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tv   Squawk on the Street  CNBC  August 8, 2016 9:00am-11:01am EDT

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big stock to watch today, walmart buying for 3.3 be there. $3 billion in cash, another $300 million in stock. tomorrow, walmart ceo doug mcmillon will join us live in a "squawk box" exclusive television interview. make sure you join us. >> "squawk on the street" begins right now. thank you, brian. >> sure. ♪ i'm winning 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 is at the olympics in rio. he will join us in just a few minutes. let's give you a look at futures as we set up for the week ahead as you can see we are at least pointing towards a higher open. the european market ps may be helping, higher as well. decent tone there and a number of different areas over in europe. you can see although the ftse is
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down a bit, as for the 10-year note yield and oil, really oil and perhaps becoming more important yet again to our broader equity markets it is up rather sharply extending gains from -- oh. >> from friday after the strong jobs number. to our road map and it starts with walmart buying for $3 billion in cash and $300 million worth of walmart shares. that will be paid over time. the biggest acquisition of an e-commerce company ever. more on the deal coming up. plus, delta trying to get back to normal after all flights were grounded across the world due to a computer problems. shares lower this morning. and from the pool to the beach, all the highlights from rio, including katie ledecky and michael phelps, both of whom wowed the crowd last night. i could watch that swimming all the time. just love it. being -- that's what i do. >> more important on the troubles of brazil. >> just watch the competition.
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>> the competition is incredible. >> it is. >> moratorium on the life. here's the problem with the water, the air, the problem with this. forget it. you know, i want a moratorium on everything than the competition which is fabulous and speaks for itself. >> it really does. yes. >> i was going to go for that. >> yes. >> let's get to stocks. what are they saying for themselves this morning? we may make history. the s&p and nasdaq hitting new all-time closing highs on friday following the stronger than expected july jobs report. oil prices on the rise after breaking a two-week streak. several opec countries pushing for a production freeze. >> they always do at 40 and it's a joke and gets the stock up, gets it up and people cover. this is time honored. i can't believe they're doing it again and the media is picking it up. >> so you don't believe it? >> no. it's never -- >> never happens. >> saudis are mad.
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the poor countries are constantly doing this. issue releases, calls a couple reporters. everybody bo byes into it. venezuela, you can't even get clorox in venezuela. >> it is a failed state. >> thank you for mentioning that. >> geopolitically may become more and more of a concern. >> we should talk to reid hay hastings. >> suffering there is horrible. >> you can't even have reporters there. i'm sure reporters are like no the committee to protect journalists people should recognize about turkey. you can't have real reporting in the country because they arrests jurn igss. >> turkey jails more journalists than anybody. >> as for the market we come off the strong jobs number on friday and after a strong market, equity market performance on friday. this morning as we saw the setup, i mean europe fine. we got china trade numbers that were a bit soft, some are saying, though doesn't seem to be great concern there. >> no. >> japan doing okay. negative rates seem to be abating a bit. perhaps that experiment is
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finally going to get tossed. >> the fact that europe is so strong. i'm getting capital goods companies telling me european orders are amazing, just amazing. remember when there would be a time when deutsche bank's problems, we would be talking about that and the spillover to jamie dimon. jamie dimon is on a magic bus. a magic bus trip. >> wilfred frost is joining me, the man on the bus trip as well. >> it's his birthday today. >> is it really? >> he's much younger than you. >> and you. >> but better looking, younger, i mean what else is there? smarter. oxford. >> it's horrible. >> i know. >> change the show. >> bring him out and let him solo it. >> "vanity fair" has not yet done anything like on me but that's ekay. >> it is okay. >> the geriatric section. vanity/"old fair". >> more done on you. >> i was around when he wrote that book. it's a good read. >> it was good. >> all right. we're towards the end of
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earnings season. >> we are. wrap it up. >> how things are. some people saying the multiples seem fairly high. we had joe lavorna on friday talking about margins hit a high in '14 for corporations. some people still talking about recession without at least the consumer being there to a certain extent we would be in one. >> okay. >> retail, more retail this week to get a bit more of a sense as to where things stand. >> i saw that matthew boss, jpmorgan, put a trading buy on macy's. the risk. he said david there was a firm, i left on friday, and we were working for the -- which companies are most stressed. which companies have the worst balance sheet, have missed quarter after quarter after quarter. what did we come up with? mattress firm. and what happened to mattress firm this weekend, david? >> taken out. >> taken out, but not just at any old price. >> no. >> no. a premium. >> that surprised you. >> more than 100% premium.
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>> sleepy's. i mean this is unbelievable. calling it the ikea. great the ikea of -- [ inaudible ]. starting to short position in this stock was -- it almost as big as tesla. almost as big as tesla. >> that's got to hurt. >> 41% short. >> got to sting. >> everyone knows they took too much debt down to buy sleepy's. they were buying. it was a roll up, a mattress roll up. >> got taken out. same way managed to get somebody to take them out. >> 538, ma the tress firm. >> there you go. >> meet the s offer shorting. >> we will talk about in a bit. let's get to rio. record setters and shockers at the 2016 summer olympic games. carl is live there in rio and he's got it all for us. carl? >> you guys were talking about the quality of the competition over the weekend and it's true. gi ginny thrasher win the first
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gold the u.s. hasn't done that since 2000, women's gymnastics leading the all around for the first time, see simone biles, 19 years old. going to be try to be the first female gymnast to win five golds in a single olympics. absolutely amazing. speaking of u.s. women, katie ledecky, 19 years old, being called maybe one of the greatest athletes alive, wins gold in the 400 meter freestyle. beats not just beats, crushes her own world record by nearly two seconds and speaking of swimming, michael phelps, extends his record as the most decorated olympian of all time. 23 medals instead of 22. the men's team wins gold in the 100 meter freestyle relay. the metal count looks good. u.s. has 12, ahead of china, ahead of italy, and then events tonight and today men's gymnastics, men's diving, women's rugby, men's swimming. on cnbc two guys will get some water polo, women's rugby, some
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women's beach volleyball, and some table tennis. so what a weekend, what a way to start the games. jim, your point absolutely right all the hand wringing in advance has turned out to be for not as we are now ensconced in olympic competition. >> totally, carl. i had an olympic party last night to watch the girls -- women's gymnastics and no one was talking about zika. i mean, heck, like, you know, give me a can of deet and move on. carl, these games, all we got to do is watch them. they are electric. >> yeah. yeah. i mean, to be fair, we're not going to take our eye off the ball in terms of how this is going to impact olympic legacy, right. doping says a lot about that. brazil's economy has a lot riding on these games. so it's not like this is completely thoughtless. but the games are in the end about the events and that's part of what we'll talk about today. >> you're right. but i mean in beijing should
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have talked about civil rights more. now we've set the scene. but this -- the competition it is so exciting. carl, it looked like computer generated design people doing these gymnastics. i mean it was not human. it wasn't. >> i have to ask david, ledecky, i mean she does the 100, she does the 1500. we haven't seen a swimmer like this in a long time. >> no. it's almost defying logic. as you know i swim a lot and i swim at distance to a certain extent. the idea you could be a marathoner and a sprinter, the idea that you could be usain bolt and also the guy winning the marathon, it's impossible it seems. >> she beats a lot of the men in practice. oh, and by the way, she's going to stanford. i mean the whole thing is incredible. >> i know. another person i'm jealous of. >> the 356 and the 400 is -- >> and the fact she will do 8.0 something in the 800. >> move over sheryl sandberg. her job is in question as soon
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as this woman comes back. stanford will be part-time. >> it's incredible. the coverage. that's the one thing i would love it see, love to be at a poolside to watch somebody swim like that. >> and the coverage has been fantastic. >> yes. >> i love every bit of it, xwlued to it. -- glued to it. it's incredible. >> it is. carl will be joining a bit later as well. updating us on more of what's happening in rio. before we get to a break, let's talk a bit about this problem at delta, which announced limited departures are resuming following a power outage in atlanta that impacted the computer systems and operations worldwide, cancellations and delays still continue. susan lee is live from new york's laguardia airport to bring us up to date. susan? >> hi, david. yeah, just about half an hour ago delta tweeted that the ground stop on all delta flights has now been lifted and some flights are resuming, though, that might take time to take off the ground. and this morning that's why we had basically delta issuing
