>> they will just put new a cyborg any way. >> dom, thank you. >> that's it for us tonight. president obama tonight is sitting down with steve liesman. right now it's time for "squawk on the street." good thursday morning. welcome to "squawk on the street." i'm david quintanilla, jim cramer. ten-year yield creeping up to just about 2.5. the lowest in eight years and then europe is green and on

track for a positive week this week. our road map begins with facebook. mark zuckerberg is saying that facebook has more room to grow. >> president obama poised to support anti-inversion tax legislation. >> we'll see. and xilinx ceo gets no free passes. what he said to the man to my right about his dismal quarter. >> facebook revenues are up 66%. mark zuckerberg was on last night's conference call. >> one thing that's so exciting is there's so much more room to grow. people on facebook in the u.s. spend about 40 minute as day

using our service, including one in five minutes on mobile. people spend nine hours a day on digital, such as tv and computer. >> premarket at 77, which is double the ipo price of 38. facebook reports, jaws drop, and then new york post business today, this doesn't zuck. people go for the high-class headline this morning, jim. but it was an amazing quarter. >> it was an amazing quarter. you're going to hear, this thing couldn't possibly be at this level. typically when you hear those things it follows with the idea that maybe it's just all revenues. i think $3 is now doable at 2016. i was highest by 50 cents going in in terms of my estimates.

you've got to give it a 90. it was a beautiful play put on, that is, their conference call. mark zuckerberg. this was a good quarter for us. >> good quarter. the margins are stunning. stunning. >> it's a machine. it's a machine. and they are humble. they talk about a ten-year plan. zuck gives you a ten-year plan up front and then sandberg tells you why people are going to like them for the next ten years. as the conference call goes on, you realize that what they are trying not to be is microsoft. they are trying to have a very long-term view. they are trying not to be google. i can tell from what they are saying, google does a lot of things and hopes that something stick. z man is talking about things sticking over a long period of time. he talks about the messenger, he says, this is the future.

>> z man? >> z man. >> there is a school of thought that paper and slingshot and other things that they have tried to do is not always a home run. >> they are doing things that are actually additive. look, i think it's great that they fail. actually, i thought there was too much on light rail in terms of the prestige of the conference call. i don't know about you guys, but when i go online and google something, i google something and typically there's 14 things that come up in ads that i don't want and it sends me to different places and zuckerberg is really worried about the user experience. and i think that's one of the reasons why they say mobile does it, they answer a lot of the objectives. mobile doesn't have a lot of ads. and he says, mobile isn't going

to have a lot of ads. isn't that why mobile is 50% of the earnings. >> to be fair, facebook and google are splitting mobile advertising, period. >> right. >> facebook share is 18. google is 40. facebook is what they are calling the cage match now. >> right. >> one thing that zuckerberg talks about and we talk about it, how many hours people spend online, it's one-ninth of the time and he wants it to go to one-sixth. as the conference call goes on, you get the sense, wait a second, they are being really conservative. >> what i got from the investors that i spoke to, they are not even monetizing and they took down their expense growth, i believe. >> i know. the leverage here. leverage meaning what they can bring to the bottom line. they have no content costs. you see the little cap x.

>> it's like the ebitda. >> we built this chart, which is an amazing chart because you can see over the past few years, right when desktop in 2012 -- right when it was about to start flagging out, they got religion on mobile and people said they were late and look at that trajectory. >> 40% of ad revenue last year. remember, it was 5% when they came public. this company has been very humble. they admit they screwed up on mobile and then they've come back. most conference calls that i have dealt with this quarter, there have been numbers that are manufactured by a lot of buy backs and this was an slept quarter. humility goes far with investors, typically when you back it up with a $3 possible number. >> incredible growth overall and

therefore a multiple on your stock, as you say, or 16. >> you struggle because let's say 50% in 2016. companies obviously are going to grow. great. but it's a big number. how do you find what to pay for $3? and i tell you whone thing, it' growing three times the average stock, maybe four in pure oxygenated growth. $90. i present to you $90 in facebook. >> total ad value is time warner combined. we are getting word that an algeria flight that was missing has in fact crashed. that's according to reuters. the flight departed from the west african country of burkina.

160 people on board and it apparently crashed over west africa. capping what has been an unbelievable week for commercial aviation, all around the globe from mh-17 to the crash in taiwan which is weather-related, but it's been a tough week to fly. >> and it's pretty clear that -- i know that historically airline traffic bounces back after these things but when you see these kinds of tragedies, you know, you try to put them in context of the stock market. it just doesn't work. >> no. >> it just doesn't work. also this morning, general motors taking charge of the recall crisis. the first quarterly profit in europe in three years. south america is still very tough. revenue is down 30. you've got brazil, argentina, capacity in venezuela coming down. >> you know, look, this is mark fields' first call. let's make sure we're not too

negative about this. profitable north america asia-pacific, it gets very important. record market shear in china. there's a lot that i like here. first quarterly profit in europe. if you remember, that's something that ali promised. i think mark is hitting the ground running. i don't want to be as negative as gm as the stock. also because the u.s. was incredibly profitable but people aren't going to talk about that. they are going to talk about the charges. but i think mark fields wouldn't just -- he was dealt a good hand by alan mulally and i think he's going to be very strong. >> it was 30 billion in '09 and 15 billion as the margin got cleaned up. and in north america, up 9%. that's the fourth quarter of profits in this country. >> and the numbers were amazing

for gm. one thing about ford, if it anyone was investing in the '80s, they would give you dividends that were, you know, these things would yield 4, 5% and now these days they have much better control of expenses, of medical. much better control of where they build and how much it costs. you're going to see a return to huge dividends from these stocks. hold on to them. >> we haven't touched cad. they say we don't return the mining but construction was up 11 and they see revenue -- even though they see revenue at the low end. >> i didn't like cad. i didn't like it because we're still talking about resource industries. we're still talking about mining. copper was up 4 cents last night. you're playing caterpillar and with it is a big turn in the u.s. i mean, if you look at what

didn't work for them, china, which we had a very good pmi last night. cis, it's a russian impact. bsaf, which is a gigantic play on russia, 50% comes from gas profit and cis weakness that i've seen for russia, there's too much not doing well here at caterpillar to get me excited to give them the runs. that's why the stock is done. this has got to be more of a mining play. >> they did see 2 million buybacks in this quarter. >> good luck. you squeeze the source by blowing away revenues. it's some of the best growth i've seen with this quarter. you don't queasy them with buyback. i think it's important to point

out that they are -- if they get china right, the stock is going to the moon but they haven't. they haven't gotten china right. >> you want to do tea here later? >> later. the thing with at&t, they seem to be aggressively rebasing their entire list of customers down and that is going to have fewer of them turning off because why would you and it's going to put pressure on sprint and t-mobile. it's a conversation that we can go into more detail. we also want to talk airlines perhaps. with. >> dif tends, gilead. >> american airlines a. dividend. >> 10 cent dividend. >> doug barker on with a great interview this morning. i know american is great. how quickly do we take for granted that american is great? >> tonight, steve liesman is talking tax policy.

steve liesman gets tough with xilinx's ceo. they are comparing to your rant years ago. plus, trains, planes, and profits. and what is the railroad operation telling jack koraleski about the economy? the dow is a few points from the train day high. more "squawk on the street" in just a minute. the cadillac summer collection is here. ♪ ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month and make this the summer of style.

