really objective analysis other than the market about whether something will really be serious or whether it's not one side anything that comes out will dismiss it as irrelevant, and the other side everything that comes out a treasonable or a constitutional crisis. so i look to the markets to tell me when something vael serious a really is serious because the market is made up of the same type of people judging what we're judging fp but i would hope that the smart money would really know when it got serious or not and you could use that as a gauge. you don't though whether t tho'- again brexit betters didn't know it there, didn't though trump withdra was going on win >> i think markets are looking at the fundamentals of earnings

and what things are doing. and all this fluff since trump has been elected about -- >> it's fluff until it isn't that is my point i understand it's fluff, but if it got to the points where you were saying wow, president pence or something like that, i don't know >> i don't think we're anywhere close to that. >> i don't either, but i'm just saying would the market know so we'll buput that on hold the market recovered yesterday do you have a question about yellen >> i'm just with listening to the dialogue and do you really believe these fiscal policy initiatives that we were also excited about in november and december they have been priced out of the market the asymmetric risk is to the up side that something actually gets done. would you agree, mark? >> no, i appreciate that opinion, but what i honestly think is what everybody has realized is that what mr. trump and company want to do is going to be extended in other words, the time line will go out a lot further. you still have the major central

banks of the world monetizing debt which flows into america. people have been totally wrong as you know about interest rates. i frankly think that we will probably head back to the line in the sand 232 and maybe go back under it. there is just increasing demand for anything with yield that i think it will continue >> but 6% lower dollar year to date, i heard you briefly mention earnings before which we'll get the four banks on friday they have been strong. we're looking at probably 7% eps growth does that not give you confidence to remain committed to the market that is rallying >> yes, i think so the market is doing okay i have another strategy to making money which is cash flow investing yielding about 7.5%. but i did not expect any crack in the market and i don't expect any great crack now. but i think most of the rally

has taken place and now we're just running along al little ahead of idle. >> there is talk gary cohn might run the federal reserve. and i'm wondering what you think of somebody who actually involved with an investment bank v versus an economist. would somebody be involved in a bank pay more attention to whether or not fed policy has inflated assets too much whereas we know that this federal reserve has not worried about it until very versely whereas a lot of people like you have highlighted this quite extensively. >> i think cargary cohn would ba terrific thing i think we need a more pragmatic fed. i think the fed under miss yellen has been starting to raise interest rates, why are we doing that when all the other

central banks of the world are still involved, all we're doing is hurting our own economy raising borrowing costs. and every time i hear the fed talk about normalcy, i wince because we're not in a normal world. we have the central banks in all over the world, japan, ecb even our own fed with the $4.5 trillion balance sheet, there is no normalcy. there is not normal and i don't know why the fed is talking about it so yeah, i think gary cohn would be a great idea. >> because he wouldn't raise rates or he would? >> no on, i don't think he would raise interest rates i think he would look at the economy and look at the desires of the government and expansion. >> traders like grant and taranova more did you evovish. they know who butters their bread. you guys are shameless >> thank you, joe. love you, too. coming up, the gold trade,

precious you metal outperforming silver some analysis next and washington was named cnbc's top state for business in 2017 we have a full rundown of the best states on the list straight ahead.

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good morning u.s. equity futures are up

50 points now on the dow i knew that before i hit the board. i added up the fair value which was -- >> live math excellent. and positive and negative by the way. >> exactly sometimes you have to add two negatives. i'm glad i made it through at least the fourth grade s&p up six and nasdaq which was the strongest index yesterday by a long shot up almost 30 let's get to gold. joining us now, head of gold strategy at state street global advisors good to have you here. >> thank you >> first of all, a couple weird flash crashes. what do you think the problem is, is that a technical signal of something >> i think technical levels were triggered in the futures markets and that means since all the computers are set to trade at exactly the same moment, it