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notice to all travelers to expect long delays, cancellations, large hp scale cancellations because of the power outage at 2:30 a.m. in atlanta knocked out the entire flight system at the airline. georgia power, the state power company, believes it was delta's equipment that caused the outage and saying that no other georgia customers have had any issues or reported any issues so far. but there are around 5,000 delta flights that take off and arrive each and every day and there have been a lot of confusion at airports across the country including here at laguardia from what we saw this morning. we had the status updates on the board saying that some flights are at the gate, some on time. and as you can imagine a lot of confusion and frustration at these airports. >> my flight is at 8:00 and i didn't know anything about it until i got here. i'm still in the dark, totally in the dark. >> yeah. but, you know, at these airports, from what we saw at delta, at delta, basically the
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customer gates they were not turning away the customers. still checking them in. one of our producers in san diego, she's telling us actually some flights have taken off, some delta flights have already taken off. the latest from flight aware, just in the past 20 minutes, they told us that they are reporting ten delta flights have taken off in the past 30 minutes or so. that's ten out of 181 that have been scheduled during that time. and the flights are taking off generally have been delayed three to four hours. but delta is offering travel waivers to its customers to august 12th and that means they're waiving change fees or even possibly getting refunds on some of the tickets. back to you. >> thank you very much, susan li from laguardia. of course delta has had a rough go in the stock market. >> the stock market has been a terrible stock. holy cow. the cash flow so huge. can't get out of its own way. >> why? >> people feel look, the numbers come down. the numbers. a price war all over the place. the price cutting has been big. i know people get on the planes
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and it's always an extremely full flight. it doesn't matter. there are price wars all over the country. and no one is -- >> surprising. for a long time they were holding back. holding back. >> oh, my. >> really keeping -- >> yeah. >> so it's all the nightmare scenario we used to have. >> right. and we didn't for some time and suddenly the guys were earning more than their cost of capital a first time ever maybe in the history of the industry. >> gave big profits, a lot of these places did very big profit share with employees, which, you know, the pencil pushers on wall street don't want to see. >> right. >> the group is historically cheap. southwest air is cheap. but at the same time, the stock will go lower on this. >> all right. we're going to quickly get to break here and when we come back walmart buying, $3 billion. intensifying that battle really i don't know if it's a about thele against amazon, but they're trying. they're trying. >> hey, you know look, if the algorithms -- we'll have details of the deal. futures as we head to the break. more "squawk on the street" coming back.
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during the ford freedom sales event. walmart confirming its agreed to buy on-line retailer for about $3 billion in cash, a portion of that -- >> subliminal.
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>> over time in addition another 300 million walmart shares will be paid over time according to the press release as part of the transaction. some reports that gentleman that founded would take over all of walmart's efforts in the on-line marketplace. that does not appear to be the case, not according to the press release. they're spending money for a company that right now has a billion dollar run rate in gross merchandise value. offering $12 million skus, separate products. >> they have a big group of people out west, walmart, in the valley, and they couldn't invent this site, is rather amazing to me. this is so [ inaudible ]. >> i don't know. they are -- >> going to be on squawk tomorrow. >> they are talking a big game here. we know that they are focused on trying to at least carve out a significant business in on-line where they've moved in fits and starts for many years and watched amazon completely crush
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them. and everybody else to be fair. you know, may give them an opportunity. there had been thought these guys do know their way around this marketplace, perhaps in a way that will be helpful to the management team. >> right. >> and maybe that will be the case. they paying $3 billion to just bring this guy over. i don't know. >> look, the fact is -- >> i don't think it's a vick rum pandit when citigroup paid -- >> no. i do like the fact that this company has historically been able to come in under the pricing of amazon, so you have walmart using its scale. these guys coming in under amazon. they might be doing a move on amazon. doug mcmillon was given a blank check basically to defeat amazon and when you a blank check this is what you put on it. you put $3 billion to and the family will not ask any questions. amazon, you have to take them on. >> i think he's got complete support is my sense.
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>> absolutely. >> of his most important shareholders which as you say is the walton family. >> and they want this. remember -- >> over 50% of the stock. >> remember in 2015, doug mcmillon came out of the investor meeting and said look, he's got the ecommerce and retailer are the same and we're going to make it the same. this is seamless. so i think it's something worth watching because walmart was the sleeping giant and they've awakened. they're awake. >> they're awake. >> they have $3 billion. it's just -- >> always interesting to see the history of acquisitions of this type to get certain companies in areas or bulk or understanding is mixed. >> analogs. >> very mixed to say -- >> no. analogs to -- >> i don't. i mean -- >> not. >> not here but -- >> not a lot of winners. >> snapple. snapple maybe. >> snapple. >> that was one they tried to give them a little more -- >> who bought quaker oates bought snapple. >> yeah. >> there's been great acquisitions that have not panned out. >> no. >> in the dotcom world.
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>> that's my world. >> frankly, the majority. >> yes. >> i struggle to come up with one. mark cuban. >> yahoo! >> well that went very well for mr. cuban. >> shark tank. >> colored that stock. a smart move. >> right. >> went on to basket and -- >> that was it. >> all good. >> a lot of on-line that have been quite terrible. >> many of those cases -- >> the facebook ones -- >> many of those cases talking about stock for stock. in this case walmart putting up that $3 billion cash, 300 million in stock. >> fapharma for pfizer. gilead. >> it could be pfizer/warner-lambert a great deal. whi we don't know. >> we don't know. i suppose time will tell. maybe tell you one day when we fig it out. >> are we going to get to the big deal that is allergen sfo.
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>> we will talk about allergen earnings, alere versus abbott, i've been following, very interesting, alere out with the 10k. abbott fires back. insight on that. but up next, we're going to have your mad dash. so get that going. >> fabulous. >> we're becoack after this. the heirloom tomato.
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get $30 off your first delivery allergen. it's that time. time for a mad dash before the opening bell. allergen reports earnings and close that teva deal last week. everybody wants to know how big are the buybacks going to be. >> $25 billion. >> nonsense rumors involved in the company. >> $5 billion going to be aggressive. botox still in the early
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earnings. halfway through the growth trajectory. big pipeline. story guided light, do not take into account the division he sold last week, the drug, and, you know, the fact that the stock is going down is because the most -- most of the analysts did not upgrade, did not finish the new model based on the sale of the drug. jpmorgan did and you can see jpmorgan which has the best says it guides to top line earnings per share that is actually pretty darn good. i would suggest reading jpmorgan's before you guy decide to sell the stock. want to sell the stock that's okay brent will buy it. >> their acquisition strategy was does not according to mr. saunders seem to include doing large deals at this time but more of the tuck-in variety. >> "the wall street journal" about biogen would be way off base. instead, i understand that the buyback is going to come in very aggressively at this leefls, $5 billion, and brent saunders is a man of his word, bought for total transparency but the analysts haven't upgraded the
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models and this happens. be my guest. my travel trust does own it and sell to brent, brent will be buying starting tomorrow. >> waiting a long time for that. >> since he -- if you call brent he was telling people including meg terrel, he's not buying biogen. >> we reported on it. the merck side is a little mu y murkier. >> from philadelphia. merck produced murk. >> some confidence nothing going on involving biogen. >> we have to float something else, david. >> oh, no. >> it's not us that does that. it's some other media outlets. we stick with the four walls of the truth. >> we try. >> drag. >> it is a drag. >> drag. we have the opening bell coming in about 4:30 or so. a lot more to talk about on "squawk on the street." please stay with us.
