gop to come. >> i think so. >> there was a rant about this a month ago. >> that's you, i think. we need to thank the guest hosts all morning, gubernatorial candidate, ames follow-up. >> thank you for having me. >> we'll see you, hopefully, very soon. >> thank you very much. that's all for us today. join us tomorrow, and right now, it's time for "squawk on the street." good morning, and welcome to "squawk on the street," i'm with jim cramer live from the new york stock exchange, carl quintanilla and david faber both off today. the dow off 60 points, nasdaq 7 17, s&p 7. we saw similar pressure on markets yesterday for a late day rally. we'll see what happens today. watching the ten-year closely in that regard, punches above the.5 level. not a big move there.

europe, a couple hours left in the trading session. mixed picture, pressure in spain and italy. ireland, u.k. as well, and portugal in the green today. road map begins now with markets setting up for a lower open after yesterday's bounce back. all major indexes logged the best day in two weeks. >> target slips in the premarket after lowering the outlook and raised estimates of expenses related to the data breach. >> cochairs hire ahead of the open after the company handedly beat expectations riding a wave of international sales. >> cbs ahead of expectations raising guidance for the year. >> futures point to the lower open. u.s. stocks off the best day since july 18, volatility dropped more than 10% yesterday, and crude oil broke a five-day losing streak, inching up a bit, jim. but the question is whether august continues the streak of under performing august or yesterday change something.

did yesterday change something for you? >> no. we still have the russians massing on the ukraine border. that should be front and center to everyone. that leads to cuts, what i care about. i care about loss of life if there's a war, but recognize russia is driving the bus. that's not why target disappointed, but because they lost their way. coach may have stopped losing their way. i mean, we have case by case stuff, but overall, i mean, yesterday was just kind of a, well, it's been down a lot. maybe shouldn't be this much. it was not a bad day, but the nasdaq had a strong performance. >> groupon, by the way, yesterday, rallied ahead of the earnings report. after the bell, a nice line on the market performance yesterday, the stock market acts like the boy who cried wolf. in other words, we have a selloff, everybody says this is it, the big one, and it never happens. >> that does happen. you can round up bears and

russian bears. look casely case. look what connected last night. they are smart. just a brilliant move. they buy cars.com, split the company, give you the spinoff of the digital and broadcast. that's an example of what happens. you know what? company survivor. they do the right thing. >> i wonder if that means one will be for sale being separate businesses in the media industry. >> we have tax issues there, but we know that time inc .is out there to be bought, companies consolidated. we know the digital operation should get a zillow-like multiple. cars.com, career builder 1 the biggest. you have tv stations from the number one affiliate for cbs, number four for nbc, a nice combo. >> tie into the news on aereo. >> that is what hurt them. i don't want to -- look, i'm

saying they are not needles in the hay stack. office depot, cbs -- not needles in the hay stack. you get negative, you realize, wow, that was an opportunity to buy some stocks, mgm. why? they had good numbers in vegas. overall, you see things like the division border, the division on the border of ukraine, you think, okay, well, it's tuesday. are they going to come in on friday and do something? >> you see gold higher a little bit. >> that's ukraine. >> raises the question whether it's a stock pickers's market or not. we have the fed in the middle of september, jackson hole later, and it's about earnings right now. >> yes, it is. we have the wind down of earnings season, but, look, you get a target, and people say, well, you know what, that's what we focus on. maybe target's not any good anymore, that's a good thing to say, by the way, target, walmart, maybe they are not good. did i just say that? i said it. >> moving on to target in a second, actually. before we do, i want to talk

about goldman next hour talking with david. >> he was negative on the friday night call. friday night. >> temporarily negative. i think three months of weakness. >> okay. now it's two months and five weeks. >> what was that focus? i thought that was the asset management sign. >> signed on with peter. the names are all on the report. >> that's for the reits. >> we can create a cottage industry of just watching the fed, okay, do everything about the fed, but we've been doing that. everyone's been doing that now since the dow was about 10,000, and it has not made you any money. >> no, because basically, the ma crows, jim, you are negative, bearish -- >> thank you. >> you've been wrong. >> what? hold it? you used the word "wrong." hedge fund managers never admit that. that's how money comes out of the coffers. >> forecasting dramatic di ver

jans between stock and bonds. >> we'll hear what he has to say. >> he'll be on as well as the ceo. >> that guy sat there and figured out the way. they boosted the dividend hugely years ago. everyone laughed -- well, wow. >> not anymore. >> let's talk about target right now. that is certainly a mover, down sharply in the premarket trading lowering the outlook in the recently completed quarter thanks to markdowns and softer sales in canada, a struggle in canada. the retailer expects expenses tied to the massive data breach of $148 million in the august quarter. also, they have the announcement recently of the new ceo. an uphill battle. >> clear the decks of the ahead of the new ceo. this is a bad release. i mean, when -- i'm tired of hearing challenging by the way. chipolte didn't put challengiin in their release. look at the way nordstrom's did

it. only opening a couple in the next couple years, see how it goes. they power shooted into canada and shot down, not unlike a bridge too far. >> to the point whether target is an operational mess or not. people are concerned not because of the cost of data breach, but talking about in this area, as we know from the consumer companies, if you're target, you come out, the traffic is not there, et cetera, et cetera, you're not wrong, but the world's problems fall in your lap. >> mark downs, you don't want to hear that, right? >> right. >> when other companies raise prices like nooik and under armour. inflation. >> i like that. i like that. immunization matters. look, i think we go back to dollar tree. one of the favorite stores. a lot of slamming of dollar tree. they are a great company. they manage little sizes, great prices. dollar tree is not talking about the challenging environment so