♪

you presented several conferences where you had an average annual growth rate for fiscal 2015 but lowered it 5%. why did you stear us towarer us higher rate. >> it's not a question of if. it's a question of when. in this case, the big surprise that we had was the rollout of the wireless infrastructure in china. we had expected the third round to happen earlier than it currently is projected to happen

and we're being very cautious now to make sure that we hit it. >> cramer with tough questions for xilinx's ceo. you did almost a mea culpa on this one. >> sometimes you do your homework and then sometimes it doesn't work because they take it back and several occasions in the spring, they said that china was ramping multiple years and then they said that china was bad, that china was pulling back. why did we focus on xilinx? because it was the worst performer, one of the worst quarters i've seen. but most importantly, technology is on fire. so how did you miss china? how did you miss aerospace? mark haines told me no free passes. when somebody does it wrong,

moshe is a casualty of what mark is talking about. >> big day for airlines, meantime. both american and united and continental posting better than expected profits. jetblue in line next. we're going to talk with southwest's ceo gary kelly later this hour. but american is getting the buzz because of the billion dollar buyback, 10 cent dividend. this is becoming the norm for the industry. >> well, i think people are going to say, wait a second, the marketplace of the journal has four new air startups. people are saying that too many planes are coming on and seats are going to go down. i think this group is still investable but i don't like to see the ual -- i have ua on the brain because i have stock that is up huge. there's so much this morning. so much.

>> so much. >> including ipg. do you want to save it? >> let's do it now. ipg, you recently had the ceo on recently. >> a couple of days ago. >> this is a company that i spoke about at the end of may. this morning, elliott management, which i said was buying the shares, does file with the 6.7% stake. although, a lot of it is options, by the way. it's interesting how these turn out to not just be the common but a lot of options that they purchased to create the common stock. but 6.7% saying we want to engage, we think the shares are undervalued. nothing more than that. they are not putting it in writing, we want you to sell yourself or we believe this or that. one of the more activist activists out there. in addition to so many other things they do, argentina is another area that they've been focused on. >> michael roth took this

company from zero to hero. when the deal fell apart, they said on our air that this company is going to be acquired. this company just won the microsoft account, which is monster. they got the pizza hut account, which is grand. they bought facebook ahead of the quarter. wow. it would be amazing if he has to product him anymore. we have some lines that weren't perfect. they did in-line but it reminds me of being picked on by nelson health. >> we'll see. part of that may be the buying or the rumors reporting on elliott. they are there now and we'll see what happens. >> excellent. >> we'll get cramer's mad dash. and what a day for wyndham ceo.

at&t and starbucks. we're back in a minute. spokesperson: get a $1,000 turbocharged reward card with a new volkswagen turbo. why are we so obsessed with turbo? because we like giving you power, but we also like giving you fuel efficiency. like the sporty jetta. and the turbocharged passat tdi® clean diesel. okay... and the iconic beetle...

and the powerful tiguan... okay you can't forget the cc... guys, this is going to take a while. avo: hurry in and you can get a $1,000 turbocharged reward card when you lease a new 2014 jetta se for $199 a month. [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪

. all right. it is time for mad dash on this thursday. this morning it feels like every story we do we spend so much time on. let's talk a little bit about gilead again. this has so many ramifications

here. part of it is the story of the stock itself. >> in many ways, this is the story of how a company created a cure to a horrible disease and the market likes maintenance drugs that don't cure. here you take a course and that's why it's selling at nine times earnings with the greatest drug every introduced in the world. >> it may become the largest drunk of all time. 3.5 billion in the last quarter. >> that will be substantially higher because people don't know they have the disease. >> $84,000 for, what, 12 weeks. a lot of pushback. and we cure the disease. you never hear cure. here's the problem, david. much of the call's q & a will be devoted to, will the insurers

pay? everybody if they knew they had he hepc and took this pill, they would bankrupt them. i wonder if they can afford to say how much money they are really making. at the same time, if you have this dreaded disease, you would pay anything. >> a lot of people don't even know they have it. >> right. >> you can say it will bankrupt the system, half the people don't know they have it at this point so it would take time. >> what do you pay for a cure? this is a sunday school question. >> and having to pay a lot for their care when they get liver cancer or whatever it may be. >> the insurers want -- the insurers desperately want competition. the patients desperately want this drug and i think that when push comes to shove, they, the insurers, must pay until another

pill comes along. peggy hamburg has not been that quick. >> paid 11.5 billion for pharma sec in sales they are going to do that. >> miss yellen, listen to me. that is in year one. >> we have the opening bell and so much to talk about right after this. we started zya with the thought

that the kid on the back of the bus might have a song that he has in his head but he just can't get out. with the technology of cloud, we change all that. i can sing something into my device, up to the cloud it goes, back down it comes, sounding better. we break down the walls of creation and we give music creation for the masses. ♪ ♪

unlock the creativity in anyone. with the ibm cloud. the ibm cloud is the cloud for business. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2. [ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up.

[ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. you're watching cnbc "squawk on the street" live from the capital. opening bell in just a minute. we have to go back to early 2006 to get a number that the unemployment rate is at. >> in the meantime, this don't trust the market theme, how many days? >> 26. >> when do we just say, yeah. >> all right. some of the names we haven't gotten to, but some of the biggest names, facebook last

night, caterpillar, 3m, at the big board town square media, live event properties celebrating its ipo. it's a drug device company specializing in ear, nose, and throat conditions also celebrating tonight. under armour, jim, we have not gotten to. the revenues basically crush it. >> and the margins are up begin. kevin is an innovator. what i liked about this was in a subtle way he's taking the big shots at nike. he's saying footwear is strong. everyone used to laugh about his

footwear. international strong. this thing is a juggernaut. it should be up even higher. it was one of the few growth stocks that got hit that has come back to the level that it had before the swoon. >> congratulations. you are killing it. >> the hallmarks of neike. >> a lot of it is the fact that we didn't think it would happen. people think of innovation and they think of the pc and the cell phone. i think what kevin plank is doing, remember what he said at the university of mare layland, was a necessity. >> under armour closing on a 10% gain. qualcomm is going to be one of our big losers despite the beat

