keep an eye on what's been happening with the markets this morning. we were looking at the dow futures down by triple digits. we're now talking about a decline of 116 points. also watch what's been happening for the ten-year note. michelle, thank you for joining us. >> it was a pleasure. >> right now it's time for "squawk on the street." good thursday morning. welcome to "squawk on the street." i'm karl quintanilla with jim cramer this morning. the biggest u.s. ipo of the year, default on argentina. as becky just said, futures do imply a gap down at the open. the ten-year yield is up almost. as for europe, germany is down a full percentage point and it has hit its 200-day moving average

for the first time in two years. our road map begins with the market. stocks set for a triple-digit drop as investors react to claims that argentina default earnings and the fed. >> the food safety scare in china causes big damage to its kfc and pizza hut locations. >> the earnings parade marches on. >> and the biggest u.s. ipo of the year set to debut right here at the nyse about an hour from now. >> we're going to start with yum, though. that start down sharply in the pre-market trading. reports of improper food handling at one of its china suppliers is causing significant negative damage sales in that country. interestingly, osi was not a major supplier to yum, but they're saying that all the media coverage in that country is enough to make this filing. they don't know how long it will last. it's been ten days. but if it continues at this pace, it will be material to the year. >> yeah, it took 18 months for

the company to turn last time on one of these scandals. people do have memories. 18 months, maybe somebody will feel short-term memory. but yum is -- just selling it, giving up. >> really? >> yeah. >> and the reason is? >> because it took 18 months last time. probably revisit it lower. it would be one thing if the united states were strong. taco bell was strong. but the company -- you know, you can play it. you can wait for the whole cycle once again. low 60s last time. should have sold it all. i just think that people have to recognize that these things are not turned on a dime. this quarter will be bad, and the next quarter will be worse. that's what happened last time. so i don't know why it should be any different except for this time the u.s. is weak. >> china giveth and china taketh away. >> if you take away the china story or make it a negative, with a you're left with is a couple companies, a couple of divisions in the united states

that have not done well. companies not prepared for this. it's long-term, it's been a big winner. but you just -- i don't know if you can hold through the cycle. >> wow, that's quite a statement. and you're not saying it's by any fault of their own, but who cares, a victim of circumstance. >> given up. >> it is turning into a tough morning for food companies in general. we're going to talk about whole foods and kellogg. >> kellogg's got that -- they have the dollar. people always think it could be a takeover. the kraft quarter was a disaster, too. up top, they don't say we had a great corner. they say we didn't have a great quarter. you look through the line items -- you know, if the fed were just to rely on the price of cheese, they would have tightened five times already. >> yes. yes. whole foods, 41 cents. comps up 3.9. the lowest in four years. the fourth time they have cut sales expectations.

>> all right, so let's look at whole foods. it's growing now, 3.1%, it sells at 25 times earnings. kroger has 4.6% comp sales. what people are doing is shorting whole foods and going with kroger. >> you've had some concern about whole foods. given, of course, the results, which have not been good for quite some time now. >> whole foods is saying this, we're going to do a national rollout of ads, but they're going to be soft ads. think chipotle. they're doing affinity, doing mobile apps. they're getting caught up in all the things -- the ad campaign is going to be stressing values. the problem is in the end it's all about comp store sales. it's difficult to give this company a premium when they're below the average of the supermarkets. >> so what should the multiple be? has it corrected for that multiple at this point yet? >> the answer is no. now, we step back for a second. do we love going to whole foods? is it terrific? does it have a halo? it does. >> who's the we there?

we're all we? >> the people. we, the people. >> the people in detroit. they're trying to remake themselves. >> whole foods is a great company. the problem is we're not paying up for great companies right now. we're saying kroger's got natural and organic, and it's faster growing, why do you need to be in whole foods? whole foods's multiple is going to shrink. actually, i saw 3.1% comps and i said well, that's just kind of like, so what? >> what do you say to people who say they created this whole trend? they were first in. they had first strike advantage. and then they just -- did they give up the market? >> no, fresh market came in and trader joe's came in. >> sprouts. >> even some of your local markets here, regional markets are starting whole food types of supermarkets. >> there's a line in there -- and i do like it again. they're great operators.

there's a line that says they're going to do more produce. it's very difficult. that's also an anti-amazon. remember, amazon -- you go into amazon, you can get the food delivered pretty quickly. if they do same day, it's going to be something. you have to worry about amazon. kroger has done an organic turn. got to protect against amazon. and this is one where your battle plan is being encircled. >> yes, you're protecting a lot of flank. let's move on to another company that you deal with routinely and that would be yelp, because it becomes a very important barometer perhaps of the service you're receiving. any number of other various retail incarnations. yelp earns four cents a share for the second quarter. that was a bit of a surprise to analysts. they were expecting a loss. but growth in business accounts fell short. and you can see that is having an impact on yelp shares right now. down almost as much as yum shares are down as well on

china. >> the stock ran up ten. people felt that this was like twitter. let's go over that. we've got piper, cantor, op-co. raymond james downgrades. now, when you go over the conference call, first question was hey, didn't local businesses -- >> paying business accounts. >> there was an acceleration in businesses. they have the belief that it will be taken over if it doesn't get it right. at the same time, let's not forget where this stock came from. it's a little bit like buffalo wild wings where i spent this morning with sally smith. i did not have a beer and wings, as tempting as it was. i still regarded it as early in our time zone to have a beer. but again, stock that runs up -- that stock ran up 15 points and then goes down 20. yelp went up a huge amount. if you want to focus on local ad revenue, you have to focus on it's not just a unit, it's an

aggregate quarter. people want to short yelp today. this is just a wild horse if you want to short it. but remember, there are a lot of companies that would want to own yelp in this space. so don't get too negative yet. >> average monthly uniques up 27, right? first profit ever. you raise your revenue projection for the year. >> right. >> and you've got just ten straight quarters of plus-60% growth. now, people are going to seize on that one number. when cooler heads prevail, people will recognize that what yelp is really about is in its infancy becoming the yellow pages, all right? i don't want to short the yellow pages. i just think it doesn't make sense. >> all right. that's going to be a big day for ipos today on what could be the biggest u.s. ipo since facebook, general electric's credit card,

synchrony. set to ring the opening bell. it hasn't been a great year for consumer finance ipos in general. >> this is capital one. capital one has been a good stock, by the way. >> the comps here are discover and capital one. when they were on the road, they were working with a 24-50 number, which would have been the middle of the range. the comps came down, since they lowered to the bottom of the range. $23 a share. 85% of the stock behind this, which will come in 2015. what you want to do is place this thing well. so let's keep an eye on how it performs in the aftermarket. does it break 23 or does it stay above? >> i think there's a sub-rose thing here, they're pricing it so it does better. a lot of people are used to when

something is low it means demand is tepid. a terrible day to come public. >> it's not a great day. but they're hoping it's a core holding. also apparently in speaking to some of the underwriters here, they did place a good amount of the stock with sovereign wealth funds. we don't speak enough perhaps about the sovereign wealth funds, the enormous pools of capital that are out there. my god. but in this case, that is a nice thing because they are not likely to be sellers. >> no. they just are going to hold and maybe they buy their first bit of 23-bedding that when the rest comes out, it's actually going to be higher. maybe this is genius to price it at the low end because we're looking at a company that doesn't have the financial risk of others. but at the same time, this company is heavy with ipos. this will be a $20 billion company. all the private labeling for the likes of jcpenney and wal-mart. when you have one of their credit cards, it's ge behind it. let's not forget about ge, jim,

which will eventually move out of it entirely by the end of 2015. or 75% of its earnings will be coming from non-financial sources. when are they going to break up the rest of that thing? >> i've stated my view, and -- >> i want to hear it again. >> i want to see how this deal lasts. >> oh, come on. backing away from that. say it again! >> okay, here's what i'll say. the stock wasn't 27, 28. it's now got that yield that i think can support it. i do feel that it's time. they have 5% organic growth and it didn't fall to the bottom line. that's better organic growth than a lot of other companies. but if they can get the 5%, then you'll like the stock. but they haven't and that's the issue. mastercard did report a good number today. you disagree with that idea that i'm saying here that it's a different animal, ge?

