visa is a dow component and "squawk" begins now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew is off today. our guest host is jason trener, chief investment strategist from strageis you slipped right in here. we like to keep people holding on until the end how are you doing? >> doing great how is the summer? >> pretty good friday in the sum e ready to go again. >> international paper no general foods? >> campbells soup. >> none of the -- alcoa?

>> nike. >> no! >> yeah. >> nike! >> nike. >> nike is a dow component >> yeah. >> united health >> not goldman sachs >> not yet >> no. >> you tricked me. >> oh. i'm sorry. >> nike. >> nike, i can't believe visa i forgot. i don't like change. that's the problem this crespo guy, is he in charge no, the guy with the little bowtie >> blitzer >> glasses >> yeah. yeah we know him. >> we're getting old a look at the u.s. equity futures. u.s. equity futures at this point are indicated higher this comes after the s&p 500, nasdaq, the russell 2000 all hit record intraday highs only the nasdaq and russell 2000 were able to hold on to them at the close. positive gains again today we will talk about visa and

microsoft after their earnings yesterday. dow indicated up by 12 points. s&p futures indicated up by 2.5. the nasdaq up by 3 overnight in asia, look and you'll see the nikkei was down 0.2% hang seng down by just over 0.1% shanghai was down by 0.2%. in europe, early trading today, it looks like the dax is down by a quarter percentage the cac is off by 0.3% the ftse still hanging in, up by 0.1% the dollar continues to slide. trading at a two-year low against the euro the dollar index hitting an 11-month low against a basket of currencies the euro was the big story it was so strong yesterday even after mario draghi came out with dovish looking comments. expectation in the markets is they'll start pulling back some of this qe they've been putting out there. the euro is trading at 1.1641. the yen is at 111.57

looking at crude oil prices, right now it looks like wti is up 21 cents to 47.13 >> like three steps forward two steps back we're not quite as tight as we thought. they're not quite as loose did you forget goldman sachs was a dow component? >> i did >> i'm looking up the dow components now >> are you surprised >> no, but i'm surprised -- i'm surprised how easily it is to forget that's just -- >> they change them much more frequently than they used to they used to do it so infrequently i used to know every dow component. >> i do if reminded, but i forgot krevisa doesn't matter it's an index. >> it's cool if you're a dow component. >> you know as a famous cnbc anchor, former anchor once said, there are literally thousands of stocks in the s&p 500.

she is still broadcasting, just not with us. among the top corporate stories, amazon trying to boost global inventory by buying products from u.s. retailers at full price. typically third party merchants pay a fee to have inventory stored in fulfillment centers. under the new offer to merchants, amazon would buy products at retail price with no additional fees. that's according to abn e-mailec home improvement stocks got hit yesterday after amazon announced it's partnering with sears to sell its line of kenmore branded appliances sears still has certain things that you think of that are still iconic >> not as many craftsman. >> yeah. >> they got rid of that. >> die hard, kenmore, dean

witter >> got rid of the tires. >> yeah. >> the market cap loss in home depot, lowe's and whirlpool, if you add in best buy, it was 1 5 $12.5 billion. >> saw some notes saying it was overdone but any category that amazon gets into sends people fleeing look at blue apron, what happened to that >> they kneecaped them on that one. >> mm-hmm. meanwhile putting together a story right now on dotcom. there's 30 stocks in the dow you won't believe which ones they are everybody is going to -- right >> click bait. >> it's being put together right now. it's being -- i broke that story today about goldman sachs and visa the ftc is probing allegations of deceptive discounting at amazon advocacy group, consumer

watchdog, says an analysis found that 61% of amazon's list prices were higher than the prices for the same item in the previous 90 days that would make the discounted prices seem like a better bargain. the probe is part of the ftc's review of amazon's agreement to buy whole foods. blackstone and cbc capital partners teaming up to make a bid for pay safe group a payments processing company. the offer represents a premium of 9% to thursday's closing price. payments companies have become attractive targets because consumers have been switching from cash to paying by mobile devices, now everybody wants a piece of the action. that stock up 7.3% >> i have to give credit to that headline to dave evans >> i knew that came from dave evans. >> how did you know? >> that sounds like something dave would say you looked at the top line and were snicker being it. >> what's the difference between

snickering and sneering. >> snickering sounds nice. >> one is the chocolate bar, the snickering the sneering -- >> they are similar. they sound so close. >> i would rather be snickering. >> it is a half-suppressed laugh. i think snicker has a negative connotation. >> laughing at him behind his bad. >> that's bad. >> chortling >> must be similar on the earnings agenda results from colgate, general electric, kind of still is a dow component, honeywell which is not, but used to be. and sun trust. we'll bring you those ge numbers an instant analysis at 6:30 a.m eastern. i'm interested in the ge numbers because the stock has not acted that well. there's been whispers about whether it's going to be even worse that immelt is leaving

>> the first report since immelt announced he's leaving >> stock at 26 now 26 and change. poor jack degan, like a long suffering -- poor guy. we'll see what he says >> shareholder >> yeah. yeah he's held it for like -- we always have him on he's like, i think things are fine >> in political news, the trump administration is expected to name a new white house communications director today. eamon javers joins us now with more on this story it is a name we know >> that's right. anthony scaramucciy as midmorning the expectation is that scaramucci, well known figure on wall street, will now be going into the administration as the white house communications director

anthony scaramucci not a political veteran or communications veteran but has a lot of qualities that the president would like, including a track record of business success, he's smart, aggressive. all of those things appealing to donald trump unclear what that means for sean spicer, the current white house press secretary, whether scaramucci would want to bring in his own staff of political experts and push out some existing staff my sense is we could know that by midmorning this morning another group of turnovers to tell you about on the president's legal time there are reports that the president's attorney has been pushed out of his political -- his personal he'll realm also the spokesperson for the president's legal team announcing his resignation early this morning not clear what that is about we'll find out why he resigned

the "washington post" reporting last night and in this morning's editions that the president is considering some pardons here's what the "washington post" is reporting this morning. they're saying trump has asked advisers about his power to pardon aides, family members and even himself in connection with the russia probe the post reporting that trump's lawyers are working to corral the probe and question the propriety of the special council's work there were concerns reflecteded in the president's interview with the "new york times" earlier this week that the special council could be going too far afield into trump family finances, which the president at least doesn't see as legitimate for this special council he thinks this investigation should focus strictly on russia itself the special council maybe wanting to unravel some of the president's financial dealings going back years that provoking discomfort in the oval office. we are also seeing this tumult in the president's legal time. a lot of moving parts here on

team trump to talk about this morning. >> okay. eamon, thank you more of the continuing circus that we've been following. we'll see what happens later throughout the day thank you very much. >> in earnings news a big beat for microsoft. results helped by strong growth in the tech giant's cloud business revenue from azure jumped more than 90% year over year. the stock hit an all-time high, up about 4% in after-hours trading. joining us now is the managing director at software research at griffin securities you were out when basteve balmer was here i needled him a little, i said, wow, you set that company up for great success, you never grot kr got credit for it.

it was set up for satya to have this great rise. or did it rise after you left? >> the last time he was on he talked about that, the idea that a lot of things that are doing well are things that started under his watch. he is -- he likes to see the company doing well he's the biggest shareholder >> exactly he has some little number like 2% of the stock that he thinks -- he thinks he's a big deal because of that how much is that -- do you know how much he has? it's like $40 billion worth. isn't it >> in that neighborhood. >> nice neighborhood >> we say that number like we understand what it means we have no idea, except trenner. >> no. >> not even you. people still everyone quarter need windows how did they do it >> let's start with windows. you asked me about that last time you were surprised at the size of that business, that it was only a tenth of their revenues

it grew in the most recent quarter. this roughly $11 billion business tied to the pc market actually had a bit of growth in the quarter. that's not really the story. it's nice, though. the real story is the continued growth of cloud. azure doubled, which we had anticipated in the model office 365 business which is even bigger than azure, that grew at 43%, slightly better than we anticipated. over the course of the last fiscal year, they added over $5 billion of cloud revenues, finished last year 9.5 billion, now 14.7 grew gross margin by 500 basis points that's the story so the cloud business is billions of dollars larger than the windows business that will continue profitability of that business will continue. one other point iwould highlight here in terms of valuation is in the most recent fiscal year they grew the free

cash flow by 25% to over $30 billion. >> would you say it's becoming -- not that it wasn't, is it becoming more of a growth stock again given the numbers you're pointing out? >> we started with our recommendation five years ago. and at that time it was largely out of favor, little expectation for the kind of even stability they had seen in the core businesses plus a bit of growth now in the core legacy businesses then on top of that is the cloud business which is approaching 15 billion in actual revenues, over 18 in annualized revenue with scaling up of the margin that's a powerful story. the growth quarter to quarter is actually increasing in absolute dollars. >> still people pick microsoft to hit a trillion first or google or somebody besides apple. microsoft's market cap is almost

600 billion now. >> it's possible think about it let's say they hit 40 billion plus in free cash flow within a couple years, 25% growth over the next couple of years in cash flow, you discount that back even just put a mid single digit free cash flow yield on that number, you get to high hundreds of billions. that's still some upside from where we are so the criticism they missed social media or whatever, and they were late -- were they late to the cloud games, they tried that for a while. but they hit something >> all these -- all these allegations of lateness are not particularly relevant. one thing you can criticize them for is the phone acquisition, the nokia business but the misery of that business is over. >> didn't they buy a consulting business >> no, no but the point about lateness, it doesn't matter.

they continue to -- in hindsight it doesn't >> they continue to do nate whe dominate. >> you sound like you think we should buy it at the all-time high >> yes same answer. >> so balmer might own the nba or something he could win every year. he loves winning buy everyone he could do it at this point jay, thank you >> thank you the dow component, i think >> i heard that. >> should be cnbc.com if you're listening other big earnings movers to watch. ebay's second quarter profit was in line with forecasts revenue beat expectations but the third quarter outlook is below consensus as it is looking to continue to invest in marketing and revamping its platform that stock is off by 3.8%. visa's third quarter profit and revenue beat forecasts as the company processed more credit and debit card transactions

visa is raising its earnings guidance for the year. that stock is up by 1.8% capital one's second quarter profit rose 10% beating analyst expectations the company pointing to a run up in credit card balances and rising interest rates for the earnings beat. that stock is up by almost 4.4%. we have a health update from one of our "squawk box" regulars t. boons pickens said he had a texas sized fall last week that required hospitalization he says he is still mentally strong but that it's hard to find the words he's looking for to speak clearly he says he is confident speech therapy will fix the problem at the end of last year, he had a series of mini strokes that impacted his speech at that point. he was working hard with speech therapists he got back about 90% of his speech he says he will make a comeback again and he will be working on this like he exercises his body daily, he will be exercising his brain and continuing with rigorous speech therapy to regain what he can

he's 89 now. he made some comments about this he said many of those who face adversity like this at 89 choose to hide it he says my life has always been an open book some chapters have been great, others not so much regardless i've appreciated the resulting accolades and criticism as i face different personal and professional challenges he also says he thinks he's in the fourth quarter of life he says he wouldn't have thought that a year ago. but that it does feel like the clock is ticking he says my health is in decline. much as it is with others in my stage of life, but don't think he's being morbid, he's still optimistic about life. >> mortality is something that -- you do eventually face it's funfulny that previous pla where you would think that's old -- i think mccain, that's said 80 is not old anymore. >> not these days. >> 90, jimmy carter was building a house. it was like 110 degrees.

