tv Squawk Box CNBC July 3, 2019 6:00am-9:00am EDT
siness never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc, we're live at the nasdaq market site in times square our guest host this morning, joe terranova and kevin o'leary, both are cnbc contributors >> the eyebrow raise there >> fro >>. >> yeand mr. wonderful changed i outfit >> does this myanmar kets will be up? >> i'm trying to match this green rolex with the pocket tie. i'm doing an intervention on andrew i want him to switch away from the apple watch. checking u.s. equity futures. building on a record close in yesterday's session. looking at an addition of 10
points at the s&p. the dow up 72 points the nasdaq looking to be higher by 32 points in asia we saw a pull back from yesterday's gains off the china u.s. trade truce hang seng is off just a fraction over in europe, european equities are mostly higher the dax is up by 0.8%. perhaps europe is still digesting the news that christine lagarde will head the ecb. the first woman to do so treasury yields fell back below 2% yesterday and remains there right now. 1.895% the global story here, the benchmark german bund yield has fallen to a new record low, negative 0.385% right now.
>> it was negative 0.4% earlier. the italian ten-year has gone from 2.8 to 1.7% in the space of about three weeks. lagarde's appointment seen not just in the german bund yield as not potential hawk, she will be more dovish, but someone who can operate politically and avoid a clash on the italian budget. both appointments being european commission president and ecb president being german and french shows the power brokers, macron and merkel still have their way. it was a win for european unity yesterday. >> the overall supply of positive yielding bonds as we discussed before continues to contract further and further in an environment where the markets still have a defense ive mindse.
>> the record highs have been built on gains of leadership and defensive sectors, utilities, reits, consumer staples. >> we've been talking about technology, yes, leading the market higher. but yet you have not seen apple, amazon, alphabet posting new highs. nvidia, netflix, still well below the highs they posted in 2018 there is dispersion in technology there's a defensively oriented sentiment that wants bond proxies. >> let's talk about our top corporate story. it is the one and only elon musk, tesla shares are soaring this morning on record deliveries he pulled through, phil lebeau >> he topped expectations on every level in terms of what people were looking for for the second quarter now already there are people who are saying, well, okay, at what price did you have to sell the model three? what will the margins look like? we won't know that until later
this month and early next month when they report 2q finltals. they hadry dlefryes of 95 d 200. the model 3, 77,000 of those the model s and x, almost 18,000 when you look at the model 3 deliveries this has been the focus for so many people the estimate was for 74,100 vehicles to be delivered now with the 77,550, and the total number, they need to deliver about 200,000 vehicles in the second half of this year in order to hit their previous guidance between 360,000 and 400,000 vehicles their q2 production numbers, a little over 87,000 vehicles were delivered. we do not know yet what the
deliveries whereby region. that's what people want to know, how many were sent to china, what was the impact of the tariffs because vehicles built in the u.s. and shipped there do have a tariff that is slapped on them and also how many were sent over to europe as well as to north america. clearly north america is the bulk of the deliveries all details people hoping to learn more about today or in the weeks leading up to the 2q report >> signaled in these leaked emails i'll be polite about them being leaked when you look at the issue now, it's -- we're at a -- not a supply or production issue, we're at a demand issue. the question -- >> i think you're going to get to the question, what they said yesterday in announcing these numbers is that the backlog of orders relative to deliveries increased in the second quarter
heading into the third quarter i've already heard from some people who have said how come in the past when you asked about orders they said we don't want to talk about reservations or orders there's not a demand issue now they put out a release saying we have a stronger backlog. the big question is what is that backlog? how strong is it nobody knows we do know elon musk said it's not a demand issue i think they were hoping that stating in the delivery announcement yesterday that the backlog increased. i think they were hoping that would put to rest some of those questions about demand >> i want to pivot the conversation another big story in the auto world, lee iacocca has died at the age of 94. talk a little bit about his legacy i would argue he's probably at least of a generation the most famous ceo in america. >> and a turnaround artist
one of the first that could take on a disabled situation, turn it around that doesn't happen often anymore. >> phil? you think about this if somebody has one important event that happens in their career, they are considered legendary. start with the mustang he's the father of the mustang then saving chrysler he has the vision to buy american motors. american motors was a dog with fleas owned partially by renault. what did he see? jeep what has jeep become the most powerful brand within the chrysler portfolio then, you know, created the minivan. people were like what is this? that's a whole new category he was the one who said people will
want that. there's no shortage of the number of consequent tall decisi consequential decisions he was a part of. he could be cantankerous, difficult, there were times you left the room shaking your head, but when he was on, he was fabulous those are the words of bob lutz. we'll hear from him later on this morning ph >> phil, you're fabulous we'll check back with you in a bit. president trump announcing his two picks for the open seats on the board of governors. christopher waller was previously head of the economic departments at noter dame and the university of kentucky judy shelton was an adviser to the president during his 2016 campaign and serves as u.s. executive director for the
european bank of reconstructed shun and development she said if appointed she would lower interest rates to zero percent in one or two years, echoing calls from president trump to lower rates make sure to tune in friday, 11:40 a.m., dr. judy shelton will be on what do >> what does it take >> zero is unnecessary at this point. pegging to gold, that's so old school >> she has said she is elevated to the fed board, she would not advocate pegging the dollar to gold >> how does it color everything else you think about the world >> you're pivoting on policy just to assume the position? >> why would you do that >> i agree >> she's putting herself in a bad set wayituation
people say i don't want anything to do with the dollar pegging gold zero interest rates scare the heck out of me >> neither of those extremes are expected what this means short-term for the markets is not much more >> i don't think she makes it. >> you don't think she makes it? >> no. >> she has already been confirmed by the senate. >> watch >> there was a view that somehow the fed would become overtly political political. is this the same just dressed up differently? >> a little less radical >> that's high it has less impact >> doctor shelton is the only one who could be perceived as political. >> you want to be confirmed, you have to keep your head down. an radical later >> you could also there are wildcard factors that got
brought up >> my take is the headline on her will be she wants to peg to gold, forget about that. >> i would agree with that there's also a lot of criticism now on this desire on the administration's part to have easy monetary policy outside the u.s. every stall bank around the world -- >> some say that's the pressure for us to have lower rates because the differential would be much greater. >> and your currency continues to appreciate. >> we'll continue to debate this and so much more coming up, big tech under fire we'll get silicon valley's response to canada's call for more tech regulation it's a big deal. breaking up big companies. the ceo of vm ware will join us next. and the biggest premarket winners and losers in the dow. back in a moment moving is hard.
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xe companies. >> it's difficult to do if you have companies like amazon, trillion dollar tech companies paying zero in texas >> on day one i will repeal that tax bill that benefits the top 1% and the biggest corporations in america for more on tech under fire, we want to bring in a ceo at the intersection with some of the biggest names in this sector patrick gelzinger is the ceo of vmware good morning >> good morning. >> it's been a wild ride over the past several months and especially the last week with the debates. you're on the ground there you're talking to these companies. everybody is in a defensive posture. there a sense this is just rhetoric or very, very real? >> of course there's concern when your industry is highlighted in political debates. we think this is a broad brush that is inappropriate. overall tech is doing incredible
things for the nation, for the world. we have cloud, mobility, ai permeating every aspect of business and society inside of that we have some issues the social media companies are enforcing invasiveness into peoples lives. we think there's action needed in those areas a broad painting of tech is inappropriate. >> what would you do i'll put you in charge of the -- you can be in charge of the doj, the ftc and the fcc all at the same time. >> that's a scary power that you're suggesting i take on. within it we think there's clearly views of how peoples personal data is being managed how that data can be used inside of the business models, that
needs to be addressed. breaking up tech, a broad brush against this -- >> addressed how through some form of regulatory requirement requirements >> there are regulates that live inside the wall street banks of new york city. there are monitors inside companies today. is that the kind of thing you would want >> i'm not an expert on those topics, i have my focus on running vm weath mshgmwarvmware small piece of technology. tech is a permealarge permeating technology and the world looks at it with envy.