for guidance. >> they had this fight with china. they were talking about how china was a problem. if you look at what qualcomm said, qualcomm will come back because the analysts can't handle it. they had great growth but there were royalty issues in china that made it so people were surprised and they expected a big blow-up. be aware that china is not so great for qualcomm. you know who china was great for? >> who? >> nokia. they sell a lot of equipment in china. nobody talks about it anymore but, wow, what a comeback. you've got to take the bad with the -- >> fascinating. >> -- to keep the good for nokia. >> twitter is up. we're going to be hearing from them. >> there was a note sent out that user engagement is not as good. >> it's going to be about user

engagement. it is. >> right. >> and user metrics in terms of growing the actual -- >> but in the end, twitter is a company that if you're looking at earnings, it's overvalued. if you look at facebook on earnings, it's undervalued. that's why facebook got that gain. by the end of the day they come back and surge. i really just tell people that facebook is going to become a moscowan stock for every portfolio manager, like google, like apple. these are the big three. >> ford looks good. >> 3m, as usual, it's hard to make sexy, so to speak, but $1.91 does meet profits up 6%. this is closing in of the highest of the year. >> he prides himself and if you look at the big industrials, they haven't had very organic

growth. he's come up with 4.8% organic growth. health care, which a lot of companies have come on strong, electronics, he does 6.3% growth. he's buying back stock. he may be, of the big international executives, the most forward thinking of all. remember, new products count a lot of what they end up doing with a new product and then it shows up in earnings. he and dave cody, gee, he and dave cody are hitting it out of the park in the 14th inning. >> in perhaps contrast to ge. >> ge is -- the margins will come back. don't worry about it. they have very good organic growth. they couldn't bring it down to the bottom hine.

this was a monday store gain for a 3m stock. >> 15th bigger stock than at&t. >> remember when st. merck, the anti-cholesterol drug, these combinations -- look, you remember when roth said his company was bigger than u.s. steel? these comparisons are factuos. >> virtually everything is bigger than u.s. steel. >> very quick, dunkin' is down. >> what is the excuse for the

not great. ins. i was upset about dunkin. i had the ceo of chipotle on. if you go to chip potly in neot york, they will say they are showing you -- stop complaining -- don't blame the weather. don't blame the ingredients. blame yourself. >> let's move on to at&t this morning which is down about 1.85%. we mentioned it briefly at the top of the program. give you a little more detail here. what is going on is quite interesting. i don't want to get too deeply into the accounting side of it. but remember when t-mo introduced all of these plans that said, hey, we're going to free you up and then at&t

responded and is introducing new plans that essentially free you from the contracts in many ways, a lot of this is resulting in an aggressive repricing of their entire customer base and it does seem to be coming down a bit. the idea is that you get that done and you get it done quickly and then you start working your way back up and you bring it way down but it can have an impact. there had been an expectation, though, as they repriced, perhaps 70% of their entire customer base, i believe is what they said, that you would accelerate revenue recognition because you're changing the way that people buy the equipment, you're loaning people the money, you're taking that up front but because they are cutting price overall, it's not having that impact and they seem to be determined to move through this very quickly. it's also havening an effect of revenue user because of the price that is coming down.

if you have record low at .86, you're not giving up any new customers. t-mo was able to capture some of the customers that lost. are you going to be able to get new customers in that's the question here. by the way, is uverse doing quite well. let's not forget the direct tv deal that is in the process. it's pressuring at&t sales this morning. can you keep churn down at that level? what does that meet for sprint and t-mo? it's going to be a tough road there. by the way, on sprint we noticed shares are quite weak lately. >> weak. >> i anticipated originally originally. so many reports that they had some by the end of this month. that's not going to be the case.

although, the report that i've gotten is that it hasn't been knocked off course. it's simply taking longer than anticipated to really make it work in terms of t -- excuse me. t and sprint. that's been moving through the market and sprint has been coming down as a result. >> the wireless margin, are they in the same -- >> no. it's not comparable. verizon is getting more aggressive and you're going to see that. >> the margins are still up 50% versus at&t. i don't know. i think remembverizon is a supe

company. >> 5.2% yield. >> verizon, google, apple, you could build a diversified portfolio versus the average. i know any of the jewel stocks are passe. >> dow is roughly flat. pisani is on the floor. hi, guys. >> hi, guys. we're up in europe and kind of a disappointing day for the ipo market. we had a bunch of biotech ipos, town square media, some of the fine people here work there behind me, they priced really 8.3 million shares at $11. the price call was 14 to 16. some of the other ones, all priced at the low end or well below expectations.

so not a particularly great day for ipos. i'll keep an eye on town square. $11 price talk, 14 to 16. you were talking about our highlight because i love industrial companies. i know 3m doesn't sound exciting. here's what is important. they sell in more than 100 companies and sell literally thousands of products. the important thing here is overall very good numbers here. sales climbed 4.9%. for 3m, operating income rose across all of the divisions. remember, they sell in health care, in industrial, dozens and dozens of industries. that's why you want to watch the company. overall, the numbers were good if not outstanding. caterpillar, you were talking about beating on earnings, revenues definitely on the light side for them and the problem is, this great diversity they have is starting to hurt them. look where they sell. they are all over the world here but north america, europe, middle east, africa and

asia-pacific. the problem that they specifically talked about was weaker sales in china and africa and the middle east. when you get this broad geographic diversity and start weakening in certain areas, that's the problem that you have overall. let's talk about these other companies that are reporting today. take a look at these names here. very good production there. cooper was very strong. a dollar. expectations were 80 cents. it being looks like the beat but i don't believe there was an operating beat and revenues were on the light side. that's the reason that diamond offshore. pulte has reported. it's tough to tease out things here. up 25% at b.r. horton. orders up only 2.2%. finally guys, the auto companies, just to show you that, better than expected, gm,

a disappointment. dow opened very flat this morning. >> all right. thank you very much, bob. let's get to the bond picks. rick santelli is here. hi, rick. >> carl, there's a lot of things going on on the economic front. we see that pmi in china definitely moved to the highest levels since march. 52 handle. but keep in mind, that series is only as old as 2011. it's hard to get a big perspective and we had a drop in claims. seasonalities accounts for things like layoffs in the auto industry this time of year. we'll keep it simple. lowest level since '06. what did that do to the market? rates popped up. that's what is supposed to happen. open the charts to may, five settlements under 2.5. and that is technically

significant. we talk about it a lot. that's the correlation. makes sense. let's switch gears. look at pound versus dollar two-day. the pound is deteriorating a bit. they are walking back. we lost the 170 plus handle. china, pmi i mentioned, look at the dollar versus the yuan on a short-term chart. how low? haven't had the numbers this low since march of this year. carl, back to you. >> all right. rick santelli, thanks. earnings lifting shares of southwest to a higher level. we'll speak with the ceo gary kelly live in just a moment. [ male announcer ] the mercedes-benz summer event is here.

now get the unmistakable thrill... and the incredible rush... of the mercedes-benz you've always wanted. ♪ [ tires screech ] but you better get here fast... [ daughter ] yay, daddy's here! here you go, honey. thank you. [ male announcer ] ...because a good thing like this... phew! [ male announcer ] ...won't last forever. see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. but hurry, offers end july 31st. share your summer moments in your mercedes-benz with us.