he wasn't, like, passing out because he was 93 or whatever. >> after beating brain cancer. >> right >> the other thing i think of, this always gets me, i get these cards. i went to a jesuit high school i get these obit cards from guys in my class. i got another one yesterday. it's like -- so, it's one -- you live -- boone pickens lives today. we live today. we all live one day, then tomorrow we hope we got another one. >> as it says in the good book, you don't know the time or the hour we don't know. >> you can keel over at 45 years old, or be building houses at 95 >> boone is not planning on winding down he says the fourth quarter, but he says that's the way to approach life, be the eternal optimist excited to see what the next decade will bring >> i wish -- how quickly time

starts going i wish that would slow down. when you get older, i wish it would get slower instead of having breakfast every hour >> i talked to some folks in boone's office yesterday and want to send our well wishes to him. a speedy recovery. they say they're looking forward to getting him back on "squawk box. >> seinfeld, it was politically incorrect, but he was talking about how as you get older you seem to drive slow you should be driving faster you know what i mean this is when you should be driving fast you have to get where you're going. i still do >> yeah. when we come back, tech stocks are on a tear the nasdaq posting its tenth positive session in a row closing at a new high. if it does that again today, this is the longest streak in -- since 2009, i think in terms of a winning streak we have a full market rundown

straight ahead. coming up at 8:00 a.m. eastern time, fda commissioner dr. scott got letlieb will be he on the "squawk" set. this is a story about mail and packages. and it's also a story about people and while we make more e-commerce deliveries to homes than anyone else in the country,

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box. the u.s. equity futures are just a bit higher right now for more on the markets, joining us is kathy jones, chief fixed income strategist at schwab center for financial research and our guest host is jason trennert kathy, thanks for joining us this morning >> thanks for having me. we were talking about how the euro keeps hitting new highs, especially after what mario draghi said yesterday. even though he was dovish, the market thinks they will be withdrawing some support they have had in the market do you think that's the case >> i think they're running out of assets to easily buy. at some point they have to taper that the european economy is looking better also part of it is the decline in the dollar. we had a lot of disappointing economic news. not terrible but some what

disappointing relative to where europe has been a bit on the better side. and our political issues are weighing on the dollar as well >> having said that, you think the market is underestimating what the fed is going to do in terms of raising rates >> i do the market is not pricing in a lot of rate hikes over the next couple of years. if you look at what they're talking about, the economy is running hotter than our potential, or what the fed estimates the potential is unemployment is low. they believe in the phillips curve. i think they are determined to move ahead with rate hikes >> jason, if that happens, is the market viewing this wrong? would that change your perspective on stocks? >> it wouldn't really for my perspective on risk assets, to the extent i would say real short rates are still negative you still have a lot of room we spend a lot of time on wages. if you look at our average hourly earnings, they're in the

mid 2s you normally don't get yourself into trouble as far as earnings multiples are concerned until wages get to be up to something like 4 i would also -- i'd be interested in kathy's view about who the successor to janet yellen would be. our impression at our firm is that the most likely successor to janet is probably janet at this point that's largely because she -- i think she's interested in the level of the stock market herself. that's probably attractive to the president. i don't know what your view is >> i don't have any prediction on who the next fed chair will be it certainly sounds like the president might want to have or the administration might want to have somebody of their own choice in there. they are choosing with some names being floated people who seem to favor the tailor rules approach, less regulation from the fed. more oversight perhaps

so that might mean janet yellen is out and someone else is in. >> if they put in someone else, that someone is leakly n likelyb as dovish as yellen is the president has had mixed feelings on where he would like to see rates he told us once on the show as a real estate guy he likes low interest rates i guess it matters, because it matters how quickly the fed is going to raise >> it absolutely matters in terms of the economy there's a lot of change at the fed. not just the fed chair fisher's term is up next year. some open seats have not been filled it matters because you could get three or four new people at the board of governors in less than 12 months. >> thank you for joining us. all right. coming up, dow component general electric is set to report. we'll bring you the numbers and reaction from wall street. new numbers on the cost of raising a child all the way

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whatever you're working forward to, even if it's chasing squirrels, synchrony financial can help you get there. welcome back to "squawk box. we have dow component general electric reporting this morning. and looking at face value to be a good quarter for general electric i was looking at the stock pre-market, it looked like it was indicated to be up actually now i see it's just up a penny.

28 cents is the adjusted number. that was above expectations. >> 25 cents. >> it's kind of interesting. we look at for general electric is revenue a lot of times as they've shrunk certain parts of the business like ge capital it looks better than expected. not always the case in recent years with ge. 29.6 billion is the revenue number 29.015 is the estimate there's a lot of metrics that the company provides to give you some background. >> they're talking about 2017 operating framework of 160 to 170 in terms of operating earnings per share >> 162 is the estimate organic revenue up 2%, year to date 4%. orders up 6% with strength in

aviation and healthcare. a lot of these numbers seem to be better than expectations in the stock. for more on the report, ge report, i'll bring in jac jack degan i called you long suffering jack degan chief investment officer at harvard advisory. you have a good dividend, the most recent period 7.8 billion was returned to shareholders in the first half of the year some of that through a buyback i don't know anything between 26 and 27 is not too thrilling long-term. >> well, it hasn't been. you're right the shares we bought in the '90s we are suffering with. luckily we added shares in the spring of '09, we're suffering less with those. but the dividend is important.

our clients are mostly retirees living on portfolio income and our expectations for the next five to ten years are only that equities will provide a total return of 5% to 7% if we can get 3.5% up front with ge, we are covering 50 to 70% of our expectations out of the beginning dividend alone >> it's like the worst performing dow component of all over the last -- >> over the last 10, 15, 20 years. >> exactly i look -- you look good. but both of us have aged as we have been talking about this over the past, i don't know -- when it you first come on? 20 years 15 years we have both gotten old watching this thing trade in the mid 20s. >> i think this has contributed, joe. >> yeah. yeah you hwould have a full head of hair -- >> when we started

you didn't have any gray >> i know. i know well, you know, i take care of that now that's a joke. i do not i do not do anything immelt is leaving. i thought maybe the action in the stock indicated that this was not going to be a great quarter. that doesn't seem to be the case looks okay doesn't look worse than what people were thinking, whether it's oil or gas with oil down at 46 none of that came to bear. it seems okay. do you think there's a quarter coming after he leaves where they throw some stuff in there to get rid of it >> that would make sense usually when a new ceo comes in, especially after a long standing previous ceo, they want to lower the bar because that's where their -- that's where their starting point begins. from there they will be measured so you often have a reset of guidance analysts are starting to expect that some of them pretty bearishly

so there are analysts in the street that are thinking there will be a reset for 18 earnings down to as low as 1.50 those same analysts are concerned about the negative free cash flow in the first quarter and even commenting on the possibility of concern about the dividend level i think it's that kind of discussion that has brought the shares down. the shares spent -- we talked before, shares spent the last 18 months in a 28 to 32 range you could predictably make money buying it close to the bottom and selling close to the top and checking your 3.5% dividend. this break below is a result of that weak free cash flow quarter and some of these earnings downgrades by analysts it's interesting to see that their holding their full-year guidance i hesitate to think that starting on august 1st there's

going to be a massive reset. i would expect something of a reset. but not all the way down to 1.50 >> is it a reset of expectations or is it a reset of new businesses that could potentially provide some growth? >> i think it's a reset of expectations the portfolio review that john flannery will do in terms of what his thinking on -- is on strategy, that will take some time that will take at least three to six months i wuchbouldn't expect him to st talking about making portfolio changes in businesses until closer to the end of the year. so we'll see >> doesn't sound like for new money you would pounding the table to buy general electric right now, jack. >> not pounding the table. >> do you think it should be

bought more than sold? so you would be buying not -- >> i think so. i think we have a 12-month target we think it can get back to the 30 range in 12 months. if you collect the dividend, you go from 27 to 30, you earned 13% 14%, 15 mrs. 15%. >> we were talking about microsoft and how ball mmer lef it was set up well, immelt has changed the asset mix. some people point out it is still an asset mix where everything can be going great and one business for whatever reason it's cyclical one year oil and gas is doing well others are not doing well. the next year others are not doing well it seems like there's always -- if it's a v8, there's always five businesses doing well, three that are dragging

down the results is it still like that? or does he have it restructured where in the future it will do better for shareholders? >> will do better because it's not a big black box of a bank anymore. >> they've been saying that for a while. honeywell just reported, too it's friday, i'm in a good mood. i won't throw up a honeywell chart verses a ge chart. they were similar businesses the only different is how the business was run >> that would be humbling. >> that would be cruel >> clearly, joe, you and i have watched some wealth destruction with this company as they buy businesses high and sell them low. they were buying healthcare when it was expensive 15 years ago. they were buying oil and gas when it was expensive four and five years ago

that has destroyed shareholder wealth >> selling stuff cheap, nbc getting out of things at the bottom getting into subprime in 2000 whatever >> good thing it's friday and you're feeling good about things >> oh, no, i didn't -- i didn't order that i swear i did not. that's not even as bad as it can get. you can get a -- if you measure ge -- >> good thing you're feeling good >> if you measure ge from 60, it's one thing -- let's get out of this, jack. >> it's all about your starting point, joe >> yeah. >> for investors now, their starting point is $26.70 or something like that. >> all right that's fair. >> the important part is what happens going forward. you have a new ceo, a restructured portfolio, 3.5% dividend i think from this point forward you can earn an acceptable return with quite a bit of cash flow from a dividend

i think that's where your viewers should take a look at it >> all right, jack thanks we'll see you. >> thank you >> see you, in three months problem beably probably >> here's some free advice don't ask the ninternet to name things britain learned this after they let the internet choose a boat name, they decided to name it boaty mcboat face. and in sweden, a train was named trainy mctrainface that will be unfailed and comes this fall. when we come back, new data on raising the cost of a child through the college years. here's a hint, that price tag is well over $1 million we have the numbers for you next a live report from the front lines of the war against zika.

meg tirrell is in key west and she has the latest techniques to try to control the mosquito population. at 8:00 a.m. eastern time, fda commissioner dr. scott gottlieb will be joining us on the set. stay tdd, yupneou're watching "squawk box" on cnbc your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain

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welcome back millions of young people are headed to college next month but at what cost joining us with more on the cost of a premiere education is stelline valonda "town&country's" editor-in-chief. the price tag is 1$1.7 million >> 1.7 million the town & country argchives are a great thing in 1978, we did a story from birth to b.a., how much it cost to raise a young woman we focussed on the price tag then was $300,000. today we tallied it up it was over 1.7 million >> why is that beyond just the obvious with the rising inflation in what happened >> what happened was in 2017,

33,000 seniors applied to harvard. there's a 5% acceptance rate it was not too long ago when those numbers were 13,000 apply kegs, and almost a 10% acceptance rate. those numbers are what have created the 1$1.7 million numbe. a $12 billion college prep and coaching industry. >> so, this is stuff that the training, the preparation also has to start much earlier than before >> the most remarkable change from 1978, aside from one of the things on the 1978 list was a typewriter, is how early the anxiety over getting in begins >> which is when >> it begins about six months, when you start to hear that your baby should begin music classes, because those music classes become feeder schools for the nursery school, the nursery

school becomes a feeder for the grade school the grade school becomes a feeder for the high school the high school becomes a feeder for elite colleges >> if you have a 3-year-old you're too late? >> you better get cracking >> let's say you do everything right. 92nd street y, trinity or whatever it is then harvard then what? goldman sachs? what is the -- what is the -- so you get to work at goldman sachs? what is -- what do you supposedly get when it's all said and done? i talked to some guy who went to dartmouth, an options trader at jeffries so he made it? what do you get? what is the end result >> that's where all the anxiety comes from the thing is colleges and this industry have done such a brilliant job marketing themselves as the key to financial and social success >> where did you go, trennert?

>> georgetown. >> that's nice, jesuits. >> you didn't go to harvard, look at you. you have your own company, mr. "squawk box. >> i can tell you this whole industry, though, i would imagine this whole industry, part of it is taking advantage of the anxieties and insecurities of the parents and the children and now -- my company is not goldman sachs. so we're a little company. so -- >> you started your own company though >> i can say when we look at candidates, we pay no attention to where someone went to college. we're not -- goldman sachs is getting 200,000 resumes a year >> everything goes right you get an entry level job at procter gamble, it's up to you any way. it's bizarre >> i think every parent enters this process with that in mind and vowing they will stay same and keep their common sense. >> but then it's your kid. >> then it's your kid. then you begin hearing about

this great summer program at amhurst, and the one school that gets everyone into harvard and i think -- >> then what you keep -- you keep -- >> but that's the -- >> is happiness the end result of that? >> you die >> zuckerberg left harvard >> i think sort of that question is always the question when it's your child -- >> i have a child going through it now we asked, do you want someone to be absolutely miserable for four years, trying to compete with all these alpha types, or do you want them to have a great but solid college career where they're happy and well adjusted and everyone else? because the train doesn't necessarily leave anywhere that is worth all of the angst. >> i think that most parents know that. >> i don't know. >> but i think when they're in the system -- >> most parents know that but are starting out at 6 months >> yeah. >> i have advice for them.

