oh, my gosh. folks, that does it for us today. have a great weekend, everybody, right now it's time for "squawk on the street." nice car. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. we kick off a new month with bullish action. futures up nicely. the nasdaq in particular now up 20% for the year. earnings are in from p & g and exxon, and the jobless claims a very big win, just 326. that's the best figure in more than five years. ecb and bank of england did hold steady and the euro zone pmis not bad 8 of 11 countries saw gains in july. the roadmap begins with the good feelings in the market on the back of the upbeat and jobs data. not all shared by exxon,

reporting a 57% drop in second quarter profit as production slide. >> change of feelings in j.c.p. bouncing back after falling yesterday. the retailer refuting published reports about cuts in its financing. and whole foods beats on earnings but the sales growth misses expectation. we'll talk to the co-ceo walter robb later this hour. first up, coming off an upbeat july, futures show a strong august adding to the positive sentiment, claims lowest level since early 2008. not participating, though, is exxon. the dow component with an earnings miss. profits falling 57% in the second quarter. the conference call's not until 11:00, jim, but there were no big onetime items. a little confusing? >> exxon's become a very plodding company. i always like to rate the oil companies by the production growth because in the end the companies can be growth stocks. eog, how can you compare the

two? we're a global company but you get lots of cash generation from exxon. you got $4 billion in buybacks. they spend fortunes to find oil and they're just not finding enough oil. they've spent more money on finding oil, how would the stock do? i don't know. the buyback really does prop it up. >> a big story in "the journal" about how the production boom in this country has eluded exxon and chevron and to what degree that will depend. hard to turn them around on a dime. >> spending $38 billion at exxon and even more at chevron to find oil. >> right. >> these are companies if you look chevron has a much better record of finding. chevron has great gulf properties. bp has a pretty good record of finding, obviously the safety record was of concern and therefore the gulf claims but exxon is the one if you look at the chart it will shock you. it has not been doing well for a long time and yet it doesn't really come down, but if you look at some of the great

independents, you just see unbelievable numbers. if you go look at continental resources which is the bachen, if you look at eog, if you look at companies that are just related to u.s. oil, those are the best. >> yeah. >> those are the ones that perform. >> one oak, is one oak -- >> they're doing restructuring. >> best performer in july. >> they are creating value, they are splitting off and doing mlps. royal dutch, i don't want to complain too much about exxon, you see that stock going down hideously. not as good an operator as exxon. you do have a pecking order here which i would put chevron at the top even though the article did indicate chevron not as good. >> pg final cents beats by couple pennies. 2014 earnings 5 to 7 estimates about 7. i guess you could expect him to come in and try to calm everyone down? >> mr. mcdonald who is no longer with the company -- you know, no

longer the ceo, set this company up to do what was right. i felt that he did get the bum's rush in the end because it's not like a.j., mr. laughly, is a fabulous executive but it's not like he turned it around in a couple months. these things were all in place. 4% organic growth i would like to see. kimberly-clark blinked in diapers in europe and procter & gamble trying to do more of an emerging market strategy, but line by line there are a lot of divisions not performing up to par but you do have a terrific great american, dividend-boosting company. >> you can't expect a ceo even one who was the ceo of the company for quite some time to come back in and effect change in a rapid-order fashion in a company as large as pg. the time line is not going to be that long. he's not in there for ten years clearly. there is going to be a successor. >> and who disproves that? who is the greatest turnaround executive in this country right now? alex gorski, he didn't turn

around johnson & johnson by making aggressive moves. but i will say that procter & gamble is now up from 6364 where mcdonald said, do you know what, we got to start taking costs out. these companies we told -- clorox took a lot of costs. i know clorox isn't going up the way proctor is, but you got to harry how much procter was in the pipe. when people get sacked you want to see what they put in place. i feel bad for mcdonald. he's an army ranger and strangle me with his hand and kill me like that. >> ranger choke hold? the trachea just collapses. >> usually you just faint. they don't kill you. put you out. >> the cfo was on "squawk" earlier today and talked about having laffley back in the country. >> it felt good, it feels good. i'm very optimistic about the future as we look forward. obviously a.g. has worked with this team for many years. it's great to work with this him again and we're committed to

serve consumers and create value for consumers and shareholders. >> well, you know, the problem here is you are still paying 18 times earnings for a 4% growth. health care looked good. volume up 5%. >> and people point out it's a ten handle -- it's ten at unilever. they're doing better but still lagging their peers. >> unilever was odd, because the guy when he did his -- he's a terrific executive. he did his conference call and said emerging markets are slowing. but procter & gamble was so lackluster in "emerging markets" they had a lot of room to grow. in the end the companies are just where the money is being made day after day in this market. 3m, day after day, johnson & johnson, united technology. big cap, international companies. by the way, if we change the corporate tax code, i can see the companies' earnings exploding. really could. >> let's see if that actually happens. >> 4x an issue here as well as the other countries. >> it takes off 2% on the health

care segment. foreign exchange on the grooming segment where it's been a real weakness continually you get a minus 3% foreign exchange, very good point. >> speaking of repatiation and job growth, what did you make of the claim numbers? >> fabulous. >> people are saying auto shutdowns haven't been as bad, maybe it's an outlier set of data or maybe tomorrow will be really good. >> the sequester -- the sequester, industry by industry, didn't hurt the defense industry. it didn't hurt the airline industry. a lot of airlines complained about travel. hertz down a little bit. but i do think the claims are good, they had not added up to what happens tomorrow so far, but this was the kind of number where the fed message is on hold but the tape can go higher. look, the two most important numbers this morning, well, no, the one most important number was 50.3. the chinese pmi was 50.3 and the european pmi 50.3 and the

european turned around. >> the hsbc measurement was different. >> i believe the good numbers and not the bad. how about that? >> that's perfect. that's per feskt. that's the way the market is operating. >> the claims today, the jobs number tomorrow, one day left to nail the number and win a pretty good prize this month, i'd say. tweet us the numbers, @squawk, and the prize is a duffle bag, you name it, simon, "squawk on the street" gang, one minute until the friday release at 8:30 to submit your predictions. best of lusk. >> it's a big number. definitely. speaking of big numbers, by the way, i know we got to get to this yelp -- >> huge. >> -- the fourth. >> it will open at 47 and change. >> it will go higher, 50, 53, maybe 55. facebook, schlumberger, starbucks and now yelp. >> yelp. i'm glad we got yelp.

is would worried there. >> don't underrate yelp. >> why? >> because they have a model that works better on mobile than desktops. i was going over that quarter i got to tell you, it's an outstanding number, it was a tw two-person company ten years ago. they have more cities. if you want people at home to know what this is, this is the portable yellow pages. remember, in the way it used to be, can you imagine carrying yellow pages around, look at this, this is my plumber. they do it on the web. it is social. it is mobile. it is cloud. it's the holy grail, the trinity of -- >> cloud, got it. >> social mobile cloud. >> ncaa was the nasdaq 100's biggest gainer for the month. trip is one of the best s&peres for july. >> starbucks is coming up. yelp up six. i mean, please, it's an outstanding quarter and it's a $2.6 billion company and it won't -- it won't be -- it will never be profitable, because

apple will buy them for $75 because they're a good partner. >> okay. >> then we don't need to talk about it again, do you? you've laid it all out for me. >> mr. cook, here it is, you have social and mobile, and you already have cloud and it will be a direct competitor against facebook and google and it's a blocking action, apple is already a good partner. i just want a small thing, i'll take 100 gs, i put this deal together right here. >> perfect. >> i say it every single day -- >> it was a great quarter. >> shares of jcp rebounding after falling 10% late yesterday. retailer refuting these published reports that commercial lender cit abruptly stopped funding some future shipments to pen ney. they expect to close the quarter with about $1.5 billion in cash on its balance sheet. meanwhile citi does take it to a sell regardless saying they see no progress. their price target $211.

they say a turnaround 2014 or after. >> i think you can have delayed turnaround without thinking that cit, which is often -- >> that story didn't make sense. did it make sense to you that it -- it was just strange that -- >> it didn't make sense. >> the retailer wouldn't seem in the state where you would start to hear stories like that also in there's something going on we're not aware of, maybe citi's right. maybe it's going terrible. >> you have to put the china orders in september, that's when macy's put their orders in. if you want a stock to go down, you spread it. some people would say it's a story from my old print days that's too good to check out, but had they, i think they would have found out it was wrong. >> these kind of cases as a retailer you have to come out and refute it immediately if, in fact, it's not true as was the case, but a lot of people ganging up on old bill ackman. you got to talk about that when you look at herbal life yesterday, jcp yesterday. >> every story's an ackman

story. >> whether or not they're trying to sort of pressure him. >> i'll come -- i'll see you jcpenney and raise you procter & gamble. i'm done with the unremitting that ackman doesn't know what he's doing given that procter & gamble is in very good shape. praise where praise is due, my friend. >> we'll talk about ackman and p & g later in the hour. in the meantime what is warren buffett's favorite tv show? find out next. we've got the pictures to prove it. also ahead a parade of top executives including the co-ceo of whole foods and ceos of tanger outlet stores, cigna, marriott and the executive chairman of the cme. >> better than expected. better than expected. some people say not better than expe expected, but a good line-up. futures are up triple digits as we kick off the month of august. a lot more "squawk on the street."

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and guess who turned up at the new york premiere party for "breaking bad's" final season last night? warren buffett, a self-described super fan of the show. he posed for pictures with the

cast before viewing the first of the final episodes. there he is with two-time emmy winner aaron paul, of course, buffett thinks the story is compelling and acting is superb, our understanding he's been on set before taping stuff, if not for the series, but the stuff they've shown internally in omaha. >> the creator of it did talk about how netflix made it so that this company -- that his production successful because you got to watch all season before the august 11th opening and he credited netflix as one of the reasons it's been so successful. when i have bryan cranston on, he did say that he patterned his crystal meth operation off of apple. he always said, listen, it was never distribution, if you had the finest product, they would come, he's a product driven guy. >> he talked about how the whole thing is an allegory for the ideaological nu ologicaological

jobseian character. >> kranston is basically a company that said we build it, we build the best, cranston did have the 99% pure crystal meth and the 94% cartel meth could not rival it, right? >> right. apparently that is not the case. >> we are not talking about the pantene numbers, the pantene numbers are just okay. his crystal meth, highest quality there. let's talk more about whole foods down in the premarket, the natural and organic supermarket chain beating the street. fiscal third quarter profits 38 cents but sales lower-than-expected and we'll have a conversation with james robb later this hour. they say the first few weeks of the current quarter 58. is there a reason to be worried? >> buffalo wild wings, sally smith on "mad money" the same situation, stock traded down four in after-hours trading and ended up being up five, there was a nine-point swing.

i've gone over the whole foods quarter which at one point was down 10% with a fine tooth comb. it's a consistent quarter. two quarters ago they did not deliver what they wanted this quarter they did. there's a lot of what i regarded as turbulence on the conference call, guys trying to poke holes at whole foods. i say good luck to them, they got it wrong, they delivered. >> robb on the call said bring it on on when he was asked about sprouts. pricing at 18. a competition from fairway. cantor earlier in the week taking it to the neutral saying it's no time to be greedy. >> as mr. robb said there's always been a lot of competition, bringet on. he feels really confident right now. two quarters ago he didn't feel confident. they were critical of themselves and disappointed. one of the things i want to talk to him about, the detroit store, everyone is running from detroit, whole foods runs to detroit. what a great american company. >> you do forget, i think, seven, what is it, we say 75, some of these stores are more than a decade old, jim. >> the new stores are doing

exactly what they want and that's still remarkable growth. chicago po chipotle and starbucks, a pantheon of people behind the scenes and they all talk to each other and whole foods needs to do a credible infinity program not unlike what starbucks has, they'll do it. but this quarter there was a guy that said, listen, i was at your -- really kind of funny. a new guy, identify was at your des moines store and that was not a good store. they come right back, have you been to our, mentioned the oxnard store. there was such an timothy, it's not like they are idiots. they're the best operators there is! and the people were, like, you know, slamming them, will you give me a break! give me a break! >> okay, i will. i'm happy to give you a break when you want one. >> thank you. i felt there was a lack of respect on this call, frankly, respect of what this company has accomplished! and do you know what, some of these analysts, let them get

behind the deli counter, see how they do. >> slicing ham. >> right? >> yes. >> the fresh ham. >> we'll talk to robb this hour and we'll thank you to the ceo of sprout at 11:00 a.m. after it opens. >> sprout probably going to win as fairway did win, but do you know what, in the end, the best man wins and it's going to be whole foods. it's just a remarkable company. you know, and look, i mean, look what they did in boston. they put a lot of stores in boston. you think there is cannibalization, we haven't seen it. mr. mackey and mr. robb, you deserve better than what the people gave you on the conference call. >> on that note, jim's "mad dash" is up after a break. [ male announcer ] here at optionsxpress, our clients really seem