in it it's important to address the core issues, at the same time holding up the greatest piece of american industry today in the global setting. >> patrick, besides tech bashing, which is great politics, i feel sorry for democratic candidates, there's nothing else to talk about nothing is really happening. even with facebook, the hate child for everybody. i'm a huge investor, i spend millions of dollars each week across 52 companies on facebook. it's getting betterment i have not seen anything change at all. the users couldn't give a damn about privacy. where do you think they'll be leveraged to change anything who will do the work and why would they do it there's nothing wrong with facebook or any of these companies. >> i think their business mods have a core issue, they'll probe deeper and deeper and influencing and being invasive in peoples lives that's a core issue that needs
to be addressed. maybe europe takes more of a leadership role looking at those topics through things like gdpr. we see technology overall, this is a powerhouse of innovation. it's creating new jobs the creating new industries. the envy of the planet inside of that we believe political rhetoric aside, the technology industry is and needs to continue to be a bastion of the future of the economy. >> do it this way. lets pretend the doj calls you and says do you have a problem with google? do you have a problem with amazon when the competitors come forev forward and say i do have a problem. when they call you, what do you tell them? >> i'll tell them i think we have an issue affecting peoples
data -- >> is it affecting your business >> no. we think this is a focused issue in a narrow segment. technology is permeating every aspect and changing healthcare and education. this is powerful, we should be bringing this forward as it's creating jobs and leadership for america. >> aside from regulatory clouds hanging over the tech sector, there's the china trade war going on vmware has a robust presence in china. how do you view china as a vehicle of growth for vmware, how much will it power the growth and sales in the next five years or so how does a china trade war impact those forecasts >> overall we believe this free trade. we believe that's the right way for the world economy to be operating. the core issue is intellectual
property how intellectual property is being used, controlled, how it's leveraged for access to markets. we believe that will last a while. i don't think near-term a trade agreement fundamentally addresses that underlying core issue. for vm ware, it's a small market for us, it's he growing nicely we're highly committed to the market and satisfying customers in china of course we'll obey international trade laws, u.s./china law inside of that. we're committed to continue to see that as a growth market for us long-term even as we see this turbulence in the near-term an we'd we'll continue to ride through that. still to come, get ready for the 4th of july. we'll tell you how much americans will spend on their independence day barbecues if you're hitting the roads, they may be crowded but expect a little relief at the gas pump. when it comes to your customers' expectations,
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big day tomorrow tomorrow the u.s. will mark independence day we have wilf here today to be with us to celebrate it in advance of the big day american retailers liberating dollars from their wallets americans will spend an estimated 6$6.7 billion, folks, on picnic supplies like hamburgers, hot dogs we were talking about whether
impossible burgers and others get in on that action. another billion on fireworks one of the country's top drinking holidays. americans will spend roughly 1.6 billion on beer and wine to show our spirit, the "squawk" spirit, we'll spend more than $5 million on american flags. >> but maybe not betsy ross flags. >> we have the best flag in the back there >> we do. >> we'll talk later about the betsy ross flag. washington, d.c. is preparing for president trump's salute to america celebration as well military tanks have been arriving as part of the festivities. president trump has been speaking about displaying military prowess at a military event since attending bastille day in paris in 2017 there will also be flyovers tomorrow the issue with the tanks is that
they're heavy. heavy and washington is on a swamp. >> yeah. >> what will happen. >> if you see paris or these places where they rollout the hardware, the streets are destroyed, they just pave it over we never had a display like this bring out the hardware, have some fun i think it's great it's controversial this guy is a controversial president. he want the rockets, the jets. >> i just want the fireworks >> you'll get real fireworks you get the hard core technology flying over, that's fireworks. that's what i want to see. loud, beautiful stuff. >> i'm not surprised i've been given this read. alec morgan celebrating a goal over england with a spot of tea. morgan said it was her way of responding to critics who have accused the american team of
arrogance. >> that's cruel. >> i don't get the fallout in this their play good little bit of joshing during the game. >> i think so. >> lay it all out there on the field. the england team did well. shame we lost. best team won. >> so british. shame we lost. >> 11 million viewers watched it in the uk. congratulations. >> for a sport that started in england, they never win anymore. >> we have not won since 1996. >> that's my point >> for the women, 11 million, that's fantastic we have to find the silver linings in our loss yesterday. >> keep your chin up >> it is i think i'm doing a good job >> same with cricket they lose that, too. >> we're playing now not that i'm checking the score, 82 for zero in the cricket world cup. coming up, a potential deal
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symantec shares are soaring. a report saying the company is in talks to be acquired by broadcom sem m symantec's ceo stepped down in may after three years in the job. broadcom has been on an acquisition spree, though it's attempt to purchase qualcomm was blocked by u.s. regulators the only question i would ask in this instance is is there any kind of similar situation in terms of anxieties >> this is different this is software broadcom has bon in thgone in tt direction with ca and now symantec you ask what is the synergy. >> this is old stuff i don't see it being cutting edge i don't think you're getting a lot of cutting edge technology >> you have to wonder if it will follow mcafee which it spun off
at a loss. it bought it for $7 billion, an sold it to tpg for 4 plus. >> do you try to use all their sales people what do you think the advantage is >> i'm not sure what the advantage is >> does it make you less -- >> so there's none >> no, no. >> it's hard to understand where the synergies are that will save you cash and make this aconcr--e >> 18 billion on ca, 4 billion, 5 billion on this. >> and now the suggestion he is a serial acquirer. a u.s. judge reduced an $80 million damage award from bayer to $50 million or less against man a man who blamed his cancer on the weed killer, round-up
the judge declined bayer's request to reverse the verdict said jurors had seen sufficient evidence that the company did not care whether its products caused cancer but instead focused on undermining poem who raised concerns. suntory holdings will hold off on further investment in china, that's according to the company's ceo who spoke at the world economic forum he said they will have to decide whether to keep products in china or make products in japan and export to china. they have operations in vietnam, thailand and indonesia the stock is flat. coming up, what the recent escalation in tensions in the middle east means for drivers this independence day. we'll talk about the price at the pump next. and more on tesla's record
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>> we're at a rest stop in new jersey, not quite 7:00, not too busy probably that will be different later on gas prices are $2.73 according to aaa 12 cents cheaper than last year. though prices are cheaper they have been creeping higher. one reason is that philadelphia refinery fire on june 21st now, because of that we've seen prices increase about 7 cents per gallon nationally since then also contributing to the higher prices, gas taxes in more than a dozen states none of this equals sticker shock. prices are still affordable and because of that we're seeing a record number of americans traveling for this holiday according to aaa, about 49 million people of those 41.4 million people will be taking to the roads this holiday that's the most sense aaa began keeping record since 2000. that means a lot of neighbors out there on the roads, a lot of
traffic and gridlock with today being the worst of the holiday and this afternoon being the worst time consider this, aaa says in the most congested areas in the country like the new york city metro area where we are, it will be about four times as much congestion at its worst. so something that would normally take you 15 minutes could take you about an hour. that's what we're dealing with take the good with the bad lower prices the good. the bad, traffic, gridlock and a lot of company on the roads. >> i'm sure it will be getting busier behind you. our guest hosts with us. joe, talking about wti prices. a lot of volatility the last two, three months but within that 55 to 65 range. do you expect that to be the norm >> i think oil prices are in a comfortable range. the impact overall on other asset classes has lessened dramatically that's the most important
dynamic that has been a result from the increase in production we're seeing so the defensive mechanism is not as impactful as it used to be >> energy sector yields 3.7% >> the big question about the sector if oil stays here, and i'm a credit/debt guy. >> you own mlps now? >> i buy the credits or debts of the junior oils. i do it internationally now. they're yielding -- what the yields are telling you is there will be failures here domestically in debt in energy you look at jnk, the bottom "c" credits in there are all energy. this sector is important, not just on the equity side. if we can get oil back up to 50, 60, you'll see success in the people who took huge risks using debt to develop the permian.
if it stays between 40 and 50, 20% of these companies will go bankrupt and those asset also be rolled into other players. oil matters for credits. it will manifest itself in the next three years that is seven-year paper put on it that credit market now is nervous to say the least >> i think that's important. i also think we have to initiate the conversation surrounding the impact on other economies that are so reliant on exporting oil, like the canadian economy. like some of the -- >> japan >> yes you have a negative impact that we've witnessed over the last five years because they can't get the selling price of that barrel of oil, what they were able to get ten years prior. the u.s. is separating itself in having this advantage. i don't know if that changes any time soon. i think it's a secular change. just look at the canadian economy. >> bringing up canada is
interesting. i have a theory that could be an interesting trade. the chances that trudeau gets another mandated in my opinion is zero he'll either get a minority and gets kicked out this wave of conservativism is sweeping through the provinces including alberta. it happened in ontario the country is moving away from the socialist mandate he came in with here's the trade, i'm guessing i converted a bunch of u.s. dollars into canadian and put it into the index there with the assumption that trudeau will lose in october. there will be demand for the canadian dollar. watch what happens, money will flow dback into canada it's down 52% since he came in businesses hate this guy maybe that's why he gets the punt he never saw trump coming. >> is this what you think will happen or what you want to happen >> i want it to happen now >> his money is where his mouth is. >> i'm saying kacanada is an
interesting trade as long as trudeau loses. it will be good for the country. we'll talk about this. we'll talk about how nike is handling this controversy over the betsy ross sneakers, the fallout from the state of arizona. we'll grade the company's handling of the issue, what it all means and what businesses need do about it next. and a quick check on what's happening in european markets. green arrows across the board across the pond. "squawk" returns in a moment twenty-four people came together to sign an agreement that created the stock exchange. just the right elements coming together. it started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. it started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. it started with the markets, bringing together steel and buildings
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an early american flag designed by betsy ross following a complaint from colin kaepernick. following the announcement the arizona government said he will order the state's commerce authority to withdrawal funds invested in the company. joining us is dean crutchfield joe terranova and kevin o'leary are with us also dean, how did nike do? >> i believe they had to do what they had to do the big question is why did they get this far with this design? i think that's the big question. this is a company that's got brand managers, marketing people research people in the hundreds. they research everything they do how come they didn't come up in the screening of the idea? why did they choose not to use the star spangled banner >> maybe i'm not the demographic that would be concerned or understand the potential
symbolism of the betcy ross flag i naively 24 hours ago, 48 hours ago thought the betsy ross flag was the early heeiest american g at the smithsonian when i does nike run the risk of being just perceived as being too political, bowing to a small group of interests you know bowing to the one guy who's the brand ambassador >> i think kaepernick seems to be the private conscience of nike i think what would have happened if he had and said anything, would it have stayed only the shelf, we don't know that. but what we do know what they have done both for their brand and for people that it's ignorant, it's distasteful and it's ignorant on their part to launch it or pull it and to think that americans will go softly on it it's dangerous because - >> but it's become -- part of the question is have we moved
into this age of being too - >> i have a different theory. >> either too sensitive, too pc, at the same time look, no one wants to offend people and i don't appreciate the symbolism associated with the flag are we never going to show the flag ever again? >> i think that's why people are worried about kowtowing to political correctness and revisionism. i think that's the big concern of the majority of americans who are on that side of that things but here's the fact. it's there, it's criticized, kaepernick came out. are you going to say, no, i'm going to keep it there >> is this focused on sales or on principle >> if you don't have integrity nothing else matters. >> ethe spite the -- despite the 500 jobs in arizona, it's probably good for business. >> look at it this way i'm being a skeptic.