that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪

shares of southwest airlines are trading lower. why don't we go to gary kelly, chairman and ceo of southwest. first, gary, thank you for coming on "squawk on the street." >> our pleasure. >> >> okay. let's get right to it. there's been multiple years where you were the only company that's made multiple money. has this industry become a secular grower and we're not going to go back to the feast and famine days? >> jim, that would be terrific. southwest has been profitable for 41 consecutive years and we're well on our way here to 42. but the legacy airlines, every single one has been gone or gone through bankruptcy. they have produced solid profits and are beginning to return

value to shareholders finally. i think that's all a good sign. what is good for the industry is going to be good for southwest airlines. >> there are not a lot of startups. there are four new startups. boeing stock is down today because people are saying no, don't worry. plane inventory is building. is there a new challenger coming in or is it going to stay the way that we see it as the big five? >> you know, jim, i've been in business almost 30 years and for that entire time, consolidation has been constantly predicted. and that's really finally come to fruition. it's a very mature industry, especially domestically today you find fewer startups and right now the industry is in a wonderful position where demand is strong and supply matches that. so, you know, the opportunities are fewer today than they were 30 years ago but southwest, we're in a very strong position.

we've got a very low cost structure and great brand. so we know we're going to face competition whether it's a startup or a legacy airline and we're prepared for that. >> well, let's talk about load factor. one of the reasons that people wanted to own the airlines is because they get on the plane and it's crowded. do you ever see a number and it's 90% or is this as great as it's going to get? >> that's a great question. again, you go back to when i started the company in the '80s, we had a record profit in 1986. so energy prices have been a real game changer over the last 30 years. you have to have virtually every seat filled to have a chance at making money. so we're all looking at ways to optimize our route networks so we don't have those empty seats. we lag the industry a bit because we're a point to point

airline. so i think there's opportunities for us to boost our loads. 90% system wide, no, that's probably a stretch. >> gary, i know that this is an earnings story that we're going over but you're a great airline man and i think we are all pondering the idea that we are seeing some turmoil in the actual industry, whether it be obviously malaysian or we saw something in africa today. is there anything fundamentally changing about worry in the industry because obviously israel ban -- i don't know. i'm trying to put it in context. i know it's not a money story. but what's your thinking about the airline business, internationally, what based on what is going on? >> sure. it's a fair question. no, i don't think anything is fundamentally changing here. we're all very aware of risk around the world in our industry despite the aviation airlines continue to be the safest mode

of travel. so we'll continue to keep safety as the top priority and look forever opportunity to mitigate risk. there are opportunities, of course, to look at flight patterns and routes that are taken in dangerous parts of the world and we'll need to continue to do that. the international aviation arm of the united nations is engaged in investigating this malaysian airlines' latest event, which i think is a good thing. but we'll continue to work hard to make what is a very safe form of transportation even safer. >> gary, one more question not earnings related. the "today" show this morning did a story about this passenger in denver on sunday who claims he got into a dispute with the gate agent, tweeted about it and

then couldn't board the plane until he deleted it. wow, rudest gate agent in denver. not happy. >> that is a long-time customer of southwest airlines and i'm very hopeful that we've repaired any hurt feelings that he has. he completed his flight there, of course, but conflict is going to take place in the world and, of course, we want all of our people at southwest airlines who work very hard, by the way, but we want them to de-escalate and not escalate a conflict. so i'm -- i think that's behind us. it's a good -- i think mistakes were made and we'll just work really hard to make sure that we keep that customer. he's a great guy and we've apologized to him. hopefully he'll keep flying on southwest airlines. >> you're a straight shooter,

gary, and it's always a pleasure to speak with you. again, remind people, this airline. >> we'll get to trading with jim in just a minute. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. then boom... what happened? stress, fun, bad habits kids, now what? let's build a new, smarter bed using the dualair chambers to sense your movement, heartbeat, breathing. introducing the sleep number bed with sleepiqtm technology. it tracks your sleep and tells you how to adjust

for a good, better and an awesome night. the difference? try adjusting up or down. you'll know cuz sleep iq™ tells you. only at a sleep number store, mattresses with sleepiq start at just $999.98. know better sleep with sleep number.

it can help your business save money. false. the truth is when you compare our fastest internet to the fastest dsl from the phone company, comcast business gives you more for your money. why pay more for less? call today for a low price on speeds up to 150mbps. and find out more about our two-year price guarantee. comcast business. built for business.

time for i had ttrading wit. >> celgene is not a promotional guy. this company has a lot of earnings' power and new drugs. do not give up on celgene. down two usually means down three tomorrow. don't give up on it. >> and airgas? >> sketchers, apparel on fire technology and i use my shoes to the club every saturday. >> thanks, jim. 6:00 p.m. eastern. home sales and market cap when

we come back. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon. ♪ she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ my mom works at ge. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.

so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

welcome back to squawk on the street. the new home sales number is down 1.8%.

406,000 seasonally adjusted annualized rate. we're looking for a number much better than closer to 500. by the way, our last look, the best level since the first quarter of 2008 was downgraded all the way from 504 to 442 so that gives it a minus 8.1%. even a larger scope when you think about what the number was when it was originally released. diana olick in d.c. will give us an idea of what this was and how much it occurred. diana? >> i'm not surprised at that seeing 18% jump to 500,000 in may was irrational. it didn't make any sense. now we have a revision back down to normal, 442 for may and then down to the numbers of 406,000. yes, it's a big miss on the new home sales but it's a lot along the lines of what we've been hearing from the home builders. these are not closings, which are what the existing home sales

numbers are. these are people out shopping for a home in june. most of them are mortgage-dependent buyers. they show higher revenue due to higher prices. pu p pulte said that price point was up 5% and they've been focused on the higher end buyer. we have a 5.8 month supply sales of new homes. you want to see demand and supply even six-month supply is normal for a housing market. we have housing starts that are very low and this is showing that the demand is very high when we see sales coming down this low again. still waiting on a price. we expect the prices will be higher for 2014 as home builders have not only been raising prices to deal with land, labor, and nearly costs but also

because they know the buyers out there are the higher end buyers, not the entry level. back to you, sarah. >> d.r. horton is down the most of the bunch. now to facebook. shares of facebook are up more than 100% since the ipo price of $38. facebook announcing second quarter results. that certainly beat on the bottom and top line stock op. almost 6%. ceo's mark zuckerberg saying that mobile has room to grow. >> one thing that is exciting is there's still so much room to grow. on average, people on facebook in the u.s. spend around 40 inmanies eai minutes each day on facebook including one in five minutes on mobile. people spend about nine hours a day engaging on digital media. there's way to improve that