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welcome back to "squawk on the street," i'm phil lebeau with breaking news. july auto sales ford reporting an increase of 11% last month a smedge below the estimate which was for an increase of 11.8%. the big driver last month, it continues to be trucks. f-series pickup sales up 23% in the month of july. we are going to get gm numbers in about a half hour. all of the automakers, david, are going to be reporting today and look for a lot of numbers being the best july since 2006. david faber, over to you. >> wow, since 2006, we'll see you a bit later in the show and get more of the numbers. "mad dash" time before the open, of course, let's talk cbs. >> one of the things that happened this quarter whether it be comcast who we work for with "despicable me" or cbs, we're seeing programming having an impact, okay? and they did this series "under the dome." i'm reading the book. it's a steven king and it's done

by simon and schuster, frightening book, really, what you are seeing is hits move the needle. you wouldn't think that but it's pretty amazing. >> it's, of course, advertising drives cbs as opposed to so many of the cable networks where it's really retransits and carriage agreements but retransits very important here and don't forget the feud going on with time warner going on right now, cbs gets paid by the retransmission by the cable operators and digital has become very important for them. >> and remember, netflix, you know, the payments, cbs has a body of work that's run all over the world. these companies are all very well managed, the nfl's going to make them a lot. remember, the nfl, you have an extra week of the nfl in this quarter. be careful. that could bring huge gains for all these guys. we know that buffalo wild wings said it's going to be good. obviously you smooth everything out, but buffalo wild wings a lot of people go and watch the games there. but cbs, comcast is pretty good numbers. disney reports next week. >> we'll get to directv and time

warner cable two distributors later in "the faber report." not so good there. they're still making money from selling "i love lucy" that's the beauty of content, not a lot but they still make a little. >> the amortization, these are phenomenal numbers. larry tisch was the guy that came up with the retransmission, the black eye of cbs, he created the launchpad for cbs that has brought you a lot of good years. >> we'll see how the feud goes with time warner cable, tomorrow is the new deadline again where they may pull cbs from time warner cable. the opening bell. can save by s.

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at this rate, at this rate, jim, the year would end up for the nas up 34 and a half if it continued at the pace. >> these are remarkable numbers. obviously there are companies in the nas that are driving everything. google in the "usa today" i know we both, you know, google play tops app store, google i think will make a comeback here. apple will get a ruling by the president this weekend where he overturns the idea that the apple 4 will be blocked from at&t, apple will go higher. the large cap companies in the nasdaq are doing incredibly well, sandisk, return to capital. over and over again the companies doing the right thing by shareholders, rather remarkable that the companies themselves are the reason why it's gone up. it's not all fed magic carpet ride, not at all. >> we should point out for the s&p in july the best 5, one oak, f-5, alxion and cellgene and trip and the worst, mosaic, intuitive surgical, expedia and

broadcom and jcp. >> holy cow, very interesting list. cellgene, it's still cheap. i know that sounds crazy, it's still cheap on 2015 numbers which is the way you have to value it. >> got to look ahead to 2015, yeah. >> the opening bell a look at the s&p on the top of your screen. the big board american homes for rent, a reit, especiallyizing in single family rentals celebrating its ipo today. a lot of stories did various financial instruments centered around rentals this week. bed bath and beyond doing the honors. >> stock jumped when soda stream reported a good number because that's a major place to buy the canisters. on the amh, it's important to remember if mortgage rates go up, renters come back because it becomes -- i know all the home builders come on and say affordability was the greatest ever, it was when mortgage rates were lower. >> mortgage rates are still low, come on. i mean, come on.

>> i'm just going by what i heard on the horton call, cancellations. >> i know it's true. i know it's true, although, then, that would indicate if you don't consider this low, then the fed's got to stay in there because then we're not normalized at all if people can't deal with a 4% 30-year. >> i think the fed was shocked at how badly home sales -- june's not a good month. not a good month. hey, sorry. >> that's all right. i'm not taking you personally. >> toll brothers, they are where they are because, you know, they are who we said they are! to quote dennis green. >> of course, if uf missed yesterday's fed action, of course, fed on hold. ecb this morning on hold. bank of england, on hold. although draghi did say the risks were to the downside. we'll watch exxon this morning. according to s&p our friend christine short it is the biggest miss for exxon since they began collecting data in '99. the second worst was 18 cents. this is 35 cents. >> well, look at what -- i'll tell you what's remarkable --

>> for what%? >> -- it's not down four, it's not down like royal dutch. again, a testament when you meet with the people from exxon or you talk to the people in the industry, they all revere exxon because exxon has a 50-year plan. i'm not kidding. boeing mcderny has a 20-year plan and exxon has a 50-year plan and they spent a lot of money thinking about what will happen in 2020. in the year 20 -- in the year 2525 they'll have a good number. >> all right, what if i want to buy it off 2525 numbers right now? what am i talking about now? >> oil companies are doing well right now. eng is doing well right now, i don't need to buy xom, four billion buying back stock and if they spent the additional $4 billion exploring and didn't hit the stock would be dramatically lower and doesn't have a great yield either. >> apple has regained the largest market cap by a few billion. >> i am sentimental, this is what i'm talking about the

ridiculous virtuous circle, jeffreys raises price target from 405 because they cut it too far to 450 and they say it will still disappoint. the new measurement for apple is the disappointment measure. how much will they disappoint, if you think they'll disappoint huge, you got to buy the stock. they may not disappoint huge but small. and everyone has to raise the price target because the stock is going higher. this is a remarkable situation how analysts were going up and down and how wrong they are again. >> let's point out the s&p is now officially at 1700 which for a long time this year, gives, was an aggressive target. >> right. >> was virtually the high on the street and now we have the likes of a tom lee at jpmorgan saying 1750. >> he did nail it. a lot of people feel that he's bullish. he turned out to be right. there's a lot of people that said, listen, we got to wait until the revenues come in and when the revenues come in, we'll start buying the s&p, where are they going to buy the s&p when the revenues start coming back,

higher. >> is your playbook for this month or the quarter to continue to buy health care, look at cigna not moving a lot, but membership way up. do you continue to buy health care? >> it tipped over 90 yesterday and it's one of my favorite companies. i do think in 2014 you'll have turmoil in that group because people will figure out affordable care, but so far they're the winners. but, no, i want to go to cummins, cummins engines reported a really good quarter. in china if you have two good months of pmi data people will be spectacularly impressed by cummins which basically said it's a chinese company. watch caterpillar, heavily shorted, there was a panel i watched, it was a very persuasive -- you ran the panel. >> yes, yes. presented a short thesis a caterpillar. >> how did it doing? >> pretty well. >> it was at 83 and change. where was it in the panel? >> i have no idea. >> 85. >> to have a short miss in this market. >> when they make it, i say, yelp!

>> you with the yelp. >> yelp is -- >> here's another one. does telecom and staples, do they continue to lag for the rest of the year? >> i think they do. these are bond market equivalents, people worried that the ten-year goes to two -- let's say they think the ten-year goes to 2.75, they'll sell those again and the reits as well. remember what jamie dimon said when we interviewed him, he said jpmorgan is set up for higher interest rates. they'll make a couple billions more. the other guy will make the same thing and you want companies with earnings momentum and the big banks have earnings momentum, i think those are great to go and i think the industrials are terrific, up 125 here. happy days are here again because of china. china? >> really quick here, google which some are using as a proxy around 900 to see whether it's true resistant, whether it's new support. your feelings on the big high

techs that you mentioned the last half hour? >> you go back over the google conference call, it was really good. i mean, they're spending for the future. they have to catch up with facebook. they're doing this programmatic add program but they said next quarter they'll catch up. google will have a big upside surprise next quarter. facebook tremendous number. amazon was a great number and people decided to nitpick, but look where it is. netflix, remember when netflix was supposed to be bad? look at that stock. >> so, does it worry you that there's no room to make a bear case for anything in this market. >> periodically you'll have downdrafts, yesterday you could get in front of a visa or a mastercard and pick them up at a good price. cellgene, had dropped and gilad, and you do get your spots. so, you can make an intraday bear case. intuitive surgical, our friend herbal life, greenburg, he came in and had a good bear case on that. someone recently had a bear case on community health and that worked out. >> intraday bear case. >> yeah? >> you got five minutes.

>> these are long days. >> yep, it's over. intraday bear case. >> too late. >> byron meade came on and told me about margin pressure. when you have natural prices going down and no margin pressure. when you have companies being able to fire so many people, remember, the hiring is not big at these big companies. >> no, no. >> they're making a lot more money with fewer people. that may be a tragedy but it's also what they are doing. >> as we said s&p at 1701 that is an all-time high for the 500. let's get to pisani to see what is else is moving. >> they are throwing in the towel on the pullback, from july 23rd to the high to the low that we had july 25th, do you know the pullback? 1.3%, we can't even get a 5% pullback at this point, so we haven't seen any heavy selling in the month of july. in fact, july was a very light month overall. even lighter than july of 2012. and i think most importantly the trading community's starting to get comfortable with the concept

of tapering. there's a belief perhaps the economy can handle it and the fed has done a reasonably good job of assuring everybody that the tapering will be gradual, rate hikes long, long way down the road. so, the stock market can move up even if interest rates move up and that's what people want to see on friday if we get a decent number on nonfarm payrolls over 200, 225, rates will move up but stock market possibly can move up as well. that and with the adp numbers that started turning people's heads around. car sales numbers, i home you heard from phil, best july since 2006, we'll get the rest of the numbers today. domestic auto sales should be at 5.72 million the best since september, 2005. the light truck are on fire. october 2007 probably the last time we saw these kind of numbers, 6.7 million, 6.8 million. big numbers in oil and construction that's what's driving the sales of the truck industry overall. do you know what i'm not happy about today? exxon, the big miss there and it was largely in the downstream

earnings area. the big miss has just hurt the s&p overall earnings. exxon is the biggest company out there and the big miss, earnings in the s&p at 5% this morning, thanks to exxonmobil, earnings for the overall s&p are now down to 4.3% that's a big move to the downside. we were moving up here, so it's kind of knocked things down. but there is some very good news out here. there was a new zone discovered in the permian, that's the big texas area for oil and natural gas that apparently was successful. in other words, they've discovered a lot more oil in texas. and that's overall very good news. i see pioneer natural resources, pxd, which is one of the companies that are involved here, jim, was very successful. and that stock is moving up rather notably here today. finally just want to mention american homes, here we are right behind me, waiting for it to open, single family home rental reit, interesting concept, priced at $16, the low end, $24 million, still waiting for that to open somewhere around $16, guys, back to you. >> thank you, bock. pioneer natural, the permian's