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you're watching "squawk on the street" live from the financial capital of the world. opening bell in about a minute and a half, jim. what are we thinking this morning in terms of the focus of the market or as i like to say,
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the key to this market if there is one? >> still going to be bristol-myers and put pen to paper over the weekend for about hours and hours with jack moore research director on my travel trust. we keep coming back to how there's going to be a dramatic slowing of the growth rate because op tivo is not working for the biggest market. bristol shot high here and a lot of talk about maybe bristol being too aggressive and, therefore, lulled many of us into believing it had to be a gimme. merck's tee true da will be very helpful for them. but there is just a lot of talk that the growth rate here is going to shrink so much that you can't even buy the stock at 63 doctors. >> really? >> i happened to think that bristol will settle down and other things in 2017 that will help, but i am talking 2017, not 2016. >> i would have mentioned tyson foods if you wanted the high
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side, the hillshire brands you talked about, there's an acquisition. >> we'll take a look at tyson on the other side of the opening bell and see how it opens after the earnings jim mentioned. as for us, well there it is. the opening bell. taking a look back at the s&p 500. real-time exchange. cnbc headquarters. here's the big board. first mark capital an early stage venture capital firm. at the nasdaq, osiris focused on cellular regenerative medicine. bristol-myers does open a bit. you were mentioning tyson before the bell there. let's talk about it right now. >> people thought they paid way too much. remember they were in the bidding war snoor hillshire and paid a huge multiple. >> worth every penny because it went from being commodity company to proprietary company and people loved that and the fact that the meat line of growth was extraordinary. so there you go. this is a very, very good deal. still paying dividends. the stock in the 40s when they first announced the first
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quarter out of the chute and ever since then nothing but up. one of the better active food stocks in a market thats like that group. >> and interesting we noted a deal where a high price was paid but ends up it would seem being a positive for the company. >> they changed the stripes that caused a re-rating of tyson right into the camp that is -- that we would regard as being a kellogg or jenning mills. both of which -- general mills. the kellogg quarter i did not see much to recommend but didn't matter because they brought in the zero based budgeting a lot of food companies like to do and people love that. they just love -- >> right. >> started by guys at 3g and it has sort of gained currency. >> wow. >> has it. >> throughout a lot of the food business. >> yes. and i think that -- >> started with the heinz and then, of course then kraft heinz and a lot of other things. >> a lot of movement within the -- everything that sold in the supermarket where you want to be on the cereal is back.
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kellogg did not talk about cereal being back because the celiac initiative of general mills is -- heinz a pint of view from the cost. the cost of these food companies. >> i wonder at what point you start to hit muscle as opposed to fat. >> that's a good question. >> people who say well, maybe the 3g guys they go a little too far. i'm sure they'll take issue with that and actually hurt their ability in terms of sales or innovation and things like that. >> you constantly have to create new products. clorox, most of its new growth is coming from new products like fa breeze for cat liter, merged those two. fabreeze a different company and selling well. i find what happens is, the more you advertise on the web, where the customers are, the more you issue new products that take shelf space, you do well. if you don't, i mean look at
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pepsico. had a remarkable quarter but take a look at the -- take a tape measure to your supermarket and see more and more snacks from pepsico. rather extraordinary. this is just share take. >> i did want to talk about alere. a company that our viewers know i have been following for some time in a deal to be acquired by abbott but failed to file its 10k, annual report for some time. that as a result of in late february of '16 senior members of management becoming aware of africa and china, significant to impact revenue reported in 2015. then they went back and looked even further and so we've been waiting for this 10k and there has been a lot of thought and i have he' been reporting on this, that abbott was going to use this as an opportunity get out of the deal. remember subsequent to agreeing to buy alere abbott moveden to to buy st. jude. this morning we get the 10k from
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alere, reported revisions, not restatements, which can be important. >> right. >> those revisions resulting in decreases of $13 million in revenue in 2014, $8 million in 2013. so we're not talking about large revisions at this point. but they did also conclude they had material weaknesses in internal controls over revenue recognition which they describe on controls and procedures if you want to take a look at that in the 10k. what i've been saying none will matter. abbott will try to get out of the deal by suing and this morning we have a few quotes from abbott saying filing doesn't eliminate concerns. there are concerns about business controls and other practices. my sources telling me the expectation is, that, in fact, those kroels control issues are what abbott is going to at least try to go to court to get out of the deal on. saying we don't know if we can believe this 10k and so this very well may end up in front of a delaware judge and we'll have to wait and see. the stock is up as you might
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expect given how long people have been waiting for the 10k but looks like we have a lot more to follow from abbott as it will fight to get out of the deal. they have not said that specifically, but even the quotes attributed to abbott this morning seem to indicate a willingness to try to push this thing to see if they can get out. >> st. jude deal was $25 billion deal. major commitment to a very good company in order to be able to challenge medtronic directly and i think that it's -- abbott is not a piggyback. it's a good company. i think they want away from these guys. >> alere delivers health information through rapid diagnostic tests we're talking about in various ways. sometimes i think we fail to explain what some of the companies do. >> that's code. >> yeah. >> a company. >> there is a company. >> but they do it. >> as opposed to the company the company that -- >> that says it does it but doesn't. >> there you go. >> there you know.
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>> yeah. >> where did you want to go next? >> well, you know, i think that the banks are right to talk about. jpmorgan, you know, jpmorgan gets downgraded today. i think it's a fact tu was downgrade but citi -- -- citi pushed. jpmorgan. i'm seeing a shuffling of the banks. give me a break. these banks are so cheap on a relative basis. aig, we had peter hancock on is chairman and ceo of aig. i'm saying the banks aren't quitting yet. the banks have been a little bit -- a bit underneath the sfwoonks a little life. >> as the 10-year got a little life itself. i was wondering are the chinese selling the 10-year. >> they may be. >> selling the 10-year. >> i think their reserves. >> came out. >> $3.2 trillion. >> i thought the reserves were low. >> i think the number was $3.2 trillion if i recall. yeah. 3.2. right in line with consensus
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apparently, jim. >> well -- >> though they were running of course a current account surplus. >> right. >> so money coming in and going out. >> true. but i'm looking at, yes, the citi downgrade of jpmorgan down to neutral. i just think that the treasures if they go higher, you're going to find more buyers of the banks. when it comes to the industrials almost no research today. that was a good group last week too. the acquisitions veil just hit an acquisition and people are in love with it. we are in a moment, remember the old days last year when there was a moment that if you bought someone your stock went higher. >> yes. >> we may be back to that. we may be back to that. that was a hall seen moment. >> it was a great moment. >> technology has seen a good deal of consolidation this year. >> i still thought that intel should have bought nvidia. looks like it's too late to do that. intel only down a buck. ibm flirting with the 52-week high. people did not hate the quarter.