>> because of the anxiety and it's a $12 billion industry tha preys on the anxiety i think you do begin to feel like is this an investment ircan make in my child's future? >> the irony it seems to me and the sadness that i have is that i think -- i don't have statistics to back this up -- but the mental health of teenagers and people of college have deteriorated. >> because there's too much pressure >> there's an enormous amount of pressure and if i don't get into this school it's over. >> and social media. >> i want to know what end result when you do everything right is you don't have an answer for me. it's not there you become a great doctor. then you make 200,000, single payer system that we're headed to >> i think the end result of a great education, i think that answer -- >> self actualization? >> there's a wonderful essay from charles isherwood about how

the decline of liberal arts -- >> because -- you have seen some of these homeless people out here they're liberal arts majors. they don't have a place to live. >> i was a liberal arts major. >> i was, i think he makes a ry strong case about how the end -- the sort of -- it's not so much -- >> you're trying to get on the air is owe sell and you finally get the ring -- >> and the answer is just find happiness and there's a lot of different ways >> enjoy the ride. >> thank you so much >> thank you it's great to see you all. >> coming up, new weapons in the fight against zika meg tirrell is op the front lines in key west. taking a closer look at some new moss koito control techniques. is she really there? >> yeah. when this bell rings...

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time for some modern medicine key west has been on the frontd lines of mosquito control efforts and it's conducting trials for a new way to fight zika and other diseases. meg tirrell joins us from the front lines. >> good morning, becky we're here in key west, florida. florida was one of the states

that had some of the locally transmitted case of zika last year they weren't here in key west. they were in the miami area. but they do have the mosquito here that transmits the zika virus as well as dengue. and even though this is one of the most vigilant mosquito control districts in the whole country, they've only been able to suppress the population by 50% to 60% mosquito control director told us that's not enough for this mosquito >> this is a very robust mosquito that's causing crazy diseases that are very impactful on people's lives. so, it's extremely important that we're looking at controlling that type of mosquito, down to as minimal as possible >> so they are trying new ways to control this mosquito one of those is a sterilization technique, essentially using a bacteria that occurs in nature that interferes with this kind of mosquito's ability to reproduce.

now, there have been some releases of these mosquitoes here 25,000 of these male mosquitoes are released three times a week and they only release the males because they don't bite. they release the males into the wild, they mate with female wild mosquitoes and hopefully their offspring won't be able to hatch their eggs so they're testing that to see if they can control the mosquito populations here meanwhile, of course, globally, there are still some active cases of zika. as long as zika is active in the world, and this mosquito exists, the risk exists anywhere this mosquito is. >> meg, we did not hear much about zika this year we have not. last year i was preoccupied with it because i was pregnant. but it seemed to be everywhere in the headlines what's the latest update with where zika stands at least in the united states at this point? >> in the united states right now there is one area of texas that's being watched in terms of local transmission in terms of the continental u.s. there is still active transmission at some level in puerto rico and other territories. and around the globe there is some active transmission we talked with dr. anthony faulk

can i from the hih about efforts and they're hoping to do efficacy trials in the areas where zika is still active but we don't know exactly how much zika there will be in order to test the efficacy of those vaccines of course we are still watching and vin lens is still needed >> did you drive down there from miami, meg >> not this time, joe. i did that the last time i was here two years ago this year we flew through atlanta. >> where does it land? >> in key west >> right here in key west. yeah, yeah, we're just a short way away from the airport here >> it's a long drive if you -- if you're in miami, and you're trying to get to like, you know i said let's go to key west for the day. it's like oh it's like four hours >> it's three hours, yeah. >> it's beautiful. it's like practically driving to cuba >> yeah, you are but do you drive through isla morado it's great down there.

"squawk box's" key west. is that out of the question? >> no. time same. >> same time >> time zone we should say >> thank you, meg. >> all right although why was he depressed? >> he had a great life cuba, key west, sun valley >> 61 -- was he sick >> i don't know. i don't know >> maybe he was losing his virility or something. >> yeah. >> i don't know. >> didn't mean much to me. not feeling very viral anyway, thanks to jason trennert it's been great -- white collar. >> yeah. i don't know we'll see. >> what do you got a big hunting tie on >> no, these are elephants they're elephants. >> better than a bunch of asses on your tie. >> or next to you. when we come back, more reaction to ge's quarterly report we're going to talk to an analyst next

a used car,

the teflon tech rally. the nasdaq up for ten straight sessions this morning, microsoft's big beat could help that trend continue plus quarterly results from general electric earlier could set the tone for the overall trading session today. analysis and where you should be putting your money to work is straight ahead plus, a quartet of conservative economists penning a paper arguing that 3% growth in the u.s. is plausible we run through their analysis and get reaction from jared bernstein, who will actually argue that marginal tax rates

have no bearing on anything and that even 100% marginal tax rate won't affect productivity. and then the battle of the meal boxes we put amazon's offering to the test against blue apron. we're trying to get betsy mccoy in to go head to head with jared again. i don't know if that's going to happen 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, everybody. welcome back to "squawk box" here on cnbc, we are live from the nasdaq marketsite in times square i'm becky quick along with joe kernen, andrew is off today. take a look at the futures this morning. they had been a little higher. heading into this. it looks like they're giving back a little bit of ground, at least for the dow and the

nasdaq they're slightly below fair value, or slightly down, looks like down by about five points for the dow. down by a couple of points for the nasdaq the s&p 500 is still just barely holding onto positive territory. get you caught up on some of the headlines. shares of dawn component visa are higher this morning. the company beat estimates on both the top and bottom lines as customers spent more money using visa cards exxonmobil striking back at the government over a $2 million fine the government assessed that fine saying exxon recklessly disregarded sanctions against russia in a joint venture with russian producer rosneft secretary of state rex tillerson was exxon's ceo at the time exxon has sued the government over the fine calling it unlawful and capricious. and the ftc is said to be examining amazon's pricing practices. reuters is reporting that the investigation is part of the look at the company's pending acquisition of whole foods the ftc is looking into complaints that amazon is misleading customers about the size of discounts that it offers

microsoft reporting big earnings beat in its latest quarter. landon dowdy joins us now with more, an all-time high for the stock, too, landon >> yes, exactly right. hitting an all-time high after reporting better than expected results. the world's biggest software companiered 98 cents a share in its latest quarter that's 27 cents above wall street's estimates revenues also topping expectations, and that's thanks to strength in the company's cloud unit microsoft's ceo talked about cloud growth on the earnings call >> wry we have taken for multiple years now, is to transform everything that we do inside the company, whether it's the product creation, how we're organized in the r&d, how we think about breaking down any silos and category definitions, and this transformation is ongoing. this has been happening over multiple years, but we've now

got very good customer momentum. >> shares did pull back off of the all-time highs as the conference call got under way. guidance was the culprit there the company expects that close to 23.6, to 24.3 billion dollars in revenue for its current quarter. take a look at the stocks. shares of microsoft currently about 0.4%, guys back over to you >> landon, thank you very much this morning marks just immelt's last quarterly report as the ceo of general electric. ge reporting evgs of 28 cents a share, three cents better than the street was expecting joining us right now to talk more about ge is nick hayman the cohead of global infrastructure at william blair what did you think of the earnings on most counts it looked pretty strong >> you've got the e c con earnings but i think what people really zoned in on in the first quarter

was the cash flow from operating activities, and that was a deficit of $1.6 billion. now we had $1.5 billion positive so year-to-date we're $100 million in the hole but we're on track for the 12 to 14 and cash is the really the issue at this company as much as it is, you know, the earnings we'd like to simplify the process of how the company's analyze but clearly a confluence of several factors have really, since the middle of last year, leaned and drawn down the cash, and that's what john flannery's got to fix as he goes forward. >> what do you think of this overall, though? if cash is improving, we're still looking at the stock down by about one cent. so what did the street want to see that it didn't >> well, we got, you know, flat with the expectation for revenue growth we did 2%. we did versus 7 in the first quarter organic. so you know, we're three to four year-to-date orders were up six organically versus seven first quarter check the box on that. the margins here were the culprit this quarter you're up 130 basis points for

industrial margins in the first quarter. 10 basis points here there was something i haven't figured it out yet, oil and gas that was done, that was related to that. but you're 60 to 70 so far year-to-date and you know, the goal is commitment is 100 basis points of improvement and so, you know, i would say right now in this quarter it has to do with, you know, the tepid improvement in margins >> the company is standing by its guidance for the full year, though that's not something necessarily everybody was expecting at this point? >> yeah, this company isn't broken again we talked about a confluence of draws on cash flow, whether it's new product introductions that started in earnest in late '15 and ran throughout last year these contract asset investments, you know, alston has 25% of the power generation installed base around the world. they were doing time and material they want to convert it to performance maintenance and double the profitability there's an investment to do that much higher cash pension ge for the first time is making

cash contributions to its u.s. pension in its 125-year history. and then you have much higher cost to build and complete the global rollout of ge digital so you know you put these together, these are things that john has got to, you know, address. he's got to reset the earnings, we've had some, you know, expectations that they could be as lows a$1.25 for next year i think that's ludicrous realistically, maybe 10% or 15% less than the $2 that was set back in december of '15 by jeff. and in turn, we've got to get a way back by fixing these draws on the cash flow to be able to get to 20 billion dollars of cash flow by the end of the decade if you do that you can easily pay $9 billion next year in dividends. $10 billion in '19 and fund your $2.5 billion, $3 billion in cap-ex and so that's what the investors want and if that -- >> yeah, yeah --

>> -- company. >> you know, nick, you mentioned something that i haven't heard many people talk about and that's the pension making cash contributions to the pension for the first time in its history. over the last decade or so, ge's pension went from having a huge surplus to being massively drawn down what happened? >> you're invested in the middle of last decade before the global recession in a tremendous amount of fixed income product that really collapsed and then additionally, you also had the acquisition of alston energy which carried with it an elder workforce and pension liability. >> in the nextive, ten years is the asset mix as it's set up to really succeed and flourish in your view? could that happen like you saw what happened to microsoft after it had that long period, and now it looks like it's sitting on a lot. is that the case with ge has jeff set it up for the future >> i think so. i think, you know, his hallmark was going to be this whole

digital industrial and that was a sacred cow and that was going to be funded at any cost but i think, you know, when balmer stepped down from microsoft we moved to the cloud as a new initiative. i think the new initiative started to be back to the industrial roots but you have so many things going on and i think that you know, john's got to kind of like plug these holes and put the tourniquets on and fix sell and minority stake in ge digital >> the transitional ceo, when you come in at 50 or 60 times he, there's going to be margins -- there's going to be p/e margin compression and it's just going to happen. and then i'm sure there were some acquisitions and sales that weren't perfect. >> right >> but it was something that probably needed -- it needed to be paired a certain way, and i just wonder whether now it's actually set up for like by 2025 are we going to be like, wow, ge's really $600 -- >> i think it could be 2020.