>> what i wonder with ge is what we're talking about. the parent company of synchrony that will be public today. what i wonder is would it be better off -- and i'm not alone in this -- being split up at this point. can you get a better multiple for health care, for -- >> a lot of that's going to depend on industrial margins. it's been a target story. >> health care's not doing well. >> it's 13 1/2 years now. it was a 45 multiple. i mean, that was ridiculous. >> it was overvalued. >> i stipulate, it's been a bad stock. i stipulate. >> yes, and i share that. because we owned a lot of it. >> it's been a bad stock. >> it's no tesla. >> we're going to find out what tesla says tonight after the bell. they're one of the companies reporting. when we come back, john ledger on his company's latest results,

his game plan for growth and what he has to say about rivals at&t and verizon. take another look at the pre-market. more "squawk on the street" when we come back. in india we have 400 million people who don't have electricity and i just figured that it's time i do something about it. what we're doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. i think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when it's needed by the consumer. a smarter energy system is made with the ibm cloud. the ibm cloud is the cloud for business. in today's market, 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. call or click to open your fidelity account today.

welcome back. some breaking news. the international swaps and derivatives association, whose job it is to determine whether a

credit event has occurred in argentina, has been asked to do so. we learned that ubs asked isda about the failure to pay bond payments today. that process will take multiple days or even weeks. it will be important to anyone who bought insurance policies that will pay out in the event of this sort of default situation. >> that's going to be interesting to see if it's an event for anybody who's not directly involved. when we come back, cramer's mad dash as we count down to the opening bell. futures are weak, whether it's about that would-be default or wiping out its credit cushion. we'll talk about that and earnings when "squawk on the street" comes back. that's chang 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. ugh. heartburn. did someone say burn? try alka seltzer reliefchews. they work just as fast and taste better than tums smoothies assorted fruit. mmm. amazing. yeah, i get that a lot. alka seltzer heartburn reliefchews. enjoy the relief.

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.

time for the "mad dash." do you own a 3-d printer? >> no. i want to break away from ge for a minute. if you've ever bought on youtube and you watch 3-d, you want to get one of those machines. but forget it, that's not what sells. >> you spend a lot of time doing that? sorry. go ahead. >> 3-d systems. we're really looking for 20. 3-d systems is one of those george orwell -- this is the best quarter where the greatest say they have no humility

whatsoever. symbiotics is the global leader in 3-d surgical products. i don't care. i care about earnings. the stock will bounce back because it's heavily shorted and they've got to cover. but 3-d systems is going to be the big negative public name today. now, here's a heng fudge fund n that people have been waiting to pounce on forever, which is new, micron. people are waiting for a supply influx. last night, samsung had a completely dismal conference call, talks about ramping up deram production. goldman was looking at mid teens production. they're going to do plus-20% production. the equilibrium is beginning to be passed. d-ram will go down.

>> are they right to do so? >> i always feel that these stocks are commodity plays and supply does exceed demand, they do go down. there's a lot of negativity in the tech world overall. a lot of negativity everywher. y i hope you're feeling it. >> i'm feeling it a little bit. we do have the opening bell, about nine minutes away. we're also going to have t-mobile's john legere. we've got the largest u.s. ipo since facebook. man, we've got some big stuff. >> and it's on the new york stock exchange. >> yes, it is. female announcer: you're on the right track to save big

during sleep train's triple choice sale. for a limited time, you can choose to save hundreds on beautyrest and posturepedic mattress sets. or choose $300 in free gifts with sleep train's most popular tempur-pedic mattresses. you can even choose 48 months interest-free financing on the new tempur-choice, with head-to-toe customization. the triple choice sale ends soon at sleep train. ♪ sleep train ♪ ♪ your ticket to a better night's sleep ♪ the ca♪illac 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. became big business overnight? ♪ like, really big... then expanded?

♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you're watching cnbc's "squawk on the street" live from the financial capital of the world. opening bell in about six minutes or so. finishing out the month of july. a couple points on the month of july, guys. the tightest monthly range from high to low for the s&p of any month in seven years. 39 points high to low in july. >> with geopolitical risk everywhere. that is the least responsive

news story -- it's just inexplicable. >> people talking about going to break out eventually, just a matter of which way. >> i can't get up in the morning and watch adidas go down gigantic and we're supposed to say don't worry about it? argentina did the flop, by the way. >> i can tell you at this point, the bondholders, the nonexchange bondholders, there's nothing going on at this point, the so-called plaintiffs. there's nothing. they ended their negotiations yesterday, and at this point, there's no new negotiations to tell you about between elliot and/or any of the other so-called plaintiffs. >> that's the word, expropriation. i'm putting this out there. if we get a settlement in

ukraine, this market's up 10%. >> this market being -- >> ukraine -- people are shorting this market. because ukraine's going badly. the industrials. >> look at the dax today. >> the industrials would go up 10%, no one would care. if you're kraft, it's not going to go up on russia. i'm just saying it's beginning to really hit. there's companies that are withdrawing their guidance for 2015. why? because gazprom turns off the gas? what is bsf going to do? what are you going to do? >> takes you a few years to build in the u.s. >> you can't ship it. >> we haven't touched on exxon. second in a row. cap ex down four. even core output down two. >> this is good-tasting tuna

versus tuna with good taste. i like good-tasting tuna. exxon has minus 5.7% production growth. look at what whiting will do today. look at apache. 18% production growth. >> in case you're thinking that it's all with mexico. >> i knew it was because i listened to you and you told me to have exposure to russia, which i knew was the case. got somebody coming on tonight. >> dudley. >> that's great. >> shell's big in russia. exxon's big in russia. but you know shell's up big, because production growth. production growth. >> another company exposed to russia, mastercard. 80 cents beats 77. purchase volume up 13. bought back more than a billion in the quarter as well. >> yeah, that's revenge against the last quarter. they're saying 50 million at stake in russia. that's the same number that visa's been using.

this is a comeback quarter for mastercard. very well-run company but they needed to put up good numbers and they did, so it's bouncing. credit card bouncing. >> we've got a number of results from the cable industry. time warner cable, they weren't great, but they don't really matter. comcast in a deal to acquire time warner cable, all stock transaction. don't think that's going to have much impact. charter also not great. okay. cap ex was a bit higher, i believe, than people had anticipated. overall, cable is not a growth industry in terms of adding subscribers in any way, shape, or form. but don't forget, if the time warner table deal goes through, charter is going to inherit -- well, own a piece of a public company that eventually it will acreed upwards in. >> don't you think a lot of people are saying what happened to that investment story the

other day, it ended up being much more pertinent to wind stream? >> frontier. >> right. >> and maybe some cable companies. but on the front of verizon, for example, which also benefited on that day, many people did come out and say listen, the idea that verizon is going to put all of it -- is fios in a real estate investment trust and perhaps allow it to be used by its competitors? >> right. >> at&t will be -- it will be interesting to see in future conference calls what the take is of some of these executives. >> come up one day and forget about it. >> absolutely. and wind stream certainly hasn't forgot about it. >> we have a new ceo and chairman of the board at target. brian cornell. begins august 12th. used to run sams club for wal-mart. ran michael's after they went private. recently ran the america's food business for pepsi. >> people have liked the business, how well he's done.

ex-pepsi guy. they tend to do pretty well. i think target's getting interesting. but he's got to do a complete house clean. >> pretty good size crowd here for the opening bell. there is the s&p at the top of your screen, as we told you earlier, synchrony, provider of private label credit cards celebrating its ipo today and we will talk to ceo margaret keane in the next hour. over at the nasdaq, health equity also celebrating its ipo today. we've been saying that a lot. this week especially. >> a lot of ipos. we should have a clap to stock market ratio. grub hub, how about how that stock did? maybe sin kynchrony opens an agreement. >> thankfully synchrony doesn't have big people covered in costumes that are food-related. and there's the video game.