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>> i know. >> we see weird stuff. >> the journal -- >> up to where it was. >> the journal talking about different views of ibm's cloud business. >> yeah. thought that was important. there's a lot of -- cloud is used too often. >> it is. what exactly we mean when we say cloud and all the services associated with it. >> right. oracle number one in cloud but salesforce is number one in cloud. you don't know if you've seen amazon's cloud. >> microsoft is coming on strong almost number one in the cloud and google making a move towards number one. >> they're all getting 10s. everyone getting a 10. 17s. women's gymnastics. >> 16.3. >> i'm giving them 17. i'm taking them up. >> one thing not going up today is about the -- big pharma. bristol-myers, now down. >> yeah. because it's problematic. >> merck's down. pfizer's down. >> problematic. >> people want the oil. >> glass yo is down. >> people want the oils. everyone got short. people are as negative about oil at 40 as positive at 50 and chevron is where it was when it
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reported. a lot of people thought it was a miserable company. the old st. mary's makes an acquisition today. worth notie ining that you're starting to get positives about eog, a great number, pioneer. for $980 million they bought 24,000 acres in the permian from rock oil. the permian, where you can buy oil for like 10, 15, $20 a barrel. >> right. >> very important to keep track of that. very interesting. >> it is. it's been such an interesting year for a lot of the mlps. i'm just looking at williams which is now up on the year. >> how is that possible? >> up 22%. kmi is up 39% this year. >> they cut the dividend. >> last year was horrible. >> the move surprise is energy transfer partners, you could have bought that stock at 18 and now it's at 42. big gains. i just find it extraordinary. extraordinary. it's where the action has been. >> it is. >> the natural gas pipelines, yes, natural gas, people forget
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these are very different fuels. natural gas, $2.60. natural gas is where a lot of the -- its taken over in terms of the big construction projects in texas and louisiana. they are all about taking natural gas liquids out. a fabulous business for america and the marcellus pipeline coming east. i know we didn't talk about trump's in favor of keystone, haven't gone over -- >> we haven't gone over the trump economic plan or some of the things we're hearing about it, but he seems to want to drill everywhere. >> right. >> which wouldn't seem to be a positive for the u.s. economy in some ways because we don't seem to have benefitted from lower oil prices as some would have thought and we can gauge the distinctive problems it has brought whether for the equity markets or job losses in that industry. >> and plenty of areas to drill. pioneer, is the one to watch. they did a gigantic secondary when they bought big acreage from devon and stock up and putting more rigs to work and what's happened they're starting to evaluate growth oils that
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have low cost of capital, are doing incredible. look at pioneer. this thing is doing as well as it was when oil looking like it was going to 60. abyfur cated market and the companies spending to build up their acreage are flying here. >> all right. >> important to note that. >> we got record highs on the s&p. to bob pisani, more on what's moving this morning. >> new high territory. doing pretty well overseas as well even though china's exports and imports fell more than expected on the dollar just level. take a look at overseas. china's moving on the upsi. even japan moving on the upside. yen weakness over there that's helping some of the exporters like toyota and even europe is on the upside. by the way, chinese iron ore imports rose about 8%. that was a lot more than expected and it's very close to a record, so the important thing is, most of those iron ore companies, steel companies, doing better. rio, bh p billy tin, clf a bid
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under them this morning. talk about walmart and what do they get buying jet. it's simple. they get a lot of people who are potential buyers that are out there. they get about 1 million customer files. people who have bought from them before. that's very important. evercorps pointed that out in a good note this morning. network of marketplace venders willing to work with who may have not been willing to work with walmart overall and they get a dynamic pricing strategy as well. more flexibility than perhaps other people would have had when working with walmart in the past. a number of reasons that works. walmart is on the flat side. talk over the weekend about technology stocks. highest levels in 16 years for the s&p technology index. what most people have pointed out is all the big names it's all tech stocks these days. the four biggest stocks, in the united states, in the s&p are all tech, apple, fail bet, microsoft and amazon. exxon number five but a point last week i believe when facebook which is now about $360
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billion, passed exxonmobil. at one point last week i believe all five of the biggest tech companies -- all five of the biggest companies in the united states were technology stocks. this has been a tremendous move to the upside for these technology tech names. new development here at cnbc. our partners at kenshow rolling out new indexes today called the kenshow new economy indissis. 16 indices covering all of the new economy areas, robotic, cyber security, nan know tech, virtual are reality, 3d printing and drones and others. they show companies most involved in each industry and some companies you may never have heard of, never thought of. for example, look at the autonomous vehicles indices, companies that you know, tesla and toyota and delphi, chip makers, like nvidia and mobileeye on there but smaller companies like wabco, they make electronic breaking systems
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critical to all of these autonomous vehicles. probably never heard of them but you can see them in the indices. want to learn more go to or my trader back to you. >> thank you very much. bob pisani. more on the olympics from rio with carl, next. >> the olympics are open for business, but for rio, this is the beginning of the test. how to manage half a million visitors get them around the city, stack them in lines and get them into the park securely. cnbc's coverage of the rio olympic games continues live in a moment. energy is a complex challenge. people want power. and power plants account for more than a third of energy-related carbon emissions. the challenge is to capture the emissions before they're released into the atmosphere. exxonmobil is a leader in carbon capture. our team is working to make this technology better,
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how was it? >> so x-ray belt wasn't operating for whatever reason and they opened the bag, looked through it, and let me go. i didn't go through a personal x-ray. sort of like getting into a concert than a worldwide event. >> welcome back to "squawk on the street" live from rio. weather is often a factor for
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competing olympians. the lack of snow in sochi. here in rio it's turning into the wind. on sundays gusts of 34 miles an hour not only knocked out rowing events on the city's lagoon they forced the evacuation of the mega store, the retail shop, tore down the panels of a mural that hangs from the swimming venue. the weather is expected to stay cool and rainy through wednesdayful. we will see how that affects competition. empty seats. organizers say about a fifth of olympic tickets remain unsold even some brazilians with tickets are not showing up at the venues spread out across the city. some not willing to make the trek in the traffic and some organizers say if it's not soccer brazilians may be too unfamiliar and uninterested. >> when we had some empty seats, we never had those fears.
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i believe they love it better to see a live event. challenge and upgrade their game. i believe that the brazilian fans which stand for the majority of the crowd are learning how to love and how to appreciate different sports. >> next hour, guys, we will show you how some olympians are dealing with another challenge in rio that is the environmental challenge that comes from some of the pollution in the waterways that's coming up next hour. >> carl, do you think it's one of these things where now that we see that there are seats and seems exciting that people go? i thought it was sold out. i would not think that you could get an olympic ticket. is this one year where the games are so great people say give me a ticket, give me a plane ticket i'm going down? >> it's very possible. although, jim, i don't know if you've been to rio it is congested, tough to get around.
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beach volleyball from here, i would say, is maybe an hour's drive at the least. so i think it is a matter of you got the ticket but are you willing to get into the mix and hit the highway. it's not easy to get around the city. >> don't hit the infrastructure. >> no. >> too bad. >> i feel like -- i wish i had known, honestly. always wanted to go. probably my chance. i missed london. have a week off. >> you, me, and david, in korea, let's do this. >> okay. >> oh, yeah. >> done. >> absolutely. i just love the olympics. >> he can show us -- carl can show us the ropes. i would love to go to one. but i'm happy sitting back and watching at night. >> what can i tell you. >> carl, we'll talk to you in the next hour, of course. carl quintanilla. >> all right, guys. >> in rio. >> up next stop trading with jim.
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♪ i'm free, baby! now get 0% financing for 72 months across the entire lineup of ford cars, trucks and suvs, during the ford freedom sales event. let's get to top trading with jim. >> we have a plethora of retail earnings this week. macy's, we have kohl's, ralph lauren for apparel. i thought these were an interesting call. ubs says that ralph lauren
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guidance is cut sufficiently and so cautious that that could rally and matthew boss, very good record, says macy's also derisk, a wall street sell side term, which means that the negatives are so discounted they think it goes to 39. the reason this call is so important is that this, other than the airlines, this is the worst group. >> right. >> nordstrom being talked about as perhaps a takeover. i don't like that call. the brothers are never going to sell. i just think if you truly believe that things are getting a little better with employment you might want to take a stab at these and buy pacy's. >> ralph lauren, the new ceo, they tanked the quarter last time, didn't they. >> kitchen sinked it in the sense. >> makes me like it. macy's new guys coming in. >> that's right. >> so i just think these are down and outers that a lot of people have been blaming the strong dollar on for macy's. the dollar is no longer that strong for a lot of currencies. sure against the peso but the real has come on strong.
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if you believe that foreigners come and buy. >> i have to tell you these two may make sense. macy's seem to have limited downside. >> they're trades. in the end, it's like best buy, that stock has been on fire but no one knows why. when you look at a mattress firm, you think to yourself, if someone is going to buy mattress firm then one thing we know in america, any retailer can be bought. that's different from what michael corleone says about hyman roth but it's very -- >> right. >> kind of an analysis. >> a sucker is born every day. >> mattress firm was a giant overpayment but maybe stein hoff wants to put a print in the united states. they have one. there's a mattress firm sometimes in every quarter. >> the move in the stock is extraordinary. given the premium and so many of the shares were short. >> right. >> very painful for many of the funds that may have been thinking this company was headed
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towards a m s s a much more dif financial futures. >> the short sellers being squeezed and helmrick and pain, lot of pain when it comes to helmcle rick and pain. mr. t when he asked for the forecast. >> calls for pain. >> not anymore. now it's pleasure, helmrick and pleasure. >> great show. >> yes. >> and i think that there will be many great shows this week. >> i expect there will be. >> i will be watching the olympics. >> i'm going to be watching the olympics but you will be back here. >> correct. >> no schedule changes i'm unaware of. >> i'm here not in my garden with the tomatoes. >> my wife -- >> also what was that other thing you were making with the -- >> it's all -- >> ha was that? >> my zucchinis. >> ground -- you scoop the zucchini stuff it with whatever you like. >> wow. >> stick with. >> i will. >> and will fred. >> making sauce too? >> making sauce. >> i'm wilfred's chef and
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servant for his birthday, his 20 what 27th birthday. >> don't go there. >> go to oxford. >> all right. now i'm sad. coming up, the countdown to donald trump's big economic speech. we're going to give you a sense as to what to look for and had to expect. "squawk on the street" will be right back.