i don't think any of the businesses are broken. i don't think they've been milked i don't think the shares have declined it's all the opposite. they've maybe been overinvested in >> all right >> nick, want to thank you by the way, we haven't seen asked you. you buy the shares here? >> yes >> strong buy? >> yes this is -- we've gone through the eye of the storm which was we need a regime change, let's paint the most bleak picture possible, the dividend will be cut. john's already come out so there's no dividend cut. we'll reduce the excessive buyback beyond the ge capital return and so, you know, now we're starting to get ready to remove the specter of the earnings adjustment overhang. and give the way back for cash flow, and suddenly this can turn very quickly you don't need all the earnings to change. you just -- the reset is almost basically done the streets at 181 right now >> nick, thanks a lot. good talking to you. >> good to talk to you

thanks a lot have a great day >> some other earnings movers watching today, ebay second quarter profit was in line with forecast revenue beat estimates as the company's third quarter outlook is below consensus it's continuing to invest in marketing, and revamping its platform capital one second quarter profit rose 10% beating analyst forecasts. the company saying a run-up in credit card balances and rising interest rates for beating, in that case that's a nice gain today, up almost 4.5%. the nasdaq closing higher for the tenth straight day let's talk markets joining us now joe diedle, richard bernstein adviser portfolio strategist and james blue head of research at clearnomics. i think you guys are maybe just a little bit diverging on your view james, you think the gains in u.s. equity slows if you put new money to work, do it internationally? do you think that, joe, or do you think we're still just, you know go with the momentum we have in stocks domestically as

well >> we think u.s. stocks are going to continue to go higher and we think we'll go as high as earnings will allow them here we are talking about second quarter earnings reporting season, and you know, looks like s&p earnings will be up probably 20%. maybe a hair over 20% on a year over year basis and those earnings gains aren't just limited to the u.s we're seeing them all around the world. emerging markets have a really strong earnings cycle under way right now. we're even seeing some gains in europe so, you know, overall i think it's a very equity bullish environment. >> i mean, james, if all these other markets improve, there are a lot of multinationals that will benefit domestically, as well why the focus on international equities valuation? >> that's right. so, from asset allocation standpoint it's valuation in the business cycle so i do believe that, u.s. equities will continue to grind higher basically we have a -- >> it hasn't been grinding since november it's up -- >> not since november, yes but there's a key point -- >> if this is grind, we need to

grind forever. because we're up -- you know, we're supposed to do 5% a year and we've already got 17% -- >> most of the gains were through the first quarter. the key point is here what spurred the rally right after the election is different from what's keeping the market up there right now. after the election we had a relief rally you had a lot of positivity that, you know, there would be fiscal benefits to the market. >> right >> but keep the market higher right now are earnings, and also, you know, some positive news around the fed, and the potential stretching out of this reflation trade. that's really what's happening in markets a lot of that is priced thin and we think earnings are overly -- the market is overly enthusiastic on earnings over the next two years and if that comes down even a little bit valuations look even more expensive -- >> is it gravy if tax reform happens? is it gravy if infrastructure happens? >> oh, absolutely. >> that would be additive? you don't need that to stay where we are >> it would justify the enthusiasm right after you do it for sure we'd probably see a leg up in

the market but i think the market at this point is already discounting a lot of that from happening >> and on the valuation front i think it's probably one of the areas where you get a lot of pushback on the u.s. where people look at this market and say it is overvalued and people are quick to acknowledge that this is the second longest bull market in history. but if you look at on a valuation basis we've had other bull markets end at higher valuations than we are today and if you look at some of those ending valuations of previous bull markets what you realize is that interest rates were a heck of a lot higher. and i think that's a point that a lot of people are missing. when interest rates are low, valuations ought to be higher. so at 25 times trailing earnings it's not like we're cheap. you know, this is not 2009, where, you know, stocks are screaming buy but it's a far cry from march of 2000 right i think it's probably appropriate valuation for a rate cycle environment but recognizing with low interest rates valuations naturally ought to be going higher anyway. >> hmm so, are there parts of like retail, is that good is tech good are banks good

is health care good? do you distinguish between all those? >> sure. i would right away say you know retail consumer discretionary, financials, are going to be i think continue to be the leaders in 2017. >> and we still like -- even though we think growth is going to stay around 2%. we still like technology here. we think those sectors still have some room to grow >> okay, gentlemen happy friday thank you. >> thanks. >> you like friday better than thursday or thursday better >> friday. friday morning before the show starts, that's the best. because you have the entire weekend to anticipate still. >> friday is too close to monday for me the anticipation of friday is thursday >> man you are getting old >> thursday is sort of better. it's like, i kind of like may better than july, because july i'm -- >> i have to say, july i can't believe it's -- we're almost

through summer >> i know. >> it's crazy. >> i don't like it yeah we are i mean it's going -- summer's over le >> we're going to take a look at the positive side of this. summer, things are great we're enjoying it. kids still out of school when we come back oil is going to be a focus next week as major oil producing nations meet pricing holding below $50 a barrel we'll be previewing possible opec moves and talk about the nation's oil glut right after the break. and then at 7:30 eastern time how to achieve 3% growth economists from aei laying out the prospect we're going to run you through the report and get reaction from jared bernstein. "squawk box" will be right bac at fidelity, trades are now just $4.95.

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>> welcome back to "squawk box," everybody. futures right now, they had been a little bit stronger when we started the morning out, but as we've gone through the course of the morning, you see we've given up a little bit of ground. dow futures relatively flat. nasdaq relatively flat they're slightly negative. s&p is barely hanging in there but by 15 basis points >> healthy update from one of our "squawk box" regulars. t. boone pickens says on his linkedin account that he had in

his word texas size fall last week that required hospitalization. he says he's still mentally strong but it's a little bit hard to find the words he's looking for to speak clearly he says he's confident that speech therapy will eventually fix the problem. we had a long discussion about boone, and all kinds of things, aging and mortality and everything else. but boone is pushing 90, and for a long time, i mean, when he was -- he used to come on the show from his -- from his gym when he was like 87. >> he'd jump up on the desk. >> he would. in his gym shorts. and yeah, so he's -- >> but, look, he's got positive outlook on all of these things he said some people at his age wouldn't talk about these issues but he says, my life has always been an open book. some chapters of my life have been great, others not so much >> he's a recently newlywed, wasn't he? >> he got married three years ago. he's in the process of getting divorced there's a great story in the dallas morning news that they

just put out yesterday on him. they went to the ranch the ranch and talked about everything how he built the remark up his life just a really wonderful piece, if you get a chance you should check it out >> mm-hmm. >> and he says he's looking at it, a year ago he refused to say -- he refused back in 2008 to call his autobiography life in the fourth quarter because he didn't think it was the fourth quarter but things have changed for me since the stroke, i clearly am in the fourth quarter and the clock is ticking and my health is in decline much as it is in my stage of life don't think for a minute he's being morbid he's an eternal optimist who is excited to see what the next decade can bring him >> i like the back nine. i like to think i'm still at the halfway house finishing up like a dog. >> yes >> hot dog >> and a beer. >> go tee off on ten not right now. >> not yet not yet. anyway -- >> i'm delusional. >> we wish boone all the best, and the goal is to get him back here on "squawk box" sometime soon meantime highly anticipated meeting of opec ministers on

monday could make or break oil prices john kilduff, founding partner and a cnbc contributor, what do we think of this meeting >> well, first, if i could send my best wishes to boone as well. he's a legend and i will happily yield my time on your program to him any day of the week. but this meeting on monday is very, very important it's not an official opec meeting. it's -- when russia and opec members came together last november to strike this output limiting deal they formed a committee to sort of issue a report cards about compliance, and bring people on the carpet or bring countries on the carpet if they aren't doing what they're supposed to be doing that's what monday's all about it's in st. petersburg, russia most of the major countries will be there, including libya is sending a delegation as you know we've been talking about the fact that libyan production has come racing back online from nearly zero to over a million barrels a day. so this is caused a whole other round of headaches for russia,

for saudi arabia, and we're waiting to see if they respond actually think it's going to be a make or break meeting. because the saudis have been floating trial balloons for the past week or two now, about what they may or may not do next month. there's one story out there that they're going to cut their exports to the entire world by a million barrels a day in august. if that were to occur that could very much support oil prices if nothing comes out of this meeting, and they disappoint us all, the cartel, and russia, are going to be punished mightily. so this is a big day >> who is cheating which countries are going to be ones that are potentially called on the carpet? >> interestingly, the adherence to the deal, their compliance is at about 92% the saudis themselves, though, raise the output and there's some confusion over cheating using that word as it relates to libya and nigeria, particularly -- >> coming back from zero -- >> they never signed up for a cap, never got a cap, nigeria, either nor has iran

and iran's also been the other big issue here they continue to ramp up output, be aggressive in selling -- >> -- the delegation >> yes, they are they're part of the committee. but, again, so the market sort of has been rallying a bit here on expectation that something might come down. >> you sound dubious about the entire thing you don't think necessarily you're going to see any concrete evidence, and maybe you think things are going to fall as a result >> i do. i think we're set up for a buy the rumor sell the news cycle here this run-up to $47 a barrel, yesterday we had the new front month september contract trading now, so there's more liquidity back in the front of the market. so we shall see that their inability to deliver on monday, and could send tremors beyond that because it appears the russians want to get out from under the deal rosneft in particular has been bristling at the production limitations. they just want to pump all out and let the markets sort it out. which is really the correct

strategy to be the lowest cost producer by doing what they're doing, they're supporting the shale folks more than anything else. now the one positive thing, though -- you'll hear different numbers on this becky. this is the important thing i hear confusion in the market about. the saudis need $70 or $80 to fund their budget -- >> but they don't need that to produce it >> absolutely not. in the single digits >> but if they need that to sit their budget for what their spending domestically maybe it's a moot point what the lowest cost producer is >> that's sort of the rub. look there's a lot of pressure in the kingdom there's been a lot of stories going around about stability that the crown princes is planning to take over and become the king sooner than we -- >> aramco ipo. >> 100%. if that wasn't hanging out there, becky, they wouldn't be doing any of this stuff. but they need that to survive. the only good thing is that the global economy is picking up we are finally seeing a decent rise in petroleum demand around the world. >> john, thanks so much for

being here >> thank you >> have a great weekend. >> you, too. >> coming up, report penned by glen hubbard, john taylor, kevin warsh and john keoghan pointing out how trump's plans for the economy could have huge rurps for the nation we will break down that report and get reaction after the break. later meal kit wars. cnbc's deirdre bosa unboxing the amazon meal kit and comparing it to blue apron's meal kit we'll tell you which ws e nserest.inth it's all yours. wow! record time. ♪ at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. ♪ get ready, because we're helping leading companies lead with digital. the power of a low volatility investing approach.

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good morning, of welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square among the stories that are front and center, the nasdaq is coming off a record close and is going for an 11th straight day of gains today. if it manages to do that, it would have been the longest winning streak since july of 2009 moody's has joined standard & poor's in helping the state of illinois avoid an unwanted distinction. it is affirming the state's credit rating at the lowest investment grade devil just as s&p did recently no state has ever been downgraded to junk status. and shake shack ceo randy garutti is joining the board of square square ceo jack dorsey says that garutti's experience helping shake shack expand will be a great asset as square tries to do the same. a quartet of leading conservative economists have written a paper arguing that 3% growth in the u.s. is completely

plausible if the right policies are pursued. steve liesman joins us now >> interesting paper, joe. three of those economists, all of whom are well known to "squawk box" viewers, are prospects for the federal reserve under president trump. john keoghan of the governor institution, joined with kevin warsh, john taylor and glenn hubbard of colombia, penning a paper that they don't by the argument that u.s. is stuck at 3% growth. attaining 3% annual gdp growth rate is based upon enactment and implementation of a package containing significant tax reform regular tory reform they say productive goes up and down cyclically and it's linked to getting policies right. what they did is a five-year moving average, got rid of some of the ups and bounce and said it was down for awhile during the wrong policies of the '70s up during the right policies of the '80s

down during the wrong policies of the 2000s and positive that it could rise again if these policies are right they believe the u.s. could meaningfully boost u.s. growth and put some numbers into it. what you're looking at next is going to be a comparison of what the cbo's outlook is for u.s. growth long-term and the aei paper here gdp 3% versus cbo 1.8. they get 0.7 more out of productivity they think by getting the policies right and another 0.5% out of labor, which also they think they can bring people back into the workforce and get back to what they thought was pre -- 2009 trend on labor force participation. now, fed chair janet yellen said that any effort that increases productivity, even a few tenths would be a huge success organizing that it's a long way to go to get 0.7 and the quartet of economists emphasize tax cuts and spending cuts go hand in hand you cut taxes and boost deficits the positive effects will be limited and temporary joe. >> i didn't understand, and i'm looking at your copy that you