looks like somebody did a really big deal in fact a lot of different people doing the same kind of deal i don't believe in the various different interpretations of, being oh, i meant 1800 rather than 18,000 or whatever this may be everybody has an which explanation, but it happens in all market all the time. >> so looked at a three year chart of gold and it is between 1100 and 1400 almost continuously mostly around 1200 second half of the year. any breakout from that in either direction? >> i think there is a good possibility we'll go up and test that overhead resist thanks that has been between 1350 and 1400 since the spring of 2013 i think that it's more likely that we'll do that rather than test the down side again we seem to test the down side every time we get a rate hike. nobody is expecting a rate hike until december and that may change by the time december comes around so i don't think we'll get the interest rate pressure that we've had previously >> so rate hikes are the short

end of the curve the long end of the curve where mario draghi moved everything around with his statements and the fed undoing potentially qe, people now calling it quantitative tightening, could that have more of an effect on gold to the negative the way i think about it, gold has no yield so the higher yields rise, gold has a much higher opportunity cost as interest rates go up >> that is true, but i think the fed has made it clear it will be gradual with its interest rate increases. gradual normalization will go on probably for years and it's also made it clir that it will be data driven so we won't get the rate rises unless we get the inflation coming into the numbers. and if we get higher inflation accompanied by hire interest rates, we're still in low to negative and a wise man said zero yield which is gold is always going to be negative yield. >> so what does a wise mantle the investor and client right now in terms of how much of your

portfolio should be allocated towards goldle and how do you get the exposure which is one of the more difficult things? >> i think the second part of your question is easy. the $34 billion of investor money has found gld the easy way. as far as what should investors on think about, i think these prices are relatively cheap. we're slightly below the middle of the trading range which has been in place since 2013 so this is to me an opportunity to either establish for the first time or tostrategic alloc. i like five. i think gold is a jen are wigen investment >> i might agree with that, but i want gold. etf? if the worst comes to worse,

zombie beingso apocalypse, north korea, whatever it is, you will be bribing the border guards with your statement that says i own these stupid etfs? what good is that? >> are you going to keep it in stocks, are you going to show them your stock certificate into microsoft and apple? same deal. >> no, that's the reason you own the metal itself >> if you are a believer in apocalypse, you want lead he encased in brass you can buy that with gold or currency >> or you could to have a glock and take what you need probably. >> there you go. i think if we are going to have a world where investment still makes sense, then investing in a gold etf makes sense if you have a different world that is a different ball game. >> i can see it for asset al allocation, but if you are woired -- >> there are part of the word where it's justified >> there are billionaires

building bunkers so people think that i even want coins so i have denom natured -- >> i have gold coins in the bedside drawer but only a few >> there is my u bmbs account, me out >> my asset allocation is gld, insurance policy in gold >> art cakascashin says keep en gold on hand to bribe the border guards good to have you thanks so much >> what is a could yuban sachb ? sandwich >> pork. and you have to press it >> coming up, i was joking about whether washington could be the t top-hfr didn't they do the income tax thing you have seattle with $15 an hour anyway, topping our list, 2017 top states for business, break down of the list after the break. and then janet yellen heads to

capitol hill to testify before congress jeb hensarling is here to tell us what he expects and then later former white house chief of staff bill daley weighs in about on the is that the health care bill and all the news from yesterday and donald trump jr. can we at least analyze customer traffic? can we push the offer online? legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday? yeah. with help from hpe, we can finally work the way we want to.

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. time for the executive edge. more than one fifth of young adults whostreaming services borrow passwords from people who don't live with them. survey respond depends say they borrow passwords to save money on video subscriptions which can be cheap on their own, but add up with multiple services. netflix and other streaming networks have accepted some password sharing, but may face pressure from investors. one estimate says streaming services will lose more than half a billion dollars in revenue from password sharing in 2019 >> that is like slippage or whatever it's called

>> doesn't it remind you when you were younger and you had somebody make a tape of the record and the record companies hated that and they said that was wrong? >> until what was that then finally it became the file sharing became common and the guy made trillions and was in the movie. remember that guy? >> yeah. >> first file sharing. mp3, right >> yes >> what was his name he was played by somebody that i -- played by justin timberlake who i liked more than the real guy. i think he's a much better mark zuckerberg >> speaking of facebook, cnbc's 2017 list of the top states for businesses is out and washington state took the top owners. scott has the breakdown. of course seattle is home to microsoft, not to facebook hey scott