>> king was pawn, but grub hub was king. >> one stock with a recent ipo who's going to report tonight is go-pro. >> i bought the go-pro dog harness. i'm going to put it on twitter where they hate me. i've got the go-pro dog harness. i want to see -- >> 3-d printers on youtube and the dog with the harness. >> go-pro is one of those stocks it's like twitter. if you say anything bad about go-pro, you're lynched on twitter. now it's a virtual lynching. >> got a little bit of that yesterday. >> panasonic does confirm their investment in this lithium ion battery plant, although they haven't decided how much. phil lebeau talking about it a few moments ago. >> i know. it's very flattering because tesla is one of those company where is they put out a number and it's the number that they kind of know they can beat the

rap against them. who knows if that's the case? but musk has been a very good stock manager, who also is very good at cars. not bad. kellogg, dollar two meats. u.s. cereal volume down five. not sure how much longer they can do this. >> sugar in cereal, a lot of people think it's the next tobacco. one of the things you have to watch with these companies, general mills went back to 51. you have to watch interest rates with these. in the end, people come back with these bond market equivalents. watch proctor. proctor has really had a tremendous decline. do i want to own kellogg? no. that's why they want to own kraft. they keep thinking about what is pinnacle beginning to do? they recognized what happened with hill shire. everyone wants these for take overs.

be careful. >> the s&p down about three quarters of a percent. not off of earnings, though. and argentina to a certain extent. >> people may not be certain as to what the implications are, if there really are far-reaching implications. >> it makes people uncertain and i just keep thinking now we're starting to get into that situation where companies are saying, you know what? if this thing keeps going with ukraine, if the president keeps ratcheting it up, then we're going to see the prudent shut down the pipe. which he has every bit of ability to do. gazprom is basically a russian company. it's going to be a very cold winter versus sanctions. >> that's going to hurt them, too. most of their export revenue, 2/3 of it is oil and gas. >> but remember, gazprom -- they did that sneaky deal with china. now we think hey, did they have a plan after all?

putin has not softened, he'd hardened. putin is not reacting -- i mean, i don't want to make any analogies yet to world war ii, because that's too incendiary, but putin is not playing ball, and we keep ratcheting up the sanctions and it ain't healthy. >> certainly, it's having an effect at least this morning. dow is down 119. we're negative for july. bob pisani is on the floor. >> i just want to give you the reasons we're down. a lot of interest in that. it's not one reason. there's really four or five of them. take a look at the european markets. we started ugly in europe. germany's near a three-month low. all the big european markets are weak. the rhetoric in the ukraine is getting rather vitriolic. the ukraine prime minister was saying russia was trying to seize crimea. it's getting rather nasty over there. that's the first reason we're down. the second reason is some individual names are having trouble. adidas lowered its four-year profit outlook, but they also talked about a generally poor

retail sentiment in general. also citing the golf business. so it's not just russia there, it's adidas talking about the poor retail sentiment. third reason that we're down is portugal. you all know what happened. late yesterday, the biggest bank there reported an enormous loss, $4.8 billion. biggest loss ever for a portuguese bank. their capital cushion is inadequate. they're going to have to go out and raise money. that's created more concerns. the lowest level from portugal since going back to october. so there's number three reason. then we have some reasons here in the u.s. you see the ten-year yield shooting up. we had the employment cost index number, came out up 0.7%, the highest since q3 of 2008. this is the big index that measures changes and the cost of labor for business, so all the hawks now are beginning to come out and argue that the fomc should raise rates a little bit sooner. then you have a couple minor things. the argentine default.

some pressure on emerging markets maybe. and then we have the seasonal pundits. everybody's out with their august numbers. august has been down four of the last five years. we know about that seasonal weakness in august and september. let me move on here to synchrony. looking forward to open. largest private credit card issuer. good news is they got it done. $2.8 billion. biggest ipo of the year. a lot of choices this week. bad news is 23 is at the low end of expectations. my idea on this, bottom line is long growth is improving. still a great company overall. just want to mention health equity on the nasdaq will open in about an hour. shares of 14 well above expectations. guys, back to you. >> thanks, bob. let's get over to the bond pits, too, check with rick santelli. >> having paid attention to the yield curve will benefit the listeners as to understanding the dynamics of what's going on with treasuries.

look at a two-year note yield and realize it's the close toast the zero interest rate policy of the fed.st to the zero interest rate policy of the fed. the highest in over three years, may of 2011. if we look at a one-year chart of fives, the highest yields basically since september, so you can see that the short maturities, which have led the charge on being stubbornly high relative to the rest of the curve, kind of jabbing at the fed, that zero interest rate policy has outlived its usefulness. now you can see those comps, they're off to the races. but look at the longer end of the curve. you look at a ten-year. yeah, we've jumped a lot, but we still haven't even taken out may 12th's 266. more importantly, we held 244. the euro/dollar is flying the wrong way. it's at the lowest level since november on the greenback. the most aggressive chart. best level since september.

see what happens when qe ends? carl, back to you. >> john legere doesn't pull punches when it comes to the wireless wars. the ceo of t-mobile is beginning to join us next, talk about his company's results and strategy for taking on bigger rivals like at&t and verizon. also keeping an eye on the biggest u.s. ipo of the year. the $3 billion offering of ge spin-off synchrony. we'll bring you the opening trade on that stock as soon as it happens. it was a special moment, with some memorabilia to boot. >> bill and carl reunited. and on the back, it feels so good with delivering alpha the logo. >> now you can own that t-shirt and it's signed by the entire "squawk on the street" gang. you want it? all you have to do is guess

friday's non-farm jobs number. don't forget the hash tag #nailthenumber. for all the official details, go to stocks.cnbc.com. good luck. ugh. heartburn. did someone say burn? try alka seltzer reliefchews. they work just as fast and taste better than tums smoothies assorted fruit. mmm. amazing. yeah, i get that a lot. alka seltzer heartburn reliefchews. enjoy the relief. 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. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not, you may know it only covers about 80% of your part b medical expenses. it's up to you to pay the difference. so think about an aarp medicare supplement insurance plan,

insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they help cover some of what medicare doesn't pay and could really save you in out-of-pocket medical costs. call now. with a medicare supplement plan, you'll be able to stay with your doctor. oh, you know, i love that guy. mm-hmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. and there are no networks. you do your push-ups today? prepare to be amazed. [ male announcer ] don't wait. call today to request your free decision guide and find the aarp medicare supplement plan to go the distance with you. go long. 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 going public!