people can share. >> obviously it's about mobile. let's bring in a research analyst with a.g. is that an accurate characterization of how these numbers look to you? >> i think it was a stellar quarter and they are downplaying it. one of the most impressive things for me was the amount of flow-through to the bottom line. so for every incremental revenue they got on the dollar, 86 cents of that was able to go through the ebitda line. very strong quarter. >> the 62% mobile, that's certainly impressive, especially when it was nothing when it went public. where does this number seem to get to in terms of mobile? >> i think we're going to see that number go to 75% less because the desktop business is growing but at mid-to high and

single rates whereas mobile goes up 152% versus last year. there isn't anything that is really going to change that. we think over the next 12 to 24 months, it's going to be north of 1475. >> what about the facebook versus google sort of race for any kind of digital ads? we saw that it's making less money per ad and, therefore, it's expanding. we're not seeing that kind of relationship in facebook. is facebook doing better at monetizing ads than google? >> one thing that is different is we're still in the early days of modernization. they were up this quarter which was an acceleration versus last quarter when it was up 118%. a company like facebook, which only has 7.5% market share right now, they are going to likely double that in the next four to

five years and they are playing catchup to google. the amount of usage that you're getting on facebook, the engagement in the platform, we haven't even talked about the other apps that they have, whether it's facebook messenger or instagram or soon-to-be what's app. >> people are obviously looking for question marks stocks are selling from an open. some of their new we are initiatives, like poke in paper, all those still young aren't setting the world on fire. what is going to drive it higher? >> well, like i said, there is more not only on the facebook platform but all of the other apps that they've got. one thing that they caution on the call was that because of the tough comparisons and because of the large numbers, they are going to see a little bit of

deceleration in their top line. they are going from 70 and 60%-type top line growth to 50 and 40. as i mentioned earlier, the operating leverage remains very, very strong. i think especially as what's app starts to monetize. >> so we want to hold you down here on specifics. 25.27 right now. you're talking about different potential for revenue streams. how do you value the stock at? >> if you share our view that the market share for facebook is going to double over the next four to five years, they are going to need a $2.5 billion market. and so their top line should continue to grow 25 to 30% and ebitda even faster than that. if you're being looking out two to three years, this is going to

be a stock that has a potential to touch triple digits. our 12-month target is 85 but there is potential for upside from there. >> and a bullish call on facebook. arvan, good to see you. >> thank you. when we come back, caterpillar is weighing on the dow with an uncertain global picture as they bring costs in. what should you be doing with the stock today? we'll talk about that. and a few hours away from steve liesman's exclusive interview with the president. 5:00 p.m. today. you can't miss that. "squawk on the street" will be right back. my motheit's delicious. toffee in the world. so now we've turned her toffee into a business.

my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.

welcome back to "squawk on the street." take a look at angie's list which is getting pummeled down to lows. it's 7 cents worse that wall street was expecting. the company spent more money to acquire new customers, carl. back over to you. >> dom, thanks so much. caterpillar's revenues missed. caterpillar ceo this morning said he's pleased with the company's second quarter. take a listen. >> what we're faced with here, though, is basically two years of flat on flat top line.

we're doing great in finding ways to be more efficient and lean in our manufacturing and lots of other things operationally that will really pay off down the road. i'm happy with where we're positioned right now. >> let's bring in jpmorgan's managing director. it's great to talk with you. good morning. >> good morning. >> they do bring revenue down to the low end. how long can the bulls support a story based on costs coming down and buybacks continuing? >> you know, i think that's a great question because they raised the guidance by 10 cents and 9 cents was simply share of purchases that they are going to accelerate in the third quarter. our concern on caterpillar has always been where is the bottom in the mining business. at this time last year the ceo was calling for flat revenues this year. and at the beginning of the year he was calling for minus 10% and minus 20% and here we are down 40% still in the mining business.

>> is china going in the wrong direction? >> china in and of itself is not a huge market for caterpillar but it's a huge markup for mining products. it's indirectly a big business for caterpillar. the competition is not helping. >> let's pretend that you have a long term and you're willing to deal with mining weakness for a while. how long can construction make up for that? >> construction can't make up for it overall. north american construction business was actually up 20% and yet their total revenues were down 4. so until we see the bottom in mining, it's going to be really hard to offset the destruction that we're seeing on the mining side. so we're looking at a year, two years, maybe, it depends on where mining finishes up. >> so the question then becomes, ann, what's in the stock already? is the better construction already priced in and therefore

the stock doesn't monitor rebounds? >> we are neutral on the name. we were concerned about where mining will bottom out. if you take this quarter's revenues in mining, they were, on an annualized basis, they were about 20 billion. it could stay there for a decade if you go back and look at prior cycles. so, you know, that's where i would argue that caterpillar's ceo, that we saw the bottom in mining and the business should be strong going forward and a contributor to caterpillar. so i think that caterpillar may be ranged for the rest of the year until we see where mining cap x is going to land for 2015. >> right. we have this conversation every quarter and obviously it is a tough hand to be dealt but in the end, do you think this is an execution management issue or are they in the midst of a giant storm right now? >> i think that's a great

question. i had that conversation with caterpillar's ceo on numerous occasions and, in my view, i think caterpillar has always struggled with forecasting its end markets and therefore we found every cycle either oversupplying demand or undersupplying demand and they are not having to cut back like we saw last year. so i think that the group cause of caterpillar's problem is its inability to forecast some of these highly complex global end markets and perhaps down the road investors are going to start asking, well, why are we in all of these markets if we can't forecast them. >> is that what you're asking right now? >> i think the question needs to be asked, yes. >> what about just in terms of broader implications in terms of the overall economy? have we looked at it as an overall barometer to really glean anything about overall demand and strength in this

global economy? >> i think we can take a few read-throughs and takeaways from the report. and i think the biggest one is that we're just in a very complex world right now. we've got pockets of strength in places like north american construction and we've got growing risks in a lot of emerging markets, latin america, middle east, china. you know, i think we are just seeing low growth and with that just brings a strength of weakness abound all over the world. >> if all of this is true, ann, they are in markets that are opaque and they are not good at predicting the future, who can? is their rival better at it than cat is? >> perhaps not and that's why they wonder why we are in these complex markets, nobody can forecast earnings and overproduction and underproduction, i think it's a tough question for management. >> ann, always good to get your

point of view. appreciate you coming to the camera. caterpillar is the big drag on the dow today. meanwhile, ford and gm reporting this morning. gm missed its qe reports and our phil lebeau is live in chicago with more of those. hi, phil. >> the recall is getting questions from general motors just a few minutes ago. ceo mary barra says i believe we have addressed the major outstanding issues when it comes to hunting for defects so it become as question of whether or not they can put this behind them. there is a certain impact on the performance in the second quarter. the company earning 58 cents a share, 1 cents shy of analyst estimates on the revenue side. here's a look at what the shares of general motors are doing today and like ford and other automakers, it has had problems moving beyond the 36.5 to 37