>> reporter: yeah, we had a lot of fun yesterday going through the overall top states for business number five was north carolina, number four texas, number three minute, number two georgia and number one state where i am turns out to be washington but we also do this through ten categories that is how we get to the top state overall. and there are some interesting movement, interesting winners in those areas as well. our most important category is workforce. and the top state for business there is texas which has a great supply of skilled high tech workers. and when the economy starts to suffer and people are out of work, there is more workers available and those are high quality workers. infrastructure is also texas texas dropped to fourth place overall this year because of its economy, but still is very strong in a number of areas. the lowest cost of doing business is mississippi, but mississippi has a lot of other things that are not going for it in economy, the number two state overall was the number one

economy and that is georgia. top state for business washington had the number three economy as we look at the all-around economy of the state including things like state finances and the like. quality of life is hawaii. not a great business climate, but great everything else there. technology and innovation is almost always either massachusetts or california. and that is hugh this how they n this year. education, massachusetts, be minnesota which is always outstanding. and as you can see, connecticut, new jersey, nebraska and new york business friendliness which is the regulatory climate, new hampshire is top there both the today company that is there. and access to capital, it's all california and norkd cost of living again low cost, but sometimes you get what you pay for. it's mississippi i do want to make a point yesterday in our story around this time about north carolina being number five state for business, we quoted in the story the corporate tax rate of being 5% which is what it still says

in the north carolina department of revenue website we do know that the state tax rate went down to 3% those are the numbers that were used in our study, 3%, not 5%. so it didn't affect the outcome, but i did want to make that clear. >> i didn't understand the quality of life criticism of north carolina what does that have to do with because i've been there. quality of life is pretty high, i can tell you >> quality of life is high in a lot of areas >> golf courses. mountains. >> right, if that's what you want but if you want inclusiveness, if you are somebody who is lgbt and wants to be treated equally, there are issues there because there is no protections for you there. so there are other issues with north carolina but yeah, it's a great place in very many ways but in quality of life in terms of health care >> i'll change the subject

no cred for me sgled who gueyes? who guessed the top state. >> first person who guessed the top state for business i'm sorry to say was mike santoli who got it really early on >> $15 minimum wage and their income tax this would have been like -- i thought this was number 50 honestly >> there is no income tax in washington state >> i thought seattle was putting out -- >> seattle is and that is being be challenged. and we actually talked with the governor about that yesterday. they had an issue where are their9th ranked for education, they were under a supreme court order to fix their schools. >> did they get points for the rain >> we don't do weather >> all right, scott. >> that is too subjective.

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this saturday, formula-e will electrify the wig apple in the first-ever race to take place in one of the five boroughs joining us now is alex tai, ceo of dj virgin racing and competitor in this week's race electric cars. >> we're in our third season now. >> you're in your third season this is 2017-18. >> right >> how many races per year >> twelve races this year. and nine locations around the world. starting in hong kong, finishing in toronto at the penultimate series two races this weekend >> and is it different than regular formula 1 in that you all race the same cars does it matter if you have a great pit team and a great mechanics and great cars or is everyone sort of stuck in a single seater electric car that's the same and it's all about the driver >> it all matters, joe

they're not all the same >> who makes the cars, do we know >> they're all made by stock but they've been contributed by renault in the first season, williams, formula 1 team, these days all of the drive trains, that's all the power units supplied by different oems, that original equipment manufacturers. different car manufacturers are coming in to display their talent with what we believe is the future of automobiles which is electric power. >> and so it sounds like formula 1. you're in cities like a long beach or monte carlo to the tight turns. what's the max that you get going? >> the cars go up to 140 miles an hour. but, on a case we'd be going much faster. but similar to formula 1 and indy you change the gearing to optimize the backdrop of where you're racing. so in city centers you'll tend to have lower top speed but 140 miles an hour. >> this sounds like a silly