this company's constantly in controversy and getting all kinds of press all day long. one issue after after another issue. it's sheer genius. whether it's this shoe or backing some athlete - >> as an investor you want that. i mean, as a brand you want that. >> but that's the question. >> i own this name and i love the way they play us, because this is a ridiculous issue and then all of a sudden it's global they're getting all this free press. good on them. >> do you think they did this intentionally? >> listen, i'm a skeptic, i say yes, they did. >> well, there's incompetence and then there's come police it. are they incompetent or complicit that they were aware that it would cause a stir it's a big question. >> you're advertising for free, andrew you are getting nothing for. >> i hold on, there are people if you remember -- the first kaepernick ads that ran, there were - >> boycotting shoes. >> i'm burning my shoes. this and that. at the same time, obviously the stock went up and the sales went up. >> that's my point be a skeptic and realize how
good this company is at playing all of us on this stuff. >> but they have - >> there will be another controversy in 60 days when things die down. >> a company like starbucks is seen as dipping their toes into the political waters as well as an investor do you like that, joe? >> i think it's -- i don't know if it's as much political as it is cultural and i think there's a difference here and i think when it comes to culture, i think sales tend to increase by those that align with the cultural belief that the company is exhibiting. i don't know necessarily if it has such a detrimental effect on revenue if you're taking the opposite position of that cultural aspect. >> let me ask you the other side of this is what's happening in arizona and we have now seen the situation in arizona now, i know it's tiny. >> it's $1 million. >> but you saw what what
happened in georgia with delta and the nra. you can get to the tipping point on if you're in a blue state or a red state, this or that, that either tax incentives are pulled or other things that actually are meaningful. >> look, i love my - >> meaningful. >> all of this is on the margins right now. >> pick any state in the union, but make sure it's texas or florida. because that's the lowest tax outcome. fantastic infrastructure, very pro business take it out of new york, stick it in florida or texas. >> you don't see a moment that the texas governor will say you know what? >> we need the jobs. >> hey, nike, we hate what you're doing with the betsy ross flag you're out of here. >> what it's done for them politically too, it's helping their political careers going forward. i think we're facing a time of brand activism. >> is there not a point if you do this too often it annoys people more or there are too many issues --
>> no, because the press cycle is 48 hours. those shoes on the screen, what is the aftermarket price >> probably quadrupled >> i thought you can't get them. >> $1,500, 2,000 bucks on the line. >> i have a broader question do brands have to stay away from anything that's even potentially a hot button symbol? >> i think it -- >> should brands stay away from everything prior to the civil war? >> no, i think it's down to culture. what's your core customer. if you talk to any marketeer, what's your target, with all the investments, stock portfolios who is your target customer and nike knows who that target customer is and they feel confident -- >> the millennial. >> did you see how nike pulled a new set of shoes that were designed by a japanese designer, that was due to go out in china who was supporting the hong kong protests how does that play into what - >> all the big brands are desperate around china,
including google everyone is sucking up to china and bending their open rules >> right. >> so i think again it's market by market. and in these situations this is a case in america where they need to bend and ply to the whole issue of race. >> mr. wonderful, he owns all the watches. i like to collect stuff, but i'm worried -- i don't want to offend people if i own the shoes and start walking around it might be worse. >> the hottest trend is to do a small run of 2,000 or 5,000 and drop them into the market. >> i know. there are some people who think the thousands represent -- think the shoes represent racism in america. >> they're tainted, that's it. >> maybe i missed it, is anyone surprised that the president hasn't tweeted about it? >> not yet. >> he's busy with his tanks. good to see you. cheers. coming up, tesla shares are up sharply but tell you what
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tesla's breakout numbers we'll run you through the production figures and tell you if it's a sign that the company sees smooth roads ahead. the big point bounce the cryptocurrency is back up above 11,000 and the ceo of circle is here to discuss the moves and why lawmakers want facebook to halt libra. a millionaire's party at the jersey shore ♪ governor murphy's plan for a millionaire's tax is dead. will other states considering taxing the rich follow suit? we'll debate as the second hour of "squawk box" begins right now. ♪ >> live from the beating part of business, new york, this is "squawk box. >> good morning. welcome to "squawk box" right here on cnbc
i'm andrew ross sorkin with melissa lee and wilfred frost. we have kevin o'leary chairman of oshares and co-host of "shark tank." just back from taping. >> terrific deals. >> you're not allowed to tip office about what happened we'll talk about that later. joe terranova is here. u.s. equities at this hour, we have green arrows across the board. the dow up about 78 points, nasdaq up 42 points and s&p 500 -- we'll round round it at 11 points. president trump announced the open seats on the federal reserve. christopher waller was the head of the economics at notre dame and judy shelton was an economic adviser to the president during his 2016 campaign and she serves
at the european bank for reconstruction and development she said she would lower the rates down to 0% in two years and she's written in support of pegging the dollar to the gold prices although she said if elected she would not advocate for that position. tune in at 11:40 a.m. and she will join "squawk alley. symantec has been plagued by a failing business and broadcom has been on an acquisition spree. symantec is up 8%. and lawmakers are asking facebook to halt the libra including the chair maxine waters sent a letter to check gives yesterday and the correspondence went to zuckerberg lawmakers say without proper
oversight and regulation products like libra can pose a financial systemic risk. both the house and the senate have scheduled hearings for later this month. let's talk about tesla, the stock surging after elon musk set new delivery and production records. phil lebeau has more on pushing this story forward i don't know i don't know what to think about these numbers. so i'm hoping that phil can help us >> well, let's start first off, we have some indication, some notes are starting to come out this morning first of all, if you look at the delivery numbers we should point out not only are they record numbers for a quarterly delivery from tesla, but they're also above what wall street was expecting. total deliveries of 4,000 more than expected. and "s" came in 2,000 more than expected here and here's what the question is.
as you take a look at total deliveries, they have not changed their guidance for deliverying between 360 and 400,000 vehicles this year well above last year right now they have delivered about 155, 160,000 so they have to do roughly a little over 200,000 in the second half of this yearn. they have said that their order backlog it grew in the second quarter. how much did it grow that's a bit of a mystery. they didn't give any numbers, they didn't give any details there. as you tyke a look at shares of tesla we should point out that analysts are saying we don't know what the margins will look like in the second quarter because we don't know how many of these deliveries were basically -- we have to push the metal here on the model 3. we don't know what the metrics were regarding the model "s" and "x." that's the big question we're seeing this morning but we are seeing analysts at leasts initially bring down the estimates for full year losses
they're still expecting tesla to lose money full year, but they're bringing down the estimates both jpmorgan and credit suisse we'll get the q2 numbers and that's when the analysts want to see greater detail especially how many were shipped over to china and over to europe? i mean, tell us a little bit more than simply here's the total number of deliveries >> phil, just so we're clear, do they typically do that they typically don't, right? >> they typically don't, but like all things, andrew, it's not rock solid in terms -- they won't tell you this. there have been times in the past on full year deliveries where they have said, well, look to china, it was about 14% of our business we delivered 15,000. i think they did that last year. but they haven't done that by quarter. i think that's part of the frustration for some of the analysts who were looking at this who are saying, well, these are good numbers but i need to know more before i can get
behind the idea that these guys have hit a sustainable run rate. >> phil, stick around. we'll broad on it the debate and bring in jean munster. what is your take, how good are the numbers? >> well, i think the market turning point for the tesla story so i'm in the camp as i listened to phil, he outlines it well i think what the conversation about demand tends to miss and the key takeaway here there's an undeniable truth starting to happen and that's the demand of evs is stepping up we can get caught up in the details of this and miss the bigger picture i want to give one quick example of that. is that there was this massive pent-up demand called 400,000 preorders for the model 3 and they burned that through the march quarter. it went up to 51 in march and in
the recent quarter it was 78, so up over 50% sequentially that step-up happened with i would say more head winds than tail winds we can step through those, but i think that the essential message here when you see a step-up like that, something bigger is happening. i can understand given the history of tesla why this is still a debate around demand can't put a stake in the ground and say that it's up into the right from here, but can say that the gas cars should not exist. and we're 1% electric today and tesla is going to ride that curve and we're starting to see it emerge. i think that's largely being missed here. >> gene, it's joe. the argument could be made though there has to be concerns surrounding margins specifically the model 3 cannibalizing the model "s" and the "x" which are higher margin. and additionally, that tesla will have to source demand outside the u.s. which is certainly going to increase their cost in terms of building
out logistics. how would you respond to that? >> i think the china piece, the shanghai gigafactory which should be beginning next year should reduce some of the costs and make the cars more affordable in terms of the overall margin, i mean you have to look at this in the period over a five year period but essentially, tesla has struggled to become a manufacturing company over the last several years and i think they have -- they have achieved that goal. that's less of the topic now, it's about demand versus manufacturing. but when you think about profitability think about the next phase of teslas they become a software company you think about this hardware 3 which enables more advanced -- not quite autonomy, but advanced autopilot. things like that are some pretty meaningful updates in terms of the profitability. so it's just put some quick numbers on that. they have called $6,000 for this upgrade, largely software
upgrade. if you assume 10% of that adoption, you're talking about close to 4 or $500 million in just pure profit from next year just based on that piece so i think that this profitability story, i think that margins aren't going to be perfect right now. but this company is unique in the sense that it has an opportunity to build a software business on what historically has been an industry that has been about reselling parts. >> i don't really understand why the demand part -- the demand question is resolved with this quarter's delivery numbers we still don't know what tesla sales will be like without any federal incentive which goes completely out by the end of the year we had canada juicing the numbers with its own incentives in may so perhaps spurring some sales of cars there. a lot of analysts had raised the delivery estimates because of the canadian incentives as well as stronger sales in the netherlands as well as norway. when you look at the "s" and the "x" there's a question about cannibalization of the business
because "s" and "x" deliveries were down 20% year on year how do we know that demand is solid with all of the wild cards out there? >> i mean, i can quickly go through them one by one. i need to grab the most important ones on the cannibalization side first i think that model 3 is cannibalizing "s" and "x." but that needs to happen for electric cars to become mass marketed i think that's the tradeoff they're willing to take. even though the cars are at initially lower margin i think that piece makes sense when we think about the tax credit, this tax credit step down from $7,500 to $3,750 in the first part of this year, so yes, that does have an impact when you look at an average selling price of what ultimately is going to be close to $50,000. i think that it does have a positive impact, it is a tail wind i don't think it changes this larger curve
the concept of electric cars is quite maddening when you break it down. i won't go through it right now, but ultimately yes, these are near term concerns but - >> it sounds like you're telling me though, gene that for the next year, you don't know how tesla stock is -- i mean, we talked about this right night that this would be a battleground stock if you look at the stocks gained today, 7% rise on a stock that's shorted 35% of shares outstanding. i mean, sort of a minuscule pop on the back of what some would consider very bullish numbers. that this is a much longer term story. if you're in this for the next year, i mean, is this -- you don't know where it will go in the next year, but you have got to invest in it, put it in the drawer and just wait for this curve? >> well, the debate is not going to end i think that's what's somewhat entertaining about this story. this intense debate on both sides. i think that the bears have --
will have enough over the next few quarters the simple takeaway is this. it's an undeniable truth that cars should be electric. tesla's battery, their range, their autonomy, i don't own a tesla, but it's better than any other car out there for price performance. i think they're going to ride this curve and it is a large addressable market. >> gene, i have a question for you that comes from last year when you were actually having a dialogue along these lines what happened to the competition? where's porsche, where's bmw, where's audi they were supposed to crush this company like the cockroach it is when they brought their models nobody wants their electric cars how come tesla is the only electric car that people want to buy? is that short story a dead one now? i don't know any engineer that wants to go work there all the hot young engineers want to work at tesla if you're coming out of the electro
engineering. have they broken the story about being crushed by competitors >> no, i think that the bears will say that the competitors will short circuit the tesla story, but some of the cars out there, audi etron is in the market, it averages around $85,000. and i think that is the core piece is that there is a scalability despite all of the issues that they have had in manufacturing. it's hard for the competitors to build a car that is feature rich at that price point. >> phil, jump in. >> well, my question for you would be essentially, gene, what is your biggest concern right now? when you look at tesla, is it manufacturing? can sustaining this manufacturing level given the constraints that they have out in fremont, is it the executive shuffle that we continue to see with these people who are there for a while, then they leave, then new people are brought in what is the biggest concern that you have as you look at tesla? >> the management issues
undoubtedly it has been a revolving door and it needs to stabilize. we haven't seen the impact of that, but culture and sustainability tightening that up i think a more stable cash position i think that will bode well for maintaining some of the people but phil, i think that's the biggest question the second piece that you're going to think i have kind of fallen off my rocker here, but the second piece that keeps me up is an earthquake. i think that if there's any sort of damage to the factory, that would be a significant hit to this company and i don't know how they would sustain that. >> okay. i have a final question -- you know, we have the music. we'll do that -- we'll talk more about tesla later on anyway. i wanted to talk about lee iacocca and elon musk. a fabulous article from 2013 that calls elon musk a cooler,
louder version of lee iacocca. i wanted to talk about both of the gentlemen with both of you, so we'll do that in little bit wheel. coming up when we come, jobless applications are out moments ago. we'll talk housing with kevin o'leary and joe as well after the break. then what's powering bitcoin in 2019? that's been a big question on a lot of people's minds. a number of factors are moving the cryptocurrency including the announcement of facebook of its own cryptocurrency but that might be in jeopardy too we'll discuss the implications thheeof circles. stay tuned you're watching "squawk" on cnbc moving is hard.