[cheering] the fastest in-home wifi for your entire family. only from xfinity. t-mobile adding 1.5 million customers in the second quarter, rising its subscriber growth forecast. joining us here at post nine first on cnbc is t-mobile ceo john legere, who fought the crowds and raced down to be with us at this hour. good to see you. >> glad to be here. >> five quarters in a row of more than a total adds. >> i had so many things to announce today, i didn't know what to do. 1.5 million customers. second quarter in a row of over a million branded nets. 900,000 post-paid.

jdp announced today that t-mobile was the number one customer care, as was metro pcs. we have some great things in our network. number one speed again in the second quarter. so it's qualitatively along with the fact that revenue growth is 8%, service revenue 7%, and 33% sequential gain. the qualitative aspects of our business are making people wonder what's happening with the uncarrier. >> we see you so much, i feel like you're framily. you don't need to merge into these numbers. you can just go it alone. that's how i look at it. >> is this the long-rumored david faber announced inside discussions? >> come on, man. my reporting is not based on rumor. it's based on fact. i know that there continue to be

long, long held discussions between sprint and t-mobile and your parent company, of course, deutsche telecom. you're going to pass sprint let's call it within a year. do you need sprint as much as perhaps they need you? >> yeah, a couple of things. it's not potentially and it's not a year. in the past few years, you've seen a dramatic difference on two companies. what i've tried to outline all along is that what's happening with t-mobile is the organic evolution of this company for the short to medium term. this is how people feel. >> give us one second. there's the opening trade of syf. i think bob might be over by post five. bob, are you there?

i see a lot of boom mics in that general direction, but we'll have to get back to him in a minute. that's the opening trade on synchrony. >> i'm glad you guys thought that was a synchrony trade, but that was actually feedback on t-mobile. the business organically is doing extremely well, and qualitatively, short and medium term, t-mobile can be highly successful. we've always said in the long-term, scale is extremely important. i point out that we have multiple options to create long-term scale for this company, one of which has been long-rumored and is one possibility for the business. >> we may come back to that, but specific to your ability to attract customers with your pricing plans and how aggressive and successful you've been, at&t seems to be in the process of repricing their entire subscriber base right now. and their turn was .86. you guys are not going to be picking up the customers that you have in the past. >> it's a fascinating question.

here's an interesting survey that was done by morgan stanley in the last couple of weeks. 33% of wireless customers are likely or somewhat likely to consider switching carriers over the next six months. there's a potential iconic device coming out in the industry in the next several months, and by the way, t-mobile has the lowest penetration of that device in our base, that being iphones, which makes for major switching event potentially to take place. those churn numbers are driven also heavily by the density of their enterprise customers, the fact that they still have contract customers and we're 1.5% churn in a total no contract base. with that amount of switchers coming into the industry, i think everybody should be looking very hard at the possibilities for what t-mobile can do over the next six months. >> really quick, rick santelli in chicago. looks like chicago pmi was not good. >> let's put it this way. it missed by half a globe or a

whole hemisphere, 52.6. we're looking for 62.6. this is the lowest level since june of '13. this july number, we'll call it 13 months. now the real key isn't about chicago. the key is, is this going to hold clues as to the national number, which is really why we follow it so closely. interest rates are not moving a lot lower on this weak data, which really is maybe the biggest story of the day. back to you. >> all right, thank you very much. >> i've got to tell you, john, i'm thinking something that i haven't thought in a long time. is it possible that people are perhaps having two phones? is it possible that what people are doing is that there's a whole other wave of people who never had cell phones? the reason i say that is something that david said. i'm just not seeing a lot of churn anywhere, john. so i'm beginning to think there's something secular going on that i've missed. >> people like carl, they should have more than one phone.

this dense at&t device doesn't even work in this building. >> i love how you're selling. >> everybody will be have multiple devices. most people have more than one cell phone. a tablet. wearable devices. >> there is a lot of activity happening between carriers. there is a possibility for a large switching pool. so this is a healthy growing industry. >> that number from at&t was a pretty impressive number. it's not like we've always had good things to say about what they do over there. >> 1.5% churn for us was relative to about 2.5% a year ago. 100% no contract business and one that, by the way, is about three years ahead of my original plan for restructuring this

company. the question is not -- i can be very successful at 1.5% churn. can they? and the question is what was the cost to their business of attempt to lock all those customers in, and i point out that at&t and q2, their average billing per user went down, and their network speed slowed. these are not great trends, you know, for the future of things. >> you talk about switching. what is iconic about this device that you're talking about, which is the apple 6, because apple has been going higher. i don't know when the 6 is going to come out, but what does it have? you probably know more than anyone. i know as much as any of you. all we know is we have clearly seen a wait and see attitude bay lot of customers. when they do come out with a new device, it's a major switching event and i think most people are waiting to see. >> you seem to indicate that they are giving up profits to a

certain extent. i think your margins have been coming down as you've been adding subscribers. it's the same game. >> actually, our margins were up 600 basis points in q2, so we're at 26.5% adjusted percentage up from 20. and we've always stated that we see in the medium term 34 to 36% margin margins. in fact, at 50% to 55% margins, better wake up and understand. >> you know, you come back to this issue of scale. you said it any number of times that we've talked to you here when we talk about consolidation in the industry. yes, you're doing great. no doubt about it. better than anybody perhaps had anticipated, not even that long ago. >> he predicted this. he's a big fan. >> eventually will run into a

wall, whether it's on your balance sheet and your capacity to build out. you need the sprint deal. that's what many people would say. now, people also believe -- and my reporting indicates that you're probably going to run a combined company if it comes to that. do you think that sprint and t-mobile with john legere running it would be a more effective competitor in terms of scale to at&t and verizon? >> obviously i'm a big fan of john legere running anything. let me just go on the record and point that fact out. i think -- the only thing i would change to what you said, david, is hit the wall. the issue, of course, is scale, balance sheet. these are things that if i want t-mobile and the uncarrier brand to lead the industry, to compete and succeed to number one over verizon and at&t, if i want to be able to bring to the united states wireless industry sustained real competition, you need more scale than we can organically get to in the short to medium term. so therefore, transaction that

brings capital and specter would be highly beneficial. there are many different ways to do this. >> any other ones i should be thinking about? >> we'll allow you to bring those through. there's capital and there's spectrum and multiple opportunities. i'm going to grow the business organically and look at those ways. >> you were quick to tweet about this ftc lawsuit over unauthorized charges. did that do anything to dispel the image of being a disrupter, a straight shooter? >> listen, it wasn't a great day. i mean, this was good consumer news fodder. i mean, even made it to "the view" in the morning. the reality is this is an industry-wide issue. there were some bad actors that we all clamped down on. i think the hearings that took place in rockefeller's report point that out.

any time you have this kind of sensationalized attack from washington, it's not good for the brand. but it hasn't slowed us down at all. >> it's good seeing you, john. thanks for bringing it today. john legere of t-mobile. we will get stock trading with jim in a few minutes. dow is down 116. this is the worst day for the major averages in about two week. we're back in a minute. chocolate is very individual. white chocolate lovers don't like dark chocolate. milk chocolate lovers don't necessarily like dark or white. before we couldn't really allow the consumer to customize their chocolate.

we needed a scalable cloud solution allowing them to select what they are looking for. now there is endless opportunity to indulge. customization is made 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.

save hundreds on beautyrest and posturepedic. at sleep train, choose $300 in free gifts with tempur-pedic. even choose 48 months interest-free financing on the new tempur-choice. the triple choice sale ends soon at sleep train. 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.

time for cramer and stock trading. >> there's two themes going on in oil. ones that have a big production growth. and the ones that don't. also royal dutch great production growth. and then you see exxon. but let's not get too caught up in the long side of oil, so to speak. when we hear rick santelli talking about the dollar, the algorithms, the big hedge funds, they just short oil when they hear that. oil is going to go down. that's very tough trade to buy oil stocks when the actual commodity is going down. so what i'm saying is don't get too bullish. you can't get too bearish because we wake up tomorrow morning and putin has had a conversation with merkel and they figure out how to deal with the donetsk region and suddenly you're behind everything. but be aware that oil is going lower and it's not a great thing for a lot of these companies. >> what's on "mad" tonight? >> that's a great segue.

bp. look, bp's on the hot seat for a lot of different things. and buffalo wild wings. stock was down 20 yesterday. i think that was a bit of an overreaction, but stocks that are up 20 tend to go down 20 in this environment. >> we'll see you tonight. >> thank you, guys. >> jim cramer on "mad money" tonight. when we come back, synchrony debuting. we'll talk to the ceo in the next hour. be right back. don't just visit san francisco. (water dripping and pipes clanging) visit tripadvisor san francisco. (soothing sound of a shower) with millions of reviews, tripadvisor makes any destination better.

the 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." our road map begins with the markets in selloff mode. we're down about 140 points. a rise in jobless claims. ukraine, of course. poor earnings. argentinean default all pushing us further into the red. yum says the food safety scandal in china is having a significant negative impact on sales. when will it show up in earnings? the stock plunging this morning. >> general electric spinning out its credit card business. we'll have the ceo first on cnbc right here.