been around, one of the oldest basens, and boom, you got new technology come in. you mentioned consumer products, procter is moving up and clorox is reversed and going up and kellogg is the only one disappointing. i doubt that will stay down that badly. the number seemed good to me. let's ship to the bonds and the bond report and rick. >> good morning, jim. if you look at interest rates. a two-day chart of tens we cont hold lower yield levels or another way to say it is we see a lot of selling come in at support levels in the treasuries whether you are talking about cash or futures. open the chart up a bit, and you could see on the 620 chart that we are now above the -- the right side's now above that left side very significant, this 260, 261's significant. let's switch gears. we know it's been a draghi thursday, so let's look at a chart intraday of the boon. first of all, notice how it's come back in yield. most of the comeback in yield on

both those charts was the 830 numbers on initial jobless claims! and if you open that chart up to 620, wow, a completely different pattern. the right side and the left side are not the same as the ten. remember, we are 164 in a boon. 264 in the ten. if you were playing that dirty shirt relative value trade u.s. versus europe on the interest rate side, you did pretty well. let's switch gears to currencies. let's forget the euro a minute, let's look at the pound versus the dollar. looks a little spongy on this chart, but if you think it's spongy there, look at the euro versus the pound on a one-year chart, euro is just smashing the pound on a value trade and if you look at the dollar index, especially over about the last five-month period you can see why this 81.5 level is so significant. now, what's the cable chatter out there on time warner, mr. faber? >> all right, thank you very much, mr. santelli. hey, this theme what's bad is good, take a look at shares of

time warner cable this morning, because, in fact, it is up. now, it's up again because of that continued consolidation chatter, more on that in a minute, but when you look at the numbers themselves it wasn't a good quarter. in contrast and, yes, identify will play the homer right now to comcast yesterday, time warner cable didn't deliver on a lot of the metrics that you would look at to sort of judge a quarter being a good one. for example, we talk about broadband. that's the key product now. high-speed data adds for this company were below what were the expectations. they were looking for as much as 70,000 in additions of high-speed data, they came in at 21,000. we put together some of these for you. i think we have them instead of just looking at the chart of the stock. there it is. thank you. and you can see right there, 21k, that's not what they were looking for. as for video, we know people are pulling it out, slowly at first and then perhaps suddenly. i have a belief on the slowly part. nonetheless, you can see it there, the key is high-speed data, they didn't do it. you can take a look at their

total cable subscriber, 11.1 in video, and voice are at 4.9 million. thank you. and that gives you some sense. but overall, not a great quarter. now, why is it up? well, you know, glen britain is moving out, rob marcus is moving in as ceo. on the call mr. brit did say, quote, you know, we are going to, our objective is to build value for our shareholders. remember john malone at liberty as we reported along with charter which they own 27% of had been trying to generate enough interest amongst shareholder base of time warner that they would get a deal of some kind or get to a conversation. that hasn't happened and time warner's feeling is you will use our balance sheet to benefit your shareholders, no. would time warner turn around and buy charter? perhaps not at this level. we'll see the consolidation chatter, at this point it

doesn't appear to be going there but the stock is up. i want to get to directv, it was not a good quarter and the stock is down 3.4%. why? they did lose 84,000 subs in the u.s. latin america, though, is the key growth component for this company as you take a look at subscribers in the u.s. and churn. let's go to latin as well, because there you'll see what was not expected. 165,000 additions. that was well below. you can see what they did just last quarter. and the average monthly churn skyrocketed to 3.1%. >> wow. >> should point out, you know, this trades at about ten times forward of eps, for time warner cable you are talking 11 times cash flow, so the valuations may simply hold up for these companies, jim. >> latin america is showing there's a tremendous trade restraint going on. i think they've become argentina a little bit anti-american. >> questions, of course, about brazil which is -- >> yes. >> -- huge. >> latin america is no longer as

friendly to the capitalists as it used to be. >> argentina the best world index in july. up 12.5%, is that ridiculous? >> good stock market, but not that good to america. >> whole foods earnings beat and raised guidance not enough to please wall street, the stock's down a touch. we'll talk to the co-ceo walter robb and he'll share his company's game plan for growing the natural and/or organic game plan. that's up next. and this will be your premium right here. sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. love this guy.

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there's a look at the heat map almost all of the s&p components, of course, in the green. it's up -- s&p's up 16 to 1701 and the dow up 123. that's all-time high. >> yeah, interesting we were mentioning truly -- i saw an actual stop trading order and balance truly so many orders coming in. pretty amazing. shares of whole foods trading lower this morning, trading much lower in the after market last night after some people think that sales growth weaken and i say some people think because i qualify those comments. earnings for the third quarter

did beat the street. we are just so lucky to have walter robb, he's the co-ceo of whole foods. how are you? >> good morning, everybody. >> i want to get right to the point in the february conference call you were a little disappointed in your numbers. in may you were positive in your numbers, i felt the same confidence you exsulded in may even as the analysts tried to nitpick your number. do you feel as confident now as you did after the previous quarter? >> i feel very confident about where we're headed. i mentioned 50 new leases in the last 12 months. 94 leases in the bank ahead. i think it was a great quarter very consistent results on sales and on gross margin and on the net income, so we're feeling very good right now. >> now, walter, there was also a thesis reporting thing among the analysts, they think that fairway is coming public and sprouts is coming public and a lot of the companies trader jeff's expanding, saying that basically you were not able to maintain your price structure because there's so much competition in your market. was there anything really

different in your price structure versus say the last seven quarters? >> no, these are all competitors we know well and they've been around for a while, some have more money than they used to, but i think the market we've said consistently we're just continuing to make these investments to continue to keep ourself competitive because we think it's the right long-term strategy for whole foods but you see the balance between the price investment and the gross margins are something we're continuing to do. >> walter, in a feel-good portion which i can't resist because it does matter, detroit, everyone's fleeing, you moving in. how's that store doing? >> you know, it's so far above our expectations it's just incredible. we're about eight weeks in now and we've been really, really pleased with the results and i think serving all of detroit and showing that we can flex a little bit on size. work a little bit on our pricing and our selection it's been a very wonderful store so far for us. >> walter, you know, earlier in the week well mentioned cantor taking you down to a hold not just a valuation but on some of the remodeling costs on some of the stores. how significant are those?

and how much of a conceptual change do you see to some of the physical spaces? >> you know, i didn't see that part of the downgrade but i saw i think, you know, i'm not sure i really under the question, i'm sorry. >> i guess i'm wondering, to what degree are you going to remodel and how much is that going to cost? >> i see. we're going to spend probably $650 million on new stores and remodels this next year and those costs are well in line and, you know, i think if you look at the return on invested capital which is the output of that effort, i mean, we're hitting new highs in terms of the -- i think we're 19% for the stores over the last couple years. so, i think the use of capital, the stewardship capital is in good shape in this market. >> walter, is it time now after the incredible three-year supply of new stores in the pipeline that you took up the 1,000 store projection because it seems to me that you could easily put 1,200 in particularly after what you've done in boston where it seems like there is no saturation or cannibilization despite the increase in stores?

>> we haven't upgraded the number but the confidence level is we're accelerating the growth and you could look and say the number could potentially be higher. i'm not prepared to put a higher number out, but i can see our way to a higher number. >> also, some of the -- there's a little bit of a misperception among some people that you're changing the size of your stores and, therefore, changing your template, but in truth you are opening some of the largest stores and smallest, for the smallest you are doing well and the square footage for the largest doing even better. >> that's right. i think what we've said we'll fit the right size store in the community and that's allowed us to flex from 20,000 to 70,000 and the store in brooklyn coming up this fall, that's the largest store. the store in chicago, that's a larger store. i think we kind of have the ability to do a range of stores which gives us more flexibility to open more stores and hit that target with the number of stores in the united states. >> and, walter, once again, "mad money" can do its show from the 40,000-square-foot brooklyn store perhaps from the

greenhouse above it? >> that's a deal. that's a deal. thank you. >> you're changing that whole neighborhood. it's going to be terrific. it's on the canal as the man goes to detroit and the canal changes the price values of everything, walter robb, thanks very much for coming on to squawk on the street. >> the man with the plan and a canal. >> thanks for having us on this morning. >> yep. 6 in 60 with cramer is coming up. le lexus enform, including the es and rx. ♪ this is the pursuit of perfection. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10.

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6 in 60 by jim on an important market day, chesapeake is first? >> chesapeake is finally snow longer outspending itself. but this stock can go higher. >> and donnelly downgrade. >> we had them on and announced an unbelievable quarter and 30% of the business is catalogs and printing. >> contrail resources. >> we're talking about pioneer, concho has 630 acres in the permian. this stock should be much higher. >> mgm? >> people are talking about china should be so bad, how can the revenue growth be 20%. >> upgrade for amt. >> a lot of people gunning against american tower but not raymond jay. they say you got to buy. >> vulcan. >> vulcan is a great tell of residential housing can with when things were bad in florida,

they were down. and coming back big, much better-than-expected numbers. let's talk about tonight. you've got a lot to cover. >> we've got marketo and salesforce.com and this is david payette, everyone is worried about restasis, it's bankable but i got to find out more. i'm worried about >> thegeneric competition for o of their largest drugs. >> we'll see you at 6:00 and 11:00 p.m. eastern time on "mad." and a huge line-up of ceos, we're back in a minute. you're not just looking for a house.

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welcome back to "squawk on the street." 55.4 is ism manufacturing, a strong number. we'll get back to that in a minute. that's july. june construction spending goes the other way. surprise to the downside at down 0.6 of 1%. we're expecting up half of 1%. let's look at some very important metrics here. the low read on this ism going back to june of '09 was in may

at 49 right on the nose. now, if we look at the 55.4 since that number, of course, it's the best, and it's the best level 55.4. boy, we have to go way back, since june of '11. that's a quick look. prices paid to the exact opposite they did in chicago. instead of moving up, they moved down from 52.5 to 49. new orders moved up sharply from just under 52 to 58.3. and maybe the most important index within that report would be employment in lieu of tomorrow's data and it moved up smartly over a threshold. they hit a threshold jump from 48.7 to 54.4. so, construction spending disappoints. ism surprises. and joins the ranks of the pmis around the globe. back to you. >> all right, rick, thank you very much for that. we do want to bring your attention to american homes open

for trading. the stock lower on the debut. ticker symbol's amh, they did sell 44 million shares at 16. priced at the low end of the range and if you don't know, it's the second largest u.s. homes for rent market after blackstone. potentially some would argue, some might argue coming to the market a little bit late in the game but we'll see how it trades later on in the session. let's dig deeper into some of the data rick was just mentioning, our senior economics reporter steve liesman back at hq already having a banner morning talking grateful dead, steve, what do you see? >> this sa blowout number here, carl, it's a huge number and it's important because it's the first piece of data for the month of july and we've thawked for a while here about how important the july data is, kreid i ceding the weakness of the second quarter and the question is did the weakness continue, apparently not. i'm doing a double take on this number, carl, because the production index of 65, i

thought maybe they had a misprint there was 56. you have to go back, i'm just double-checking this, back to july -- sorry. june -- may of '04 to find a production number that was that strong. as rick said, the employment numbers strengthening. the new orders number, i wanted to see when the last time we had a number of 58 was. hang on. just give me a second here. i'll tell you, but it's been a while since it's been that strong. got to go back to the middle of 2010 i think and also the inventories number being low, that also bodes well for the future. so, the manufacturing sector really knocking it out of the park, carl, and this is going to be i think beginning to set up expectations, again, where the tapering in september. remember, the economy doesn't have to be as strong as the fed predicted it was going to be. they're certainly going to be lowering their forecasts for the year given the weakings in of the first half, but it has to show that it's expanding and that would be suggested by this number here, carl.