wrote. >> right >> i didn't understand what you met. john cogan of the hoover institute, penning a paper for the after ei that says they don't buy the argument that the u.s. is stuck at 3% growth >> right >> what do you mean stuck at three? >> we're stuck at 2% growth. >> i guess that was a mistake i made i'm sorry about that stuck at 2% growth >> i've been focusing on that the entire time and i don't think i heard anything else that you said if only we were stuck at 3%. then you're making the case that we could actually go above 3%. that's not the case you're making >> no, stuck at 2% added at the last minute because my lead was stolen for somebody else >> okay. now we're going to get to jared, broken glass in a bag is actually a good toy for your children, bernstein. baghdad bob. jared actually -- >> i'm not sure you mean that. >> what i mean is you actually

are going to tell me that marginal tax rates have no bearing whatsoever on economic growth and productivity. so -- >> definitely not no bearing no bearing -- >> well, you got some -- people have all kinds of crazy charts, jared. are these four guys, i mean you got john taylor, you got kevin warsh. you know, you got cogan and you got glenn hubbard. i'm supposed to take you -- when you come on, do you get mail from people saying what -- i mean i can imagine the only fan mail you get is from elizabeth warren and bernie sanders with some of your contentions >> some of the mail i get from people who say why does joe kernen keep talking over you >> last time it was betsy mccoy -- >> so anyway, look, first of all, that was a brilliant explanation by steve as to what's going on in this report >> you're talking about to take your side. >> he doesn't have a side. he's telling you what's in there. look, this is a classic validater document i've been there myself you're in the administration,

you have a proposal, you tag some in this case a-list republican economists, many of whom as he suggests would love to see themselves sitting in janet yellen's chair next year and ask them to validate your report on the marginal tax point, look, let me surprise you. there are lots of credible studies that show cuts in marginal tax rates will boost productivity, will boost investment, a tiny little bit. by the way there are studies on the other side, particularly if you're running budget deficits but, you will never find evidence in any of those studies that will get you the magnitude of the effect these guys are claiming and that's the biggest problem with this report it's not a directional problem it's a -- >> why is it a problem >> well, if you read -- >> i'll tell you why -- >> let me just raise my point. my take on this is you have to try. that it doesn't -- it's okay to say, underlying growth is 2% and i generally accept the arguments, however, why wouldn't i try to do a series of things

if i could do so in a way that didn't necessarily harnl harm run outlook -- >> of course you should try. >> i'm amazed, jared, that the democrats have not looked at what's happened to small business optimism, looked at what's happened to consumer confidence with donald trump becoming president, and said you know what, we have some work to do we have -- >> no, no, the -- >> to entrepreneurs, and to small business, and we have not connected with them in a way that we should have. >> so the dynamism problem, the start-up problem, they actually mention that -- >> they do >> they're completely -- >> and they're completely right about that and, in fact, there's absolutely no reason not to try i think the problem, it comes down to this, steve, when you make these 3% growth projections, and then you build them into your budget, then you're able to say, in fact, we're going to balance the budget, we're going to raise interests of dollarsed based on these phony growth projections so in a way your argument says what's the dpivs why not say we're going to get

to 3% or 4%? >> i get that you don't want to spend like at 3% if all you can do is 2.5% but it's something you could pull back -- >> here's another problem. i think that we, and particularly these kinds of discussions, create a false sense that economic policy, as practiced by the folks behind me here, can add a percent to gdp growth it cannot. it can add a few basis points if you do it right. but i know of no policy combination that's going to move productivity from 1.5% >> the problem is this, it's the sharp break in '09, and it's also the pre -- '09 forecast of the cbo as to participation. let me explain that. the cbo knew what was coming demographically in the united states and they forecast a decline in participation. the actual result was 3 or 4 percentage points lower than

that now we come back and say it was demographic. i'm the first guy to say a big churng of this is demographic. another part is policy and i think that the people who argue your side of this coin have to explain the sharp break that happened in '09 in fact, i have a business investment chart back there, if you could put it up, and you could see we have this surge right after the recession, and then it remains flat and negative for a very long time. then you've got to argue about -- you've got to explain that flatness on the right side of the curve there >> okay. so first of all, my favorite productivity expert will tell you very clearly that there was no break in productivity in 2009 that, in fact, productivity began to slow around 2005, 2007. and secondly, in terms of labor force, there's a very important federal reserve paper, i will send you the link, that, in fact, predicted almost precisely the decline in lfdrs based on demographics that's not to say policy doesn't

matter and we had a much deeper recession in the great recession than we should have. and, of course that has impacts on productivity and labor supply but are you telling me, steve, are you telling me steve liesman that you believe there's a combination of policies that will take growth from 2% to 3% >> no, i think there's a combination of policies that could maybe get us to 2.5 and i'll take 2.5 because half a percent compounded is a big deal >> i love you -- >> so i like that argument -- >> i might say 2.2 or 2.3. >> you and steve, you know, guys on the floor -- coming from similar places, talk about that. you know, the three words that are never truer that's different this time, or four words, whatever it is, and there's a contraction in there, too, however many words that is, you saw that long-term chart where they say there's no reason why productivity can't -- i just -- i get depressed when i see a whole group of people defend -- just to defend the last administration's legacy.

just to show that we did all the right things, but we were -- we had this upper limit of 2% that's why we never did 3% that's why we're the first administration to not hit a single year 3% so you got to argue this narrative that it can never be done again, which is -- >> no, no, no. -- >> to me that you think america's best days are behind it in terms of 3% growth >> from here -- >> just so you can justify the crappy policies of the last eight years. >> joe, i'm really glad you intervened there because i think the difference between my conversation with steve, and my conversation with you, is very indicative. i mean, steve and i are trying to pull apart labor supply, productivity, the elasticities built in there, investment trend and yurp basically saying it's all based on hope and we can do it and that's just not the way economists think now, hope and animal spirits and all of that are really important, and we should do our best to improve them and in fact one of the things i'd love to see congress, and i don't care if you want to talk about democrats or republicans, i

think the policy uncertainty coming out of this -- of this congress does probably hurt growth it does probably shave a few basis points when you're talking about the debt ceiling, the uncertainty around health care the tax policy -- >> what are you going to do if it happens -- >> our deficit becomes less, you know, we can -- if it tell tirious to our future and we can afford more of the entitlements that you love so much and all these good things come from 3% that you're hoping so much that we can't get there what are you -- if it does happen, what are you going to do, jared? >> look -- >> paul krugman joe stiglitz economic view of the world doesn't come true in your view -- >> you raise another good point here which is people on my side of this argument get tagged as saying you're against faster growth i am definitely not against faster growth. i'm for -- [ everyone talking at once ] >> i'm for realistic analysis.

>> all right, joe. we're -- >> you want it to be europe in terms of entitlements and cradle-to-grave government spending and size -- >> i want to have a fact -- >> and you'll be happy with 2% like they get over there >> i want to talk facts. that's all >> i love -- i love it when people have different facts, though that's the great thing anyway, that's what they're talking about with alternative facts. i figured i had to take betsy's place today. that was something last time, jared. i've never seen anybody get, you know, get you like that. >> no, no. just when you start dismissing cbo numbers that everybody greece are kind of the foundation of the argument except for people who -- >> that never been wrong, cbo. >> i just think that when you bring your own numbers to the discussion the discussion kind of goes south pretty quickly >> jared you're going to love it when we get reagan type gdp growth you're going to absolutely love it and you know what? you're going to have to say you know what? i'm glad this is happening i don't care that i used to

argue the other way. i'm glad for the country that this is happening. >> well, i'll be glad to come back -- i'll be happy to come back and mix it up with you. >> all right why does the vice president have an economist anyway? a chief economist? that's like someone wrote in that's like the water boy on the football team having a trainer i mean, i don't -- why does the vice president have an economist? do you know? >> i don't know. but jared was an important part of the thinking inside the last administration >> well, that's why -- >> he's a smart guy. >> all right thinking outside the box when it comes to tech investing a look what's beyond the bank stocks is next and then blue apron stock taking a beating after amazon announced it's going to be offering a meal kit. we put the kits to a consumer stndheestsren. ellent. they always refer to me as master sergeant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle,

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the nasdaq on a ten-day winning streak and the s&p tech sector finally cracking a 17-year-old barrier this week. notching a new record close for the first time since the dotcom double burst not even talking about the financial crisis here. you got to go much further back. year-to-date that sector is now up nearly 23%.

joining us right now for a look at what's been working in technology is chris bertleson, president and chief investment officer at aviance capital management chris, this is kind of an interesting time when we start talking about technology and microsoft is one of the first names that we pick up, better than expected earnings that stock sitting at a new high but you're picking some names that aren't the ones that people always talk about when you come on today, right? >> absolutely. sure it's easy to story microsoft, oracle, nvidia, sales force, but these are a little scary, but i think this is the way that if you want appreciation, you're going to get it >> let's talk about -- go ahead, sir. >> go ahead. >> let's talk about checkpoints software technologies. that is one of your top picks. why do you like it >> yes, it was belted yesterday, down about 8%. israeli company, certainly one of the leaders in cybersecurity.

they have a complete sweep they're big on prevention. they really have been a terrific execution. and they kind of underpromise and overdeliver and all the analysts were a little upset, because they didn't meet the analyst high end of guidance bull really, yom kippur falls on the 30th of september this year, and on the call they said, yeah, cost us three or four cents and several million because they don't get the final billing at the end of the month so i think they're overlooking the fact that cybersecurity is a real important area going forward. cyber warfare is certainly something that we all have to be aware of >> they say that yom kippur will affect it by three to four cents of earnings and take several million off of revenue do they make it up does it fall into the next quarter so it's not going to change >> absolutely. they are, and of course they're trying to go to the clients and say please, book the orders early with us.

and that probably has no effect. but they definitely said it would make it up a full year earnings looked to me like they're right on target. and maybe beat so, i think it's a good time to go in, you're looking for an opportunity, this is an entry point. >> what about seagate? that's a company with a p/e of just 8.7 >> yes seagate's great. not only is it a low p/e stock, but also, it has a yield that's north of 6%. and i think you get paid while you wait with $3 billion in cash, this is not about to cut the dividend. seagate is interesting they already had a kitchen sink quarter. and they're making the transition from hard drives to solid state to ssd, plus the fact data storage is not stopping when you see everything that's coming forward, even 5g when we get it across our mobile networks the need for storage is tremendous it's not something that's really just in the later distances, it's early on. and this is a cheap company. it's unloved

unwanted it's been downgraded you look at western digital. it's been flying seagate is a duopoly i think, you know, this is the time to enter into it. >> chris, do you always look for stocks that have been beat up first? >> i think that's the first thing i'd like cheap i love tech. but i like cheap tech. and i think it's real hard the f.a.n.g. stocks are terrific and probably make more money, but the real money is made when you bought nvidia three years ago, and microsoft four years ago. and that's what we're trying to do with these names. >> all right well let's talk about gamestop, too. that's a company that has its work cut out for it. >> yes, even more controversial. gamestop, again, great yield its p/e is just a little over 6. but for reasons. and that is they've been beat up by activision and other game companies and the idea of storefronts is really fading yeah, they've got collectible business and that's good, it keeps them going they have to make the transition to internet and online gaming. and they're doing it

you know, i think their franchises, particularly their link in with nintendo as far as the game consoles are concerned are really going to lead them to break out of it, and to become a player along with the rest of the gaming stocks. and here's an opportunity to get it cheaply if they don't execute you're looking at a $10 stock but i think the risk is really priced into it >> what are the risks, though? i would assume that the risk is this goes the way of blockbuster? >> exactly you know, storefront business is tough everywhere i mean, everything's been amazon'd so to speak and the gaming business, definitely so you'll see store fronts that do survive. look at a best buy you look at these companies, that if they can execute on a plan and then still get a big share off the internet, off online, you'll see that they come back. and if you look at the gaming titles, the star wars, whatever, everything that they're doing, you'll see that they're pretty popular. so i think they're going to make the bridge here.

this next quarter is tough after that i think really looking good into the holiday season >> chris, thanks a lot good talking to you. >> thank you coming up, the battle of meal boxes deirdre bosa unboxed the new amazon meal kit and compared it to blue apron's. compare to those school lunches. that have been around for the last couple of years which -- >> see which healthy foods -- >> which wins the consumer test? i've got some chips with that. >> oh. >> ate too many -- i almost felt kind of sick find out after the break i love them. but can't eat them as we head to break, check out the futures. "squawk box" will be right back.