>> we have to start with the markets. a selloff across the board with the dow down over 150 points. the chief investment officer with trend macro also with us. ward mccarthy, chief u.s. financial economist with jeffries. when you look at some of the headlines, whether it's the argentinean default, russia fears over there, a strong dollar. anything to really have a concern about when it comes to this u.s. equity market? >> i actually don't think so. these are all potential threats, but they're not actual threats. the world's a dangerous place. argentina default, argentina devaluing. gosh, that's never happened before. i really don't know what we should be worried about here. we've got a fantastically improving u.s. labor market. we've got a great earnings upgrade picture.

for the last four years, they've only been getting upgraded at 4% a year. the economy is recovering stronger than anyone ever expected. does anyone really care what happens with argentina and ukraine? >> well, it's sort of this confluence of global events. what we've seen is the u.s. has done better but it's been shaken and thrown back, disrupted by the weather, the european debt crisis, all of these external factors out of control. the world is a scary place right now. does any of it threaten what we saw yesterday, 4% economic growth? >> noni don't think so at all. the u.s. economy continues to grow. it continues to develop critical mass. and we're working our way through a very advanced stage of the cycle and we still haven't had some of the typical key drivers of growth kick in yet. so i think the u.s. economy is going to continue to do well, be somewhat similar to last year when growth averaged over 3%

over the second, third, and fourth quarters and i think we're replicating that again this year. and as don said, the labor market is cooking with gas, and it will still take some time to heal some of the longer wounds from the recession, but the labor market is doing well. >> i'm so glad we're showing the dollar index, don. at the highest levels of the year. this could be a big deal for u.s. multi-national companies. the dollar was weak going into the year. now all of a sudden that's reversed. there's also the threats of russia, which is the eighth biggest economy in the world. do you have to stay away from those bigger multi-national companies? >> i don't really think that's the case at all. i wouldn't worry about the dollar. a strong dollar is a sign of a strong economy. you know, the ecb is doing everything it can to weaken the euro. let them do that. let them try to shrink their way to greatness. that's going to plak the dollar look strong in relation. but that's not a problem. that's because they're facing deflation and we're not. this is a great blessing. the u.s. is the place to be

right now. >> biggest quarterly gain in six years, especially on wages and salaries. why doesn't the fed or yellen see that as an inflation threat? >> the reason why is because janet yellen thinks inflation has been too low for five years. she has this theory called optimal control. when inflation has been too low for five years, it has to be too high for five years. when steve leaseman asks her in the press conference, are you willing to tolerate overshoot? of course she has to lie. every time she says optimal control, she's promising to overshoot. she wants inflation. she's starting to get it. this is good news. >> you followed the fed for a number of years. do you agree with that standpoint? isn't she just trying to be patient here as they rethink the change in policy? >> well, i don't think janet yellen is lying, but she is carrying a heavy load in part

because we have such an inept physical policy. a lot of the problems we have in the labor market, the underutilization, really structural issues that should be addressed with fiscal policy, some type of labor policy. but of course, we have a totally dysfunction aal government. so what the fed is doing right now is trying to buy enough time to allow the people who have been unemployed for a long time to reset their tool box, try to get back into the labor market and basically what she's trying to do is be as accommodative as possible until inflation forces her to start raising interest rates. and i think that that's a good ways off. >> we're getting jobs tomorrow, 231 is the estimate, the consens consensus. >> i'm a little bit below that, at 2.10 this month. we're still going to generate somewhere between 2 and a quarter and two and a half million jobs this year. and we have burst into the expansionary phase and that's

what's going to cause average hourly earnings to rise. >> it's not really just the headline number and the unemployment rate that matters, certainly not to janet yellen. she's looking at wage growth. she's looking at other granular data that comes out with that labor report tomorrow and that's certainly what the market's been looking at, too, right? >> sure, and that's the right thing to look at. a lot of the things that have been wrong with it for so long are starting to get better. so this has been the so-called economic recovery, where there's been a lot of long-term unemployment. long-term unemployment is coming down at twice the rate as short-term unemployment. we're starting to really pick some of the high-hanging fruit. by the way, as to tomorrow's number, 258,000, and you might as well just mail me the t-shirt right now. >> would you agree with that estimate? >> i'll take the t-shirt, thank you. >> when are we going to see wage growth? the kind that the fed wants to see. >> i think that we will see it over the course of the year. right now you still have average hourly earnings, and that's at

the low end of the cyclical range that has prevailed since the volcker years. they want to see average earnings 3% higher. i think a year from now, that's where we'll be. >> thank you both. lively discussion on the fed and the markets. don and ward, good to see you. >> argentina, as you might have heard by now, is defaulted on its debt after talks broke down last night. kate kelly is back at hq. >> a business you morning here for argentina watchers. as of 12:01 this morning, the country fell into what is for the moment a state of technical default. a borrower that has the money. the bondholders whose legal rangeling are blaming the country, saying it rejected numerous creative solution. trustees that handle the country's bonds have notified creditors that a day after the end of a month-long grace period, the money owed still hasn't been paid. and a review process to

determine whether today constitutes a credit event is now under way. yet argentina denies the default, saying it posted the money it owes to investors. earlier today, cabinet chief jorge capitanich accused the u.s. courts of malpractice and even said the mediator needed to adjudicate this dispute, was guilty of incompetence. argentina now saying it will take this dispute all the way to the international court of justice at the hague or the u.n. itself. as we wait, carl, for argentine markets, which plunged on expectations of default late yesterday to open. >> all right, kate. were you going to say something? the blue dollar which is the black market dollar, which people watch in argentina, because there's such a scarcity. it absolutely plunged yesterday. >> are they going to try to run out the clock on the rufo clause

to make sure they didn't hold back existing holders? >> the equal treatment clause for all bondholders, which apparently argentina was worried about. if they made a deal with these holdouts, maybe the others that already accepted discounts would demand equal treatment. that runs out at the end of the year, and debatably, the holdouts have a lot less leverage when that clock runs out. they may even have less leverage starting now. it would be interesting to see about elliot management, which you know is the ringleader of the holdout group, what their next move is. the other thing that's interesting, and carl i believe you're the last default in 2001, it feels very different this time, right? it's a small amount of money. i don't see a lot of, like, agitation in the streets so far coming from buenos aries. >> no. i remember being in buenos aries, it felt a lot more urgent for some reason. and the prospect of contagion felt more acute. but it's still early day. we'll see where this takes us. another big story we're following this morning, yum

brands out with a filing saying news coverage concerning the sale of bad meat in china has caused a "significant negative impact" to same store sales at locations over the last ten days across the country. extensive news coverage has shaken consumer confidence, impacted brand usage. yum shares are trading sharply lower. the company warning that if declines continue, they could materially hurt full-year earnings, and unfortunately for yum brands, guys, they've been through this before and they saw how it impacts same store sales, down all of 2013. and it took over a year to recover that credibility. it was just starting to come back, and here you go. it's really a sign of how chinese media aggressively covers these and how it impacts the sentiment of the chinese consumer. >> absolutely. it does take so long to rebuild that part of your business. when we come back,

congressman paul ryan's exclusive with our own john harwood. and the largest u.s. ipo so far this year, just opened for trading. it's in the red among the almost two dozen ipos this week. ge spinning out its consumer credit card business. synchrony financial. we'll have the ceo in just a moment. in a world that's changing faster than ever, we believe outshining the competition tomorrow quires 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. 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.