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morgan applications data out moments ago, diana olick has the numbers. >> melissa, the mortgage rates calmed down last week so there wasn't a lot of incentive to make a moment. the volume was essentially flat, down 0.1% for the week, but 41% higher than the same week one year ago and that's thanks to lower mortgage rates boosting the refinance the market it decreased 1% for the week, but were 93% higher than the same week one year ago, because rates last year were considerably higher. the average on the 30 year fixed with conforming loan balances increased to 4.07% from 4.06%. that's for loans with the 20%
down payment that is 72 basis points lower than a year ago. more damage applications to buy a home were up 1% for the week and 10% higher compared to a year ago purchase demand is stronger this year thanks to lower mortgage rates. but supply is still very weak especially for affordable homes. the number of homes for sale nationally fell slightly in june compared with a year ago the first annual decline in inventory since last september that's according to redmond. back to you. >> thank you, diana olick. let's get some thoughts on real estate and rates with kevin o'leary and joe terranova. low rates does it change how you look at housing, for instance? >> refinance will be strong in terms of home purchasing i think pricing is near the ceiling. i also think for new home construction what has become an obstacle is for home builders the land is expensive and they have the inability to pass that
rise in cost on to the consumer to the point of reaching the ceiling here in terms of prices. so i think that's the obstacle i also think the impact of salt is playing into the housing dynamic. >> yeah. that salt thing is really starting to have an effect in regions like new york, et cetera i look at housing whether you buy an existing homer a new one at how much pressure you can take in terms of affordability once it's more than 33% of your free cash flow it's not affordable i would say most houses are not affordable and i think it gets you into the rental market which is where the millennials are going and for developers, joe's right. land has been a big, big problem and it's not going anywhere. this is the result of long term low rate policy. it has - >> right. >> it manifests itself in some pretty weird places. >> what percent of your overall portfolio of investment portfolio is in the real estate world? >> a lot
a lot. about 35% in one way or another is involved in owning assets that spin cash the reason -- i'm in the same boat cap rates -- i can't sell these properties because i'm taking huge tax hits and the cap rates are the lowest in my life. i own storage facilities that i bought 11 cap that trade at 3.8. that's ridiculous. that's a garbage class and it's trading as if it's prime office. so if you're in the real estate business you're looking at the wonkiest world you have ever seen cap rates have never been slower. >> why aren't you selling them >> because i have a massive capital gain and i can't replace if cash with i think in else if i sell it i can't go to the credit market and make 6%. i have to -- i would lose 300 basis points of yield if i sold my real estate and bought ten year credits from a credit worthy company how screwed up is that >> you can get 2% on the greek ten year. >> yeah. but i don't buy sovereigns anymore because there's no
yield. but think about this, right now real estate if you owned it for the last 11 or 10 years is the best asset class in terms of returns you ever had. >> you - >> that's why i think we're going flat i really do. when we bring the big real estate guys on this show and they're sitting with their hands off the table and not playing right now. >> i'm sorry >> home builders at these levels. >> second derivative fortune brand that's the way to play it. >> there we go. still to come what's powering bitcoin's run this year and will the roller coaster ride continue we'll discuss after the break. time now for today's aflac trivia question. how many hot dogs are likely consumed over 2017's july 4th weekend? the answer when cnbc's "squawk box" continues do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle.
consumed over 2017's july 4th weekend? the answer -- 150 million. >> we're listening to hot dog by led zeppelin before. >> was that? >> we should do a hot dog -- we have done a doughnut eating contest. >> i think you had nine. >> yeah. we'll see what we can do with hot dogs on the show in the meantime, a bitcoin contest and house democrats want facebook to put a halt to the cryptocurrency project, libra. lawmakers say they want more time to investigate the possible risks to the financial system. bitcoin's slide over the past week -- i can't call it a slide because it went up so quickly, coming to a halt and then climbing above 11,000. bitcoin up over 35% in a month and clearly much more than that past couple of months. joining us to talk cryptocurrency is circle's ceo jeremy allaire good morning. >> good morning. >> to the extent that the move
in bitcoins' price has been a function or correlated with the situation at facebook and the launch of this libra currency and sort of the larger idea that billions of people are going to get an electronic wallet through libra and therefore they need to get interested in crypto, et cetera, if lawmakers are trying to say -- or at least push the pause button on this, shouldn't bitcoin drop like a rock >> yeah, i don't think we're seeing that. i mean, i think there's a couple of critical things i mean, one which is -- you know, crypto has been on a sort of rise for ten years. and it's sort of the block chains that power the different major cryptocurrencies continue to grow. we're going from tens of millions to hundreds of millions of users and i think the excitement about libra do we go from tens of hundreds of million of users to billions of users
and they say i don't want a centralized coin from a kind of consortium backed by facebook. maybe i want something more free and open on the internet like bitcoin. so it's driving awares and and i think that's what's sitting behind the growth we have seen in the price. >> separate question if maxine waters called you up and i have the figure out the questions i'm going to ask mark zuckerberg about the new currency, you would tell her what what are your concerns about what's going on with libra >> first of all, i think it's outstanding that we have national scale policy attention on crypto. i think this has been an issue that's been on the sidelines from a regulatory perspective. central bankers, treasury officials. others around the world have been largely dismissive of this for a number of years but what's very clear now is that
cryptocurrency is here to stay it's going to be massive scale it's going to play a fundamental role in transformation of the digital system and people have to figure it out so what i would be telling maxine is you need to listen and learn because the technology is moving at an incredible pace not just what is an experimental project in the white paper face from facebook, but globally tens of thousands of engineers building things constantly there's no stopping that it's continuing to grow and right now it's a time for policymakers to learn because this is a major breakthrough in the global economy. >> jeremy, let me take the other side of the coin on crypto becoming a big thing if i want to be compliant and i don't want to breach any regulators because i'm a participant in financial services globally and that's where the majority of money is the trillions of dollars that trade every day in fx are with compliant managers i have to be compliant. i have no interest in doing any
of this crypto crap because it's not compliant and regulators in all companies do not agree isn't the real opportunity here to build a consortium with two or three in the beginning like the u.s. dollar, the yen and maybe the euro and the swiss franc and let's call it the wonder coin and let me trade and pay my taxes with it and be compliant and buy equities and debt with it but it can be exchanged back to one of the currencies. all of this noncompliance stuff i don't want to get involved with a drug dealer trading a bitcoin somewhere. when is this industry going to grow up and get regular lated so i can -- regulated so i can play baseball there. >> that's not accurate the crypto industry than regulated in the u.s. since 2013 if you want to sit between the banking system and cryptocurrency you have to be licensed as a financial institution.
we have been licensed broadly over that team and in the eu just recently the international any money laundering defined the licensing that every country in the world needs around this. that's not accurate. i think -- >> i totally disagree with you why can't i issue with the crypto -- because the regulator says no way on earth. >> because of the volatility. >> can't see the clearing of the trade, so i don't buy that at all. >> there's critical differences between the sort of digital commodity assets and what are emerging as what are being as stable coins as an example with coinbase we launched u.s. dollar coin. we did it through a consortium model. it allows you to issue -- you know, a digital version of u.s. dollars. we'll be rolling that out with support for major -- you know,
sovereign reserve currencies, will allow for their use on the market including very, very efficient payments, settlements, swaps, et cetera. >> can i pay my taxes with it? can i pay my taxes >> you can take a u.s. dollar coin and you can cash it out to any bank account. >> i have to go back to the u.s. dollar to pay my taxes and in other words it's not the good faith of the underlying currency. >> so the fact -- i mean, the u.s. treasury accepts checks and bank wires so if you want to be able to use one of those - >> but they don't accept crypto. don't accept crypto to pay taxes. >> obviously it's a matter of time before every government in the world accepts crypto >> just a matter of time when is the time when i can use this on the compliance basis to pay my taxes in switzerland or in france or in the united states, because right now you can't do that. that's why this is a rogue currency that's the problem with it it's not backed by anybody it's just talking the story. that's it. >> yeah, yeah. obviously i disagree i think what we're - >> we do disagree.
>> yeah, we clearly disagree obviously what we're seeing is that there is a new infrastructure layer to the internet not just about currency. it's a fundamental new infrastructure for a very broad range of services, applications, information apps it's a major architectural shift and currencies are an app on top of that. securities and other financial products will be apps on that of that it will ultimately i believe be the foundation of pretty much every major financial transaction every financial asset that's traded in the world. >> jeremy, it's joe. response to the argument of how it can be considered a currency if it's not having a store of value. >> so what are we talking about? are we talking about bitcoin or - >> we're talking about bit coin - >> let's use bitcoin. >> yeah. so bitcoin is classified more as a commodity asset so i think that the challenge here is that
digital -- >> but you call it a currency. >> people call these cryptocurrencies, most people -- i think generally call this crypto assets. they sit on a spectrum from currency to commodity to security some assets actually have features that are all three. it may have revenue and yield generating features. may have utility features for someone who's utilizing it in a service or a network and can also be use as as a payment token that settles instantly. so the traditional classification of financial assets that we use today don't work in this environment so we're seeing financial instruments that sort of defy those traditional classifications. >> jeremy, we have to run, but one last thing f you're long crypto, who should you be short? meaning be short mastercard, visa, the banks that are capturing these fees paypal - >> libra. >> they're the libra but no -- whatever margin -- libra can never be as high as they're capturing now. >> pick your time frame but i
would say over the next five to ten years, the ability to extract margin or fees from moving value around will go to zero just like the ability to capture value from moving data around or communications around has dropped to zero. so that's dropping to zero so the ability to extract the fees so that affects banks, payment schemes, others. i think ultimately this leads to the rendering of very broad range of financial services on top of this which would be highly competitive too in the banking. >> happy july 4th. >> thank you, you too. millionaires in the garden state have something else to celebrate other than the fourth of july. blocking a new millionaire's tax. president trump applauding that move we'll be right back and we'll talk about it.