>> steve, does it square with any of the regionals that we saw -- >> yeah. >> -- philly or chicago? >> regionals have been strong in general, carl. rick mentioned that, and it's suggesting that you've had this little bit of a swoon in the spring and summer and now it's coming back. now, what i need to do and i can't do this right now. a little more detail. is figure how much of this was autos. remember, you don't have auto shutdowns. phil lebeau's been talking about this a lot. i don't know if it's all autos, if it's broad based, though, it's good news. >> steve, let's ask our next guest. thank you very much. steve liesman with the strong data this morning. let's bring in the aerial investor director of research and pnc, good morning. >> good morning. >> charlie, first to you, steve was highlighting the strongest points in the ism survey that we've seen in a couple years. is it your sense that this is reflecting the outside strength of autos or a more broad based recovery in the u.s. economy? >> it's more broad based than that.

it's autos. it's housing. it's energy. all leading to good-paying jobs which are going to bring down unemployment. and it spells a strong recovery. a higher than the 2% everybody is talking about, we're going to get to 3%, 4% and that means bond prices are going to go down. bond prices are going to get hit hard and the stock market can still do significantly better from here. >> charlie, you safe the bond prices are going to get hit hard. we've obviously seen a little bit of this already after bernanke first came out talking about the taper back in may. what do you think happens now? because the ten year we're still sitting at the levels just under 2.7%. remember, the gdp data still isn't that strong. >> well, it's just starting to get stronger. and we were at 1.7 a year ago and we're at 2.7 now and we'll be at 3.7 in a year. people that own a ten-year bond will lose 7%, 8% of their principal value. they've been buying $85 of

indicators, you see job growth, you seeing falling unemployment claims in the u.s. and in europe we saw a very strong pmi read this morning. similarly japan pmi read and even the china official read was better than expected. the global economy is expanding and the u.s. and europe are gradually getting over the great recession. so, the direction for economics is better. >> charlie, in a word, you mentioned, again, this concern about another selloff in the

bond space, so what are you guys doing with -- i mean, you're an investment officer there, how are you allocating funds? this is the first day of the month and a lot of people will be moving money around and trying to position for the second half of the year. what are you doing? >> we still think there will be a great rotation out of bonds into stocks. we still have individual investors. we still have pension funds that are overinvested in bonds and underinvested in stocks, we think that will continue. bond prices will continue to come down. stocks which are only at 14.1 times forward earnings are going to continue to be very strong. >> okay. let me just make sure i get this right. you're saying that you do expect people to move out of bonds and into stocks, is that right? even though you guys aren't doing that right now? >> no, no, no. we absolutely have been doi ingt for a long time. we've are saying for a year the bond prices are overpriced, 1.67 and 1.45 on the u.s. tre.s. tre was a bubble price. and bond prices will continue to

come down. institutionals and retail will continue to move out of bonds. >> well, what a way to kick off the month, charlie and bill, thank you both this morning. >> thanks for having me. in the meantime, what's amazing the market is doing it all without the cooperation of that name, exxonmobil with the miss, down 2%. $1.55 is a miss. it's not just a miss it's the biggest miss at 35 cents since s&p began collecting data back in 1999. previous to this the biggest miss was only 18 cents back in 2009. we know what was going on in the course of that year. and just to remind you how big this company is, as a result of this miss, s&p 500 q-2 earnings growth goes from 5 to 4.3 all because of that one name. >> this will be another reason as well for the russell to keep outperforming. making the note in the client note this morning that if you look at the s&p 500, the weight of companies like exxon is so much larger relative to, say,

the russell and that's one of the reasons. >> in the meantime you've got a problem with the refiners. you saw it with phillip 66 and this is all because of the rising price of oil in the middle of the country as you are finally able to get it out. gm out with its auto sales numbers and phil lebeau with the details. >> simon, the numbers from the month of july for general motors an increase of 16.3% below what the edmunds.com estimate was for an increase of more than 19%. let's bring in kurt mcneil the head of u.s. sales from general motors joining us from the detroit headquarters. sir, weaker than some were expecting but still a strong month. characterize it if you could for us. >> greetings, phil. yeah, we're pretty happy with the month. if you look at that, that's 16.3%, our retail business was up over 23%. all of our brands were up double digits for the month, so we feel pretty good about those results. >> your pickup sales up 44%.

when you break that down, how much of that can you say is the housing market, it's the contractors coming in, and how much of that is simply that old pent-up demand, a lot of that on the retail side, with people who just have old pickup trucks? >> i think it's -- i think it's a combination of both, phil, both pent-up demand in housing. like you said, up 44%. we see small businesses up 61%. so, we're seeing some good growth. that segment was about 11.8% of the industry. that's up about 1.5 points, so we're seeing, you know, that strong, good business and a great time to launch brand-new pickup trucks. >> yet at the same time, kurt, year to date, your market share is 18.1% exactly where it was last year. do you pick up market share in the second half of this year? because your come pettepetitors clearly picking up market share. >> obviously we see the industry

continuing to improve. and to your point we've got a whole host of new products coming here in the back half of the year. we're just launching the new pickup, the new impala's just getting started. the new buick encore and then we've got a new chevy ss corvette. a new regal and lacrosse. a new cadillac cts, so we've got a host of new products that will really help share in the back half of the year. >> kurt mcneil, the head of u.s. sales joining us from the gm headquarters in detroit. one last note, guys, when you take a look at their car sales and a lot of people talk about whether or not car sales will go up since gas prices really haven't spiked as they usually do in the summertime gm car sales in the month of july up 24%. that's the latest for now, guys, back to you. >> all right, phil, thank you very much for that. macy's and jcpenney back in court today for the final days of the lawsuit we've talked about so much about. find out what each company might say in their closing arguments.

plus, after being stranded for more than a month, nsa leaker edward snowden has left the moscow airport. the question is where is he going now? we'll get the latest when "squawk on the street" comes back. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

we do have a new issue at the exchange, american homes, i think it's amf is the sticker symbol, of course -- amh, sorry about that, which is looking at the rental market. priced at the low end of the range and is trading lower by

just a touch here at 15.96, i think priced at 16. we'll keep our eye on that. but overall some of the housing names are truly either in a short squeeze or responding very well to some of the data we're getting. for instance, take a look at zillo hitting the eyes of a lot of traders and trulia, too, there's zillo up 82 and trulia up 19% to 44. for a sector that some had said was beginning to show signs of weakness. >> you started to see a tail wind after rates came back down, carl, when people started to calm down about the fed tapering. what's interesting about the moves today they are poping on a day that we just had a raft of strong data that falls into the taper camp that could mean rates are heading higher, completely shrugging it off and, in fact, benefiting. >> it means a september taper is probably more likely than ever before. >> i don't know, but that's definitely going to be the debate.

>> tomorrow, tomorrow, wait until jobs report. >> give it 24 hours, is that what you're saying? for the jobless claims figure today. luxury retailers are seeing double digit gains in their stocks this year, what does it meanwhile for discounters and outlets? we'll go straight to the source, steven tanger, the ceo of tanger outlets will join us when "squawk on the street" continues. i khnow, get yours, it's th delivering alpha bag, but there's more, yours will be signed by the entire "squawk on the street" gang. all you have to do is guess friday's nonfarm jobs number. sweet your guess and don't forget the #nailthenumber. oh, yeah, you have to be at least 18 years of age to enter. sorry, kid. for all the rules and details go to stocks@cnbcnews.com and you have until 8:00 a.m. eastern friday morning.

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nsa leaker edward snowden has left the moscow airport after being granted temporary asylum in russia according to his lawyer. nbc's jim maceda is live in moscow with the latest, jim? >> reporter: hi, kelly, that's right, we were into the sixth week of watching or waiting for more snowden to come out of the transit lounge at the airport here in moscow. the planets were really lining up to suggest that he would be staying there for a long time, but it was confirmed today by snowden's lawyer that snowden was issued temporary asylum. we saw images at least of his new official refugee passport dated yesterday, july 31st. good for one year. but this asylum is renewable after that indefinitely one year at a time. so, despite the wait at the airport, this process which

normally takes three to six months, in fact, russian officials fast tracked that process, and within two weeks, really, he got this ability now to travel anywhere he wants to in russia. when asked where snowden was going, the lawyer would not tell us. he said that he's concerned about snowden's safety and citing security concerns only said that he had left the airport. now, a top russian official later today said that snowden was insignificant as a case, as an incident and that the kremlin would not want to see this incident further damage relations with the united states. but it's really unclear how the u.s. is going to respond to that. we understand they're crafting a response as we speak. but it might mean that all bets are off for that key summit meeting to take place here in moscow in the beginning of september between president putin and obama. back to you. >> a lot of focus, yeah, on when

they will hold those bilateral talks, jim maceda in moscow, thank you, sir. meanwhile, macy's and jcpenney beginning their closing arguments over the martth through stewart products. >> reporter: hi, good morning, carl, it's been quite a day for jcpenney, the retailer refuting a media report that cit had stopped supporting deliveries for smaller manufactures. jcpenney said it's business as usual that use cit as a factor. and now it's on to court and jcpenney joining martha stewart living omnimedia against macy's. and seeing the parties in court today for the first time in three months and it's possible the judge could even render a decision today because he's had all of the post trial briefs for quite some time to really determine who, in fact, has the right to sell martha stewart designed products in the categories that macy's claims it contractually owns. right now martha stewart's legal

team is presenting its closing argument. jcpenney's team will present after that. each of those legal teams will get 75 minutes each before macy's goes on for two hours of its closing. the judge said he will not ask any questions this time, he'll simply sit back and listen and take notes. macy's is no longer asking the judge to pull the jcpenney everyday products that martha stewart designed off of the shelves but is instead asking that he prohibit martha stewart living from designing any additional products in those categories. also macy's is now seeking damages, attorney's fees and punitive damages and injunctive relief. so, it is possible today that after we hear all of the closing arguments, the judge could render a decision because he has said that he will make a decision shortly after the closing arguments, but we really have no idea to guess exactly how long that will take. simon? >> okay, courtney, we will wait and watch, courtney reagan

outside that particular court case. back-to-school shopping season is looming and our next guest is betting that parents will continue to seek out value and travel to tanger's 43 outlet malls across 26 states. joining us now is the ceo of tanger factory outlet centers, steve tanger. good morning. >> good morning, thank you, simon, for having me today. >> it's a pleasure. >> thank you. >> we saw earlier in the week you came through with earnings we should point out that were above targets and that was driven by strong base rent. as we start back to school, how do you feel about the base business? >> we feel good about back to school. the retail centers in the u.s. and canada are totally stocked with wonderful products at great prices. we are extremely optimistic. >> how do you feel about where we are with the share price performance? obviously you were saying to me in the break there that you're paying now 2.8% on a dividend

but because it's a move that we've had in market interest rates since bernanke spoke may 22nd, your stock has clearly been under pressure, that's a natural reaction for a reit. at the same time you have ubs who are calling the stock 25% higher. the stock price 25% higher because of compelling growth. that's quite a confusing situation for investors. what would you say to them? >> well, we are both a growth company and a dividend-paying stock. most investors look to tanger for a total return on their investment. not just the dividend. last year in 2012 our total return was 19.8% to our stakeholders. over the past 15 years, it's been close to an 18% compounded return. so, we have a lot of embedded growth. i might say, simon, also that in the first six months of this year, we've had a 4.5% comp noi

increase which we have had comp noi increases for -- >> sure. >> -- 34 consecutive quarters. >> but what do rising market interest rates mean to you? >> well, as a company, we have very little floating rate debt because we're only 25% leveraged. and only about half of that is floating rate. so, about 10%, 11% of our total market cap is floating. on the product side, think about it for a second. as interest rates go up, the cost to carry inventory for over 450 partners becomes greater. and they want to move inventory faster which in past cycles where interest rates went up, they moved better product faster into the outlets at greater prices. >> let's talk about that. i know you don't want to talk about individual tenants, but we're very focused this week on coach and the decision that every retailer makes being exclusive and in the outlets that you have in order to drive the growth. do you think that maybe the

balance is switching? coach has a 2-1 ratio at the moment, to your sorts of outlets, do you think you may lose customers as they move up the value chain? >> we're very pleased with coach. we've been partners with them over 20 years. we have a lot of respect for them. we have michael kors and kate spade, et cetera. as far as that category is concerned, we think it's a dynamic growth category in tanger outlets. >> and your occupancy rates remain extraordinary high, steve, thank you for coming in. >> thank you, simon. >> thank you very much. when we come back cigna getting a clean bill of health, beating the street for a second quarter pushing the stock toward a new high. look at that chart. the ceo will join us live and break down those results and the state of the health care industry when we come right back. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform.