female announcer: you'reduring sleep train's triple choice sale. for a limited time, you can choose to save hundreds on beautyrest and posturepedic mattress sets. or choose $300 in free gifts with sleep train's most popular tempur-pedic mattresses. you can even choose 48 months interest-free financing on the new tempur-choice, with head-to-toe customization. the triple choice sale ends soon at sleep train. ♪ sleep train ♪ ♪ your ticket to a better night's sleep ♪

shares of exxon mobil moving lower despite a better than expected second quarter. that offset a 6% drop in oil production. net income rose to $8.78 billion. exxon right now off more than 2%. its peers all moving lower right along with oil today. c as congress gets set to recess for august, congressman paul ryan sat down with our own john harwood and joins us this morning from washington. hey, john. >> good morning, carl. everyone agrees that congress is a mess. the republican house likes to blame the democratic senate for not passing all the bills that they have sent their way. but one thing the republican house hasn't passed s the full blown reform of social security and medicare that paul ryan has

talked about so often. i asked ryan why not, and didn't hear much optimism that anything would get done in the next two years. >> you have to have a senate pass the budget and then you bring it together where the senate has not been willing to do those things. >> but isn't the actual reason that you haven't passed in the house free standing entitlement reform, that even though you're willing to do it, your colleagues are not? >> no, i don't think that's it. i think we know that the senate won't act on these things, and we're trying to pass a lot of bills that we think have a reasonable chance of passing it a law to make a difference in people's lives and that's why we've been passing things li s like keystone pipeline, jobs training legislation. we would like to think that these things could possibly get a fair hearing in the senate, but even those reasonable measures haven't gotten a fair hearing. i think if we had willing partners on the other side of the aisle, a president actually willing to tackle our tough fiscal issues, our members in the house would be more than willing to participate in that.

but it's been abundantly clear to us that the senate and the white house is not interested in tackling the really big problems facing our country fiscally. >> if the republicans take the senate in midterms this fall, what changes in the next two years. anything? >> well, i think we get past legislation then. >> i think we can put a lot of things on the president's desk. harry reid has been preventing the president from having to make any difficult decisions on any issue. i think if we were to obtain the senate, we were to have the ability of passing legislation all the way through congress, not just half the way through congress, and giving the president the opportunity to make a decision whether or not to support the legislation. >> shouldn't the message for the conclusion that average americans should draw is that there's really nothing that's going to happen until we have a new president? >> i hate to think like that. unfortunately, i think there's some merit to that criticism. >> not a pretty picture, carl.

the president yesterday was out on the stump calling on republicans in congress to stop hating on him and stop hating on all the things he's trying to do. so we've got a pretty thorough picture of dysfunction in washington. >> and we haven't heard from paul ryan in quite a while so it was great to get that interview. john harwood, thanks for bringing it to us. coming up, the ceo of lam research will be joining us. and synchrony financial is now officially open. a general electric spin-off. the ceo with us right after the break. she's still the one for you. and cialis for daily use helps you be ready anytime the moment is right. cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. tell your doctor about all your

medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use ask your doctor about cialis for daily use we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not, you may know it only covers about 80% of your part b medical expenses. it's up to you to pay the difference. so think about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.

like all standardized medicare supplement insurance plans, they help cover some of what medicare doesn't pay and could really save you in out-of-pocket medical costs. call now. with a medicare supplement plan, you'll be able to stay with your doctor. oh, you know, i love that guy. mm-hmm. [ male announcer ] these types of plans let you visit any doctor or hospital that accepts medicare patients. and there are no networks. you do your push-ups today? prepare to be amazed. [ male announcer ] don't wait. call today to request your free decision guide and find the aarp medicare supplement plan to go the distance with you. go long. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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. credit card issuer synchrony financial debuting today. it is a spin-off from general electric. they sold 15% of the company. the price at the low end of the range. the overall company value of roughly 20 billion. it is the largest ipo so far this year in the u.s.

joining us at post nine is president and ceo of synchrony, margaret keane. big day for you. >> very big. >> thanks for being with us. you did break syndicate bid there. rough day to go public. we have to say that. are you disappointed at all? >> not at all. this is just the beginning of the company being public and we're in for the long haul and i think we're going to do fine. >> when you say doing fine, i'm curious. how does your approach change now that you are a public company. you're not independent of ge yet. they still own 85%. but perhaps as soon as a year or so from now, that will be the case. how do you go about doing your job any differently, if any? >> i think the great thing, david, i got great training at ge. it has great heritage and we're going to bring the best of ge with us and create our own culture so that we can really just be a great company to work for and a company that's growing. >> what does that mean? >> it means that if we're going to have a great culture -- >> what does that actually mean? >> it means that we're going to focus on technology. we're going to make it a fun place to work. we're going to attract great

talent. and we're going to make it a great place. >> why haven't other consumer finance ipos done so well this year? is there something endemic to consumer spending? >> i think they're fearing a little bit from regulation. i think that's certainly a pressure point. we're seeing very good consumer growth. we're in the credit card business, so we really see how consumers are shopping. and they are being cautious, but they're still shopping. >> people have made some points about your net interest margin. 11, i think, which is above average growth profile. >> yes. >> how does that happen? >> you know, it happens because our credit card rates are a little higher. partially because the consumers get really good discounts and promotions on our cards. you can get up to 40% off in a given purchase. so our consumers come back because they really like that value. and as we do research, consumers are really looking for a reason to shop and those promotions really help them. >> i know you work with some of the biggest retailers.

amazon.com, lowe's, target. what are you seeing in term of consumer spending? there's a lot of pain for retail. talk a little bit more about the trends that you're seeing. >> i think that -- we're definitely seeing growth in the consumer. so i'd say they're cautious. but they're spending. i would say that one of the big trends for us, since we have mobile applications and capability, we'll definitely see a lot of work on our mobile sales and online sales are up 18% last year. >> across the income spectrum? >> yes. >> when you talk about mobile, you talk about the long-term future of this company. can't help but think about the likes of google wallet or isis mobile wallet, square. these are emerging technologies that one would assume are going to have an impact on your business. how do you deal with them, and aren't they a competitive threat? >> we actually see them as an opportunity, because the reality is it's really going to be up to the consumer on what cards they put in the wallet. i think for us, what we've got to focus on is having the best value, so that when consumers load their wallets, our cards are on there.

>> another threat, of course, cyber attacks. cyber in general. target was mentioned. of course they own their credit card company. they dealt with the ramifications of that. but you also rely on third parties who might get hit, and yet it will come back to you. what gives you the confidence with the increasing in tax that we know are coming. >> i think the most important thing is investing in technology to protect the company. we have a great team looking at this every day. i'd say the other thing that's been a positive, i think the retailers in general are really looking at ways to really get more security inside, and we actually sit and talk about ways to get stronger in the security front. >> are things changing, though? are practices really changing? >> yes, i think practices are changing. we work with sams club. we just rolled out the first emv chip at sams and we're going to roll it out to the rest of our cards. that's exciting. but i think you can't stop there because there's always the next person trying to come in.

so you've got to constantly be on guard. >> you have a currency now. i have to wonder, do you see an opportunity to consolidate using your stock at some point in the future now that you actually got one publicly traded? >> i don't think so. i think we're going to take one day at a time and kind of go from there. >> you talk about the store credit cards. it sounds like there's always this internal debate between the store guys and the credit card guys. the store guys want some growth. the credit card guys do want security. do you get involved in those internal debates within the chain? >> we really focus on them on growth. since our cards do not charge interchange, it's a real positive for the retailer to have our cards in their store. so we work really close wli them to really work on growing the program and getting more consumers in. >> just one more on the consumer. do you see a return to a cumulation of credit balances smd -- >> no, i would say consumers are still being thoughtful. we definitely see payments rate a little higher than they were

precrisis. >> the shareholder base that you were able to put together. i think it was a nine-day show. are you comfortable with the shareholders in this company? they're suffering a little bit today. do you think they're in there for the long haul? >> i think they are. we had a great road show. we're really happy with the investors who chose to invest with us and we're going to do them right. >> and ge, what is the timetable for their sale of that 85%? >> we're targeting the end of 2015, and that's what we're working towards. >> thank you. margaret keane joining us. synchrony going public today. >> thank you. >> largest ipo since facebook. >> the dow is down 135. let's get over to bertha coombs. >> all right, carl, check out 3-d systems. the 3-d printer maker posted a second quarter decline in net income of 77%. its gross margins plunging about four percentage points during the quarter, resulting in the company earning a weaker than expected ten cents a share,

sending shares down about 9.25%. fellow printer makers, the 3-d printers are both looking -- well, they're not flat. take a look at x one, off about 7.5%, losing ground and sympathy. back to you. >> thanks so much, bertha. when we come back, markets continue to move into the red. we'll talk about what's kri contributing to the selloff with the dow down nearly 150 year . we'll be right back.

the 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.