question but just thinking about it, is it loud? >> it actually is quite loud >> it is what does it sound like? >> you've got between 19, and 100 disibles formula 1 -- >> they make noise >> of course they make noise >> why is that important >> you'll have noise from the tires, you'll have neers from gear boxes you'll have noise from other elements of the car. and the motors themselves still make noise >> but it sounds different, obviously -- >> what you're not doing is you're not burning actual diesel and having small explosions which make the noise that you normally get -- >> i was thinking it sounds like when i used to race my flat cars that would be amazing if that's what it sounds like pip >> it doesn't. it's kind of like the future >> did i read you're going to go into space or you've been in space? >> that's right. i was part of the original team, cheap operating officer for virgin galactic. yes, i'm planning on going into space. it will be fun >> when is that. are you excited? >> we'll go when it's safe

>> are you going -- ride around up there is there a mission are you just trying to break -- >> we're doing galactic, we've got a really exciting test and development program now, which is going to ensure that we have the first safe space flights, and we're aiming for sometime next year. >> and you just go around there and get, you know, float around, or -- >> so it's a three-day training course leading up to probably the most incredible three or four hours that you'll ever have, when you're one of the first 1,000 people to leave the planet >> when is the brooklyn race >> brooklyn race is this weekend. the first race is at 4:00 on saturday and the second race is on sunday at 1:00. you can watch it live -- >> live on fox >> oh. >> sorry >> another tv station. >> still -- >> they're still around. you know >> whatever. >> they've got a -- >> -- trying to find where -- i do watch a little fox news

believe it or not. anyway, alex, thank you. appreciate it. >> pleasure. >> good luck >> and joe, thanks so much for joining us this first hour >> i got to go watch yellen's testimony and get ready. >> all right we'll be back. >> all right >> coming up, fed chair janet yellen will speak to congress today. congressman jeb hensarling will tell us what to expect sips he's the financial services committee chair. and bail daley weighs in on the gop agenda and t tmpheru campaign connections to russia don't move the new guy? what new guy? i hired some help. he really knows his wine. this is the new guy? hello, my name is watson. you know wine, huh? i know that you should check vineyard block 12. block 12? my analysis of satellite imagery shows it would benefit from decreased irrigation. i was wondering about that. easy boy. nice doggy. what do you think? not bad.

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yellen on the hill the fed chair set to address congress with her monetary

policy report. jeb hensarling joins us ahead of the hearing to talk politician and the economy. plus stocks are higher this morning after a wild ride yesterday. when donald trump jr. released an e-mail chain on his meeting with a russian attorney. a russian government attorney. i don't think we know that anyway, more on this story and market reaction with guest host jim paulsen is straight ahead. and water.org partnering with corporations to help bring clean weather to underdeveloped areas of the world the organization's co-founder gary white is joined by bank of america vice chair to discuss this important issue as the second hour of "squawk box" begins right now live from the beating heart of business, new york city, this is "squawk box." good morning welcome to "squawk box" here on cnbc live from the nasdaq marketsite in times square i'm michelle caruso-cabrera along with joe kernen, and

wilfred frost has just joined us in studio sharing his thoughts, jim paulsen, chief investment strategist futures at this hour are suggesting a positive open let's show you what going on there. dow would open up 48 points, the s&p 500 by 6 and the nasdaq by roughly 27 headlines, janet yellen heading for the hill today the fed chair will testify before the house financial services committee this morning with another appearance tomorrow before the senate. we'll have more on this, and the potential impact on the markets in just a few minutes. we're going to be interview be jeb hensarling, chair of that committee. another fed related event will occur shortly after yellen concludes her testimony. central bank releases its so-called beige book not very exciting but sometimes the market reaction is that is the region by region assessment of the u.s. economy that's at 2:00 p.m. eastern time smack dab in the middle of power lunch so make sure you watch and we may have another stock sector to follow index providers, s&p, dow jones,

and nsci are considering the creation of a communications services sector. so splitting out companies currently contenned in the telecom and other groups just last year the real estate sector was added as the 11th s&p industry -- >> i liked it when it was ten. >> so twelve might be better now, since six and six you like even numbers? >> i'd like to go back to ten. >> maybe our economy's bigger than ten >> financials did make sense but you know, ten was enough i thought. >> joe >> yes >> what's the matter >> nothing >> you don't like eleven sectors either >> no, no. in politics donald trump jr. said looking back at his meeting with what was presented to be by publicist as a russian lawyer but has been denied by both the lawyer herself, and russian