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the meal box battle is heating up, and amazon is looking to take a piece of blue apron's pie. deirdre bosa put the kits to the test and she joins us right now with more. this is a real test. which one came out on top, deirdre? >> i'm going to get to that, becky. but let me tell you i spent about an hour and a half in the kitchen. at first glance what you're

looking at here, this is what i saw first. they're pretty similar this is the new amazon meal kit. it's smaller because it serves two people one meal. the blue apron comes to you in a box, you've got to subscribe and there's three meals in here for two people so we tested both last night, of course, and we found the differences. once we started cooking certainly. the menus, they're laid out almost the exact same way. we even found a catfish meal from both that we could cook said by side to try to make this as fair as possible. here are some of the major differences. in amazon more ingredients were already prepped. like the premade guacamole this is the amazon box that corn on the cob that i didn't even need to shuck. the blue apronbox took about 6 minutes more to cook and there were less ingredients that were already prepped. for example you had corn on the cob that is not shucked. you actually had to prepare. here are some of the differences.

i want to go through it. in terms of cost, they're pretty similar. about ten bucks each for amazon you have to have a prime subscription, and a fresh subscription the prep time was a little different. blue apron took about 15 minutes longer but you had to subscribe as i mentioned at the beginning but guys, maybe the most important thing, of course, is the finished product this is where we saw some differences. the amazon box looking at right here, this is the catfish tacos. those are the catfish fillet from blue apron. the amazon one is easy and fresh. i don't do a lot of grocery shopping i don't cook very often. quick and fresh. the blue apron one, they felt a little fresher i felt like i accomplished something more in cooking them so, guys, that's what you have here i'm not sure that there's a clear winner because there were such different propositions. maybe for a different customer >> okay, deirdre, thank you. we're out of time. i'd love to talk to you more about it but i think we're going to see you a little later today, as well. when we come back, fda commissioner scott gottlieb is here we're going to be talking drug

pricing, pharmaceutical innovation and the trump agenda right after the break. in the meantime take a look at the futures at this hour you're seeing that things are relatively flat. stick around, "squawk box" will be right back. so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver.

the markets right now, the nasdaq looking to extend its winning streak a positive close today would mark 11 straight sessions. "squawk box" newsmaker fda commissioner dr. scott gottlieb talks drug pricing reform, pharma innovation, and the trump agenda he will join us on set >> plus, unleashed >> you be a good boy, leonard. >> the company that makes your pet's medicine set to go public. we'll talk to the ceo as the final hour of "squawk box" begins right now >> live from the most powerful city in the world, new york, this is "squawk. >> good morning and welcome back

to "squawk box" here on cnbc, live from the nasdaq marketsite in times square, i'm joe kernen along with becky quick, andrew ross sorkin is off today i don't know where what's he doing? >> i don't know. >> he didn't check with me he didn't -- >> didn't get your permission? >> didn't get my permission. >> i don't know where he's at. >> i can tell you he's somewhere nice probably. >> i have a guess. he's probably taking a long weekend with the family. >> in a nice place with a staff most likely. a chef anyway good if you can do it. futures are indicated to be flat that's really flat would have been 11 straight sessions that's kind of interesting we'll see whether it's like that at 4:00. >> for the first time since july of 2009 if it happens. >> look at you that's amazing >> yeah. >> okay. >> a few earnings reports -- is this me or you >> you, i think. >> i'm answering i need to answer this maven that

rode in on my side here. few earnings reports to tell you about earned 28 cents a share, 3 cents above estimates. revenue beat forecast, as well however revenue was down 12% from a year ago. honeywell beating on the top and bottom line. the diversified manufacturer also raised its 2017 full year guidance as sales of aerospace and performance materials exceeded prior expectations. and microsoft reported adjusted quarterly profit of 98 cents a share. well above estimates revenue also beat forecasts. company strong gains in its cloud computing business check out the shares of ebay, the company's second quarter profit was in line with forecast while revenue beat estimates but the online third quarter outlook was below consensus. >> also in our headlines this morning blackstone and cvc capital partners making a bid for paysafe.

the payment companies have become attractive targets as consumers switch from cash transactions to paying by mobile devices. and check out shares of amazon the ftc is probing allegations of deceptive discounting at the e-commerce giant an advocacy group called consumer watchdog says that an analysis found 61% of amazon's list prices were higher than the prices for the same item in the previous 90 days that would make the discounted prices seem like a better bargain than they really are the probe is part of the ftc's review of amazon's agreement to buy whole foods. some news just out this morning whole foods shareholders will vote on that merger on august 23rd amazon shares are down by $3.30. and samsung is expected to unveil its newest phone next month. the company has sent out invites for an event on august 23rd to launch the galaxy note 8 the phone is expected to have a 6.3 inch screen and dual rear cameras. it may also have a smaller battery to try and help avoid problems with overheating. now onto politics.

president trump is expected to name wall street financier anthony scaramucci his new white house communications director. the announcement could come as soon as today. scai scaramucci is no stranger to wall street. here on "squawk box" we know him well he recently sold his stake in the hedge fund as he prepared to join the trump administration. white house press secretary sean spicer has been doing double duty as press secretary and communications director. the source told nbc news that spicer will stay on. >>le >> in the meantime the fda making some strides in helping those who can't afford the medications they need. the new fda commissioner is looking at ways to try and lower drug costs and increase competition with the addition of new generic drugs. fda commissioner dr. scott gottlieb joins us right here on set this morning, and doctor, it's great to see you. zl thanks for having me. >> so let's talk a little bit about this drug pricing was a huge issue that candidate trump talked about during the election. something president trump has talked about since he's been in office how does the fda go about trying

to put some plans in action that will bring down drug costs >> we don't affect drug prices per se but we affect competition in the market place so we're taking steps to bring more competition in the market one of the ways we're doing that is trying to bring more generic drugs onto the market more quickly. we see places in our own regulatory policies where companies are creating obstacles to generic brands. where congress intended for their to be kween entry but generic drugs are forecalled for getting on market. for a generic company to come onto the market they have to do certain studies using the branded company's drugs. they have to test their drugs against the branded company's drugs. and branded companies are creating obstacles to generic companies actually getting the physical sample of the drugs they need to do those studies. >> like wait a second, we're not going to sell to you >> exactly >> that way we'll keep you from being able to get these tests completed and bringing your drugs to market. >> that's exactly right. we have drugs that have in place certain risk management plans

associated with them that control for safety reasons so some branded companies use those systems to try to block the generic companies from getting access to the drugs. they also prevent certain specialty pharma companies and other supply chain intermediaries from selling the drugs to generic companies >> that's insane >> it might be anti-competitive. i'll leave it to the ftc to make a determination. but we can do things within our own policies to try to allow that generic entry >> and what can you do if you can't go after them for antitrust on this, how do you make it so that their rules are not allowed to stand, and that these drug companies can get access >> first of all we can put pressure on them one of the things we said we're going to do, we sent letters to the branded companies when the generic companies have trouble getting access to the drug saying no you can sell the drugs to them, there's nothing within our regulations that's blocking you from doing that when they invoke our risk management plan as a reason not to sell. we're going to looking to make those letters public so people

know the situations where we believe the branded companies are creating an obstacle remember these are situations where the intellectual property has lapsed congress intended for there to be vigorous competition. but the competition isn't happening. and we have a marketplace system for pricing drugs. in order for markets to work you need to have competition when competition should be entering the market >> the argument is the government shouldn't start setting prices because the best way to take care of it is a free and open market. but if there's not a free and open market it's hard for that to happen. >> that's right. this is a market failure congress set up a law that allows for generic entry once the intellectual property has lapsed on these drugs -- >> how many years? >> on average a little over twelve years some drugs come to market with more intellectual property some with less it depends on the drug >> it's an arbitrary number of years, and then it's different for biotech stocks, and it's different all around the world in different countries so it's really not a free market and it's tough you need to revisit exactly how you're doing it to make sure you get maximum innovation, and maximum, you know, price, you

know, stashibility, or keep it affordable for society for a lot of these -- >> right i mean you got a tough job >> look there's two separate issues how much intellectual property does a company get the cost of capital is very high there's a lot of risk and uncertainty as far as to capitalize these endeavors that's a separate issue. congress needs to contemplate what the ultimate patent length is once that is up congress intended there to be vigorous competition. we're not seeing that. there's situations where there are what we call complex drugs which are drugs that are hard to copy because of certain scientific obstacles, also because of certain leg raer to obstacl obstacles. these are a class of drugs that where the intellectual property has lapsed there's no longer any patents on a lot of these drugs but there's no competition >> scott, you've been on so many times, talking about the fda and there are -- you used to write editorials all the time about the fda. and now you're in a position, and are you happy? or is it like oh, my god because do you have to drain the

swamp? are there things that you need to do at the fda to get it the way you've always wanted it to be and is it possible is it difficult? >> well i was actually very happy to go back to the fda because i think it's a great agency it works very well i'm able to get a lot of things done there and the discretionary spending is fantastic we've moved quickly. in the first two months we've moved pretty quickly >> things you want to do you want to -- like we used to talk about you've got people that feel like they're doomd and they're waiting for things to help them, and yet they can't be helped because you're in phase two trials or something. in the past you've said, i mean, what is the sweet spot for giving people experimental medicine when they have no hope? it's a fine line to walk because you don't -- you know we did that with gene therapy and someone dice you don't want to, you don't want to give them before human testing. but you want to give them -- have you got that exactly where you want it now? >> i think what we need to look at the other side of this cost equation is making sure that the

cost of development isn't unnecessarily high there's things we could do to make the new drug approval process more efficient ultimately drugs get priced to some measure of the cost much capital it takes to create them. if we could do things to make that cost more efficient, less costly -- >> should they get to try experimental -- >> they can and they do under current rules. we do allow drugses to tb made available to patients under what we call compassionate use ind. they can petition the agency to get access to it there's questions whether or not that's seamless enough and people can get access to that. >> or quickly enough >> scott, let me ask you, i know wall street, and the reactions of the stock market are not what you're thinking about as you're putting these rules in place you are thinking about access for patients, you're thinking about competition from generic drugs. you're also thinking about making it easier for the big manufacturers to get some of their drugs to marketplace if i'm on wall street and i'm thinking about this, should i walk away and think, this is not going to be great news for some of these big drug companies because they're going to have

more competition coming after them, in their pipelines >> i think investors, when they're making capital allocation decisions, they need consistency, they need clarity from a regulatory agency they need to understand the rules are clear. they're going to nderstand them be enforced in perpetuity. we're not going to arbitrarily change the rules that's what we're trying to do i don't want to create any unintended consequences where capital leaves the sector. that's important that's what underwrites new drug development so we want to make sure we're being transparent and consistent in what we do so i do think about that >> when it comes to what some of these companies have done and i'm thinking martin shkreli, obviously that's an outlier, what his pharmaceutical company was doing, buying up orphan drugs essentially, taking things that had been off patent for a long time and jacking up the prices i know he's an outlier but i have heard some other people who say what happened there, what happened with valeant, with some of these companies, is more widespread with some of these drug companies that you might have known what's your understanding?