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♪ good morning and welcome back to "squawk on the street." i'm david faber with kayla tausche and wilfred frost live from post nine at the new york stock exchange. sara eisen has the day off. carl quintanilla, he is with us as you see from the olympics in rio and will join us shortly. first a look at the markets this morning. of course we had been in record territory, but let's see it flat on the day for your broader averages. oil is up, it was up on friday, well above 40 bucks now, and we had again set a new record high on the s&p before we pulled back. >> let's get to our road map at this hour. donald trump getting ready to unveil his economic plan in a speech to the detroit economic club. the focus, boosting jobs, cutting business taxes, and
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reducing regulations. we'll head to detroit straight ahead. plus the olympics are under way with big upsets and record-breaking performances. we'll get the highlights, the medal count and what is to come as we head to rio. >> and a crippling power outage at delta forcing the airline to ground all flights worldwide, limited departures have resumed. the former ceo of continental airlines gordon bethune. >> donald trump getting ready to unveil his economic plan this afternoon during a speech to the detroit economic club. our john harwood is at the event and joins us with what to expect and what the significance of detroit to this message is? >> well, detroit is a symbol of the decline of blue collar america and the blue collar economy. of course the auto industry went through crisis in the last decade and has turned around since then. but donald trump is going to talk about a lot of things that he's been talking about on the campaign trail. don't know how much new detail we will get and an adviser told
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me this will be a vision speech, not a tax speech. some of the main points. one, donald trump proposed some months ago and will affirm today, 15% rate on businesses, corporations and pass through companies that file under the individual code. he's going to talk about a moratorium on regulations, not just dodd/frank but obama care and the climate plan that president obama has articulated. he's going to talk about a child care tax credit, a full deductibility on child care. he's going to talk about revamping trade deals, renegotiating nafta, getting out of tpp. the one new thing in all of this is the child care tax deductibility. don't know how much that's going to cost because he hasn't sketched out the details. an adviser told me he's not likely to sketch out the details today. his tax plan as previously articulated would in the estimation of the tax foundation
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add $10 trillion to the deficit. don't expect him to tailor that today or shrink that amount but see when he provides detail even his advisors aren't previewing today. >> for more on the plan we're joined by jared bernstein former economic adviser to vice president biden and sara fangen, former political director to president george bush. sara, critics have said for months now that donald trump had to the gone line by line and actually broken down what his economic plan would be. how much clarification does this provide? >> well, i think this is an incredible step for the trump campaign in the right direction of writirighting a badly functi campaign which is so start talking about policy. we saw from the latest nbc news poll on the economy trump and clinton do pretty well together. trump actually bests clinton in many polls and this is an issue where he, because of his strong
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business record, can actually gain some ground back that he's lost in recent weeks. i do think on the specifics, though, one thing that will be very popular, and is smart by the campaign, paying for it another question but in terms of politics this child care deductibility is a really wise move by the trump campaign. you'll remember ivanka actually announced this at the convention. she announced it in her speech and donald trump didn't talk about it until today. i think this is a wise move on the campaign's part. >> but in recent weeks we've seen such divisions within the republican party in the wake of comments by mr. trump over the weekend, you had conservatives like david brooks and charles krauthammer weighing in saying he's not psychologically fit to be president. are republicans who are on the fence, going to be swayed by the economic plan, where previously they might have been a little startled by the comments that the candidate made last week? >> i don't think anyone will be particularly swayed.
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i mean it's one thing to talk about policy but matters a lot what you're saying. and as i think we all agreed the idea of adding $10 trillion to the deficit that's how much trump's tax plan cuts, is not only problematic, but when you add to that on top of this, this child care deductibility. i totally agree that's a smart political move, but he's new to this game and not thought it through. if you have deductibility versus a tax credit that means a billionaire with an au pair or two gets to deduct their expenses at the top marginal rate. this is an upside down tax policy. the 15% rate on corporate taxes and pass through, again, 70% of a pass through income goes to the top 1%. he's talking about deregulating the economy. this is all kind of the george w. bush recipe for starving government coffers and heading back to recession. i think it's problematic. i suppose talking about policy is better than all the incoherent craziness we heard last week but it matters about
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what you're saying. >> the thing trump will do effectively today, hopefully effectively, we'll get the conversation in this campaign back on policy and back, frankly, on what many believe is too slow of growth that ha come out of the obama/clinton administration. and when trump is talking about jobs and getting higher wages for workers, trump is doing much better against clinton than when he's talking about these other controversies that have bogged his effort down over the course -- >> i pretty much agree with sara on that point. especially people like me and sara and a lot of others, would rather be arguing about policy than insulting people who have experienced tragedy in their lives. however, like i said, this is where hillary clinton is very comfortable. i mean she can definitely talk policy with donald trump and donald trump's economic policy strikes me as extremely incoherent and reckless. for one thing, you never know what he's going to say one day to the next.
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for another he's somehow talking about holding social security and medicare harmless, increasing the defense budget and cutting $10 trillion over ten years, $30 trillion over 20 years and adding this child care expense deductibility. that is really fiscally reckless. the minute score keeper will he hold to that we will have a policy discussion not as helpful to trump as you think. >> we should talk about the people who have had input on this speech, at least as has been reported, steve mohr, a widely respected economist, our own larry kudlow has been informally advising mr. trump op economic policy, we have good conserve thought leaders on this topic of the economy which i think, you know, if mr. trump is listening to them, will get incredible economic growth which as we talk about a lot on this network at least larry and i and others talk about on this network is the path to prosperity and the path to raising wages which is what
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he's -- >> larry kudlow is a dear friend of mine, but this whole idea of supply side free-throw, this trickle down business has been so thoroughly and empirically debunked that that is -- >> that's not true. >> that is just -- that never works. >> well, it -- >> are we coming back to that? are we going to just come back to that universal argument about the value of supply side economics and whether it just inflates deficits and actually does not increase economic growth or to larry kudlow's point he endlessly makes, of course, that if you give it a try, you're going to see economic growth rates you've never seen. >> if we're going to be data driven we're not going to come back to it. >> put money in the hands of hard working americans, they will spend it far better than the government does. and that is -- that is what -- >> we're talking about the top 1%, they have all the money, can do all the spending they need. >> leave it there. we'll get more details when that speech happens at noon. for now jared bernstein and sara fangen, thanks you so both.