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welcome back to "squawk on the street," reporting live from the nymex where traders just got this week's storage report, an injection of 59 billion cubic feet of natural gas, that was higher than classifications of 54 billion to 58 billion cubic feet and we are seeing prices depressed this morning. a decline in natural gas more than 1%. keep in mind we've seen a slide of more than 40 cents in the

last two weeks and traders were looking today to potentially find a bottom here. but that may not happen. in the meantime, we're watching weather forecasts as well, they're not supportive of prices as we are seeing average temperatures to below-average forecasts here especially on the east coast but, again, that number 59 billion cubic feet injection in natural gas storage. kelly, back to you. >> all right, jackie, thanks very much for that. now, cigna's second quarter profit beating estimates by 18 cents helped by lower medical costs joining us is david cordani, president and ceo at cigna. thanks for joining us. >> thanks, good to be here. >> a lot of people wouldn't necessarily expect to hear about lower medical costs, what in your experience are you seeing and especially in the week since the quarter ended? >> sure, relative to medical costs about 60% of our company is u.s. health care, in that part of our business most of our business is self-funded where it floes dire s flows directly to the employers and the rate in growth in medical costs is a little less than expected about a percent

less than we expected. mostly in the outpatient services category. >> so, what do you think is going on there? >> sorry about that. >> no problem. just curious, what exactly might be driving that drop in outpatient in particular? >> yeah, we had expected to see an acceleration in outpatient utilization and outpatient servi services. it accelerated somewhat but not as much as expected and we're seeing individuals make trade-offs in how and why they are engaging their services. the thing i would highlight is the preventive diagnostic services continues to go up and that's a very positive thing to the benefit of our customers. >> certainly if the trend is taking makes across the u.s. more broadly and people acting more proactively before they are hit having to go to the hospital to support the condition it's a good move. there are a couple of things, david, that are happening in the health care space which will have a huge impact on your company. most specifically with obama care and i just wonder in

particular, when you guys bought health spring a couple years ago the idea was to dramatically increase the medicare advantage base. now we know, of course, that what obama care would like to see happen is that there are fewer people relying on these plans, albeit, they just increase the rates for next year instead of lowering them. what's the future of medicare advantage and what does that mean for your company? >> today medicare advantage makes up about 25% of all medicare eligible population so it's significant. 14 million americans, they're highly satisfied. a little bit lower average income level, so highly price sensitive, and very engaged with their physicians. over time we think it's going to continue to be a robust market because it delivers outstanding value and great clinical quality and great service satisfaction. 2014 will be a bit of a disruptive year. we'll grow our customer base meaningfully in 2014. there will be some revenue pressure that goes along with that. when you put it into the context of cigna has a whole, we have a very attractive portfolio with

medicare. be able to grow it over the long term. >> it's interesting because there are people who are saying that the intent of obama care, the affordable care act, is to bleed medicare to death to some extent, to bleed medicare advantage to death. >> if you step back we have an affordability challenge as a country. that's the bigger issue, there's a fundament affordability challenge, medicare is a significant outlay and medicare advantage is a subset of that and today the most efficient medicare advantage programs are delivering a very strong value for individuals, so clinical quality, affordability in service and increasingly helping the government pay the overall bill that goes along with medicare, so we see it as actually a big part of the solution, but at a macro level we got to come back to the affordability challenge. for cigna we believe it's all about engaging the consumer and engaging the physician around value and we're seeing it work in both the commercial space and the medicare space which is why we're growing again this year.

>> i'm curious as well, david, about the future of the state exchanges. there are 50 experiments in some ways you can call it playing across the u.s. but a lot of pressure to this get these up and running. what's your own experience been with rolling out or trying to roll out the exchanges across the country? >> yeah. so, the exchangesing are s s i to be new to everybody, outside the u.s. we sell direct to individuals in about a dozen countries around the world, electronically interfacing and selling directly to individuals, and the new markets and new opportunities, we'll use our most collaborative physician models to be able to deliver a very good value. we think 2014's going to be a challenging year. there's a lot of chineg thatof being introduced, we're focusing in five states and a limited number of cities in those states to make sure we're in a position to deliver a good value and experience service to our customers with our physician partners. >> is that because of where you are geographically located or is that because there are only five

states where you think it makes sense for your company to be involved in the exchanges? >> i appreciate the question. stepping back, cigna has not played in the u.s. individual and small employer market, so this presents a new opportunity for us. >> yeah. >> so we don't have to enter 15, 20, 30 markets to protect an old block of business. we can look at each market on a fresh basis with a new business model which is an attractive place to be and we identified five states that were very attractive where we have great physician collaboratives and there's a good demographic to be able to sell to and over time so long as the exchange market evolves in a positive way we see the ability to continue to grow the markets to the extent they evolve in a positive way. >> okay. david, so much more we could discuss, david cordani of cigna. a lot of media stocks are in rally mode. cbs at a 13-year high following last night's strong earnings and time warner cable at a new

all-time high and comcast a new all-time high. time warner cable, $1.69 did beat, and doesn't appear to be slowing down the stock. and overall with the markets at all-time highs, again, this morning coming up the definitive way now according to morgan stanley to play the fed and interest rates. and later, why this dog is hanging out at the nyse today. why he'll be on the "squawk on the street" set very shortly. you'll have to stay tuned to find out. ♪ you ain't nothing but a hound dog ♪ including the gs and all-new is. ♪ this is the pursuit of perfection.

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let's take a look at what's going on with regard to one set of data points, i guess we'll call this the abcs of pmis. and what i do see is a lot of

strength. whether you look at china, whether you look at europe and a really fast turnaround in the u.s. boy, may, we were under 50. a couple months later we're at two-year highs. i'm not saying that we shouldn't trust the data. what i'm saying is, is that we are in crisis control right now. crisis control. consider, draghi's comments on one hand. i think europe's turned the corner. on the other hand, we're going to keep everything the way it is. crisis management mode. pretty much as far as the eye can see. we'll call it 2015. look at our own central bank. our own central bank talks about the economy's doing okay. moderate. there's all these, of course, scripters, descriptions that are put forth, but i guess the real issue is this. i see the crisis control in place. but what i don't see is the crisis. now, burden of proof. we know about it from

jurisprudence side, innocent until proven guilty. i would hope that we could have the burden of proof on many of these programs, healing assumptions versus crisis. but that's not the burden of proof. and that's the main difference, i see, between governments and agencies like the fed and the private sector. it's kind of the cover your butt mentality. in the private sector, where you have a profit motive, you can't do things forever, there's a profit motivation, there's a metric to measure that. but more from the government side, it doesn't behoove any central bank to do anything early. because should it go wrong, the consequences on that part of the ledger are much worse than potentially doing what i would consider, my own opinion, the right thing and acknowledge there isn't a crisis anymore and maybe stop the programs. but there are a couple of dangers. first of all, i guess, the danger, i don't see danger, no,

not carlos danger! but here's the point. that should there be another front to the slowdown, we don't have any real soldiers to send to the other front. a lot of people on this trading floor talk about, you know, if the fed's really or draghi's really honest about, listen, if things improve, pull back and we want it to be this floating arrangement, then they really need to get to floating and really quick. because should there be another dip down the read, what are we are we going to do, buy everything the fed issues? okay, and if i look at treasuries, i get really optimistic when i see a 270 and 10 because like many, we hope that there's real fundamentals behind it, but there is also a caveat. i've said for a while, that maybe the worst thing will be the best thing. because when the white flag goes up, that all is good, we're going to see the velocity of money go wild in my opinion, and all the naysayers about pricing

issues, well, look it, listen, if detroit in a couple of generations could go from number four to where it is today, let's not underestimate how quickly things can change. remember, in may we were under 50 in the ism. back to you. >> rick santelli, thank you very much, sir. coming up next "squawk on the street" is going to the dogs. coming up, tv is for the dogs. literally. launching today is dog tv. the first and only tv network created for dogs. it's set to entertain, relax, and sometime late stay-at-home canines. we're giving a whole new meaning to dogs of the dow. sit, behave! we'll have all the details after this break.

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♪ this is the story of the famous dog if the dog is wagging its tail bowe'll be busy ♪ ah, that's charlie at post 9. tv is going to the dogs, if you own directv you will now have access to dog tv, a 24-hour channel designed specifically

for your canine friend. we've got the co-founder of dog tv, and he joins us with charlie. it's great to have you. welcome. >> thank you. >> it goes live today. >> on directv channel 354. >> i'm told 46 million homes have at least one dog. >> at least 80 million dogs in the u.s. more than 46 million households with gadogs and directv has mor than 20 million households, very exciting. >> 24 hours? >> 24/7, all dogs. >> i'm looking at a study from oxford university from '97, looking at the use of video images to stimulate dogs. how do they respond? we know they see differently than humans, right? >> dogs are actually color blind. they can see blue and yellow and they can't see red and green and we alter the colors in post production to make it more attractive and enhanced for them so they enjoy the video better. we have content that is specifically for dogs, scientifically developed. we have music and soundtrack that are specifically for dogs

also create an environment for dogs. >> the images other dogs as we're looking at here on the screen? >> yes, there are other dogs, other animals, not necessarily just dogs. we have beautiful landscapes, relaxing animation, a variety of things we use to importantly, should be watching television, are you? >> we want da ution dogs to spend time with their parents. that's the best thing but, unfortunately, dogs spend a lot of time home alone every day. >> isn't the remedy for that give them more company, not to put them in front of a screen with the impression we're going to make a sort of -- >> in a perfect world, you're absolutely right, but, unfortunately, they stay home alone. we have to work. and that's one way we could help them and we could help dog parents to do something good for their dogs when they're home alone. >> do they bark at the dogs? this could be pretty troublesome for the neighbors. how does to work? >> we have no barking on our channel because that overstimulates the dogs. so what we do is have sounds

that are soothing and relaxing to help dogs enjoy the show and that's it. >> $5 a month, right? on directv. is it only a sub model. there can't be advertising, can there? >> there's no advertising yet, but we are having a two-week free trial so people can enjoy and tune in for their dogs and starting august 14th, we'll be for $4.99 a month. >> how do you measure ratings? are you nielson rated? >> this is a subscription model, so it's a little easier but anyone who is buying the subscription can leave dog tv on for their dogs. >> can dogs recognize when it's a repeat? >> actually they do if they see it over and over they get bored of it. these why we have a very diverse and wide variety of content. >> otherwise you could simply loop a lassie film. >> you're absolutely right. but that wouldn't work. they will get tired of it. >> is cat tv next? >> well, we're thinking about it, but cats are actually not as social as dogs and they don't suffer from boredom as much as the dogs do, so that's next.