>> so i think there's certain people playing what i call a regulatory arbitrage where they buy a low volume drug that's cheap that doesn't face competition it's a generic drug, they jack up the price, and they know it might take up to 48 months on average to approve a new version of that generic drug we've committed to get the average length of time down from 48 months to approve a generic drug to eight to ten months to eliminate the ability of people to play that regulatory arbitrage. because that shouldn't exist we've also said we've also committed to publishing a list of all the drugs that are generic but don't face any competition. and we said that if the new application comes in for one of those drugs we're going to prioritize that application right at the top of the queue. it's still going to take a certain amount of time but it shouldn't take 48 months it should take maybe six months and i think sp speculators know if they come in, buy a low volume drug, jack up the price and it's going to be six months before we can bring on new competition it's going to reduce the incentive to do that because that is taking advantage of consumers. >> everything you said has been great news for consumers by the way. it's going to open things up, it's going to put the bad actors on alert and i think this is all really

wonderful. >> you wroept a lot of editor l editorials about the affordable care act and the positives, the negatives, the possible fixes. you know recently they've been thinking about repealing that and replacing it have you been following that >> i've read that. >> you've been following this saga it's like war and peace, i think, sometimes although i don't think it has a happy ending although neither does war and peace. what -- you have any comments on the way forward here on what we need to do to make health care better for everyone? what would be the way to do that >> well, it's outside my scope right now. what i worry about with respect to the detate over health care reform and health care insurance generally i worry about people getting access to medicines. that's my current job and making sure people are adequately ensured to get access to medicine to something that i'm concerned about. i don't directly affect it i think about it i look at it it's not something i'm working on every day right now >> oh, my god.

you are a doctor and you used to have a lot of good ideas >> i still have good ideas >> okay. that was a really good answer. so you now you're in charge of people being able to get medicine >> right >> and that's your main purview now is that they have the insurance to get the medicine. i'm not sure what the heck -- where that takes us and i don't think i'm going to get much more but are you -- would you say you're frustrated by the discourse from both sides of the aisle on this? on where we're headed? or -- >> look, i mean, i'll say from my personal experience what i've been doing, i've been able to get a lot of stuff done i've been able to work on a bipartisan basis on capitol hill as well. i've had a lot of conversations with members of both republican and democratic leadership and stuff i'm doing and i feel like i have support on both sides so, we've -- fda is an agency that really has function in a bipartisan fashion and is tinge to do that >> good news let's talk about the opioid addiction. because, you want to get the drugs into the hands of the

right people >> right >> but you also want to keep the wrong drugs out of the hands of the wrong people i'm hearing statistics the other day about how 58,000 americans died during the almost 20 years of vietnam war more americans than that perished last year from opioid overdoses. something north of 60,000. how do we get our arms around this crisis. what's being done? and what can the fda do? >> this is the biggest crisis facing the fda right now one of the biggest public health crises facing the country. fda has a role to play, i think across all continuum of this crisis i think where we can play a particularly prominent role is in the new addiction side of the crisis trying to reduce overall exposure to opioids. most people who become addicted to opioids become medically addicted their first exposure is going to be a clinical prescription that they received and then go on to develop an addiction about 6% of all people exposed to opioids for any length of time in the clinical setting will go on to develop an addiction. so we need to reduce overall expore your. that means making sure only properly indicated patients are

getting an opioid prescription so educating physicians, making sure they aren't being written inappropriately and when people are prescribed opioids the duration of use should purport with the reason they receive the prescription minor surgery or dental procedure smud be three or four day prescription not a 30-day supply. we think there are things to reduce overall exposure. we're working on multiple goals. we want to look at risk benefit not just in the labeled use of these drugs but also in the illicitating what happens when they're used in an illicit fashion. we've made regulatory decisions recently recommending that one drug be withdrawn from the market on the basis of a risk purely associated with the illicit setting. we've changed our regulatory approach to this and i think we've redirected both look at this from a different standpoint from a policy standpoint >> i've heard regulators have cracked down on doctors like you were mentioning. you're only allowed to give

three to five days those are fda rules? >> that's happening at a state level. so right now the states are doing that the question is can we do something federally? i think there are things we can try to do federally to encourage more judicious prescribing. that's going to be a longer conversation two weeks ago we basically expanded what we call our risk management plan that regulates how niece drugs are dispensed, and requires certain education for physicians from the extended release drugs which is 10% of prescriptions to the immediate release drugs which is really 90% of the prescriptions it is a drug like vick din and percocet and oxycontin a lot of the new addiction gets started when people are exposed to the i.r. drugs immediate release drugs and move on to the higher dose form you alaulationd then to the low cost versions, street drugs heroin is cheaper. >> we've made great strides in basic research as you know, and ten years ago i thought when we sequence everything and you look

at techniques and rational drug design, i'm expecting great things and i'm frustrated by the slow pace, i guess, should i be is there a quantum point where all the sudden the knowledge we have and the ability to design drugs is going to usher in alzheimer's treatments or a cure for a lot of different cancers am i too optimistic about that >> i think you should be very optimistic about it because if you look through scientific history the length of time between the discovery of something fundamental about science or the fundamental discoveries about immunity and antibodies was a 40 year process. we've made some basic fundamental discoveries around genomi genomics, 15, 20 years ago and we've seen drugs related to that some -- >> i know it's a lot of time, scott. but you know -- >> look at what's happened with gene therapy these were techniques that really were pioneered a few decades ago and now we're seeing their payoff in the form of

potentially curative therapy very exciting things in clinical development that i think you should feel optimistic about >> you look at -- i was frustrated for awhile, and pharmaceutical companies have and biotech they have to decide where they put all of their resources. and for awhile a lot were putting it into expended release versions of another cholesterol lowering drug or something like that what's been the biggest drug since statins? have we had a life changing drug since statins? other than -- what would be -- humira >> well, look i think you're seeing the reallocation of capital towards unmet medical needs. reallocation of capital towards a lot of products in mutt -- you're seeing less of what we would call evergreening. but that does provide some public health benefit when you can turn a drug into an extended release formulation. you want to see that innovation but i think you're seeing potential changes in what's coming on to the market. when i look at what's in early

development -- >> when you look at cell based therapies and gene based therapies you have the real potential for a real inflection point in the treatment of certain diseases >> -- quantum -- five years, ten years? >> i don't want to be specific because i'm looking at a drug pipeline in the late stands where we're making potentialry regulatory decisions when i look in the early stages i think we're going to see real novel breakthroughs. it's not elite to me to say that everyone sees this >> we're doing things not just palliative now we're looking at we should be able to start looking at the -- >> the underlying mechanism -- >> the underlying mechanism. you're hearing an unbelievably exciting time. >> great time to be alearn >> i'm glad it's you >> a very interesting company that we're going to bring on last week that just talking about how young blood can help you in a million different ways. so many things that are out there. pretty amazing >> hurry >> we'll get out in front. >> all right >> thank you so much >> thanks a lot. >> you'll be back?

i have to ask you a few things -- i was gentle with the -- >> with the reform you guys were much harder on me by the remote. you're much easier on set. >> we like having you here on set. >> kind of the elephant in the room and it's the elephants that are screwing it up, the republicans in terms of -- >> i'm going to reserve judgment >> okay. >> i wasn't asking for a comment. i wasn't asking for a comment. >> run away, scott >> all right thanks >> coming up the s&p and nasdaq on track for a third straight winning week we will talk market strategy right after the break. plus, food truck millionaires we'll take a look inside the industry of making curbside meals. your muscles look good, but we should be seeing more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier ed ugh... am i covered for that?

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welcome back, everybody. a million dollar business and all you need is a truck and some ingredients. kate rogers has the details. >> hey, becky. when they started making their artisan ice cream in their green point brooklyn apartment back in 2008 they had a no idea what a big hit it would become. they laumpled their first truck with unique flavors and fair trade ingredients.

>> we pulled onto green street and drove to the corner of green and prince and by the time we opened the window there was a line of 30 people and the line remained there all summer. >> the lines have been coming ever since they have nine stores and six trucks across new york city, and los angeles. they also retail in whole foods in the northeast, and in california, with their delicious flavors, including honeycomb and vegan mint chocolate chip. and this year, they're on track to do about $20 million in revenue. now over in austin, texas, former attorney eric silver steen wants his truck the peach tortilla back in 2010 after he couldn't get the capital he needed to open up a restaurant >> biggest challenge early on was just a mental hurdle of just staying mentally strong and trying to run this business when you're not taking a paycheck so if you're doing it, you got to be ready for, you know, an all-out war on the street, basically.

>> today, he's about to do $3 million in revenue he's got two trucks and he's also got that restaurant he always wanted. one thing all of these food truck millionaires say, all of the local regulations that they have to go up against really are big hurdles. right here in new york city food truck mobile vendors need to spend months just getting the license that they need to operate a truck like this. he says they're considering that as they continue to expand they may even close down the new york truck because they say the city's not very friendly and they could do other markets like los angeles where they feel the rules and laws are a little more friendly this is strawberry and macha ice cream. i scooped it i used to work at dairy queen and i haven't lost my touch. >> kate, where are you in new york >> in soho on the corner of sprint and green >> not too far of a drive. why don't you come about 60 blocks north bring some of that our way >> it's melting but i'll try >> okay, thanks, kate. see you later. when we come back, petiq

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good morning, of welcome back to "squawk box" here on cnbc we are still live from the nasdaq marketsite in times square among the stories that are front and center this morning, amazon is trying to boost its global inventory by buying products from some u.s. retailers at full price. typically third party merchants pay a fee to have their inventory stored in amazon's fulfillment centers taking advantage of the amazon supply chain to deliver the products immediately anywhere in the world. under this new offer to some merchants amazon would buy products at retail price with no additional fees. that's according to an e-mail sent from amazon to sellers that was obtained by cnbc the offer is good for what they are calling a limited time shares of visa are trading higher in the premarket this morning. visa's third quarter profit and revenue both beat forecast as the company processed more credit and debit card transactions visa is also raising its earnings guidance for the full year and that stock is up 0.8% and get ready for a flood of earnings next week we'll be getting reports from 13 dow components and about 180

members of the s&p 500 among the highlights we've got alphabet, mcdonald's, gm, caterpillar, at&t, facebook, ford, coca-cola, boeing, comcast, verizon, amazon, chevron and merck. have fun next week i'm not here >> unbelievable. let's get over to the cme. joining us now jim iuorio of tjm institutional services he is also a cnbc describe outer. can you sit in next week and help me with these, jim? now that becky's not going to be here or no? >> just tell me where to be. tell me where to be, i'll be there, joe you know i do that for you >> you going to wear that jacket, though >> do you like the jacket? you're just jealous of the jacket a little bit, aren't you? be honest. >> how are you we in terms of at this -- we're not quite -- maybe we're at a midpoint, maybe not on this quarter. but have you been gratified, and does it justify the move in the

markets so far, the earnings >> well, those are two separate questions, i think yes, i'm very encouraged, i think the earnings have been great. i'm not really encouraged by how the individual stocks have done post-earnings particularly in the banks. but all about the bank stocks next week. those are the ones that have done the heavy lifting for a long time. so i see it this way yesterday, 24 hours ago, i took a day trade short position, and a minute later i realized how stupid this was, because trying to keep this market down is like trying to push a basketball under water. it keeps popping back out. if you want to look at it from a broad perspective, a week and a half janet yellen took a pivot towards more dovish. we expected draghi to be more hawkish and he was dovish. i think it was nor a question of looking at these two currencies and trying to figure out which one is better to sell not which one is better to buy so i bought gold i'm staying long stocks. i think they're giving away options so to buy protection seems like something that you should be doing, or to replicate positions with calls

the risks next weeks are f.a.n.g.s and janet yelling walking back >> how do you explain what the moves that we've seen in the dollar, jim? and you know, larry kudlow always talks about king dollar nobody wants to devalue the currency we see what currency headwinds mean to multinationals those aren't fun either. what happened in the last two weeks? >> this is interesting the dollar is down 9.5%. that's a huge move and i think it's because we realize now that we keep -- the administration is going to face head line risk after head line risk and every time that's happened we'll economic policy that we really hope for six months ago is getting pushed further and further back, possibly to oblivion i actually think that's the reason that janet yellen hasn't taken a turn for dovish. when she was hawkish five months ago she really believed there would be regulatory reform, tax reform and we were being looing at greener pastures.