range. the company will be taking $400 million charge to handle the compensation program being run by ken feinberg. this morning, the ceo of general motors talked to us about that program and the money that they are putting aside. >> there is no cap on this program. ultimately, the cost of the program will be independently determined by ken feinberg and ken feinberg alone. the $400 million charge that we took in the second quarter is our best estimate of the potential exposure based on the data that's available to us and work that we did with outside third party actuaries. >> let's shift gears and look at what ford reported for the second quarter. beat the street by third quarter revenues. same for ford. when you look at shares of ford, however, intraday, you can see that investors are much more optimistic of where things are at ford. by the way, carl, ford reporting

a record $2.44 billion profit in north america for the second quarter. that's the best they have ever done in any quarter in north america. back to you. >> what's the final tally on general motors and the recalls? >> in terms of the number of vehicles? >> the number. the number so far, yes. >> the total number is just under 29 million for all of these, not just the ignition switch-related ones, 29 million for the year. >> yeah, crazy. phil lebeau, thank you for that. under armour seeing big gains and beat analyst estimates. can the company really compete with global giants like nike and adidas? we'll talk about that right after the break. at humana, we believe if healthcare changes, if frustration and paperwork decrease... the gap begins to close. so let's simplify things.

let's close the gap between people and care. over 1.2 billion eyeballs are on us during the two weeks at wimbledon. true tennis fans want to know what's happening. they don't want to just see what's happening, they want to know and understand why it's happening. anybody can just put data up, but we want to get a reaction, make it far more interactive. we rely on the cloud to provide that immersive digital capability.

give fans more then just the game with the ibm cloud. the ibm cloud is the cloud for business. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity

gives you a more powerful investing experience. call our specialists today to get up and running. yyyup. with xfinity internet soyour family can use all their devices at once. works anywhere in the house. even in the garage. max what's going on? we're doing a tech startup. we're streamlining an algorithm. we're going public! [cheering] the fastest in-home wifi for your entire family. the x-1 entertainment operating system. only from xfinity. under armour came in at one cent above the forecast by a pretty wide margin. under armour raised its guidance and wall street is pretty happy with those results. the stock is up 11%. wouldn't you say best performer right now? >> best performer this morning. >> yeah. one of the questions i know on

the call, they are talking about a lot of growth and opportunity. kevin plank is the ceo in running in international. this is the company that is getting a bulk of its sales in the united states and has really started to expand its sales overseas. people were looking at it doubling from the same quarter coming off of a very low base. they are opening new stores. i thought what was interesting was the tidbit from this call. 40% of sales actually come from international customers. and what plank was doing was emphasizing that there's an international appeal. footwear is more popular overseas than apparel, which is actually different in the united states as well. if under armour can compete with the likes of nike and adidas, it's going to have to grow. the stock is up 40% this year before earnings, i imagine. >> yeah. sustaining that brand, you know, obviously we can't buy stocks but just from noting the behavior of my son when he was

younger than he currently is, over these last few years when watching the stock move, it's been concurrent. all of his cohert as well. >> that gets to you 49% margins. >> that was a big improvement as well. women's was a good opportunity as well, especially with lululemon. let's go to rick santelli. good to see you. >> good to see you, too. mark hansen, what a perfect day, thanks for taking the time to join us today, mark. >> you're welcome. >> so last month we lopped off 62,000 when it was originally released to 405,000. you have to go all the way back to april of 2008 to find a number in that area. so big difference. peter book farr, friend of cnbc, e-mailed me. new home sales is 425,000 and compare that to the average of

all of 2013 at 430,000, give me your comments on all of that and today's number in general. >> today's number was kind of shocking down 12% year over year. the big revision in the last month. remember, demand always precedes or sales volume prices. our next price, rick, has to be lower prices. people need lower prices to buy houses. this is clearly not a supply problem. we've clearly changed trend to demand destruction in both existing sales, new home sales, starts. it's all looking the same. one or two months you might be able to blow off but after this many months, this far into the year, this nuclear fed policy for this long at zero percent interest rates for five or six years now, this is all we get. this is clearly a structural demand problem. >> let me interrupt you right there, mark. i so agree with you. i did this thing with you in february 2009 where they said

low interest rates, you can put them in negative territory. that's not going to really help housing. it's not necessarily about the financing of housing. it's about being able to afford a house. >> right. >> and i think that's borne out. another issue, who the end users are makes a huge difference on how it impacts the economy. explain. >> existing home sales and the surge we saw over the past two years was run largely by investors getting pushed out the risk curve buying houses to flip and rent as an alternative asset class. we saw 33% of all existing home sales this week are from investors. i think that's skewed what people -- how people look at the macro housing market. again, this is not an end-user driven recovery. normalization keeps getting pushed out every single quarter. now we're out to 2017.

consensus estimates for a normalized housing market. again, rick -- >> mark, listen, we have 20 seconds left. i want your expertise. we can't do a counter factual but if we had allowed housing to truly bottom after the crisis, do you think it would have turned out better? it seems like all these years and we don't see single family creation and all of those people are shopping at home depot. >> i put out a report called foreclosures are the solution and not the problem. yes, things would have probably gotten scarier but now we would have all of those people foreclosed upon. they would have raised capital and been back in the market buying houses as first time buyers today. >> mark, i could talk to you for hours. we're going to bring you back as we get to next month to see what kind of wild ride we are on. thank you for taking the time. into wh when we come back, a big shake-up at walmart.

what does this mean for the giant's turn around? the dow is up 4 points. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. machines will be sprayed to be made. and making something stronger... will mean making it lighter. one day, factories will work with the cloud. one day... is today.

could help your business didavoid hours of delaynd test caused by slow internet from the phone company? that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip. fly to florida. win an award. close a deal. hire an intern. and still have time to spare. go to comcastbusiness.com/ checkyourspeed if we can't offer faster speeds - or save you money - we'll give you $150. comcast business. built for business. welcome back to "squawk on the street." the department of energy is out with its quickly report on natural gas storage. we got an injection of last week of 90 billion cubic feet. that's slightly less than what analysts are trading higher today. $3.86. but not necessarily so much because of the number, more

because of the tech dal technicals here. there is a bit of a buying pattern here. it's roughly double what we saw last time this year and also double the five-year average and total stocks. that's what traders have been watching. they are roughly 20% below where they were last year and we were looking at a 50% deficit. so really we are seeing these numbers close quite quickly. again, prices right now, $3.84. back to you. >> thank you very much. meantime, the president is going to support anti-inversion legislation today, according to some white house officials. steve liesman has an exclusive with the president later today and joins us this morning with a preview. good morning, steve. >> good morning, carl. i want to give people up to date. a senior white house officials talked about the president's views on inversion and basically what he's doing is supporting

one or two out there, each from a lawmaker named levin. the president and the white house are concerned about these escalating inversions and obviously the u.s. companies are being taken over in quotes by foreign companies and basically getting around u.s. taxes. the president supporting a 50% threshold to be considered. currently it's 20%. retroactive to may and separating it from the broader tax reform debate. that's also new. the idea was until this point the executives have been concerned about the reputation risk to their companies of doing these inversions. the risk goes away because it's why they want to stem this right now and make it retroactive to may. obviously other issues out there, broader capture form, thousand get to a place where both democrats and republicans