>> or goldfish tv. >> let's go for the dogs next. >> how about cost of production? how much do you refresh the content? is it different every day? >> yes. >> do you shoot new stuff -- >> we're shooting all over the world, beautiful landscape, other animals. we do a lot of post production, scientific techniques to improve content and make it compatible for dawogs. >> what about partners. i was in a pets mart that shows dog television. it is movies like lassie to a lot of the dogs staying there during the day or overnight. is that something you would pursue? >> not really. we're focused content for dogs. we want to give them something to focus on when they're home alone. >> if purina said can we have a little banner ad, would you put one in the corner? >> theoretically it's possible. at this point it's a subscription model and we're focusing on content for dogs. >> my dog, lucky, i don't have

directv, but if i did, he would probably be a fan. charlie though, does she watch? >> is that your dog? >> they got a shot of lucky somewhere. >> starting this morning charlie is going to be our number one fan. >> how old? >> charlie is seven. >> she's seven. she's beautiful. >> thank you very much. >> i wondered if the trading floor would let her on. when seaworld went public we'd lemurs and penguins. >> she was getting more attention than i was. >> she's the most popular living being on the floor. >> it's working. >> she's watching the television. >> gilad, thank you for coming in. dog tv live today on directv. still ahead, as trading surges, the cme group is beating estimates. the president and executive chairman of the cme terry duffy will join us live for a first look at the company's second quarter results. we'll be right back. [ male announcer ] come to the golden opportunity sales event

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secret, pink, bath and body works and others, also a new all-time high. both stocks jumping on upgrades. we should also say jumping as we've gotten evidence the u.s. economy looking a little better this morning. lower jobless claims, higher ism manufacturing. >> a lot of people upping their forecast for second half gdp. a lot of people -- we're asking whether or not we're in taper territory despite what the fed said yesterday. jobs, of course, tomorrow. tweet your nonfarm payroll guess to @squawk street with the hash tag nail the number and you might win this bag which we gave to everybody who spoke at delivering alpha. signed by everyone here at "squawk on the street." there are the rules. again, you have until 8:29 a.m. tomorrow morning. i have seen a lot of guesses around 200. >> such a safe guess. be creative. >> 200 is the six-month moving average. >> right where adp came in.

the joke was adp threw up their hands and went with the five month average. meantime, dow continues to lose a little ground here but still above 15,600 and the s&p is above 1700. been a long battle to get there. >> you know, the irony is if i look across the headlines screen on the reporting today, time warner disappointing, "new york times" disappointing. procter & gamble disappointing, kellogg's disappointing. >> what's also interesting about the rally is it started overnight after the fed statement was perceived as more dovish after the gdp numbers came in and weren't that great. then we got the flip side of the coin. instead of giving up the gains and being worried about the ten-year, the opposite has happened. >> as jim pointed out in the 9:00 a.m., there appears to be some asymmetry to the winners versus the losers. you miss on the quarter, you're down a few percentage points. you beat like a yelp today does,

you're up 18%, 20%. >> shorts are knocked ou. >> we should point out this is the best gain for the dow in about three weeks. july 11th we were up 169. so it's an impressive move but it's nothing that you would say is a quarter-maker. >> there may be a sweet spot that's appearing where the central banks are delaying their action and yet the growth is beginning to kick back in. you might find that extends for possibly six weeks to two months. >> with all that in mind we'll see. still a long day ahead. if you're just joining us, here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> a pretty good fiscal year. a good steppingstone back to where we want to be leading our industry. we generate a 98% free cash flow productivity return. $12.5 billion to shareholders. >> in the end these companies are where the money is just being made day after day in this market, 3m day after day,

johnson & johnson, united technologies. big cap international companies. if we change the corporate tax code, you can see these companies' earnings explode. we're not talking pantene here. the pantene numbers are just okay. mr. eisenberg has swallowed the risk. >> the opening bell. let's point out the s&p is now officially at 1700. >> i think it was another great quarter and very consistent results on sales and on gross margin, on the net income. we're feeling very good right now. >> 55.4 is ism manufacturing, a strong number. >> we're very excited about back to school. the retailers in tanger centers around the country and in canada are fully stocked with wonderful products. >> relative to medical costs, about 60% of our company is u.s. health care. in that part of our business, most of our businesses is

self-funded where it flows directly to our employers. good thursday morning. we're live at post 9 at the new york stock exchange with a heck of a market day. the dow putting up its best numbers in about three weeks up 121. s&p above 1700. got some good numbers from claims, the ecb on hold but the ism right around 10 ou clock, a blowout number which took the market to a new level today. big miss for exxonmobil. the stock down over 1% after the company's second quarter profit fell 57% in the quarter. that's a big miss. oil and gas production at exxon fell 2%. it's the eighth consecutive year-over-year production drop. and then there's yelp surging after its earnings and outlook beat expectations thanks to strong mobile advertising results. getting an upgrade to overweight at jpmorgan. >> record day for stocks. the s&p hitting 1700 for the first time ever. morgan stanley vice chairman

gary kaminski is here. he'll tell you what's next. plus, edward snowden finally leaving the moscow airport after being granted asylum in russia. we'll hear from the head of the nsa. also marriott lowering its profit forecast for the year. we'll ask the ceo if he's worried about a slowdown in the u.s. and some concerns about the market overseas. a couple hours from now motorola will inveil iunveil it phone, the moto x. jon fortt is live at the event in new york. he joins us with more. hey, jon. >> hey, carl. this year we've already seen big launches from nokia, from blackberry trying to take on samsung and apple. this is google though. they've got the fire power to pull it off, but still the stakes are high. enter the moto x. two years after google said it would spend $12 billion to buy

motorola. >> we're going to build this out. >> but motorola ceo dennis woodside isn't focused on failure. his mandate from google's ceo larry page, aim high. >> larry is consistent with everybody on his team. he is looking for big innovation. he's looking for leaps in the consumer experience, and he's looking for ten-year bets, not one-year bets. >> the moto x will be assembled in the usa. that's a big bet. >> we keep the open views of the skyline. >> reporter: and right now workers in downtown chicago are building motorola's new headquarters here. it's attracting attention from chicago's mayor. >> this is great. i love this. >> reporter: to make an impact in the phone market, google probably will have to do more than make a splashy product. researchers work suggest marketing spending has a huge impact on whether a new phone

succeeds. and it takes a ton. the most successful companies spend hundreds of millions of company. that's because smartphones themselves are a huge market. idc projects 919 million of them will ship this year. carl, i spent some time in chicago with dennis woodside, took a look at the phone which we'll get a closer look at this afternoon. i have dennis woodside's first live interview as motorola's ceo coming on at the top of "closing bell." >> it is a big deal, and it's been a long time coming. can't wait to see that. jon fortt with us. good to have him on the east coast in new york city. markets riding high on the latest round on global economic and u.s. data. interest rates, the fed, housing, all impacting the market. good topics to ask our next guest about. want to bring in our friend from morgan stanley, gary kaminski. >> good to see everybody. >> you have been traveling the country. >> i have. >> what do they think about

what's going on? >> i'm glad to see the stock market continues to act the way i anticipated it would act when i left this role in a full time role back in april. i think as i described last time i was here, it's a very normal -- things continue to be very boring but normal. one moves into equities, people are anticipating continued good performance in the equity markets, but more important it seems very normal for the first time in five years and that's a good thing. think about the last five summers. think about halfway through this summer. it's a positive environment for people to think about long-term investing and they're doing so. >> i thought this tweet perfectly encapsulated what's on a lot of people's minds. sure, the safe haven persona of the bond investor will move into a stock market at all-time highs, sure. >> again, you know, there is a normal tendency -- forget the stock market is at all-time highs. think about the 10, 12-yir type of returns. you have to think about things in perspective. we're going to talk i know about the bond market and we'll talk about what i see in the bond market, but in terms of trying to invest in equities, it's the

same theme you reminded me was a year ago where we heard out of europe we're going to do whatever and that started the liquidity boom and there's no reason to think stock isn't going to be a great asset stock. >> even after up 20% for the year? >> you can't think of it that way. we have a lost decade. >> people are nervous about things that sound dangerously familiar. some of these instruments built around rentals, for instance. dangerous or not? >> putting on my former hat, yesterday i couldn't help but look at the article that there's going to be some securitization of rental income streams. you just had this ipo list this morning, american homes for rent right behind us at the post. i will tell you this and i did spend some time in the southwest earlier in july, carl, there is a huge momentum shift that's happening and, again, it's about interest rates, about housing, but this rental -- the people that are renting homes that have been accumulated by the institutions is a story that's

early, early on. let me tell you why. i used to love when research firms put together these thematic pieces. fortunately, morgan stanley just yesterday we came out with a huge thematic piece which looks at what is happening with this institutional age of buy to rent. we know many hedge funds, many institutions bought up all these rental homes. the numbers here are startling. 17 billion to 100 billion. while everybody knows it's in the southwest, las vegas, phoenix, parts of california, that institution move into housing is now happening in florida, the midwest, and the northeast. again, you talk about equities, there's great waves of companies that have not even started to take in the value increase that is possible as a result of the move. if that goes up five times which is what the team estimates it will, this huge wave of supply through the real estate investment trust, home improvement companies. >> do you want to come back to the bond market for a second? you said there's a difference between the kind of people you're interacting with now who are sort of buying bonds and the people who are running bond funds. what do you mean?

>> it's very simple. i get a chance to speak with our great advisers and clients. i was two days on the west coast earlier this week. jeffrey gerlach stole one of my favorite people in the world, we all know bill gross. drew zager runs $7.5 billion in fixed income. deals with actual clients. somebody who is actually running money for clients. and this whole media myth about the bond bubble, kelly, it's just not happening. what you're seeing people do is you're seeing them change duration. they're being mindful of the fact that there's a difference between owning a 30-year bond and a 5-year bond or a 2-year bond when interest rates go up. but this idea of money coming out of fixed income and just huge amounts, i have said it, i'll say it again, just not happening. >> finally, people say this market is just a long series of face rippers, right? you look at all these short squeezes here in. where does this lead us eventually? how long does it last? >> what are we talking about with short squeezes?

yelp. you remember the day i was at the post and we talked about the anatomy of a short squeeze. you continue to see it. it's been very hard to make money on the short side. but i don't even know if there has been short squeezes. a lot of people have asked me, we did something months back about herbalife when we talked about what is a short squeeze. clearly that stock has been up dramatically. if you check around and see whether the stock is still able to be borrowed, in other words fundamental research, can you borrow those shares if you want to short them? the name is yes, you can. a short squeeze is created where you actually take the stock out of street name and you basically put it on the side and that's how you create a short squeeze. i don't know if there's been many short squeezes. >> do you feel good about the back half of the year? >> i continue to think we're in a normal environment and that equities will continue to get flows and, yes, i think i'm very hard-pressed to find a reason, a reason, to be concerned because it seems that the liquidity continues to be the driving factor.

i don't think it goes away. i don't believe tapering is tightening. i don't believe we're seeing any mass exodus out of the bond market. i get to see the flows every day so i think i know what i'm talking about when it comes to that. >> you see a lot of the country. >> yeah. >> gary kaminsky. >> sprouts will start trading on the nasdaq in just a couple minutes. plus edward snowden granted asylum in russia. you will hear directly from the head of the nsa on snowden. >> i'm in the cme group. i will be talking to the executive chairman and president of the cme group terry duffy. it looks like they had a good quarter, profits were up 27%. the stock is dipping a bit, but it's up 40% on the year. we'll ask him all the pertinent questions in about ten minutes and he knows hand signals really well. make sure you tune in.