now none of us are so sure and that's what's taking the air out of the dollar. >> all right, jim, thanks. we're going to keep it short thank you. >> thank you >> this is me, too petiq listing on the nasdaq today the company will trade under the symbol petq offering 6.25 shares at $16 a share here ringing the opening bell, co-founder and ceo of petiq. any of the recent offerings in the past ten years, anything pet related has done well, hasn't it because people are crazy about their animals. >> people are definitely crazy about their pets and like a lot of the other great pet companies that have done well we're following some of those same great trends you're seeing as people are treating their pets more and more like their kids even in this country, the last two years we've actually had a point in time where more pets have come home than even babies at this point in time. so we're really excited about the trends we're seeing in pets and following some of the great pet offerings in the last ten years. >> and i think it might be -- i

have three dogs. i go to the vet for whatever, and i can't believe when i give them the credit card and i see the receipt. i just can't believe what i'm doing. and then i go to the supermarket and buy these bones, and they're like $12 and they last two days and then i'm back buying more. i mean we spend whatever we need to on our pets more than on myself i think. >> yeah it's really quite interesting. i think we just surpassed $80 billion in dollars spent in the united states alone on our pets. and the veterinarian channel i think we crossed over $8 billion a year on health care for our pets it's really quite interesting. even with all the dollars being spent there's still a huge percentage of consumers that aren't providing great pet health care and so ultimately petiq we really focus on seeing how we can even expand that to get better health care for pets and make it available and accessible to everyone >> i asked you when you were here about amazon because i know costco, petco, walmart, they're all customers of yours

amazon is a customer, as well? >> we do business at amazon, as well and we view all of our retail partners as great ways for us to access consumers we do not do any direct business with consumers, i mean our job is to really help enable the market to have access to affordable pet health care >> i ask this just because we've seen what happened with ipos recently blue apron is the most recent one we were talking about. blue apron came out with a lot of -- under a lot of pressure because amazon was getting into its sector that's not going to happen with you. they're already a customer how would you describe the ipo market right now outside of what happened with blue apron >> i'm no the pet business i'm not in the ipo business. i've learned a lot -- >> you must have had people saying this is a good time or bad time right now because why >> we've met with the top investors in the country the book was significantly oversubscribed i think that may be either the market itself, the ipo market, or there's a lot of people that have multiple pets, and just get

that pets are going to be very important and continue to be important. we've had a great reception coming on to the market. we couldn't be more excited to be here. couldn't be more excited about the shareholder base that came in over the last couple weeks has been something we could only dream about as a company to have that type of support >> in terms of having more capital because it's going public what will you do with that >> we've got a lot of growth strategies, the company has put out there that are important like we said, there's a very -- very large number of consumers that are virtually unaware they need to provide the kind of pet health care that's available so a position of more capital just makes us be available in a market that we can do what's required to expand that, so it's a time for us to really implement our growth strategies, bring consumers in, hopefully help those pet parents just provide better health care >> how much of this breaks down, how much is dogs how much of your revenue would you say is dogs? >> dogs is a bigger portion of it >> how about cats? >> smaller portion but we're all -- >> what about turtles?

>> yeah, we have not studied the turtle market -- >> just dogs and cats? >> dogs and cats are big enough. >> i'm thinking there's a lot of other kinds of pets. what about -- >> goldfish? >> i'm pretty sure people may be using some stuff there -- >> pigs. >> we're really focused on dogs and cats >> what about the cute little pigs >> we may have to look at that as an expansion. >> at this point it's all dogs and cats you have a huge possibility to expand, right? >> right and so we talk about that expanding pet market, that $80 billion, it's dominated by dogs and cats, i personally am a dog guy and we have great -- >> do you have any drug that can make cats like their owners, or appreciate their owners, or even allow them to approach their owners without sort of a, you know, an aloofness do you have anything -- >> that might be more you than everybody else i think we have a lot of people that love cats >> thanks so much for coming in. >> thank you >> thank you so much for having us appreciate the opportunity

>> when we come back -- >> i have a joke for you, too. >> uh-oh hopefuls weighing in on president trump's growth argueate we'll get reaction from former cea chair's austan goolsbee and aei's ryan streeter. ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't.

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welcome back, everybody. fed hopefuls kevin warsh, john taylor and glenn hubbard have backed the president's 3% growth target joining us is former chicago booth sool of business professor austan goolsbee and aei's domestic policy director ryan streeter gentlemen, we've been talking about those growth numbers austin you want to weigh in? >> i think growth comes from two parts. number of people, and growth per person which is productivity. the population growth rate is half what it was in the 1980s. and the administration's now talking about cutting legal immigration in half. which is where the growth game from the other part of the population so if you're going to -- unless you're going to wave a magic wand and make a lot of working age people get creative, i don't

see where you get to the overall growth rate of the country getting up to 3-plus percent >> ryan, how do you make the math work? >> i agree with what austan just said i think you need to get more people from outside this country into this country. and so increasingly legal immigration with people with skills and ambition and talent to come to this country is probably the most important things the administration could do that it's not talking about and then continuing to invest in innovation that's the second thing. i just think that we need to kind of accelerate growth through new innovation, and that's also something that kind of in the trump economic plan you don't hear a whole lot about. >> ryan, i mean, these guys are your colleagues, aren't they did you read the paper >> yeah -- what do you mean they're my colleagues? >> aei, right? they're aei-type guys, right i mean you read what they're saying that these initiatives can do 3%. is it different this time, and we can't do 3%, because austan's probably going to argue, you

know, he was with the last administration, it never got to 3% so he's going to argue for whatever reasons that it's just not possible to do it. because they had the best policies back then these other guys that i'm talking about, glenn hubbard and kevin warsh, and cogan, and who is the fourth, they're saying that you do these pro-growth initiative -- and john taylor. they're saying that if you do these things you can get to 3% do you disagree? or do you agree with austan? >> i agree that the kind of things they're talking about are a step in the right direction. clearly reforming the tax code, particularly lowering the tax on businesses which there seems to be a lot of agreement about is a necessary step and regulatory overreach, regulatory intrusions, peeling that back, those are all really important things >> can we get to 3% -- >> that you need -- >> i don't think you can get to 3% with just -- >> so you don't -- necessary but not sufficient

austan -- >> not sufficient. >> jamie dimon is a democrat he's like one of you -- >> he would like to call himself a patriot i think. >> no, but -- no but he said it in a -- no -- trust me trust me but trust me he has said before actually during the last administration he said i'm barely a democrat at this point. but he is a democrat he just was watching wrote in that these guys are write. this is what we need you saw his comments a couple weeks ago. used on a conference call, and used some colorful language, but he said that these things are necessary. that they're even doing it in other countries around the world for pro-growth initiatives, and that we can grow a lot faster. you just don't -- why so defeated, paul >> i didn't say -- >> why -- >> why so defeated >> some of the few places we agree, joe i agree that if we blooden the base and lower the rate on corporate taxes that would be a good idea. certainly, there are regulations

that you can find that we could get rid of or streamline and would help matters the question is, is that the main reason that we have not been growing 3%? and it isn't the main reason and each of the members, except for cogan i don't know, but warsh and hubbard, they're friends of mine. i've known them. i don't agree with this paper. i would -- i would point out to you that taylor, hubbard and warsh are all under consideration for major jobs in the administration, so it's clearly in their interest to try to back a trump policy but even conservative economists have major questions about whether -- what they're saying is accurate. >> i mean, we had -- the last segment we did i had liesman and jared bernstein. now we get a guy from aei that said i think it's going to take that -- we can't get him so i'm all alone in trying -- i

guess that's -- >> joe, even your mother is telling you that you're being unreasonable, maybe it's time to think whether you're being unreasonable >> okay i admit it we're europe we're an entitlement state we're socialists, and we -- >> europe has the lowest -- europe has the lowest corporate tax rate of all regions in the world. so why are you complaining about europe you're trying to turn us into europe >> they don't have any other anti-growth labor problems there. don't -- don't -- you know, when you do it that way, that eats your argument because you're leaving everything else out, austan anyway, i'm hopeful. i want 3%. it would be so good -- we can get all the people you want to help, austan, we can give it all to them and not break the bank >> i would be thrilled if we got it >> well at least i got you to say that >> we all want that. >> jared i don't think would be thrilled he'd been like dog gone it ryan, you know, go back and talk to your friends. you've got the wrong -- you're not drinking the kool-aid. >> look, like i said, it's going

in the right direction i'm not disagreeing with that. i just think without the kind of investment to innovation that we know that we can -- >> we can do that, too we can do some infrastructure. just give back to, you know, i mean, we're stuck at 2%, it's going to make it much harder to do all these things we want to do and hopefully, you know, we got to try it. at least we should try it, right, austin? at least we should try >> we should try a lot of things to get the productivity growth rate up, yes i agree with that. >> all right all right. thanks thank you, gentlemen thanks for playing along all right. what's next? war at dunkirk rex reed said he needed dramamine and ear plugs to watch this sometimes like saving private ryan, i'm -- no i'm glad i wasn't there you know i wouldn't have done well in that -- dunkirk opens in theaters tonight so just how big will it be, and what will it

mean for the movie just try? julia boorstin joins us from los angeles. you haven't seen it yet, have you, julia >> i haven't seen it yet but i am going to see it tonight. i'm very excited to see it but i don't plan on bringing dramamine or ear plugs here's the thing, joe, it's been a summer of sequels and expectations are very high for this film which is an original christopher dolan's "dunkirk" is expected to bring warner brothers as much as $40 million in the u.s. box office which would be a lot for a war drama because they tend to open smaller and perform well over time this film has a 292% positive rating from critics, aggravated by rotten tomatoes and it's not just warner brothers which spent $100 million plus to make the film are that has a lot riding on it. "dunkirk" is imax's widest u.s. release ever playing on more than 400 screens, plus an additional 760 screens worldwide. the film was tailor made for imax a record 70% of the movie was shot with imax cameras

nolan saying imax is like vr without the goggles, and 70 millimeter which is the highest quality we've had in 25 years. with the u.s. box office down about revive interest in movie going the way 3-d did about a decade ago. i'll see it in imax and i'll have to tell you if it feels that much more intense than a regular movie. >> we'll talk to you on monday about it you should give us a, you know, two thumbs up or what did those guys used to do. >> rotten tomatoes. >> thank you all right. thank you. if you ever want to take a game of thrones themed trip here's your chance. how about for about 2,200 you can travel the 7 kingdoms, travel comparison site created an itinerary for fans to fly to

some of the sites of the show including moroco, malta, i want to be an ambassador there. croatia, scotland. and the price however does not include the cost of lodging. >> i think you can sort of say it but not say it. >> when we return, when we return jim cramer live from the new york stock exchange. his take on today's top stories when we return ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected.

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down to the new york stock exchange jim cramer joins us now. this wasn't the quarter where everything came home this was good wasn't snit >> cash flow improved. the cfo is saying things are trending to the bottom of 1 drrs.60 or $1.70. >> everything that we read when we were talking about it at first, unless i guess it's the outlook i guess. so there were some bright spots in this the last three months but i guess there's trouble on the horizon or something, huh? >> i think that the cash flow

takes the idea that the dividends is in trouble off the table and they can do a buy back but $2.60 is quite a disappointment from the hope one day of a $2 or even $1.80. >> did you see nick. >> i love nick. >> crazy nick. i love crazy nick. >> he had a lot of positive things to say. buy the stock he said too. >> i have loved him for 25 years and i was thinking okay maybe he has insight to where the cfo is going. i would not sell the stock at 2524 where i think it's headed but a new guy is coming in let's see what he says this turbine business was terrible they're going to say how could you say it's terrible? and the reason i say it's terrible is because it's terrible because i don't play for dinner. >> jim i have been pushing back against the entire world really, we can never do 3% can we do 3 approximate%

can't we try isn't it morning in america? can't we do 3% >> i think we can do 3%. our interview with the head of the fta and not just because he's a philadelphian but didn't you feel great about that? >> yes he has been talking about the things he thinks we need to do and he's starting to implemented them he has great market solutions for a lot of these things. >> what a breath of fresh air i thought maybe this guy is like the head of unh. wow we got him as the head of the fda how did that happen? >> in this administration and look at some of the other people look at some of the other people we got if you could just get beyond russia for a second they might actually think -- >> i'm a huge fan of so many people in the defense department they have the best. >> mattis i know. >> you're not going to get a better defense department. >> as soon as we get you at the fed or treasury then we'll be all set.

thanks. >> yeah. >> maybe not >> we need him with us. >> the ceo on amazon buzzing on social media and no it has nothing to do with buff besos next i think we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements,

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jeff besos is on instagram it's a fly over preview of blue

origin's new rocket factory with jeff besos sitting on the roof right here there is the sign that says rocket factory coming soon he looks pretty cool up there. >> he does. >> have a great weekend everybody. make sure that you join us on monday right now it's time for squawk on the street. ♪ good friday morning. david is off today the futures are just below fair value as markets study earnings from ge, honeywell, ebay, visa, microsoft, the ten year is back belo