from president trump and some joyous millionaires in new jersey robert frank has the news. >> yes cheering for blocking the new millionaire's tax. quote, congratulations to legislators in new jersey for not passing the millionaire's tax. he tweeted new york and others should start changing their thought processes on taxes but while the new jersey legislator blocked phil murphy's hopes for a millionaire's tax, others are making good on the democrats on the campaign trail to tax the wealthy massachusetts the legislature is taking steps towards the first ever millionaires tax. they voted to impose a 4% surtax on those making $1 million or more it will require a second vote in two years because the vote quirk that can be ratified by voters in 2022. in illinois led by j.b. print kerr, voters will decide on a new plan to abolish the state's
flat tax in favor of a progressive tax where filers pay 8% on income over $1 million a year it will be on the broader ballot next year. and in connecticut, they scrapped plans for raising the tax on the capital gains we talked about on this show for high earners now going ahead with a mansion tax but it's got a twist 2.5% on homes over $2 million but only applies to the seller if they move out of the state. the tax was a way to penalize those who sell their homes and leave connecticut. that'll teach them. >> stay there or pay up. all right. let's bring in adam brandon and a senior fellow at the center for american progress. seth, you say that the president is wrong about high taxes don't drive people out of the state. really that's hard to believe. >> well, i think -- think about it this way. i mean, you're talking about
somebody who lives in new jersey, who is embedded there, whose kids go to school there and career or business is based in new jersey, is three cents on every dollar of income above $1 million i mean, this just a marginal tax rate really going to cause them to up and move out of the state, i don't think so i think the studies that have been done in the past find that state tax rates are really a minor factor really a negligible factor when it comes to migration between states >> adam, i would guess that you disagree i mean, i would imagine that maybe that is true, that for the people who are currently in the state they're -- you know, they have a lot of ties, they have kids in school, et cetera. plenty of reasons not to move, but for people who are thinking of moving into the state and i would imagine states do want to grow their population particularly of people who are upwardly mobile this could really dampen that decision. >> i was looking at the numbers and in 2018, almost 6,000
people -- millionaires, 5,700 millionaires left new jersey and went to florida. so when new york and connecticut and illinois, when they're looking at raising their taxes i think the people down in texas and florida their jaws are dropping open and saying, well come, folks. this is a problem when you pace your tax system on the ultra wealthy. when david tepper left new jersey, that cost new jersey hundreds of millions of dollars every year one person. >> you're right, it did, but if you look at the overall millionaire population of new york, new jersey, connecticut, they continue to grow. so the net number of millionaires in the states -- yes, some leave. you make a lot of money, you retire you move to florida. that's the law but a lot of people are younger and they're making their new fortunes are moving into the communities so the overall millionaire populations are growing. >> well, i look at that as a look at the trump tax cut and the other investments that start to happen but over the long run if you're looking at where the people are going, yes, you're
creating new millionaires that's the strength of the u.s. economy. but look where all the growth is happening. i know like just looking at travel and u-haul of where people are moving to it's very clear people are voting with their feet and texas and florida are the big winners right now. >> governor rick scott comes on this program often. >> he does. >> he says thank you new york city, thank you, new jersey, thank you for sending us all of your rich people to my state you are helping me kevin, does -- do taxes factor in to where you operate? >> absolutely. not only where i personally operate, but where i put my investment dollar because i want to be in places where i keep more of the dollars to reinvest in the business. i personally believe that one-third of every dollar given to any government anywhere is completely wasted. when you let the entrepreneur invest it back into the economy, that's how you create jobs that's why this whole idea -- i love it when you get the billionaires on here particularly that facebook guy
who says that everyone should be taxed into oblivion. nothing is stopping hip from giving his wealth back to the government and he can get a hot dog stand in new york to start all again. >> i'm going to argue that's a specious argument. >> why can't he write a check? >> it doesn't -- if you believe that we need - >> in the meantime - >> if you believe we need more revenue -- >> how about spending less for a change >> absolutely. let's spend less. >> make the government more efficient. why can't we be like switzerland? you have to manage your country -- >> i would love that but look what's happened over the last couple of decades. >> wow. >> you need to put it on the republicans, you can put it on the democrats, on both sides >> it's a good debate. >> a short term mentality. where is the gen-z going to live >> i don't want to live in florida, but the taxes are good.
bruce spear headed the investment by consolation brands, consolation gave them a major infusion offered them to develop new products and enter new markets so bruce is out. >> i'm stunned on this development. this guy is the founder of that industry in canada in terms of raising capital. he is -- he is the hammer. >> what do you think happened? he was just at a public event with martha stewart no less about a week ago is there talking -- they're talking up the company and everything else. >> he is that industry so clearly here there's something going on with his larger shareholder. >> you think is a consolation brands - >> i'm speculating >> pushed him off the ledge? >> he's stepping off the board. >> right which is the more suspicious thing about this whole thing i agree. i think consolation wanted him there in some capacity he would be there in some capacity. >> i think we have to get him on the phone. >> okay. we're going to dig into this issue as soon as we can get to the bottom of it right now we want to dig into the nike issue because it's causing a lot of controversy and
consternation. the question of course, did nike make the right choice in pulling the betsy ross sneakers days before the release joining us is the founder of the 2015 marketing and cnbc contributor and also another cnbc contributor you're with me, so i'm going right to you you think they made the right decision, the wrong decision what would you have done >> you mean for their customer >> for the customer. for the business. >> for me they made the wrong decision, for the customer, the right decision i run 100,000 miles and i don't own a swoosh in my closet. i gave them up over the last controversy. they don't care. their customer is a young guy, not a young woman even though they do a women's business not an old guy like me even ran i have run all my life, but a young guy. they like the controversy.
they harvest the controversy. >> that's what mr. wonderful was saying brilliant marketing. >> this is brilliant marketing and they're handling it b they didn't do this one on purpose. they did colin kaepernick on purpose. this was an accident but these guys are the best in the world at taking something that went wrong and saying, let's turn this into news and let's just go ahead and harvest what we've got yes, i think they did the right thing for their customer base. >> i want to come back to jan in a moment he's offended by this, but mike, a lot of people are of fended on the other end of it and you think that nike did the right thing. >> i definitely think nike did the right thing. it's just a marketing mishap on their behalf when they stray away from culture and empowerment and relevance and pop culture and enter into politics with the whole flag issue, you know, that's not the nike that we know so i think putting it out there, getting feedback, ultimately getting better understanding of what that flag means and how it's been adopted by these
nationalists -- it's definitely the right think. >> obviously, the flag up until a couple of years ago -- at least as i understood it did not have these connotations. and the question is, whether a limited number of a group of people, maybe it's not as limited as i thought, you know, those connotations that have been added to the flag how you sort of think about those two very different things. i think one of the reasons that jan is offended by this -- i don't want to speak for you, is because your connotation around the flag is very different. >> i think i would say that not one analyst that you have had on the air talking about this because i have seen them all and not one i have talked to had a clue that this this flag was offensive until yesterday. neither did i. >> is that our own ignorance too? >> were those analysts, were any of them african-american >> yes. >> okay. all right so also did not -- >> and -- didn't have a clue it was an issue
until the issue broke out. >> i really -- i really beg to differ because back in 2015, 2016, this issue slowly but surely started to seep into culture if you talk to any of the young consumers that really are passionate about the nike brand, they would all tell you that clearly that's a symbolism here that has been adopted by a group of folks that they don't want to be associated with so it's an issue that frankly nike could have done a little bit better job doing their research and understanding, you know, what the issue is going to mean and the flag has a totally different meaning these days than it had before and this is one where, again, i believe they did the right thing. >> mike, you're commending them for backing down on this particular issue, because you say they shouldn't be taking political positions. do you not think that's what they're doing in other areas over the last 12 to 18 months? >> you know, i disagree because if you look at nike, and you
know, even if you go back to the evolution of the just do it campaign, you know, one of the early spots were encouraging young women at a time where they weren't predominant in the sports, that sports would really, you know, change their lives and you roll that forward to 2018 prior to the nfl season when they, you know, got behind colin kaepernick and his whole right to protest in activism that's consistent with what the culture around the nike brand and positioning. but when you start to stray i o into, you know, using a version of the flag that has different meaning for different people, that's a line you don't want to cross. >> okay, mike jackson, jan kniffen, thank you when we come back, bruce lend is going to be on the telephone. we'll have the first conversation with him about what has just happened. that stock we should say was off over 7% before
see where it lands after our conversation with bruce lind right after the break. also, trade, taxes, the markets and much more with skybridge capital founder, anthony scaramucci ♪ creating the perfect night... just takes a little creativity. the light beer you've been waiting for has arrived. lower carbs. lower calories. higher expectations. corona premier.