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.

wanted to take a look at the broader markets. the s&p down as much as 1%. the nasdaq down more than that. we mentioned in ukraine concern about the argentinean default. but we haven't spoken as much about the huge loss taken by banco espirito santo. the bank of portugal requiring that lender to raise money after it set aside 4.25 billion euros in the first half. this does seem to be having an effect on our markets as well in high yield. but when you impact high yield over here, you can have a creeping effect on equities as well. we can add that to the list of

various concerns on the macro front, or at least in this case, on a very specific bank in portugal that has a huge first half loss. >> yeah. a lot of things working against us. markets are in the red. art, good morning to you. >> good morning. >> 1950 takes us to our 50-day. we haven't done that since may. >> it's a critical area. the game is really on the table here. i sent a note out to friends saying -- and i mentioned in my morning notes that 1950 to 1953 are critical. they break much below 1950 in the s&p. that's also a neckline and a kind of head and shoulders formation. so pretty important that they stay here. and i would add one other thing into david's nice synopsis of the negative influences here. and that is the employment cost index that came out at 8:30, showed a jump of .7 of 1%.

immediately that started the feds behind the curve talk again, and we took the yield on a ten-year dangerously close to 2.6. and that's also weighing on the market. >> it's also kind of interesting when you talk about a selloff here because of all these negative macro events, you're not used to seeing higher treasury yields and a stronger u.s. dollar. at least that hasn't been the pattern. there's a lot of influences here, including higher rates. >> yeah, that's why you have to balance out. the other measure of influence, that hints that it's more about the higher rates here than about offshore, is that gold is down. and oil is down. and usually, you get a little bit of a bounce in those when it's a geopolitical concern. so i would suggest the viewers keep a strong eye on the yield on the ten-year, as the debate about the fed being behind the curve continues, and also at this level.

if they don't hold 1950, it's beginning to be a bit of a problem. >> our friend tweeted this morning, it's rare, as you point out, where you don't have a safe haven trade today. what is it today? is it just dollars cash? >> yeah, i would say it is primarily the dollar in this. and again, i think they're working their way through it. everybody wants to see how widespread the banco espirito is. that's there. but that feeling of contagion hasn't really spun out quite yet. >> what negative factor do you see as the longer term problem? to me it would seem like russia could be the progress problem. we see adidas lowering its guidance on the ruble and on consumer confidence. >> there is great concern.

the trading desks have been passing around little lists of russia vulnerable companies. either through trade or some other kind of affiliation. so that's a concern. but we're going to have to address this move up in yields in the bonds because if that's a signal, the great thing to worry about here is if it begins to look like the fed has lost control. that not just so much behind the curve, but the markets, we know more than you do and we're going to take yields up. >> two years at a 2011 high right now. >> no question about it. >> were you surprised at how much wiggle room they gave themselves in the statement yesterday? >> not really. i think what they wanted to do -- some of this is sweeping up on them. next week i think you're going to start to see them guide. you will hear more conversations.

i think they want to prepare the markets for possibly moving a little bit quicker. i don't think they dared to want to send that. tomorrow, jobs are thought to be good. again, it's the extremes. you get a number above 300,000. that will definitely change the yield curve. you get a number that drops back below let's say 190. people will be giving the fed a lot more room. i don't think it will be there. the consensus seems to be around 230. >> we've lost two points on the s&p since you've been speaking. >> stop speak. >> stay nimble. >> stay nimble is right. speaking of retail here, as part of our 25th anniversary here at cnbc, courtney ragan is back at hq looking at the next 25 years in retail. >> you can imagine 25 years from now, big data for retailers will be bigger than big.

it will be everything. and if it's yuz eused right, it lead to sale. while leveraging consumer data may be a hurdle for retailers today, it will be the lynch pin of their success in the future. pricing will be dynamic and reactive. algorithms will determine price points based on current store traffic. and shoppers' profiles. >> in the morning it will be cheaper to shop in. the afternoon when everyone comes home from work, it will be expensive, so the prices will go up and down. >> prices could also vary from shopper to shopper, even while in the same store, at the same time. >> i could do price. i could do promotion. i could in realtime start to think about how i use markdown and pricing and promotion to trigger reactions in sales behavior inside the store. >> smart stores and dressing rooms will be common place, complete with rfid technology, beacon signaling and geofencing,

all powered by data. >> it knows that these products are getting picked up, getting brought into the dressing room. they can analyze sizing information. they can analyze information about how many people come and try it on, versus those who don't. there's a lot more data that the retailer is gathering here. >> by opting in, a couple will volunteer everything, from their profile, their preferences and their purchasing patterns. all helpful to the retailer for pushing sales of your favorite products at the exact time you're ready to make the purchase. >> you'll know the frequency patterns of a customer who actually is purchasing that shampoo and you'll be able to anticipate when they're about to run out. you'll also know where they are so you can make a recommendation to them when they're a block away from where that special shampoo might be available to them. >> and though privacy concerns won't go away 25 years from now, experts say consumers wanting a 24/7 concierge style of service will be comfortable sharing their data.

>> it will actually be more attractive to participate than not to participate. and those that don't will actually feel left out. >> not only could you be paying a higher price than another customer in the store thanks to big data, but your facebook friend who garnered thousands of likes on a product post could also be getting discounts that you might miss out on. so it's safe to say social media influencers will benefit from their online clout. coming up on power lunch, we'll take a look at payments and it's not necessarily about bitcoin. >> i was just going to say that. all right, courtney, thanks very much. coming up, a major samsung and apple supplier lam research. the stock is moving today, as the company reports earnings. we'll see what the demand looks like. the ceo with us next. [bell rings] ♪

time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade.