authorities, last year he probably would have done things differently. the president's son made those comments in an interview on fox news last night. donald trump jr. tweeted e-mails yesterday showing he welcomed an offer to meet the lawyer, who was allegedly linked to the kremlin. and had damaging information on hillary clinton. in the interview he also said he didn't tell his father about the meeting. >> it was such a nothing, there was nothing to tell. i mean i wouldn't have even remembered it until we start scouring through this stuff. it was literally just a wasted 20 minutes, which was a shame. >> donald trump jr. also says he's willing to testify under oath about the meeting the president tweeting this morning, my son donald did a good job last night. he was open, transparent, and innocent this is the greatest witch-hunt in political history sad. wilf >> but the one big thing it does call into question though is his intention. i completely get that it doesn't call into question the outright actions that followed the

meeting, which he's saying there were none and we have no evidence to say otherwise. but it definitely questions his intention. >> we already said that. we said it looks like an intent to collude >> right >> but nothing came from it. looked like there was a willingness. >> right >> to collude. we talked about this for ten minutes, and opposition research has gotten very, very popular. and everybody wants it and if you were -- in a perfect world you would have turned it over meadely to the fbi. you would have said look this is from a not just a foreign entity but an adversarial entity and i want nothing to do with it then again, this was in june i think of last year, before the whole -- before anyone even knew -- >> and -- >> they're both looking -- donald trump jr. thought maybe the russians were helping hillary. so we didn't even know who -- >> -- that was supposedly out there. also, i mean, it shows what a bunch of political neophytes they are compared to, i mean,

somebody who's been long involved in politics would know big red flag, potential violation of federal election law, send this off tothe lawyers, don't respond >> yeah, and i think the other thing which i'm sure you guys also probably mentioned there was a bit step further than we've seen before from some of the other perhaps overexaggerated stories is this wasn't just simply according to sources or someone may have seen a memo this was actually from the source himself and i think that is a much bigger step, and you'd have to say adds more fuel to what might be an already overexaggerated fire, but does provide more fuel in a way that in the past we have had to rely on, according to a source type stories this is from the source himself and it is very damning as we said, just to his intentions no further proof yet >> as i said, there's no fake news here. there's no you can't blame "the new york times" for this >> no. >> obviously and, we already said a lot of that stuff you were probably in the car >> i was >> don't you get sirius xm that you can put it on -- >> the driver put it on? >> -- on the conference board --

but anyway there we go. >> all right >> stocks to watch today, dow chemical agreeing to sell a portion of its business in brazil for $1.1 billion. the news comes as the company seeks regulatory approval for its merger with dupont apple is reportedly putting in overtime time for the next generation iphone glitches include problems with wireless charging and 3-d sensor for facial recognition all right let's talk about the markets. our guest host for the morning is jim paulsen, paul hickey, investment group founder guys, good to have you here. what do you think of markets right here, mr. paulson? >> well, i think we're doing pretty well, and not only just the markets, but i think the underlying economy has continued to do fairly well. and i think most what's impressive this year is not just about the united states economy anymore. i think globally there's more economies, broader recovery. we've got more than two-thirds

of the oecd economies now growing faster than the united states and we've had less than 50%. so i think this story has broadened out to main street america with middle class median income s rising and to the glob which makes this look more stable >> to the degree people are worried you talk about improving global economy now we see global central banks moving away from being very accommodative, and now talking about tightening or being less accommodative. >> right >> you saw interest rates, the long end of the curve rise pretty sharply >> right >> they've calmed down since then how much does that worry you should you fear the fed in this market >> well, i think that the fed's just gone through this massive unprecedented easing we've now raised the funds rate four times and the real funds rate is still negative 60 basis points, negative 65 basis points hardly anything close to anything that's shut down a recovery in the past we're going to restrict or contract their balance sheet