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breaking jobs data the latest private sector payroll report is hours away. and anthony scaramucci will join us to talk about the trump economy and much more. "squawk box" continues ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning. welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin here with melissa lee and becky and joe are off. our guest host is our skybridge capital founder, anthony scaramucci also former white house communications director. never one to hold back we'll hear in him in a little bit. and "shark tank" mr. wonderful,
cnbc contributor he is hanging out all morning. the s&p 500 is looking to open up nine points higher and nasdaq nine points higher and where the treasuries stand at this moment. we'll flip the board around. the ten year right now at 1.957% well, we'll see what happens at the fed and the ecb. everybody is getting dovish. but to the breaking news in just -- in the last few minutes, canopy's co-ceo, bruce linton stepped down. the shares have fallen off as much as 7% before that, come back a little bit right now. but joining us on the "squawk" news line, we have been speculating about what's happened here. bruce linton is with us. bruce, give us the back story. why are you stepping down and not only from the ceo role, but from the board. >> well, i think stepping down might not be the right phrase, right? what -- on november 1, we closed
$5 billion, 4 u.s. billion for 17% of the company and a condition of that closing was the board had to be reconfigured eight months and two days later, i think the board had decided they wanted a different chair and a different co-ceo so i'm out effective immediately and there's a search to replace the transitioning co-ceo. >> bruce, just to be clear, have you been terminated or you stepped down on your own >> i was terminated. >> okay. >> so you were fired. >> yes a lot of words for it. in fact, what -- is this kevin >> yes. >> there's life after firing, trust me you'll be just fine, okay. >> bruce, i want to go back -- >> kevin was one of my first interviews on the sector because it was kevin, i was expecting you to look like a hippie i wore a three piece suit and you sat there looking at me going, i don't know what in guy
is about, i'll wait until he gets off the segment how are you, kevin >> very good you're a hammer in the canadian market for raising capital you are the industry and were for years. where are you going? what are you going to do >> well, i'm -- i have already gone to costco and filled it up this morning, i have a long list of important stuff like to do. and i hope by the end of the day i'll figure out what to do it won't be cannabis in canada. >> this is clearly a surprise to the investors, the market, the analysts give us what happened here give us your vision of the future of the company was and how that must have differed with the board. >> so i think the company is in great shape because we did a couple of things one is when we hired really great people, we loaded them up with long term employee stock option programs. there's a bunch of great people working through the transition will be a bit odd because nobody including me was necessarily expecting it but i do think that we have this
ip driven global rolling force that is going to be the dominant player and from my perspective, i'm pretty upbeat today not because of being terminated but because in six years to create something that's 4,000 people in six countries that's a productive period of time and so i think it's actually going to be the dominant company and i'm wearing my green shirt today because i still feel that. >> bruce, you're credited with being in the constellation investment in the first place and they're a handing you the walking papers do you agree with where they want to take the company and in consideration of getting rid of you? >> i think the direction they want to take it will be determined i don't know how material it will change or anything. when we looked at this, both mark and i assessed the circumstance and it was our view in august when we were announcing that it was really important for the company we
take the $5 billion because otherwise constellation, which is a very powerful company may have decided they would put other oars in the water and this made them 100% fully structurally integrated with nobody else by canopy. when you bring in a big check and change the board unless you're like living in lala land, there's some perceived risk. but it would have been worse if we didn't do that. >> do you regret how this had shaken out do you wish you had done with a different partner perhaps? >> there was no other partner. the check was $50 million, the first check from constellation was effectively $245 million and it's a serious players they make decisions. and the way they can make a big decision on putting big money in is the same way to make a big decision on time frame and the way to do with this with
leadership. >> bruce, you were recently one of the executives sensitive to the demand to buy -- to buy medicinal versus recreational. i can't invest in this because it's a schedule one narcotic you had a plan, you talked about this recently that you were looking at bifurcating or going in the direction that i could invest in medicinal. is that one of the reasons you had some friction here >> no. that hasn't been specific. i think part of the complication for analysts covering our sector and looking at canopy, covering it with the ag, pharma or the cbd, so i think the right thing for the company over time is it's really sort of the four discreet entities and we had begun to work it in the reit or a lend free back to free up billions in capital. what kind of sector has farmers and physicians >> here's the part i don't understand there's a lot of people
investors in particular who have bought into you personally not just the company but you personally this seems like a decision that's been made overnight, but it sounds from what you're saying this was in the making almost from the beginning. when did you know that this was in the offing and what do you think really led to it >> well, i didn't know for sure, but when sort of an unexpected board meeting gets called on a friday afternoon, or the tuesday, one does have to wonder if i'm the chairman and i'm not calling the meeting i suspect it's about the chairman. >> so that just happened last week, that's what you're saying? >> friday. so this is a big boy's game. we're talking about billions of dollars in enterprise value and canopy is an awesome company the thing that we put together, it's not bruce just going on tv and explaining how the world should work. it's the people back at the shop doing all the work and so like i would say to the investors, i think the company built really solid and it will go through this transition and it is a fun day for bruce.
well, no, but like tomorrow, who knows? maybe i'm working and you're off on the holiday. >> did the board do anything nice on your way out meaning, did they give you anything >> you always get -- >> what were you saying? >> you always get a nice gratuity when you're asked to leave but in the context of everything that's been created it's not a meaningful thing. just a pleasant thing. >> the consolation prize >> if you're coming to work for a couple of years we would have paid you this. but these sorts of things i think it's more about for me -- i have had so many people firing me texts and saying, you guys have created a sector, not just a company. and i think that the work with the media that you guys have helped facilitate has allowed people who wouldn't have had a conversation about this as an investment thesis can become investments over the last year. >> what do you think the last straw was in the view of the board?
was it the last quarterly report that you posted? was it disappointing >> i don't really know i think they expected some disappointment there but at the end of the day, sometimes entrepreneurs are entrepreneurs because they're not super employable and i would say i probably don't have a resume because i like to create businesses and driving them you don't -- you don't always mesh well with everybody in the play pen so it will be a better decision but not a great day for bruce. >> do you have all your stock, are you planning on selling any of the stock >> i think i have -- i have a pretty good chunk. so no, i'm not planning to sell more than -- so i think i'm sitting on a few million shares and i would expect -- i think as the u.s. opens on the deal with acreage and it becomes activated my stock is worth a multiple of what it's worth now. >> bruce, it's anthony scaramucci i'm curious, is this the first time you have been fired >> oh, god no.
this is not the first company i have created so there was one which was a -- bought by microsoft for the ip that one was looking for funding after 9/11 when the vcs put in their -- whatever you want to call it, ratchet round you can't agree with it so you go yeah, that was the -- that was the main one but no i find entrepreneurs at a certain point in time, it's not about competency of doing all the tasks but about alignment with how to govern hey, listen, i look forward to getting back to your restaurant and actually getting to say hi to you. >> i appreciate that. >> one last question here. diversification is the only free lunch in investing and now you're not constrained is there another cannabis company if you would take some of the 18 million shares and invest it in that one to hedge your bets which one would that be >> that's a good question. you should buy half of your
portfolio with canopy and what i like in the canadian market because of how they run themselves is organ agram. they're pretty solid if you're trying to diversify, i like rivers. you have about 14 investments in one portfolio, but it's done by people who know the sector so those would be my diversified portfolio choice and individual. >> bruce, one question, actually coming in from a viewer asking whether this was related at all, you know, about a week ago the company announced that it had improperly used -- basically, had to issue a correction on the adjusted ebitda. did that have anything to do with it? >> not to my knowledge i think it's a transition of a philosophy in management and i don't think it's much more than that and i think -- when they search this will be the most applied to job in north america so i don't think there will be a particular challenge - >> somebody you'd like to take your job
>> yeah, i have to -- it's unpopular, but i think elon should take it on. he's a creative guy. >> are you saying -- i mean, the board announced that mark zekulin is now the ceo is that not a permanent move >> no, if you look at the press release, they're doing a search that will look for internal/external candidates >> how confident are you that other countries in europe will follow suit what we have seen in canada or u.s. is that coming quicker >> i think it's coming quicker it ebbs and flows a little bit just like with if new york and new jersey thing in the u.s. but most of them now are looking at how do they grab ahold of the research opportunity and the ip and i think it's driving a
different part. >> bruce linton, thank you for calling into the show this morning. your candor and for being so open with us right after what is i imagine a difficult, difficult day. >> it's not that difficult. >> anthony is here >> if it ever happens to you, bruce and i will go to a counseling session for you, okay it's really not that difficult don't worry. >> but bruce, thank you. thank you, again >> if you own canopy -- do you own canopy shares, what do you do with it without bruce >> personally i can't own it it's a schedule one narcotic so that's why bruce was the first to tell me and other institutional investors one of my plans is to bifurcate this company to give you an opportunity to invest in an fda approved medicinal solution. of which i believe there's tens of billions more interest in than that in recreational. mothers against drunk driving -- >> although no fda approved ones
except for one. >> but if the industry said look, i want to deliver the cbd molecule with 2.5% thc, bring that as a product. there's no high there. i'm going to make a medicinal versus -- there's mothers against drunk drivers that says to the politicians if you legalize this as a legalized drug in this state your life is over who goes against a mother? nobody. >> they'll have long time liability as recreational. >> never going to happening. >> the feeling of getting fired when it's your baby -- >> listen, it's a bummer i have been fired more than once just like bruce. but here's the thing
it's the comeback that matters f. scott marlin fitzwatfitzgera are no sect acts >> it's the 18 million shares. >> i didn't get 18 million shares when i left the white house. i got 18 million page views. >> he's probably one of the largest shareholders that's no longer part of it. >> but he'll right again and capital, venture capital will flow into the guy's hands. >> hit pause because we have the latest adp private sector payroll coming out mark >> i don't have the numbers. i think you have the numbers >> let me have a look. 102,000 we have for the numbers. apologies, mark, for expecting you to predict that number what is your take on 102,000 >> well, generally, you go through the numbers so i'll do it for you so 102 is the top line number. we saw weakness in construction, in retailing
so we saw some outright job declines there in the weakness across company sizes it's really small businesses that are really taking it on the chin. small businesses lost employment last month and they have been struggling now for the past couple of years. the broader point, the economy's growth rate is significantly slowing. and i think the risks are rising that it will stall out we're growing below potential and if we stay here for much longer unemployment is going to start to rise. if unemployment starts to rise that will undermine confidence and that's the fodder for the economic downturn. i think the economy is on the razor's edge and this number is consistent with that view. >> mark, how much does a rate cut alter that >> the rate cut will help and the fed is going to trying to get out ahead of this. if we get the number on friday, it's anything close to the adp number i think that seals it for a july rate cut for the fed.
and probably for a september rate cut so they're going to try to get out ahead of this but it's going to be difficult you know, the fed will work really hard to forestall the head winds created by the trade war and the ongoing uncertainty created by the trade war but it's going to be tricky. if anything else goes wrong and there's a lot of things out there that could go wrong, brexit is coming up, we have some budget battles in washington that are coming up. if any of those things go off the rails i think it's going to be tough for the fed to forestall -- at the very least a much more significant slowing in economic growth. >> consensus right now is around 164,000 additions. where do you stand in relationship to that and does the adp number make you change your forecast? >> yeah, well, the adp as you know is private sector so it doesn't include government we'll probably get a good sized government number in part because census -- the census department is now gearing up for the 2020 census and you see
they're opening up facilities across the country or at least if they are doing it on the same schedule they have historically. so we could see a pop to government say 30, 35 "k" so that's a number around 135, 140 i think that's probably the best estimate on friday and just for context, job growth between 100 and 150 "k" is consistent with stable employment if we start drop south of 100 "k" and it feels like we're moving in that direction then unemployment will start to rise in a consistent way. one other point, other data suggests that the unemployment rate will rise on friday we'll see an increase in the unemployment rate from the very low 3.6% to 3.7% so unemployment is already starting to trend higher. >> okay. thank you so much for joining us we should point out the ten year note headed to 1.939% since november 2016.