earlier in the show walter rob joined us and spoke about how whole foods needs to make price investments in order to stay competitive. >> they're competitors we know william and they've been around for a while. we've said consistently we're just continuing to make these price investments to keep ourself competitive. you see the balance between the

price investments and the gross margin is something we're continuing to do. >> one of the sprecompetitors i spourts farmer's market. the specialty retailer forecusses on natural and organic foods and has 163 stores around the u.s. and joining us now is the ceo of sprouts, doug sanders. thanks so much for your time. good to see you this morning. >> good morning. thanks for having me on. >> look, so we understand your shares haven't opened just yet. how much of a milestone is it for your company? >> can you are repeat that? >> how much of a milestone is this for your company? >> it's a tremendously exciting day. we're excited to come off a great two-week road show where there was a lot of excitement around the brand. looking forward to a great exciting day and continuing to move forward and growing sprouts into a nationwide company some day. >> whole foods already has so many stores across this country. how do you think you can grow from about 163 to maybe ten

times as many stores without oversaturating the market? >> well, there's a lot of growth in national organic. the health and wellness movement is really reshaping grocery, and today's consumers are focused on two things, they want to feel better about the food they eat and make sure they don't pay too much. i think that's where our focus on health and value really resonates with customers not just in the natural food sector but with the broader $600 billion supermarket industry. >> i wonder as well, you heard from whole foods talking about margins. it's going to be something investors are focused on because the more entrants there are, the harder it will be for anyone to fight higher cost of food or to avoid using the lure of lower prices to steal share from competitors. how can you guys keep prices low, get traffic into these stores without sacrificing on that front? >> since day one sprouts has been relentlessly focused on health and value. it's not just in its value across the store. we work hard at getting the best deals we can find whether it's in produce or whether it's in

packaged grocery. our size gives us tremendous leverage. we're continuing to pass that savings onto the customer to appeal to the broader supermarket base and not just the natural foods customer. >> it's amazing how competitive this space has gotten in such a short period of time. it may seem long to you, but it seems shorter to us as we watch all of you players come to market. what is pricing going to look like 12 months from now and is that power going to be slipping or growing? >> well, i think, again, there's continued growth in the industry. i think with continued innovation and continued investment in our industry, you will see continued price investment across the board and i think with that innovation and continued competition, it's great for the consumer because there will be a broader base of products on the market and making the healthier foods more affordable. >> we keep hearing anecdotally about the price of an avocado outpacing overall core inflation let's say. are consumers going to have to

pay a lot more for your product in 12 months? >> we're not seeing tremendous inflation at all. i think, again, with our distributed buying model and the leverage we have with our growing size, we're still able to leverage our size, get great costs and pass that savings onto the customer. >> all right. doug, thank you so much for joining thus this morning. >> thank you very much. >> has the makings of like a pepsi/coke kind of thing. watching those two guys duke it out. >> love a rivalry. >> dow is up 25. strong quarter for the cme group. we'll talk to chairman terry duffy. santelli has got him when we come back after a break. preet and peltz got one. now get yours. it's the delivering alpha bag, but there's more. yours will be signed by the entire "squawk on the street" gang.

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cme group second quarter earnings. let's get to rick santelli in chicago. hey, rick. >> hi, carl. and i'd like to welcome the big man out of the cme group, the floor favorite, terry duffy. thanks for taking the time, sir. >> my pleasure, rick. thank you. >> all right. one thing i know for sure, anybody looks at the stock, granted we had a big split, it's

really been surging this year. you were up well over 40% prior to your announcement this morning. why don't you tell us how the scenario both top and bottom of the balance sheets look at the cme group, sir. >> well, obviously, rick, you hit the nail on the head, right, because it's all based on volume and on rates, and that's how we accumulate money here obviously. you know, we've had a tremendous quarter with the interest rate fluctuation. that's our biggest product line. it's been fairly dormie for the last couple years. we've had some activity and hence it sparks the value of the stock. we really stay focused on building up the business and we think the stock price will take care of itself. >> it looked to me like 27% on profits. can you tell me a little bit about revenues? there was definitely some improvement there as well quarter over quarter and i believe year-over-year. >> again, i think it's just the diversification of our business. roughly about 27% of our revenues, rick, come from

outside the united states today so we're doing a tremendous amount of business out of europe and out of asia. we have roughly 150 people now in europe. we're opening up our new exchange over there shortly. we have the clearinghouse up and running and we're looking forward to this fall to the launch of the new exchange. that's a big part of our growth expansion. >> well, obviously i'm sure you would like the stock to go up. now, please get ready to put this chart up, gang in the control room. if you want your stock to go up, i'll give you a hint, you should hope for lots and lots of activity for higher rates. see this three-month chart of cme stock ver what's going on with the ten-year note yield, there was a surge in the stock price. i think that's very relevant. i don't want to ask you your call on interest rates, but maybe you could talk a bit about how this place can really explode if the markets explode with activity. >> well, i mean, there's no question about it, rick. it's our biggest asset class we trade here at cme group between

the euro dollars and the treasury complex. if that starts to move, we are going to see a significant amount of volume run through the doors at the cme group. our open interest is poised for it. we have 88 million contracts open on the books at thec me group. people are not anticipating rates being at zero forever. so, yeah, it's a very dynamic and exciting time, but at the same time it's a wait and see game, and what we are doing is continuing to make sure that people are aware of our products and they can use them to trade -- to mitigate their portfolios. >> all right. let's take a different angle on this. you said you were getting a significant amount of business in europe and i think that's a great thing. what about basel, margins, set aside. i know some of the derivatives and swap rules in the u.s., many were excited that held cme stock thinking there's going to be an uptick in volatility in treasuries. your thoughts on that, sir? >> let me talk a little bit about basel.

basel 3 obviously is a capital requirement that will be a standard throughout the country and throughout the world obviously on how much capitol banks need to hold for different products and it appears it's going to be five days of capital for different products. it won't apply to the smaller fcms, but, yeah, this could add significant cost to the banks to participate in all different types of markets, but a lot of them are already complying with the basel 3 requirements. so it doesn't seem to be affecting them from any major standpoint. i was a little concerned. i testified on this just a couple months back. i think it could hurt the small community banks. i think it hurt the small reinsures, and obviously clearinghouses that were not part of the crisis of 2009, nor were some of the small banks or reinsurers being subject to basel 3. i hope the fed looks at that and makes the exceptions for not only the banks but the smaller banks but for the clearinghouses

as well. >> all right. now, we were talking about interest rates being good for business. obviously energy, you're diversified in the new york exchange, is good for energy. commodities a year ago completely different pricing picture. softness in the price of commodities, will that affect the numbers in the quarter ahead? >> sometimes the price has nothing to do with volume. when you look at the price of commodities, the grain markets have been sitting in a very high priced but a very range bound for a very long time. so fluctuation is really where we're going to see more trade and in return we'll see more revenue from the trade. >> terry, thanks for taking the time on your first interview on cnbc after your earnings announcement. we appreciate it. >> thank you very much, rick. appreciate it. >> carl, back to you. >> rick santelli, thank you very much for that. shares of marriott slipping today after the company cut its full year profit forecast.

so is the largest publicly traded hotel chain in the country worried about the global economy? we'll ask the ceo of marriott in just a few minutes. plus, the bell is about to sound across europe. a lot of information to digest. central bank meeting as well. simon hobbs will get you all the details when we come back. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. [ babies crying ] surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission. [ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees.

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let's quickly recap what's

happened with the european trading session. that's a sea of green. stocks ending the session with gains where interest rates were unchanged. mario draghi reiterated his -- there's the bell to mark the close officially. look at the major european markets. here is a look at the ftse, france doing well. better than 1%. german dax, how often do you see a move of 1.5%. italy up 2%. spain up 1%. even as mario draghi talked about signs of improvement, he's still extremely concerned about the exceptionally weak lending conditions. so while there may be a turn, there's still plenty of room to go for recovery across the continental. we're still waiting for italy's high court to rule on sylvio

berlusconi's tax fraud constriction appeal. he faces a jail sentence and a ban from office if the conviction is upheld. there are concerns it could result in political uncertainty. the center left party already in a fragile coalition with berlusconi's center right party. >> jackie deangelis is live at the nymex this morning. >> good morning. the energy complex seeing green arrows across the board with the exception of nat gas. we'll get to that in a second. i want to look at crude prices first continuing their gains. watching west texas intermediate up more than $2. a couple factors, that strong july gdp number out of china but also the strong ism number we saw this morning and the strength that we're seeing in domestic equities. bullish sentiment on the back of the fed minutes as well that qe is going to continue at least for the moment making traders here say it's a risk on day down in the pits. i want to point out we're seeing some strength in the dollar index but that cannot curb this

momentum today. additionally, we have the news out that libyan oil exports were cut due to port unrest there. that note out factored into the wti price and the brent price as well. moving on to nat gas, we are sliding further after we got this week's bearish inventory report. we saw there was more of a storage injection than expected and, of course, we are watching weather forecasts as well which have not been supportive for nat gas prices. back over to you guys. >> jackie, thanks. a big mo of in crude. bob pisani joins us with a look at what's moving down here at the big board. >> historic highs once again. remember, the thesis that everybody has been promising us, these companies the second half of the year, things will be better. now we have a data point today, the first data point, the isi numbers -- >> ism. >> it's supporting the idea that maybe things will be better. that's why we moved up, even though interest rates are higher. there's the fundamental question about whether or not we can pull this off. look what's going on. by the way, it's not just our manufacturing numbers, pmis were

up everywhere. china was good, europe was good, and now the united states was good. draghi came on and up held essentially the same thing the fed did. interest rates will stay low for a very long time. now the question is can the markets take rates, higher rates? we saw it with the adp numbers wednesday. up and the markets did not fall apart. take a look at the ten-year. it's what matters here at this point. we're moving up here. here is prices here but we're moving up, 2.685%, 2.87%. now the question is we get a strong payroll report tomorrow, we get 200,000 or a little over, we go to 2.7, does the stock market hold up? if it does, there's the proof you can take a little higher interest rates and the market does not fall apart. we're at very important inflection point right now to test interest rates versus the stock market. let's move on, got sectors today. it's all the growth sectors. the cyclicals, industrials, financial, energy, and material

all moving to the upside. most of them better than up 1%. if it wasn't for exxon, energy would be even higher. there's been some questions about the strength of the construction recovery. gener generally vulcan helped support that idea. commodity stocks had a miserable ride for part of july. they're doing better today. a quick comment on the stock that ruined my morning, exxonmobil. i was happy and cheerful until exxon came out here. a huge miss. they had a writedown on the refining. refining downtime was greater than expected. that happens in july. lower checkcle profits. here is the biggest problems, big oil can't grow. they can't find enough to keep growing. the free cash flow seems to be shrinking overall for oil. there's exxonmobil to the downside. that's what's holding down the energy stocks overall. by the way, guys, royal dutch shell had the same problem. they had a big writedown as well

on their exploration in the shale business in the united states because their drilling was kind of disappointing. these companies are so big, it's just tough to keep finding new stuff to replace the old stuff. >> and it's something to keep in mind when you look at that oil price still above $100 a barrel. >> simon is back at post 9 with a look at mour yot. >> the fact that the market surged as strongly as it has pushed marriott back into positive territory despite cutti cutting -- arne, it's good to see you again. you're up 36% but the market being what the market is, it's focused on the fact that you have taken down now the full year guidance. just trimming the top of that. why is that? >> well, a quarter ago we talked about rev par, our same store sales measure being up maybe as

much as 7% for 2013. today we said we thought the high end probably would be 6%. and really that's mostly math. we've now put two quarters in the books at a little over 5%. those are good numbers for the united states, but to get to a number like 7% by the end of the year would have suggested a blowout fourth quarter. we don't think that's likely to happen. we think we'll have a good, steady as she goes strong performance between now and the end of the year. >> we should remember that this country is still by far the most important for you as the business stands. maybe we should have seen from the industry data in may and june that things were a little weak across the board here, but why have you scraped in this country at the bottom of the range just up 5.2% on the rev par metric that you measure? is that about as exposure to d.c., exposure to groups? what's hurting? >> you have exactly the two right factors. if we exclude d.c. from our numbers, our rev par would have been up about 6.5%. so d.c. by itself is the weakest