michelle but right now the m-2 money supply in this country is 71% of nominal gdp that's 10 percentage points higher than its ever been in the last 50, 60 years. >> so stick with -- >> i think so. don't let the fed scare you away because i think they're going to have to tighten for some time before they -- >> and don't worry about the ecb? don't worry about any of that? >> well, i think they're even going to trail behind the fed in terms of their tightening. >> what are you doing here who are you? why are you -- didn't you retire from wells fargo >> well, you know, i got a little tired of that retirement. >> is this like g-3 they pulled you back in. who are you with now >> the loophole group. >> how long were you -- you said -- did you really retire? does it rhyme with retire? what helped to wells fargo why did you leave wells fargo? >> i tlfs 20 years >> no,ry know. you didn't want to stay there anymore? >> well, i think i've known leuthold group for years the office across the street

from me -- >> did you get some serious scratch -- >> we can't tell all -- >> because i wondered why you retired. you don't look a day over 70 and i don't know why -- why were you -- why were you retiring >> well, i was out for two months, and you know, once you play golf -- >> you lose your identity. i know and plus you're in minnesota, right? so you're surrounded by al franken -- >> i had to get replied before winter >> okay. sorry. but you seen him lately? he retired -- >> when i saw that leuthold i thought -- >> that's what i mean. >> so you're back for good you're going to be on guest hosting? jim paulsen is back? >> i'll outlast you, joe >> and welcome back to jim >> what did you think of what he said >> i think, you know, unfortunately you want to create some conflict but we agree with a lot of what he said. >> i don't want to create conflict >> but the big knock in the market this year has been that it was this four, five tech stocks driving things and then,

whereas the rally was confirmed the entire time. now that the big large cap tech stocks are fallen under pressure, we've seen the slack pick up from other sectors, financial sector, every stock in the sector closed above the 50-day moving average yesterday and that's only happened a handful of times in the last 15 years. so we're seeing the slack pick up now people are saying this weakness in the tech is a sign of underlying weakness in the market i mean we can sit all day reasons why stocks should be going down, but they're not and i think that's the most important thing you have to take into account here. because the market rally yesterday we saw a sell-off on the news about the e-mails but, things came right back. we've seen every stage in the last 18 months the secondary indicators aren't showing any major divergences -- >> valuations don't bother you >> valuations are certainly expensive. you look back at any bull market bull markets, first of all, they don't end because of valuations alone. something has to drive them there. and valuations always get above average during the late stages of a bull market

>> what about the location that we have seen into financials, out of tech that you referred to do you follow that or stick with the broader market >> i think you're looking into a more cyclical retags here because economic data despite concerns that the economy is slowing, economic data has been coming in relatively good. the iss last week were very good. employment report was positive the jolts private quit rate yesterday has only been exceeded one time in the prior like 15 years. so, there's underlying strength there, and i think that's going to benefit more cyclical assets. but again also, the tech weakness toward the end of june, july is a rotation you saw some -- >> but what do i do? do i follow it or do i -- >> i think you want to stick with the market overall sectors you want to focus on you want to focus on the financials you want to focus on technology to a degree. >> okay. >> and you want to focus on the energy short-term because the earnings season has become so low towards the energy sector that when you look back at prior earnings seasons we've seen

sentiment this week -- >> would you say that about retail >> retail i would -- retail, i would compare to -- >> no, you wouldn't. >> there's so much in the retail sector, and now the headwind of death by amazon, it's just, you know, it's not a good place to be >> i just want to point out i think the biggest decision faced by portfolio managers today is what level of the 10-year yield is going to shut down the momentum in the global economy >> yeah, i agree >> and the stock market. to me you've got to focus on that level obviously not where we're at today. >> in this bull market -- >> i just think there's two things to look at there. one of them is just the correlation between stock markets and yield changes. that's still positive. when that's positive, it says that the market looks with good news is good news. that when economy comes out with good news, yield goes up and stocks do, too if that term is negative that says the market's perception of good news in the economy's turning towards concern about inflation and the fed behind the curve. and that would be bad for stocks but we're not there yet.