agree we need reform and because of the politics in washington, we can't get there. minimum wage. a bunch of things happening of great import to average u.s. citizens and especially to markets when it comes to russia and economic sanctions and, of course, what's going on right now in israel. all of that on the agenda later this afternoon, carl. >> he can't act by executive action. he needs an act of congress and very few people expect there will be action on this particular issue before year-end. >> i think that's right. i think the president wants to make a point on this, david. some people are cynical and say, you know what, the president is doing this just to make that point and to see if republicans choose to vote it down. one of the things we're going to hear in his speech and obviously in the interviews, he's going to talk about this in patriartic terms. he said that what his daughter is doing should be declared

illegal. >> senator manchin and heather, his daughter, who runs mylan which did a deal. >> yeah. that's a fun family dinner topic. >> all right. steve, looking forward to the interview. thanks very much for the preview and we'll be watching into meantime -- there you go. exclusive interview, steve liesman, 5:00 p.m. on cnbc. and walmart is announcing that its chief is leaving. the rumor mill and speculation mill was running about where bill simon will end up. we can confirm that he has a two-year noncompete. if you were looking for him to go to one of the many vacant roles of ceo of a u.s. retailer, it doesn't appear that bill simon will be doing that. for more on what all of this means for walmart, courtney reagan is at hq. >> it's not really a huge

surprise to bill simon because it was widely known that he wanted the top job, the c eceo the entire company. sam simon's last day will be august 9th. greg foran will replace him. he came to the u.s. in 2011 to run the china division and was previously with australia. he ran all of the international business and he's had a lot of confidence in mr. foran. however, walmart's u.s. same-store sales have fallen for six consecutive quarters. when i spoke to bill simon on july 8th, while the job market has improved, walmart shoppers may not feel that way. >> i think it's going to take a while, six months or a year for those numbers to balance out. you'll see a drop in the rate.

and then as more people come back into the workforce, that might change again. hopefully after six years we're starting to gain a little traction in the u.s. and that track is coming at the top end. i think the middle is pretty challenged. >> there's a lot of speculation about where simon will go but the noncompete clause in his retirement prevents him from working for another retailer with more than 5 billion in sales for two years. target, dollar general, jcpenney and others cannot hire simon for at least two years from his retirement date. back to you guys. >> thank you very much. i want to mention, also, courtney, thank you and it's a retail market in terms of woolworth, highly penetrated,

highly mature and that's the challenge and same-store sales, they are competing online. even the smaller store strategy, given the experience, the man has been in the retail world since he was 17 years old. also, doug mcmillan, the ceo, has been in for a very long time and has had a lot of experience internationally. so it sort of puts that new hire in perspective when it comes to running the c eceo division. >> barely got his feet wet. two months running asia even though he ran china before that. >> and bill simon, just to make things smoother, is going to stay on not only for two weeks but he'll be a consultant for the next six months. >> maybe he'll sit for walmart part 3. >> we'll see. >> when is that coming? >> no time soon. >> those things take time.

when we come back, the ceo of union pacific will come back live. his thoughts on the latest quarter and the economy when squawk on the street returns. sh, and for a family of four, its $160 a month. wow, sounds like a great deal. so i'm getting exactly what i want, then? appears so. now, um, i'm not too sure what to do with my arms right now 'cause this is when i usually start throwing things. oh, that's terrifying at&t's best-ever family pricing. for instance, a family of four gets 10 gigs of data, with unlimited talk & text, for $160 dollars a month. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family,

get an auto insurance quote and see why 92% of our members plan to stay for life. e financial noise financial noise financial noise financial noise

♪he cadillac summer collection is here. ♪ during the cadillac summer's best event, lease this all new 2014 cts for around $459 a month or purchase with 0% apr and make this the summer of style.

welcome back to "squawk on the street." we're watching shares of royal caribbean up nearly 8% in today's trade, the company beat second-quarter estimates. royal caribbean reported q2 revenues of $2 billion versus estimates of 1.9 billion. the company citing higher demands for its european cruises. be sure to tune in to "power lunch" today, a cnbc exclusive, 1:00 p.m. eastern time right here on "power lunch." carl, back over to you.

>> dcom, thank you very much. revenue for union pacific came in a little higher than expected. joining us is the ceo, jack koraleski. >> good to be with you, carl. >> we were talking about a harsh winter. do you feel that it's over and done with? >> you know, i was glad to see winter be done but then mother nature that knocked out a big piece of our network for some period of time. we recovered well. we did a two-point improvement to 63.5 which is better than our history. we think we handled averse tdve pretty well. >> you're optimistic. why? >> everything is headed in the right direction, carl. just to give you a couple of numbers, lumber was up 17%. other products like cement and

rock, sales in june at 69 million, all of those are fundamentals of the economy and they are all headed in the right direction so we feel good about that. we have a nice carry over from last year's crop that is driving our ag. it was our strongest commodity. the current crop for 2014 is looking real good, which kind of sets up not only for the end of this year but into 2015 as well. so kind of all of the basics look pretty good to us. >> those who have been watching the rails have been hoping and watching a rebound in coal. your number was a little bit below. why? >> you know, we had lost a contract early in the year and so we had kind of a headwind to make up. our core volume was only up 1%. and the rainstorms -- we had basically two 5-inch rainstorms that covered our territory from

nebraska all the way to chicago right in kind of a quick proximity. that's the heart and soul of our coal network. that dampened our ability to handle as much coal as the demand was there but we're seeing the coal network school up and so we feel good about the second half of the year. >> do you see that move up at this high rate? >> you know, it's certainly a good number for us. we picture somewhere in the 16 million as kind of being a nice stea stead rate for automobile manufacturing. it's still uncharacteristically high. >> finally, average operating speed, where did that come in?