>> we'll digest that when we come back and a lot more from former white house communications director anthony scaramucci including his take on the marquee tax law. looking like a give away to the rich, at least that's what some people are saying. take a look at what he had so say in the series "the weekly." >> well, like i told the president, you know, when he called me after i got fired and said am i okay, you don't have to worry about me. you made me as famous as melania and ivanka and i didn't have to sleep with you or be your daughter and i didn't have to your son-in-law, so i'm totally fine so don't worry about me. >> we'll talk to anthony about life after working out at the white house. and he guided bruce linton on life after as well
in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. healthier brain. better life. welcome back to "squawk box. let's take a look at futures right now shortly after the release of the adp report that shows that the economy is on the downward point the s&p is at 9. dow looking to be open higher by 64 points. that nasdaq is looking to be up. and we want to look at hedge funds and again faced with the question is simply betting on the s&p 500 better than trusting
a high profile hedge fund manager? leslie baker has more. >> hedge funds once again trailing the s&p and a bond index for most of the first half of the year. based on the latest numbers from the hfr, hedge funds saw returns of 5.3% on the year through may. the s&p gained twice that amount 10.7% including dividends. the barclays government credit bond index rose 5.6% may was a tough market as global equities declined from trade tensions, the u.s. yield curve converted and 70% managed to outperform the s&p for that month even in the majority of strategies posted losses in may. and liquidations are exceeding new fund launches for the third quarter in a row and these new funds are charging less and less for the average management fee now down to 1.2% that's about 10 basis points
lower than last year's launches. so for year to date not a single hedge fund strategy has been able to outperform the s&p, except one, you guys can you guess what it is cryptocurrency up 82% on average. >> what was the return last year >> it was down 70%. >> two factors. >> recouped the losses >> but we have to stipulate the funds are searching for lower volatility returns and looking for like high single digit rates of return relative to the bond market. >> cryptocurrency? >> no, cryptocurrency, that's explosive. but i'm talking about the hedge fund industry in general. >> they measure themselves versus cash. >> yeah. off of the bloomberg -- off the index. >> i mean, that's -- that's the problem with the industry. i'm not going to pay 2% to anybody anymore. >> it's totally dead listen, we have $10 billion in capital that we're allocating, we have 26 managers in our portfolio. and we have discounted fees in
and around the 1.2%. some are at 15 i think our aggregate is about 1.2 and 12 so yes it is dead but you have to pay people because they have a versatility of talent. >> it just feels like the quote/unquote gods of the hedge fund industry are no longer gods right? >> well, i think that's true of most people, right very few people are a hero to their valet, as we know. so we have a tendency to celebrate the people on the way up and where skybridge has made their money is on a lesser known hedge fund managers that really just do their work. >> just cranking. >> less focused on the art - >> for equities i want to have an alternative thought i'll mark you against the s&p 500, i'll give you a ton of money if you can beat the index i'll give you half of what you beat it by, but no other fees. if you can beat the s&p i'll give you half of what you made over the index returns.
>> i think somebody would take that deal. >> nobody has yet. >> but the problem is that the people you're probably offering that deal to, that's not in their style box. their style box is how do i get to a 9, 10% return in an interest rate environment at 1.93, if you can get 700 basis points over the ten year with very little volatility, there a's ton of money for that. >> a new generation managers that eats what they kill and that's how it should be. >> i think what you're missing in the argument though is that you're going up against the s&p 500. >> so? >> well, because you have to understand, like in our -- >> get it for free. >> i understand that then you should -- 9% low volatility return, there's all the money in the world for it. >> is there a strategy, is there a different approach, looking for stock pickers or looking for -- >> right now for us, mostly structured credit. a lot of residential mortgage backed securities. our portfolio is 9.75 adjusted
cash yield. >> so certain verticals and people are willing to pay for that. >> i want to win slowly and that's been the hallmark of our success. >> i want to preserve my capital. >> you should come to us then. >> that target to someone, then surely their incentive at the end of the year would be to take whatever risk. >> in other words, if you tell me you're going to be very concentrated but you think you can do it, i'll give you a shot. >> we ve ls reo mehaotmo tco with all of our guests coming up after the break.
welcome back to "squawk box. some breaking news before we all break away for the holiday and of course what we're going to be looking at is initial jobless claims and they move from 229,000 down 8 to 221,000. and by the way, that 229 originally released last week at 227,000. continuing claims moved down a smidge from 1.69 4 million to 1.686 and trade balance for the month of may expected to be $54 billion with a minus sign all in red a little bit larger deficit, minus $55.5 billion.
sequentially following a slightly upwardly revised previous month of 51.2 it moved up about $4 billion and we know that adp was released. it was definitely a little light but we did garner some from last month. interest rates, how low can they go, we're doing the limbo. and ms. lagarde will be the head of the ecb and most likely we'll see the interest rates continue to move down of course expecting her policies once she starts after october 31st to mirror if not enhance mario draghi's stimulus. andrew, back to you. >> rick, i have a question for you, it's melissa. on friday in terms of the jobs report, hey, what do you think would be the goldilocks number for the markets? i wonder if bad news is good news because that seals a fed rate hike -- >> cut. >> cut, excuse me. cut. >> i think goldilocks is
anything 175 or higher. >> stronger number. >> yeah. i really don't understand if it's going to be good news/bad news i understand at the end of the day, even though many want the rates to be lower are a beacon for much of the world that continues to sink into the quagmire of negativity. >> happy july 4th, my friend we hope to see you on friday when we get the jobs numbers as well as we just saw with the continued low levels of jobless claims the economy humming along nicely as the third quarter kicks off. but a question of course is will investment confidence hold through the second half of the year joining us on that, jared bernstein, former chief economist and economic policy adviser to joe biden he's with the center on budget and policy advisers. we have hedge fund veteran and former white house communications director anthony scaramucci and kevin o'leary,
co-host of "shark tank." i was going to call it squawk tank i want to get everybody involved in the conversation. do we think that based on what we're hearing both from the adp numbers this morning some of the numbers we have got in terms of earnings that the second half is going to be better everyone thinks that the second half will be terrible but i'm not so sure. >> i don't think it will be as recessionary but not as strong as we'd like it to be. i think we'll see some important numbers fail to hit expectations like we did with adp i thought it was a good question about the goldilocks number, anything below expectations is going to be unsettling because we're really all in this place where we want to discount one or two negative numbers especially with the unemployment rate so low. one or two numbers that miss expectations aren't a big deal but now we're starting to see more this little bump in the trade deficit is also concerning
it's a small matter. but we're growing faster than the competitors that's going to pull in more imports we have lots of global tensions around the trade war so i think there are enough reasons to be concerned. i think the consumer remains strong and in the 70% consumption economy that's the big story but that's where we are. >> it's anthony scaramucci are we in a new paradigm as it relates to the inflation the u.s. is growing but the rest of the world isn't is it a paradigm risk or is the specter of inflation looming >> i think the specter of inflation is very much in place and we're really talking about, you know, a 7, 8, 10 year story. we have inflation missing the fed's target from the low side, undershooting when the unemployment rate has been below they're estimate of the sustainable unemployment rate for a year now so it's widely argued that the corollary between unemployment
and inflation is very low and that's a structural no not a cyclical matter. >> your concerns about the economy slowing, global issues have been in place by many for almost three quarters. those who stepped out of the market or pulled back went for safety or went to cash have wildly underperformed. this is -- if there is a new paradigm maybe we have a structure now where it's so powerful being released from regulation and to a certain extent tax that we are just in the fourth inning. maybe the third inning that's a more optimistic tone but everybody that's called the market down has been wrong for almost a whole year now. >> yeah, i think that's a really important point. i think that there's this argument obviously going -- i think it's obvious going on between the stock and the bond market both are betting on the fed cutting rates and i think that's probably going to happen but the stock markets are assuming a soft landing and the bond markets are looking for a harder landing the fact that the stock market is doing great that's a fact but it also doesn't mean that there's some sort of trickle
down that's helping a lot of the middle class and lower income families are going to support the expansion going forward. i think there's a -- >> what's your take on whether or not the president is likely to make a deal with china? do you think we get into 2020 he'll want to make it? >> i think he'll make a deal if it's right for the president but i was with secretary mnuchin last week in bahrain at the -- at the conference and i think they're confident that there is a deal there to get done but you have to remember he said he was 90% of the way there and then the chinese walked it back. the chinese need adeal the president has been up front about that but he's a very stubborn guy, president trump. so he's not going to do a deal that he thinks is not in the interest of the american people. just for the sake of his election campaign. i don't see that happening >> jared, if we stay where we are nothing gets worse on trade but we don't get a full deal
but we get a couple of rate cuts do you think in general the economy holds through in 2020 such that it's a good factor for the president? >> i think so, but you know i can't see it further than six months and i can barely see out that far you know, there's just too many moving parts, too much uncertainty right now. yes, my forecast is for a downshift from gdp around 3% to something maybe slightly south of 2%. but as mark zandi said a few moments ago, if the jobs numbers start to come in a lot softer than they have been say south of 100 "k" then the unemployment rate starts to creep up. sure, you can end up going into the election with an unemployment rate below 4% but it's the delta that often matters. >> you just described a 33% decline in gdp that is the definition of a recession, my friend. >> well, the definition is
really crossing zero, but i take your point people will feel that, and that's the median forecast. >> without the president's policies in place and the tax cut and the deregulation, do you think we'd have been headed to the recession? >> i don't think so. the deregulation stuff is mostly hoch am. people who apply numbers to gdp numbers are often just waving their hands. i do think the tax cut really stimulated economic growth in 18 and 19 much more through a keynesian channel. >> you're not willing to -- even if you didn't think this was meaningful deregulation, just the psychology of psyching yourself -- of thinking to yourself this white house, this administration, it wants business to succeed meaningfully in a way that i think it's fair no matter where you are, it wasn't clear that was the case before. >> andrew is channeling joe
kernen here. >> i'm not a psychologist, so yes, i understand that - >> you don't think that matters at all even a tiny bit >> i think it may. what i'd like to see are hard numbers. i know the white house put out a report on this. >> it's not just manifesting itself in the companies. small private american companies that are almost every state including california and the restaurant business, for example, have really felt the lift of these regulations and have been able to expand in a way -- >> i don't know, man i hear you, you may be on to something on the margins but i call all of that anecdotal we have been talking about the de acceleration in the job growth - >> i respect you being a hard numbered economist but at the same time, there are plenty of impacts that the economists strictly modeled into the models that didn't get reflected such as the ripple effects of the
chilling effects of the tariffs. just not the mathematical impact of the tariffs and i would say deregulation falls into this but that aside - >> a great point it's possible that dereg had a positive impact and there's a lot of moving parts. i think the thing we can be more certain about is that when you have a fiscal fade that, you know, could be tens of billions of dollars or will be. that's going to -- >> i'll make it complicated for you. if it looks like bernie sanders or elizabeth warren have a meaningful chance of winning the white house, do you think that would have -- a psychological, but not just anecdotal in how the stock market would react and ceo's would react. i have a view that they would sit on their hands and said you know what, for the next 24 months by default, we have to stop what we're doing because we don't know what's about to happen >> i mean, i think that's
probably over the top but i generally would agree with the thrust of what you're saying i think that when you're talking about a couple of candidates who have been very up front about taxing wealth, about breaking up some big multinational conglomerates, sure, that's going to have the kind of effects that you're talking about. but again, i consider those to be much more at the margin than some of the big ticket items and that we're talking about by the way, i think both of those candidates would probably lead to tail winds when it comes to trade relations relative to trump. >> leaving politics out of it, can you remember in your lifetime when a president -- a sitting president at full employment has ever been ousted in midterm, ever i don't. i don't think that's the case. >> no, it's definitely a fair point. again, i think the -- some of the political economy models which i don't know how much i trust them really work off of the deltas, off of the change. you're right, if unemployment is low that helps the incumbent but if it's rising that hurts him. >> jared, thank you. that was fun
we'll thank kevin and anthony, they're sticking around for the rest of the hour. all right. coming up what to watch ahead of the opening bell we'll get you ready for the abbreviated but key day on wall street futures meantime are pointing to a positive open this morning we have seen some stability throughout the morning in futures. dow looking to be up 60 points and the s&p adding 7 1/2 the record closes we should note for the tech sector and lower s&p 500 yesterday. what's next for the rally? we'll break it all done when "squawk box" returns
hi, i'm here at the nasdaq market site with ann lester, head of the retirement solutions at jpmorgan asset management what are the implications of low interest rates for retirees? >> so the low interest rate environment at the end of a ten year bull market means that we think the returns over the next ten years are going to be lower than they have for the last ten years so you have less return means you have to save more to get to the same sized nest egg. >> that's big shift in how we have traditionally thought about this what are the other challenges? >> one of the biggest we're focused is on how do we help
people shift into retirement >> we have so many people that no longer have defined benefit plans. meaning no set payout they can count on how does that play out >> that lack of a guaranteed payout beyond social security means that you really need to think about working with the financial adviser or finding an investment solution that's going to embed some level of information around the safe amount to spend every year and take the right level of risk for the market environment we are in. >> thanks. for more search jpmorgan solve it online.