>> you said the 10-year specifically the shape therefore also influence things or you just focus on one particular point in the yield curve. >> well i think you could look at different parts of the yield curve and have the same analysis done if you wanted to look at the 5-year, and the curve would matter but as long as that curve is positive i don't think it's going to be that significant i'm just seeing there's a number of things including the spread between earnings yield and the bond yield that tell me that we have a ways to go, maybe yields more like 3.75, 3.5 before we really bring in to question shutting down the momentum of the global economy and the stock market >> thanks, guys. >> thanks. >> good to see you good luck in the new venture >> thanks. >> unbelievable. >> oh, he's sticking around for the rest of the show >> he's here for two hours --s >> go back >> we're going back. >> so, did they -- i mean, any kind of dress code they let you have this -- >> well, i'll tell you -- >> actually leuthold, had that

crazy looking beard. you fit right in but come home did >> i fit right home. >> come home, paulsen. >> sure, yeah. >> good guy. yeah >> why don't we just have him on leuthold himself on. >> maybe he wasn't available >> okay. >> meantime the latest mortgage application data just out in the last couple of minutes diana olick joins us with nor on those numbers. diana? >> wilf, a big drop in mortgage applications -- mortgage demand last week due to a big jump in interest rates for the past two weeks. take a look, total mortgage application volume fell 7.4% seasonally adjusted compared to the previous week. the mortgage bankers association did include an adjustment for the july 4th holiday volume is now 36% lower than the same week one year ago now, why rates. the ten year treasury yield, which mortgages loosely follow has increased 18 basis points over the past month so mortgage rates are back to their highest level since may.

last week the average contract interest rate for 30-year fixed mortgages with conforming loan balances went to 4.22% from 4.20%, and that's for 80% ltd loans. higher rates have the biggest effect on refinance applications they fell 13% for the week to the lowest level since january of this year now refis have fallen off 58%. 58 compared to a year ago. mortgage applications to buy a home also fell down 3% for the week but they are still 3% higher than the same week one year ago purchase volume is being hit harder by high home prices, and meager supply of homes for sale. much more than higher interest rates. back to you guys >> diana, thank you very much for that >> say that again? diana -- >> thank you very much for that. >> i want to hear how you entered -- you said diana -- >> diana olick >> olick i love that. >> how is it -- >> diana olick >> i think i said the same thing.

>> and you know what i know about you? you could if you wanted. >> you know i can. >> say what i watch -- >> from i've changed, i came back from europe the last ten days, i said i need to go to the rest room, my brother and my friend are like, the what? i get grief in public now. >> the loo >> the loo, yeah >> come on skip to my loo >> i can't win on either side now. >> that social media type, say it like i say it >> i've got another one. >> i will if you follow twitter. >> twitter i mean, it's painful when you do that >> i have to really think about it >> you tear the lining of your stomach, it's like a hernia. coming up, janet yellen heading to the hill to testify before the house financial services committee. we're going to speak with the chairman of the committee jeb hensarling, also known as jim

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xfinity mobile. white house adviser gary cohn reportedly the leading candidate to replace janet yellen as fed chair. politico says president trump is unlikely to nominate yellen for a second term next year. sources say the job is cohn's if he decides he wants it former goldman sachs executive would be the first fed chair in four decades who isn't an economist. a lot of people think that's a good idea. cohn has also been mentioned as a potential future white house chief of staff janet yellen heads to the hill this morning. the fed chair will testify before the house financial services committee our next guest leads that hearing, jeb hensarling of texas is chairman of the committee, and welcome, chairman. let's -- maybe we'll get to the news from yesterday at the end but, i mean, this is, you know,

we just had some market watchers say this is really what the market cares about at this point, even though there was some volatility yesterday on the e-mail stuff but let's talk about yellen. what do you -- what's your first -- what do you think is most important to hear from her? >> well, i'd like to know exactly what type of policy normalization path are we actually on. so i'm encouraged at what i see the fomc doing i think that one of the great but for causes of the last financial crisis was keeping rates too low too long let's hope it's not a contributing factor to the next. also want to understand what's going to happen to the siz it's not my call and again i think there's a number of candidates who could serve our