>> you know, average operating speed kind of hit a low point because of the storms that we had in june but we are now returning. we're starting to see it and the thing we feel really good about, carl, we're having the highest volume of the entire year right now. this morning we're running somewhere around 192,000 cars a week. so we're seeing our operating metrics improve and that's a good thing. that kind of sets the table for the second half. >> jack, just curious what your reaction is to the department of transportation's new rules governoring shipping fuel by train to make it safer and more efficient. does that make your life harder? >> you know, sarah, there were really no surprises in secretary fox's announcement in the nprm that came out. we have been working in the rail industry, the petroleum industry and the department of transportation has been working for quite some time to make today a product that is safe even safer. the types of things that they

included in the nprm are not really surprising to us. there are some we are concerned about. certainly there would be consequences if we had to reduce all crude oil trains to 40 miles an hour thought our network. that will slow passenger trains that share that network and others. so we'll have to work through that. there are some other options they have on the table that we like better. but, you know, when you look at all of the things that have been proposed -- and we're going to be at the table cooperating, as we have been, and we think that, working together between the customers, the railroad industry and the government, the department of transportation, i think we'll come to the right solutions. >> i was surprised that the bakin they said was more volatile as a product. is that true, jack? >> you know, i have to leave that to the chemists and -- >> yeah. >> -- to really determine -- the engineers have going to have to answer that question for you. it's kind of hard to say for me. >> yeah. stay in your lane, as they say. jack, thanks so much for coming to the camera.

we'll see you next time. >> hey, great. thanks for the opportunity to joan you this morning. >> all right. up next, wyndham worldwide raising its guidance. what is the secret to success there? the chairman and ceo joins us for a live exclusive interview after the break. my motheit's delicious. toffee in the world. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side.

that's why i always choose the fastest intern.r slow. the fastest printer. the fastest lunch. turkey club. the fastest pencil sharpener. the fastest elevator. the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business.

welcome back to shares up of wyndham worldwide, reporting a jump. five year an amazing chart. go to hq, simon hobbs has a special guest. >> good morning to you. yes. hospitality wyndham worldwide beaten this quarter by four cents thanks to its time share division. raising guidance for the full year accelerating both its free cash flow generation and indeed its stock buybacks. joining me exclusively, stephen holmes, chairman and ceo of wyndham worldwide. a solid quarter here? >> one of many we've had. we've put up a lot of great quarters and this is another one in the string of good quarters. >> the stock underperformed others in the industry. why many analysts have a buy. they think there's room for you to make up here. if we look at the hotel section

first of all, the hotels division, a lot of people will know the brands. big brands, 7.5000, biggest in the world. and launching a campaign first time on television. is there a view perhaps you've underplayed some of those brands? >> i don't know if we've underplayed the brands. days inn, super 8, power houses in the mid-scale sectors. underplaying it? i don't think we've underplayed it. we've not had the ability to do an umbrella campaign up to this point. >> why is that? >> we work with our franchisees, their money going into a fund used for marketing and we have to have blabberation and concurrence we can do an umbrella campaign. something historically the brands haven't wanted to do. we've talked about it, we've had a breakthrough, and been doing it since may. terrific. >> vacation rentals.

you place about 5 million families in vacation rentals or exchanges each year. how disruptive is air t and bbu? one. great big bets. take what the europeans do, extend it around the world to this country. is it ripping the rug under your feet? >> not at all. it's a very large market. we're a small player in. they're small in it. we're the largest of professionally managed vacation rental. we do everything from soup to nuts. list's house, put it into the hands of the consumer. we give the consumer the keys, make sure it's handled well. we fix the problems, if problems occur. from an owner of a home standpoint, they can list it and deal with joe consumer or come to us and let us handle it, dot mark macting and deliver the consumer to their home. >> would you ever consider air b & b? >> we do the same.

>> mimic them? >> or they us. we do it on a more local basis. so we have people in destin, florida. people in the rocky mountains, actually on the ground dealing with it. it's really quite different. if you're a homeowner, it's a big decision to decide, are you just going to list and deal with joe consumer or are you going to put it through us and we will handle all of those aspects and make sure it's used properly. >> if an 4ri679s recommend your stock or people like your stock it's because of financial discipline, fee-based, free cash flow, share buybacks. what are you promising shareholders for the rest of this year and into next? >> with respect to what? performance? >> with respect to what extra you can give them from where you are now to try and drive the share price? >> we'll continue to perform at a very high level, which is what we've been doing for quite some time. to go back to your earlier question about, there's a gap between us and valuation. the multiple with peers, there is. it's something we need to continue to close and we've been closing that gap and closing the gap, but we've got a long ways to go to get ourselves --

>> what should your stock price be? >> i'll never tell that secret. >> really? >> it should be wherever the market feels it should be but it's certainly low at this point. one of the reasons we're a big buyer of our own stock. we said this morning we're on a pace that will buy at least $600 million of our stock this year since we initiated on the new york stock exchange eight years ago, repurchased or paid dividends $4.2 billion back to shareholders. we're not afraid to give cash back to the shareholders. we're trying to drive value. all in this game together. >> and this afternoon, of course, the travel lodge mascot sleepy bear rings the closing bell, will you be there? is there any truth to the rumor that you wanted to wear the costume? >> there is truth to the rumor i wanted to wear the costume but will not be in costume tonight. i will be standing there with and supporting sleepy bear, but looking forward to that. it's a great occasion. sleepy bear is 50 years old, and that shows some of the strength and depth of our brands.

we have brands that are 40, 50, 60 years old that are part of our collection of brands. we're very proud of that. >> just before i leave you, any chance of a tucking acquisition? >> always. we look at deals all the time. our dna, m & a. we've been built through acquisition. we are constantly looking. always on the prowl for something that makes sense g. to see you. stephen holmes, ceo of wyndham worldwide. will you be there are for the sleepy bear? >> i think you should wear the costume, if that's an option. >> yes. i do actually have crowd-pleasing steps, which would look good in a large costume that i know. simon good to see you. over to kayla tausche with a look what's coming up on "squawk alley." >> no sleepy bear costumes on "squawk alley" but more on this earnings avalanche. ford posting its best quarter in the u.s. ever. phil lebeau sits bown with the cfo coming up.

and facebook officially doubling its ipo price. stellar quarter for that company. best performer in the s&p in the last year. can it continue growing? we'll discuss that, up next. finally, amazon reporting after the bell. what do bezos and company have in store? all that and more up next on "squawk alley." here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95.

in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today. if energy could come from anything?. or if power could go anywhere? or if light could seek out the dark? what would happen if that happens? anything. ♪ ♪

[ male announcer ] if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end july 31st. share your summer moments in your mercedes-benz with us.

breaking news here. the ukrainian prime minister says he is resigning. according to reports, talking about a breakdown in politics, and in getting his way through parliament. we should note also that the president, the ukrainian president poroshenko has been in charge and leading the charge, and at the helm of this country as they are dealing with the pro-russian separatists and conflict there. bring you the fact, just more upheaval and turmoil in ukraine when the prime minister announcing that he's tend eerin his resignation. and the dow hasn't done a lot. would do more except for caterpillar. almost 8:00 a.m. at amazon headquarters in seattle. 11:00 a.m. on the east coast, and "squawk alley" is live.

♪ and welcome to "squawk alley." obviously, a big day for the markets, although's indexes may not show it. a big day for tech as well. joined by henley blodgett, editor-in-chief and ceo. good to see you. >> great to be here. >> as always, kayla tausche and jon fortt. right to it this morning. first up, amazon tonight after the bell, the firephone going on sale tomorrow morning. expect aces very amazon-like, analysts looking for almosts 20ds billion in sales, a loss of 15 cents per share as the company continues to make big investments and roll out new products. citi, by the way, downgraded the stock earlier in the week, in their oends words,