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.

coming up later, i'll be speaking with kevin plank, under armour ceo. that is 2:00 p.m. eastern time, this after adidas warned on its profit, cut its outlook for a

year. a big part of that is the golf story. we'll talk about that as well. as well as women's. lam research beating the street on earnings. as you can see, the stock up 6%. strong revenue growth. the stock has been remarkably outperforming the s&p 500 year to date. complex chip maker, that's used in am products, samsung products, a unique insight into everything from tablets to pcs to smart phones. martin is the president and ceo of lam research. good to have you here. >> very nice to see you, thank you. >> so go beneath the numbers for us and tell us a little bit about what you're seeing in term of demand on everything on smart phones to pcs. >> there's so much diversity in terms of drivers of consumer electronics and enterprise products, that we see a way for fabrication equipment spending, outlook of about $32 billion for

calendar 14 and our expectation is that there will be some growth relative to spending by customers heading into 2015. at a company level, a little stronger as you have indicated, and that's a by-product of the positioning of the product portfolio of the company in support of the technology inflections of our customers currently. >> i mentioned tablets. the best buy ceo telling recode this week that tablets are crashing. do you see that? >> well, you know, we're one step -- at least one step removed from the specifics on a day-to-day basis, and as i mentioned, the tablets and the pc have their own kind of influences and drivers. and certainly, they are very relevant to integrated circuit demand and ultimately wafer stocks. but the short-term adjustments in trending tend to be a little bit removed from the equipment industry, and when we look at consumer electronics demand and enterprise demand, generally we

are certainly -- i would say cautiously optimistic about increasing opportunities for the company in the coming years. >> and what about pcs? i get that it's hard for you to see the stability on the direct demand side, but intel certainly, that was a big help for the quarter, that there's a pc refresh. is that what you're seeing as well across businesses? >> yeah, i think the story for pc, i think a lot of people have a similar view here. the cannibalization of pc from tablet is perhaps slowing. and certainly relative to the aging of the install base. somewhere around a third or 40% of the install base is four to five years old, and certainly the replenishment cycle with new applications and aging pc is something that creates positive momentum for that industry as well. even the pc today is not as dominant a single influence over the fably indication equipment the way it was five years ago.r way it was five years ago. >> i think it's the third quarter now a declining

operating profit. micron, a lot of discussion about what happens now. are we going to run into some inventory or supply chain problems in the back half of '14? >> i think at a general level, whether it's inventory or the pace of spending by our customers, i think one of the raelts of c realities of consolidated industry today is a level of discipline around managing those risks. at a very general level, i think our outlook is reasonably certain and confident and we would certainly have an opinion that variability is reduced as a by-product of consolidation. always for any one customer, we have to respond to volatility on a quarter to quarter basis. but i think generally speaking, discipline and focus on sustainable profitability and return investment is a healthy reality of the history of our customer and the capital equipment industry as well. >> i think people would argue that discipline has actually been evident in the past few quarters. the question now is whether it's

slipping a bit. you don't see that? >> no, i think -- i have a lot of confidence that the discipline we've seen recently is with us for some time. i mean, the reality is the size of the investments and the risk-reward for those decisions is very high. that i think the accountability systems around all of us from the investment community make it a very important part of how we run our companies today. >> in terms of opportunities for you down the road, which technology are you most excited about, 3-d printing, wearable technology, the internet of things? where do you see the opportunity? >> you know, i think everybody is excited about connectivity generally, but the reality is the integrated circuits have such a diverse end use today from the cell phone, from the pc, the tablets, the electronics in our cars and increasingly in our home. the connectivity agenda is very positive. and certainly with the overhang of an outlook of consumer confidence increasing and gdp

expectations growing. our focus is on taking advantage of a disproportionate and beneficial expansion. we believe we've got a $2 billion sam expansion through calendar 2017, and staying focused on education constitution so we have the right products at the right time, and we can gain market share through those disruptions and transitions as well. so, you know, this year is an important year for us. 20% to 25% revenue growth is our target this year, generating a billion dollars of cash and operations and our expectation hope is we continue that trend in calendar '15. >> certainly it has worked well for you and your shareholders,out performing the s&p. martin, thanks for joining us, the ceo of lam research. >> thank you very much. wanted to get to a takeover battle we've been following for quite some time, that being valeant's bid to acquire

allergan. not necessarily on the earnings they reported. perhaps lower than some of the analysts following the company, although it does seem to be in part due to the sale of an asset that you would expect. if that were to keep up, it affects the value. interestingly, the spread on the deal has actually narrowed a bit. it's worth about $172 per allergan share in stock that they've made. the spread right now, let's call it around three, a little over $3 a share, so that has narrowed. on the conference call, mike pearson, ceo, when asked do you have a plan b? he said yeah, we do have a plan b. if we don't succeed if buying allergan, we lined up a number of medium and large transactions, if for some reason we have to go to plan b. he also said listen, we surprise people as well when we pursued these targets.

nobody expected us to go after bausch & lomb. so an update there. we'll be keeping an eye on those shares. if that continues to deteriorate. it certainly has an impact on their ability to continue to mount that bid, though this is going to play out for quite some time. when we come back, walt mossberg, the takeaway, the tablet sales are "crashing." and markets continue the selloff. we're down 151 in the worst day in a couple of weeks here. in just a moment.

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. 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. 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. nick wood mapp tomorrow on "squawk alley." a public company. shares of gopro almost doubled since their $24 ipo. don't miss that. and over to rick santelli with "the santelli exchange" for us. interesting day, rick. >> absolutely. thanks, sara. like to welcome our guest, beaterman, beaterman, beaterman. welcome, chuck. thanks for taking the time. >> good to be with you again. >> let's start at the top. we had a nice jump on the

compensation in today's employment cross-index data and offerings out there, and you think it might be the last of the big time offerings. why don't you sggo into both of those? >> $11 billion of new offering today and tomorrow. a huge amount of cash to leave the market. to me that's why we have the main -- supply and demand. all of that money leaving. stock prices of the remaining shares go down. so -- and this is the last of the new offering calendar until september. so august should be a decent month, assuming corporate buying continues and -- beware the ides of september. >> and tying it to a line everybody talked about. underutilized labor market. what i would sassume that to mean, and sure that's not what they meant.

i suspect people out of work are coming back soon. the people left are in short supply. skills in short supply sand wages are going up. what does that mean for janet yellen, if she gets by some of the east coast sugarcanesians? >> seeing a big increase in 30-hour jobs just over the minimum wage. >> the north carolina effect. right? >> exactly. they ended extra compensation last july and we saw it pick up in hiring but not a real big pickup in overall income for the economy, because you really are replacing dole money with -- >> limiting me to one more question. interest, after everything we've gone through you still see money going into things like small savings, checking, still dwarfing the money going into

equities. finish up with that line of thinking. >> millennials and people even older, all they know is stock market crashes. never see bull markets in the last five years. with two major crashes before that, they don't trust the market. money is going into checking accounts and savings. more than twice as much money has gone into checking accounts and savings than into bonds and stocks so far this year, and with the income level the way it is, there isn't a lot of new money generated for savings, because wages and salaries are not growing that much for the country as a whole. >> although they may be changing. charles, it's always a pleasure to talk to you. sara and the gang, back to you. >> rick, thanks. more on this market move now as we close out the month of july. dow is down 170. s&p down 24 points. be right back.

in a world that's changing faster than ever, we believe outshining the competition tomorrow quires 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. the ca♪illac 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.

a check of major indices, cease losses accelerating. dow down 188 points. s&p 500 down 1.3%, and the nasdaq composite is getting hit the hardest, down 1.6% at this hour. a lot of influences on the market. you can blame argentina default, sanctions, obviously, in russia

and increasing tensions over there when it comes to geopolitics. looking at portuguese banks and considering the prospects of higher interest rates here in the united states. seeing a sell-off in treasuries. higher rates, a stronger dollar. all setting us up for a big jobs report tomorrow. carl, consensus, 230 jobs created in the month of july. we will see you then. over to you for "squawk alley." >> keep our eye on wages, too. thanks, sara. down 187 this morning. it is 8:00 a.m. at apple headquarters in cupertino. 11:00 a.m. here in the east. "squawk alley" is live. ♪ ♪

welcome to "squawk alley" for a thursday. joining us here at post nine, jon steinberg, account accoukay here. jon fortt is off today. the main story of the morning, maybe the afternoon, down 188, 189 on the dow. s&p down almost 30 points. 1942. back to our first touch of the 50-day moving average since may. internals are not good. the a.d. line, 9-1 negative. gold is down. oil is down. really the only thing performs today is the dollar, as you've got ukraine, argentina, portugal and now with this employment cost report, kayla, the idea among some that the fed and yellen are behind the curve. >> and employment cost report doesn't often move the market. given the strength, gdp, the statement from the fed yesterday afternoon, they'll continue tapering, slack in the labor maet