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>> thank you. >> they're great. interview each other. we don't need to do anything. >> popcorn back here on set. >> i can check out again. >> but you look so good, though. stay will. it was a big weekend in rio. our own carl quintanilla is there, and he joins us now with a lot of the highlights. good morning again, carl. >> hey, david. we've talked a lot this morning about some of the successes of team usa this weekend. but it is kind of a bittersweet morning with some very notable upsets. look at tennis. the williams sisters serena and venus out in the first round of doubles play, up against the czech republic ousted in two sets, 6-3, 6-4, that is their first ever olympic doubles defeat. serena did advance to the next round in singles and venus an early exit after her first round loss. we're on the lookout for injuries this morning. women's cyclist, annemeik van vleuten slips on a wet pavement take a look at this, runs off the road, flips over her handle bars, and was motionless quite a
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while on the ground ended up with a concussion and spinal fractures. she later tweeted will be fine, but most of all, super disappointed after the best race of my career. michael phelps, talked about his 23rd olympic medal extending his run as the most decorated olympian of all time, after the relay, about looking for his 2-month-old son boomer in the stands. >> i was trying to find him during the awards ceremony but couldn't find him and finally found him and he was asleep. hopefully awake for the race if not i will replay it for him when he's old enough. >> take a look at the medal count. u.s. is still ahead in these early days with 12 medals. ahead of china with 8, and italy with 7. of course we're looking forward to a lot of men's events today and tonight. gymnastics, swimming, and women's rugby. we hung out with men's rugby over the weekend. you will hear from them later in the week. talk about a brutal sport that
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requires athleticism from head to toe, that's coming up in the next couple days. guys? >> carl, quick, who are the favorites in men's rugby mathisen hughs, grew up in europe and lives in san diego and the coach is from the uk, not an inherently american sport but the u.s. does have the gold from the last time it was an event in 1924. can you defend your gold 92 years later. >> carl, we will check in with you later, carl quintanilla. >> british coach as well. cheering them on. >> there you go. >> gives you a reason to cheer. plus that breast stroker. amazing. >> the gold medal for the brit and a new world record. >> yes, i forget his first name. >> adam. >> he was fabulous. a computer glitch grounded
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delta's flights world wide. they're starting to resume limited departures at delta. we'll hear from gordon bethune next and take you to a break a look at what stocks this morning are doing on various news. much more ahead on "squawk on the street" stay with us.
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so hurry in for 0% financing for 72 months. that's freedom from interest... and freedom to choose with ford. america's best selling brand. ♪ i'm free, baby! now get 0% financing for 72 months across the entire lineup of ford cars, trucks and suvs, during the ford freedom sales event. a power outage at delta grounding flights worldwide this morning, limited departures have resumed. susan li joins us from laguardia
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in new york and brings us up to date. susan? >> yeah, hi, david. yeah, delta flights are taking off once again in the past hour or so. we've seen quite a number of them. the ones that we tracked have been delayed two or three hours but delta on social media 90 minutes, two hours ago saying they have lifted the global ground halt on all flights and they have limited departures, but, you know, still expect some long delays and possibly some cancellations if you are heading to the airport and flying on delta. we caught up with passengers here at laguardia this morning and some of them as you can imagine are frustrated and giving up altogether at least for now. >> flight was at 11:00 and we couldn't get any information from home because the website, so we came here and finally we did get some information. there are hours and hours of delays. so we -- she decided to canceling. >> between what's happening in the airport and the flights, some flights are leaving sooner
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than others, others not leaving at all, so it's a mash of what's happening and what's there. >> all global delta flights were grounded this morning after systems outage that was caused by a power outage in atlanta in the early morning hours. the state power company georgia power saying they believe it was delta's own equipment that caused this outage and from what they've seen from their customers no other issues so far have been reported to them, to georgia power. confusions across airports this morning. here at laguardia, we were checking in on the status boards and because of the systems outage a lot of them were not updating correctly. some said flights were at gates, some said flights were on time, and when we checks in and looked at the check-in, basically the check-in boards they were still taking in passengers, weren't turning them away. taking luggage, issuing boarding passes and wait at the gate. 5,000 delta flights take off
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each and every day according to some of the estimates. the latest from flight aware now say that delta flights around the world are departing worldwide at a rit of multiple flights per minute, and 160 flights in the air and delta issuing the waiver fee until august 12th. look into that. back to you. >> thank you very much for that. for more on how this story impacts the airline and the industry, we're joined by gordon bethune, former continental airlines chairman and ceo. good morning to you. thanks for joining us. of course it was also a british airways outage around a week ago. are airlines and delta in particular a bit slow to upgrade their technical systems? >> i'm not sure it's an upgrade issue. sometimes, you know, these central failures it's very complicated like a wristwatch. you need one part to stop the whole thing. they're having to revert to manual processes where the automation has failed and why you have some flights leaving, because they're doing it by hand, which is they're not
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staffed to do. of course people go to the airport because they can't access it on the web. so i've seen it happen in almost every airline and it's just a question of getting the right people in there and getting things fixed. >> and gordon, from your experience of heading up a major airline, when these types of events happen, do they really hurt the image and customers' eyes of the airline over a medium term and longer term view? >> i'm not sure how long it lasts. i know it's a disappointment and people want to get to their destination on time. continental had a backup electrical system 50 miles away from the downtown, so a lot of companies do backups. this power failure doesn't sounds like the whole story because i'm sure tell delta had generators and things to run their systems. they cascade and cause other problems and i'm sure that's what they're trying to cope with. >> gordon, being off-line for just a handful of hours how much
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would something like that cost an airline? >> you don't get the money. all the payments for the people and rentals at the airport all keeps going but you get no money. it costs you a lot on the bottom line you'll take a hit. i'm sure they're not going to let things go too long. they're not -- they've got all the technical ability to get this fixed as quickly as humanly possible. >> and gordon, the technical systems that were lost today, the booking systems on the ground, they're totally separate from what the pilots use in the air, is that right? >> yeah, but they -- but everything is generated from a central data base so you have real-time information and, of course, you have to have the name, passenger name records of who's on the airplane and how do you access that without doing it manually. so yes, you can manually dispatch the airplane from the altitude and air speeds you want for the flight plan and the faa but you've got to get the people to the airplane and loaded and that's another encumbrance when
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you don't have automation. >> it feels like we've had a particularly high number of system outages at airlines in the last year. wilfred mentioned british airways but southwest in jewel, wide ranging american ground stop in september. how accustomed are customers becoming to things like this happening, regardless of the fact it's an inconvenience but are we getting used to this? >> i think so, because the use of technology is so pervasive and frankly necessary for the complexity, of what they're trying to do. so you have everything co-dependent means the weakest link in the chain can cause this kind of disruption. i guess we're dealing with a bigger, more complex system, delta has thousands and thousands of flights and -- but when you look at it as a percentage of the world's traffic, it's very small. so all in all, i think we're not used to it because it happens so infrequently. >> gordon, can i ask a different topic to finish things off. of course we've had the recent
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brexit result and the european economy has been suffering for other reasons as well. the latest data on some of the european airlines in that region has seen a slow down. what are you hearing from your industry contacts? >> well, some of the foreign exchange issues, obviously, the strength of the dollar is causing a dilution of revenue in foreign currencies and, of course, people with terrorism and other associated incidents around the world, are making alternate travel plans and some of them are staying home or going to hawaii. i notice hawaii traffic was up. so it is having an effect. it's not catastrophic. you know there's not a big margin in the airlines to start with. >> gordon, thank you very much for joining us this morning. much appreciated. gordon bethune, former ceo of continental. >> coming up, markets in focus, stocks hitting fresh all-time highs earlier this morning. take a look at where we're trading right now. we are in the red if fractionally. the market is digesting chinese
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trade data as well as follow through from friday's job report. much more ahead on "squawk on the street" stay with us. hey look, it's those guys. [music] shawn: look at those pearly whites, man. [music] bud: whoa, cute! shawn: shut-up. jess: are you good to drive? shawn: i'm fine. [music] [police siren] jess: how many did you have? shawn: i should be fine. jess: you should be? officer: sir, go ahead and step out of the vehicle for me.