market because it's our home. we are very big in washington, d.c. we have over 100 hotels in this city. and the average numbers at those hotels are negative in the second quarter. why? because of contracting government obviously. the sequester, but even beyond the sequester it's about government demand being relatively week. urban d.c. is better than suburban d.c., but d.c. is weak. the other thing that's happening is group. what we've seen is short-term group is the weakest segment in our hotels across the united states. what's really strong is the individual business tra and the leisure traveler. they're up 7%, 8%, 9% depending on the markets. what we see is that the individual business traveler is back on the road, seeing their customers, meeting with each other, doing the things they need to do in order to move business along. families are back taking vacation together. they're going to the places where they want to go. but this near-term group where it's discretionary, there's a little bit of relative softness there. government is a piece of that, but i think there's still a little bit of cautiousness in

the economy. do we have a spring swoon again or not? what's happening with the government? what's likely to happen with budgets in the fall? all of that i suspect is not crisis-like, but it's in the background a little bit. >> even as the figures and the projections stand at the moment, there are those like citi that say, look, your guidance is so light for the third quarter, you are still banking on a very strong return to business and growth in the fourth quarter and maybe some in the market are skeptical of that. i mean, is the jury still out to a certain extent? >> well, it is in some respects, but, again, we're ticking along at a 5% growth year-over-year. same-store sales growth. those are good, solid numbers. we feel good about those numbers continuing and think we'll get that in about the third quarter and the fourth quarter. and then, of course, you get around the world and there are some other things which are happening, much of which is very good. we signed 16,000 rooms, new management and franchise

contracts around the world in the second quarter alone. that's great growth for us that will come in years ahead. >> arne, before we let you go, you're making a lot of people satisfied, if not happy, with the share repurchases which are running ahead of schedule. half a billion dollars in the first half of the year. i think you have authorization at the moment to buy back another $900 million. where do you stand on enacting that? how do you feel about the price and what you're likely to do? >> well, we think our stock is very attractively priced, and we will continue to be aggressive buyers of our stock. our model as a management franchise company produces lots of cash every year, so we have purchased about $3.5 billion of stock in the last few years. we think we'll continue to purchase $1 billion or so per year as we go forward. we're -- the one nice thing about the stock not moving much in the last few months is it's become that much more attractive a buy for us. i suspect we'll stay active in the market. >> i can only infer what that

means for everybody else. mr. sorenson, it's nice to see you. thank you very much. arne sorenson. >> so i mon, thanks a lot. nsa leaker edward snow din leaving the moscow airport after being granted asylum in russia. the head of the nsa is talking snowden in just a moment.

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coming up next on the half, is the jobs report about to send this summer rally into high gear. where should you be putting your money? big oil's big miss. what's the trade on exxon and the other big names in that space? and is linkedin's rally about to be derailed by tonight's earnings? we'll see you in about 15 minutes or so. looking forward to "the halftime show." >> thanks. just this morning nsa leaker edward snowden has left the moscow airport after being granted asylum in russia. eamon javers spoke with the head of the nsa at the annual black hat conference in las vegas and he joins us this morning with some more. >> good morning, carl. this is the first big hacker and cyber security conference since the edward snowden news broke. general keith alexander came here to speak as he did last year. this year though a lot more tension in the room. general alexander facing some hecklers during the keynote speech, one of whom yelled out a barnyard epithet at general alexander. we caught up with him in the hallway just after his speech

and we asked him about his reaction to edward snowden. here is what he had to say. >> do you think edward snowden should be allowed to come back from russia and face charges here? >> i do, absolutely. >> what do you think will happen to him? >> that's up to our judicial process. i think he'll get justice. >> do you want the russians to let him go? >> yeah, absolutely, absolutely. i think it should be something that comes out in the rest of the story. >> traditionally this is a conference that involves security professionals, folks from the private sector, private individual hackers as well as government security experts. they traditionally welcome the government here with open arms. this year though after the snowden revelations about what the nsa has been up to, not so much. we caught up with jeff moss, he's the founder of defcon and black hat. we asked him about this and why he sent an open letter to the government telling them we need a time-out between the hacker community and the government.

>> people in the community are very fairly skeptical. they're professional skeptics. to them it's one thing to think, well, the nsa is monitoring a lot of stuff and it's different when it actually gets confirmed. people start behaving differently. >> guys, a lot of tension, a lot of emotion around this issue here. we're going to talk to more folks today. some really interesting things going on here including some stuff that really scared the pants off of us involving how to hack a nuclear reactor, how to hack an oil pipeline. a lot of dangerous issues facing the hacker community. kelly, back to you. >> great stuff. thank you very much for that. it's been a record-breaking day for markets here. the s&p 500 hitting fresh highs and stocks rallying. coming up next, the earnings squad will be here to break down all of the biggest movers we've seen today and lots more detail on some of the big names that have reported. stick around. (announcer) at scottrade, our clients trade and invest

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time for the earnings squad where we dissect the earnings story everybody is talking about and try to help you trade the stories you may have missed. i'm tyler mathisen in for melissa lee this morning. i'm joined by herb greenberg and cnbc contributor stephanie link. welcome, guys. first off let's get you up to date. 75% of the s&p 500 companies have now reported. 67% beat the eps estimates or targets. 9% have met them. 23% have come in below. let's start, stephanie, with

procter & gamble. shares trading higher, better than expected results. >> 2 cents better and the guide of 3 to 4% organic growth is encouraging. when you drill down though, i thought the most important part was the 5% volume growth, the best in two years for the overall company. we knew that health care was going to be strong, we now home and fabric would be strong. it was the beauty piece that rose 4% in volumes. i thought this was interesting. >> i think though if you want to take another interesting look, something they stressed and it was something you want to pay attention to, when they talk about the organic growth, they also said the organic growth did well even though with the underlying market growth rate decelerating. so they were basically able to get there into a really what appeared to be not a great market. >> gaining market share and that's actually what the game plan is for this new ceo who -- >> can we say that the new ceo, same as the old ceo, has made a difference here or what? >> not yet. >> too early? >> way too early.

but he has a reputation of restructuring, of heavy product investment, of expanding into emerging markets. these are all things the company really needs to do to grow that organic line. >> by the way, overall sales growth a meager 2%. so it's not like it was knocking the cover off the ball. >> better than it has been. >> do we have a ipo we're going to talk about? we're going to break away from here? or not? i'm sorry, say again, please. there you go. sprouts farmers market. up 92%. that would seem to be rather a pop on the opening of sprouts farmers market. they're sprouting there i guess we could say. let's get back to the earnings squad. sally beauty selling off this morning. cosmetic and beauty supplier posting mixed third quarter earnings. what's the story with sally? >> they missed the top and bottom lines, but store traffic from nonbeauty club card customers in the u.s. was soft.

that's very important because that's 50% of their retail business which is more than 50% of the overall business. so they're basically saying if people aren't going in there and getting a deal because they're regular customers, they're not going in there. i don't know if they're go somewhere else -- >> they're totally going some place else. >> even though they say they're launching initiatives, their margins weren't bad. it's kind of puzzling. so it's one of those things why people are running away from this thing today, i don't know if it's that but that was the big standout in everything they said. >> any thoughts? >> speaking to the margin side obviously they're able to control their cost structure, so that to me is very important, but i really think that you're seeing an enormous amount of competition in this sector. >> what do they sell? i don't know about you, herb, i have never been in a sally beauty store. >> i'm sorry, i have not either. but it's cosmetics, especially professional hair products to the professionals. >> have you ever been to a harmon, bed, bath, and beyond.

they own harmon and they have a beauty -- it's a massive -- >> we have to leave it there, folks, because this new stock is opened and that's the earnings squad for this morning. join the conversation, tweet us #earnings squad. they will be back with simon hobbs. and we've been all over it this morning. stock hitting record highs as the s&p 500 crosses the 1700 mark. art cashin will be here right after "squawk on the street" returns.

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want to show you sprouts which as tyler mathisen just said would appear to be putting on a bit of a pop. that's 103% gain. they did already price above the range of $14 to $16 at $18. 18.5 million shares of common. adding some more market cap today, kelly. just the latest example of food and grocery new issues being big winners. >> you made the point about annie's but that's been one of the best performers and that's symbiotic because they sell at a lot of sprouts and whole food markets. >> they're up better than double. $36.75. a huge day for stocks. right now the dow is adding better than 100 pounts.

the s&p 500 up by 17. let's bring in art cashin, director of floor operations atu bs. skr good morning. >> what do you see here. a lot of people questioning sustainability. >> it's an interesting day of cross currents. i think we may actually have to wait until next week to get a better result. i think what you're seeing is yields are up to levels where they provided a counter thrust to stocks. we're right at 2.7 is where bernanke began to talk things back to normal after the taper bump. so that's kind of been washed out. in the past when we got here, stocks began to pull back. i think what you see differently today is new money for a new month. that's usually a two to three-day process. so that may also conflict with the nonfarm payrolls tomorrow. we'll see where that goes. next week a couple fed speakers and then we'll start to get into looking at jackson hole and this

whole phony to me debate about who is going to succeed mr. bernanke. you think it's all about floating a summers, putting other names out there is ultimately it will go to yellen. >> i think they want to change the yellen appointment to a yellen anointment and make sure that she is so beloved and necessary that everybody will accept her. i think the debate with all due respect around mr. summers began to look like a first round tko and that's why the president may have brought the topic up. it was interesting to hear they also threw in the name of don cohn who was greenspan's first choice to replace him. >> to replace greenspan instead of bernanke. what's the street's reaction to a don cohn? >> i think it's more of an intellectual exercise and supplies some fodder for the friends of fermentation away from worrying about the market. >> we have to give you guys something to talk about. >> something plausible and repeatable, yes.

>> let's do ism. a lot of economists today say there's no way this number squares with a slow global growth environment. it's all about the auto shutdowns. we're going to be looking at weaker data later in the quarter. do you agree? >> yes, you and i have discussed for months the idea that seasonal adjustments since the lehman impact have been screwed up, and particularly this year because the auto shutdowns were completely -- almost completely different than they've been any other year, and so that has tended to distort everything from initial claims to things like the ism. >> others though respond by saying, well, isn't the lack of an auto shutdown -- >> still a good thing? >> -- a sign of demand? we're looking at the run rates in the 16s. >> it is and you're beginning to see reports of more desperate replacements. people saying they drive the car up to the auto shop just in time for it to conk out and have to buy a new one. >> just got to ask you two seconds, sprouts. doubled. are you surprised? reaction to that?

>> no. you know, as you said earlier, things like annie's, it's a very popular area. and occasionally we do get some mispricing in things. so it worked out well. let's hope they can hold onto it. it's the opposite of the facebook effect. >> you got that right. >> that's for sure. >> art, thanks a lot. art cashin. art mentions the jobs number tomorrow. you have one more day to nail the number. tweet your guesses for this month's nonfarm payrolls number to @squawkstreet. you have until 8:29 tomorrow. make sure you use the hash tag nail the number. if you win you could be the lucky winner of that duffel bag which we gave to everyone at delivering alpha this year signed by everyone here at "squawk on the street." >> faber had a little flourish at the end. >> you know david is full of flourishes. there are the rules, you can read them or not. but need your answer by 8:29 a.m. tomorrow. >> the sooner the better. again, at least if you're going to guess around 200,000, change it a little bit. give us something to work with.

too many guesses in that range. >> a lot going on this afternoon. we'll continue to watch the action among some of the big winners like yelp and sprout. let's get over to headquarters. scott wapner and the "fast money" halftime. thanks, welcome to the halftime show. four hours to go until the close. let's go up to the wall, see where we stand on the street at this hour. it's a big day for the bulls. there's the dow, good for 123. s&p, nasdaq higher as well. here is what we're following on "the half." the social standard. linkedin in is up a staggering 350% since the ipo but is there still time to get in with earnings looming or are the risks just too high. plus, the great debate. exxon suffers it's biggest miss since 1999. the stock is getting hit, but what now? it's link versus terranova. first our top story, the summer rally. after the strongest july since 2010, august gets off to a ripping start after jobless claims come in