shares of tesla surging after report deliveries were reported for the second quarter. phil lebeau will break down the numbers. >> they exceeded the expectations in total deliveries and the "s" and the "x" and here's where tesla stands in meeting the guidance for the full year deliveries remember they have said they expected to deliver between 360 and 400,000 vehicles so far they have delivered essentially about 158,000, just over 158,000 vehicles, so they have got to deliver another 202,000 vehicles basically 100,000 in the third and the fourth quarter the tesla bulls will hang on to the fact that tesla said in announcing the deliveries look, our order backlog grew in the second quarter we head into the third quarter with a greater backlog of orders
that should put to rest any questions about demand out there. what are the analysts saying about this as you look at the shares of tesla, everybody has a note this morning. in summary they're saying, we're going to cut our loss expectations for the second quarter. in other words they're expecting a smaller loss for the second quarter. but they're not changing their full year estimates. mainly because they want to see what the q2 financials are they want to see what kind of profit margin pressure there is. what happens with free cash flow they want more details in essence. >> phil, we should note that the stock is up 6.5% or so had been up more than 7% in the aftermarket yesterday when the numbers were released. i get that the rise in tesla over the month of june has been staggering, up 21% this is building on top of that. but are you surprised that the -- at the lack of pop on the back of the numbers here considering the shortage is so high >> the short interest is 35%. >> 35%. >> you would think -- you would think that there would be a greater pop coming off of that
that's why i think some of the analysts that -- look at the end of the day, i know the bulls and the bears they're out on social media and they're going to spin their stories that which ever way they want. but if you talk with the analysts who are looking at this company right now, all of them say the same thing which is i need more detail i need these q2 financials before i can buy in to whether we need to change our price targets or revise our full year estimates. >> phil, you talked to all of the ceos of all of the other companies that are supposedly jumping into the electric market because of the potential growth. >> yeah. >> how come nothing? i mean, what happened? last year it was all about the porsche competition and the audi stuff. >> well -- kevin, porsche is coming later this year and that's going to challenge them on the model "s. but you're right about the fact that we have heard this talk about the competition is coming. and by 2020 it would be here well, guess what, folks? we're six months from 2020 where is that competition? it is just not there to the
degree it was hyped. >> sales of the chevy volt plus the audi etron combined in the second quarter was 6,000 or so. >> right i think this gets to what kevin is getting at which is if you're not going to -- if you're truly not going to get into electric vehicles and take on tesla you can't say well, we have the electric vehicles coming they're trying to have one foot in the internal combustion engine which they have to because that's their business and half a foot in electric vehicles i don't think that's enough to take on tesla. >> is there any other brand, the volt sucks nobody wants to drive that car it's the truth. >> totally different customers you're right they're totally different. the customer for the volt is not the customer for tesla 100% different. >> i think this is capital markets issue because they could run out of cash. >> right. >> so i think that the -- i guess my concern is without the
financial detail, phil, how confident are they that they can continue to raise the capital that they need and the capital markets? >> i think that they're pretty confident. i think that tesla is pretty confident. they would rather not raise capital and andrew has talked about with a couple of analysts that they have some major outflows in terms of cash coming in the second half of this year. >> so these things drop like 100 points that's the problem. >> we were talking about the passing of lee iacocca from last night. i was -- i found this article, lee iacocca was compared to elon musk and it's interesting because iacocca restructured ford and chrysler in an amazing way and when -- if tesla ever gets to one of the really tough moments, will elon musk be able - >> remember, lee iacocca had a government bailout though. >> do you think you ever -- would ever have elon musk who does war with the government on the regulatory body ever call them up for a handout?
not a chance in hell. >> let's just remember, iacocca paid that money back with interest and the government made money off it. >> i hated that deal i hated it as a taxpayer picking one sector and saying we'll save you, but not you there's something so wrong about that they should have gone through bankruptcy that would have been the right thing to do and not every government that did that deal bankruptcy not every government that did that deal -- >> you're now talking like bond holders in 2009 as related to gm and other issues >> bankruptcy is a cleansing thing. it is a good thing >> okay. phil, we want to thank you to the other big story of the morning, shares of canopy growth dropping after the co-ceo said here on "squawk box" he was fired. >> i think the board decided they wanted a different chair and a different co-ceo, so i'm out effective immediately and there is a search to replace the transitioning co-ceo. >> just to be clear. have you been terminated or did you step down on your own?
>> i was terminated. >> you're saying you were fired? >> a lot of words for it. >> down to the new york stock exchange you don't have exchanges like that on tv that often. jim cramer joins us now. what do you make of that, jim? >> i talked about it last night with green growth, another one of these operators, that constellation was very unhappy with bruce the numbers weren't there. there were many bets being made by bruce that bill newellen wasn't excited about bill on the conference call, june 28th conference call brutal saying these guys have not delivered on their numbers we're not pleased with canopy's recent reporting you knew bruce was out bruce is a different kind of operator he's from telco. he's from water. he got it off the ground and did great things for it. but time for someone more buttoned down, like bill newellens, to be -- to have a partner. david kline who is the cfo of constellation was king member of
the board of canopy. rumored also to be very unhappy. the numbers, he was spending a fortune. he wasn't -- he was get something good revenue growth. there was no plan to make money under bruce. >> who is making any money, jim, on any of these companies now? don't you have to be patient no matter who you are while this all gets worked out? bruce was talking about splitting his company to provide an investment for a guy like me on a legal basis nobody else had that vision. he got run over. >> i was only recommending him -- recommending -- i was recommending canopy and recommending kronus, i got to tell you, you're totally right i'll make this point, you should be buying canopy, not selling it this is very good because bruce got it to where it has to go now they need a operator and it is the best on medicinal, best in recreational, there isn't anybody close, huge war chest, i
have no idea why people are selling it constellation was unhappy with bruce. you got to hand it to bruce how much money he raised and he's a great guy. everybody knows that. >> what do you do with tesla this morning >> oh, let the bulls take it up for a while. give them a break. it is already up then they'll fade it look, a good number is a good number sold a lot of cars and i know the bears act as if nothing is good this was good. let's just give musk his due nothing wrong with giving him his due. >> fair enough, jim cramer, we'll eyou insee you in a couplf minute oz on "squawk on the street." happy fourth judy shelton 11:40 a.m. eastern time on friday you're watching "squawk" on cnbc back in a moment ngs
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>> you love that line. >> there is a bigger point, aed beforer poina broader point, if lean into it, it is not the end of the world we have such a success oriented culture. there is a good thing about having a little bit of failure in your life. >> would you go back to the white house? >> sure. i'm an american. i would serve my country no chance of me going back to the white house. the president would never offer that to me i don't like people saying, i would never go back when they would really go back, the same way politicians say i would never run for office when they're really running for office just be a straight shooter. >> you're so close >> i am close. i think he'll resoundingly get re-elected what are you going to do put a socialist in place and wreck the entire economy and what we left out of today's conversation is there is real wage growth for the bottom 10% of earners last point, the illegal immigration, he's reduced it by
85%. it took the slack out of the labor market for the bottom 10% of the people in our society >> it is settled then. he'll be the first president in modern time with three terms in a row. >> you think -- no, that's not going to happen. though i love when he trolls people and says he'll be president forever. it is trolling that's what he does. he's a great troller >> you don't think that biden will be the nom any inee on the democratic side? >> i think he has a hard time with contact with the enemy. he almost lost to sarah palin. when he's in a debate situation, he locks up. rick perry on our air cnbc in 2012, vice president biden has that tendency and donald j. trump is the ronnie lott of verbal contact he'll knock the person into the next room. >> you think it will be biden? >> i don't think it will be biden. >> who do you think it will be >> very hard to tell right now i don't think it will be kamala harris i think one of the younger people on the stage now. >> who do you think the president really wants >> i think he wants biden.
i think he wants biden he can compare and contrast himself to the 50 year establishment failure in washington and to the new disruptive things he's doing now. >> what do you think of his latest picks for fed >> i love the picks. i'm close to steve moore i know hermann kaine these are consistent with what should be on the fed board the president is yielding to the consensus there and they'll be put through right away. >> kevin doesn't think the deal will get through. >> that's going it hurt her. >> i think she will get through. the reason is there are so many big things going through in washington now and they have to mitigate the usmca i think they'll let this one slide. >> market by the end of the year >> it is going to be flat. to where we are now. >> we'll see what that means to politics thank you for being here. >> great to be here. >> mr. wonderful, thank you.
melissa, thank you happy fourth of july, everybody. have a great weekend we should show you the futures real quick >> holiday shortened trading session. >> 1:00 p.m. >> tune into closing bell and you'll get where the market closes. >> we'll get to "squawk on the street." happy fourth, everybody. ♪ good morning and welcome to "squawk on the street. i'm david faber with jim cramer. we are live from the new york stock exchange carl quintanilla has the day off. stock market, by the way, set your watch, going to close at 1:00 p.m. eastern, due to getting an early start on the independence day holiday look at futures as we get ready for an open 30 minutes from now. we're looking up, but u.s. equity futures, what we are talking about, 2% or so. we had that quiess