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transport stocks turning a corner as recession fears from earlier in the year seem to be receding. morgan brennan joins us now and has more on that subject. morgan? >> hey, david. so after a steep sell-off from late 2014 into the first months of this year, the dow transports are finally moving higher, outperforming both the s&p and the dow so far this quarter. you can see that right here. this is important because transports have long been seen as a barometer of economic health. now we know the data has been mixed with a blockbuster jobs report last friday on the heels of disappointing second quarter gdp estimates but what are the transports signalling? start with trucks. trucking is a lead economic indicator, 70% of u.s. goods move at some point through this mode of transportation. the american trucking association reportonnage has tu but a slight uptick in demand the case in june and july helped names like night transportation, swift transportation, old
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dominion freight line, xpo and a small but closely watched trucking company called covenant transportation, all of those are up by double digit percentages since the start of july. another group to watch, railroads after being battered by the collapse in commodity prices every rail stock is higher this quarter. see that here despite tepid earnings and some analysts suggest the plunge in rail lines may be bottoming out with demand for certain goods like grain expected to pick up this fall. keep in mind while the worse could be over for the transports we still have a long way to go before freight volumes return to 2014 early 2015 levels and there are some key factors like inventory levels, energy prices and the strength of the dollar that could spell more economic tumult, at least where this sector is concerned. david? >> all right. thank you very much, morgan brennan. well the s&p 500 hit record highs earlier this morning weighing in on the strength of the equity rally and the economy. drew maddist, and berns
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mckinney, at nfj. berns, start with you, did the jobs number from friday change your approach at all to the stock market? >> well, the jobs report friday, it really is almost a tale of two economies because you had the very weak gdp numbers prior to that, but then you saw the jobs report came out, much stronger than expected and i think one of the key impacts was a shift in market leadership. you saw post--brexit the likelihood of a hike in interest rates is low that's up to about a 50/50 chance. one of the places you saw a l t shift in leadership was towards the financials, some of the beneficiaries, also tech stocks and some of the consumer discretionari discretionariries, also move to leadership post that report. >> what's your take overall in terms of what it means for the broader economy given that 1.2% gdp number we printed which didn't impress anybody. >> it's easier to measure how many are working than to measure
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the entire economy. what we really focused on in that report was you had more people working, working longer hours, and they were getting paid more to do it. when you add it up the cash flow going to the u.s. consumer base was up 6% year over year. really healthy number for the u.s. consumer to have keep some shopping, the economy moving higher and while the second quarter gdp number was poor, you know, i'm not really sure how much i would worry about it. i'm more interested in what's going to happen the second half of the year and i think it looks good. >> drew, the uk added its name to the list of central banks around the world easing right now last week and we know that the ecb and the bank of japan va been doing so strongly in recent months as well. does that make it harder for the fed to decide to hike when the domestic data is suggesting they should? >> i think, you know, the fed would hike and maybe that would put some pressure on some aspects of it, but also it could actually alleviate some of the pressure in terms of the
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currency side, right. the u.s. would have to be careful because if the fed hikes and the dollar appreciates, then of course it puts a little downward pressure on the u.s. economy but it could take pressure off other central banks who feel like they might need to ease to depreciate their currencies. it's two sides of the same coin. if other countries are easing and we're tightening it's really the same result. some of the secondary effects are a little different though. >> and then throw in the recent weakness in the oil market, dipping below $40 per barrel and yes, we are above that in recent days, raymond james put out a note today saying the move downward was technical, the fundamentals are still strong, not to worry, do you share that view that long term oil will stabilize? >> i think in the near term you could have some weakness. there is still a bit of a supply challenge, a build up in inventories. look out longer term, in fact a great piece in today's journal talking about the degree to which a lot have been cutting
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back on capital spending, that spending down about 20 to 25% from a couple of years ago. and so going forward, a lot of that supply is being taken off-line. opec's capacity has gone from about 5 million barrels a day to about 1 and the non-u.s. nonopec side has been flat over the last five years. now, i think that rise would be capped at about 60 or $70, but it does look like the upside, downside risk is probably more positive for energy prices from where we are today. >> berns, you walmart on one of the buy lists, one of the stocks you like. do you like the deal they've announced earlier today? >> i think we haven't had a chance to fully digest it, but, you know, just looking into that, seems that they have been very good stewards of capital and so from that perspective, it is a positive. you know, they've been great about returning cash to shareholders. it just seems that, you know, they're making a good transition forward. they have been reinvesting in
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the business and that's really paid off. you've seen same-store sales up for the last six straight quarters, and, you know, from my perspective personally, they have. losing share to some of the dollar discounters but gaining share elsewhere. i go camping with my kids often and used to have to go to three places to get things. i can get everything from walmart nowadays. >> yeah. they do have a lot of skus. drew, and berns, thanks to you both. >> still to come after the break, more on that very deal that berns was discussing. and tomorrow morning, one not to miss, the ceo of walmart doug mcmillon will join the "squawk box" team. much more on that deal and everything else happening in the markets today when we come back in just a couple minutes.
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good morning, everyone. i'm sue herera. here is your cnbc news update at this hour.
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a bomb exploded on the grounds of a government run hospital in southwestern pakistan killing at least 64 people and wounding dozens more. officials called the attack an act of terrorism. a breakaway faction of the taliban in pakistan is claiming responsibility. five gunmen wearing afghan military uniforms abducted an american and australian in kabul both believed to be employees of the american university of afghanistan. they were taken from their suv while driving on a main road. no group claiming responsibility so far. in new york city a 12-foot tall red, white and blue tea was sent on fire in front of a donald trump supporter. the homer says his support for trump like the sign outside his house is only going to grow. and jim furyk shot a pga tour record 58 on sunday. he recorded 10 birdies, and an eagle, but get this, he actually
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parred 5 of his final 6 holes. his try for a 57 on the 18th hole ran by the cup. furyk is the only man in history to shoot two rounds below 60. congratulations him. that's the news update this hour. i'll send it back downtown to you guys, kayla. >> i would be lucky to get double that, sue. that's incredible. >> i wouldn't try. >> sue herera, thank you. it is official, walmart buying for $3.3 billion in an attempt to boost its e-commerce business. courtney joins us with details. >> good morning to you. it is the biggest e-commerce acquisition ever. the largest retailer adding a big piece to its acquisition portfolio buying and founder mark laurie for $3.3 billion, $3 billion in cash, 300 million in deferred stocks. the brands will remain distinct for now. walmart hopes the acquisition will accelerate its e-commerce growth which has been slowing while capturinging an urban,
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millennial on-line shopper. mark lurie will play a management role although the details are yet to come. he founded and sold and, to amazon six year ago. walmart is paying a lot for a non-profitable company, come argue the deal is about the founder and his e-commerce experience with jet's pricing model and the experience working for amazon and just the beginning of the retail news this week. big earnings reports still out coming from coach, michael kors, ralph lauren, jc penney. after the first quarter lowered expectations for the second quarter not surprising investors are nervous. department stores could report another rough quarter. according to mastercard spending polls, sales at department stores have grown once this year in the last 12 months. the group says that total retail sales, excluding autos and gas, slightly from july and june growing at 3.6% compared to last year. restaurant spending continues to
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be the group out performer when it comes to consumers. kate spade's result sent shares plunging 20% last week, placing a lot of blame on lower tourist spending and shoppers seeking deeper promotions and investors are showing more confidence ahead of results from competitors michael kors and coach. now hsn ceo's says the election and rhetoric is weighing on consumer spending and called it incredible uncertainty, distracti distraction, negativity and in a small way fear. we'll see what happens. not to miss the walmart interview with doug mcmillon tomorrow morning. >> last week when the news leaked about the walmart/ deal, the thought was that what they needed to sell was mark lorie on staying with the company. any word on how much they paid him or what his agreement looks like. >> we don't know what role he will play at walmart other than he will be part of the team. walmart is holding a call this
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afternoon for reporters and i'll be on it and hope to get more color there. we have pushed everyone from the jet to the walmart side and nobody is releasing details yet. as you suggest he is a very big piece of this deal. it's the largest amount ever paid for a private e-commerce company. he is worth a lot of money. think about the people that he brought with him as well from quizsy to jet that have gotten two payouts from amazon and now walmart. >> we'll look for those details later on when that call happens. for now courtney regan on the walmart deal. thank you. >> thanks. over to carl now, back in r rio, for a look at what is coming up from the olympics. carl? >> david, these games have come with some environmental challenges. pollution and zika. we'll talk about how athletes and their sponsors are trying to adapt. when we're back from rio in a moment.
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what if a company that didn't make cars made plastics that make them lighter? the lubricants that improved fuel economy. even technology to make engines more efficient. what company does all this? exxonmobil, that's who. we're working on all these things to make cars better and use less fuel. helping you save money and reduce emissions. and you thought we just made the gas. energy lives here.
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for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. ♪ olympic athletes being
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forced to adapt their uniforms and equipment to protect themselves against the zika virus. carl quintanilla joins us now from rio with more on that. carl? >> hey, kayla, good morning to you. it's not just zika. there's the polluted water, water sports athletes will compete in. here's how u.s. athletes are teaming up with homegrown companies to keep them safe in rio. >> to address zika concerns under armor which is providing uniforms for 250 olympians including gymnasts, boxers and rugby players, tells cnbc all of our teams and athletes will get a variety of gear that includes multiple long sleeve pant options. but long sleeves are just the start. the u.s. soccer team has received over 600 bottles of bug spray from florida based sawyer teorng with north carolina company insect shield, to treat the team's competition and casual clothes with a repellant that lasts through 70 washes.
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for rowers an sailors the added challenge of competing in leo's polluted bay and lagoon. long contaminated with sewage and trash. in response, the u.s. rowing team will be sporting seamless outfits that cover 50% of their bodies. and feature a moisture wicking anti-microbial finish to protect athletes from the potentially dangerous waters. uniforms are provided by philadelphia based boathouse sports which spent nine months developing the outfits with athletes. now the rowers didn't have to worry about some of that yesterday, guys, because it was so windy here with 30-mile-an-hour gusts if those events were canceled but for insect shield that company that makes the finish for those clothes they actually have a mail away business that treats clothes up 100% this year. so it's not just the rowers who are getting some of the protection from zika. guys? >> carl, last week when soccer had its opening match hope solo got booed and the audience was
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shouting zika at her, sort of mocking her for even being worried about it. you said you haven't seen a mosquito since you've been there. has that changed? have there been more bugs? >> i haven't seen much of a change now. granted i've been working in long sleeves and pants for the most part. but it's, again, not been the highest of concerns when you put it against things like security and i would argue pollution too. we haven't seen the last of that issue being talked about, especially as some of the sailing an rowing events continue through the week. we're not trying to discount zika by any means but it's not top of mind here in rio. >> carl, you were at the london olympics as well, compare and contrast what's the atmosphere on the ground like compared to london four years ago? >> well, i would argue it's definitely being done on a budget, compared to london. i mean london budget was $15 billion versus a third of that here. tenth of it for the opening s ceremo ceremony. trying to be thrifty, i think,
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and projecting more an image of creativity and spunk given their economic challenges in london at the time. we went to team gb yesterday and hear some of the sound, we asked about brexit and other things so we can't wait to share that with you in the hours and days ahead. >> and carl, finally, do you get a chance to get to any events and if so got anything on the schedule today? >> not yet. we almost made it to men's basketball friday night. you know that's a tough one because by the time you're done working getting into these venues is not simple. usually have a media badge which lets you walk in, one of the perks of being here, something you and jim will find out when we all go to korea in two years. >> all right. that's the second time i'm going to start to believe that may become a reality. carl, thank you. and, of course, carl will join us again in rio shortly. speaking of athletes, by the way, worth noting that alex rodriguez is retiring. the new york yankees alex rodriguez, announcing his last
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game will be on friday. a-rod has 696 career home runs. that puts him fourth on the all-time best list. he will continue to work with the yankees through next year as a special adviser and instructor and if you want to see a-rod's last game get ready to pay up. following the announcement on-line marketplace tick iq said it soared by more than 500% at its peak. >> later this week. >> friday i believe will be his last game. of course he will still be paid $27 million next year. >> it's a shame he can't be an adviser to the mets now. david, as a mets fan. >> well, we won last night 3-1. it's not looking good. >> i haven't been to a baseball game. maybe this friday would be the one to -- >> maybe not. >> maybe not. cost wise maybe not. >> take you to sciti field to a mets game. >> millennials switching from big screen to small. how much time do they spend on their smartphones. we'll break down the data with the co-founder of com score up
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next. another look at where the markets are trading at this hour. off the lows of the morning. still fractionally lower. "squawk on the street" will be right back.
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. welcome back to "squawk on the street." from pokemon street. from pokemon go to snapchat millennials are spending more of their time on smartphones than anything now. a good morning to you. we often talk about the rise of certain smartphone applications and the rise of pokemon go relative to the others? >> this has been unbelievable. i have been measuring consumer behavior now for 40 years and i have never seen anything like this. at the beginning of july, there for 5,000 users of pokemon and 10 days later there were 28.5 million of them and while there's been a slight erosion, not unexpectedly in the user
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base it's still well over 20 million and as a comparison, just to give it a scale, if you take the walmart retail app, savings catcher it took three months to go from 5 million to 25 million and if you think of the scale it gives you perspective on how unbelievable the poke man. >> we've seen a nintendo share price still up on the back of this. is it much easier to monetize a game than free apps like facebook and twitter? >> mobile apps and ads that are running in them. we found them to be very effective and there's different types of adds ads and monetizing the business with the purchase of services and the goods and the like. that's already happening but
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looks like they're planning to introduce ads and they could have the likes of a mcdonald's or different retailers and we have seen that those kind of ads are very effective. so mobile ads are something that certainly a face block has really done well with. i would expect pokemon is after the same benefit. >> we have seen the likes of book and pokemon all obsessed with attracting millennials. all understandable because of 75 some odd million in the u.s. people overly obsess about focussing on millennials. i think there's two reasons, millennials are important to marketers because you want to try to establish the value of your brand and brand loyalty early on in somebody's life and
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you increase the lifetime value of a customer but the thing here with millennials today is they're the leading edge of the users of all of the technology and i think that the focus on them in part is the marketers are trying to understand that it will be used going into the future. and how best to market everybody in the future and probably will be heavier into all of this digital technology. >> who is now doing the best. there has been talk that snapchats rise some of the likes of instagram and facebook. is that fair? >> well, snapchat and instagram are neck and neck if you will. both are a long way behind facebook and we're not seeing any erosion in the facebook user base. if you look at snapchat, it's
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grown rapidly and somewhere around 7 and 10 millennial, young millennials aged 18 to 24 are using snapchat in a month. you have 30% of the 25 to 40-year-old millennials and then drops off to about 15% 35 and older. it's interesting because if you go back to pokemon, one of the things that i find intriguing and 35 years of age and somewhere around 15% of them are 55 years of age and older. it's intriguing. >> tell us more about snapchat because the company said there's 150 million daily active users but we don't know much more than that because it's one of the only networks not publicly traded but what at a at a do you have about how big snapchat has gotten compared to the other
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social networks? >> well, we're seeing about 75% of the younger millennials are using it and that's an amazing number in and of itself. it drops off to 40% among the 25 to 34 year olds so it's really skewed toward the younger people. there's no question. if you look at facebook, it's very, very different. the user base of facebook covers all age spectrums so it's snapchat is definitely the most popular communication a application among the younger people but hasn't been able to penetrate the older segments the way that facebook has. >> thank you for joining us this morning. amazing stats in there. three hours per day is the average that millennials use on their smartphone but that's presuming just taking selfies. >> and also watching squawk on the street and squawk alley. it's a pretty big day.
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>> worldwide exchange if they're up in time. millennials are probably not big viewership of worldwide exchange at that time. >> standing by with a look at what's moving. >> we're watching shares of sotheby's up in early trading. they fell less than expected in the latest quarter and profitability did improve. shares are more than 20% higher this year and outing big gains today. meanwhile, you're seeing some positive moe men tull. you have mohawk and stanley black and decker hitting record highs at one point in training today and it goes to show this idea that perhaps people are spending money on this economy but on the bigger ticket items and trying to improve it shall back to you guys. >> thank you very much. now to john forte with what is coming up on squawk alley. >> we have ben silverman, former nbc entertainment co-chairman and we're also going to talk apple with the author of a piece
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that's getting a lot of attention. all that and more coming up on squawk alley. at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad.
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♪ good monday morning back here at rio. really quickly here's this olympics this monday morning. a strong weekend for the u.s. national team. katie ledecky becoming the face of team usa and women's swimming. wins the gold in the 400 meter freestyle, crushes her own world record. she has the chance to be


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