target and walmart caught in the middle. nobody thought this. what happens is one of the things you have to do in retail is go to the stores, okay? none of the dollar tree analysts go to dollar tree, wouldn't be caught dead there. >> can get a half dozen red balloons for a party, where do you think we went to get them? dollar tree. >> best stuff in the world. that's your fourth of july party. honestly. >> i go to party city. >> wow. >> that's in new york city. >> city? okay. now, one of the things when i look at what's going on with target. i say to myself, okay, they moved into food. i don't want to buy food at target. they had a really great displays with the clothes. i can get that at kohl's if i want that. there's an attractive alternative. in the end, i'm going to costco and dollar tree. not walmart. when's the last time you've been

to walmart? >> when i was growing up. cincinnati, midwest. >> that was awhile ago. i we want for cargo pants. i was going to olive garden to stuff it with rolls. no, i just wanted pants. >> talk about 1990s. cargo pants? >> look. okay. jeans. don't get me sidetracked. do you have jeans? the woman there, it's a giant store, sure, over here. she sends me to the refrigerators. she says it's a big store, who knows where anything is. not confident inspiring. >> yeah. we talked to retail last week, speaking with a couple different people with courtney reagan about the future of retail. one of the guys said walmart is 5 name to watch. >> for what? the new ceo, okay. >> they are moving into e-commerce, trying to be the first brick and mortar retail store to bridge the gap, not an

amazon.com, but scooping up companies left and right. >> look at williams-sonoma and restoration hardware. >> should they sell on the news or buy them? >> look, i think target has problems. look, they send retail down. look -- i don't know how many, but target is troubled. you are not used to saying that. i remember when dayton hudson morphed into target. i don't know target. they over expanded. they don't know what to do. >> they had the cool collaborations, designers. >> like coach, one day it bottoms, and take a look. >> we'll look in a second. looking at walmart as well. great to know if they are under pressure on this point or if they are higher. down about six -- >> target's a yield play. dividend seems safe.

sounds strange. >> no, it's important. moving on to coach. reporting earnings this morning. highly awaited report. >> yes. >> the luxury retailer saying the fourth quarter revenue better than expected, help by sales in markets like china. came in at 59 cents a share, excludeing items six cents above the estimate. the trade looks like it's working for a couple days. >> cut numbers far enough, you beat them. coach -- never jump up and down about a same store sales number that's very, very weak, but they have been talking that china story forever. finally, it matters. minus 17% u.s. same store sales is nothing to write home about. abercrombie stopped the bleeding. i like a story beyond stopping the bleeding. whole foods stopped the bleeding when they get 3% comps. you know what?

this does not drive me into a stock, but makes me want to cover my short. i'm not short anything. that's a theory. not -- you know. >> they have a new creative director at coach. >> yes. >> some see catalysts coming. >> right. it could happen. >> in september. >> i looked at the shoes. >> it's cheap, isn't it? >> the shoes? >> no, the stock. >> shoes look cheap. tell you that much. >> do they have cargo pants? >> no, coach doesn't carry those. that's strictly -- wow. comparing this to kors. an angry call. a lot of congratulations, but in the end, they said, listen, we're not who you think we are. it was kind of like that dennis green speech. we are not -- we know who they are. we are not who we think we are. i don't know. i read the release with the reality check, saying, what are they doing giving guidance for if they are so, we don't know what we're doing? i know, growth story remains in tact. you have morgan stanley.

everyone loves it. they don't want to lose a really great retailer. you know, great growth story, but in the end, i quote the note that says when the ceo, john, says we are not here for a quarter-by-quarter situation. no. i like quarter-by-quarter situations. >> yeah. i like the long term. give them credit. they are saying to the analyst and invester community, stick with us. you need a longer term view on this. is there a point in that? >> low multiple, not for a high multiple. >> what about coach? >> why do i need a minus 17 when i have a plus 17 with chipolte? the multiple is high. costco is not expensive, but retail's really, really hard right now, and i'd rather not own retailers than own them. others are okay. >> great stuff. leaving it there for now. coming up, other media companies spinning off the print

business. we'll talk to the ceo later in a cnbc interview, and futures are under pressure this morning. more "squawk on the street" live from post nine when we come back. we never thought we'd be farming wind out here. it's not just building jobs here, it's helping our community. siemens location here has just received a major order of wind turbines. it puts a huge smile on my face. cause i'm like, 'this is what we do.' the fact that iowa is leading the way in wind energy, i'm so proud, like, it's just amazing.

cbs care mark beat estimates by three cents second quarter profit of a $1.13 a share, and the company raised the full year forecast on the basis of better sales and expanding profit mar gyps. you know, some worry about the fact they pulled tobacco off the shelves. >> they did 3.3. the cfo out, against the inversion, who knows, but i think cvs is a complete stand out now for multiple years, well-managed, and this was a sign, again, that pulling fak was both a good thing and also not a thing to damage the earnings. stocks higher. >> points jumping out, one is that they had a negative impact on pharmacy same store sales from generic drug introduction. significant one, they overcame it. >> overcame it, well put. >> another thing back to the retail conversation we had. we still think of cvs as a place

to buy a candy bar and magazine. not so much. front store same store sales reversed that, negatively impacted by softer customer traffic, basket size, but the tobacco hit affected 110 basis points. there is a traffic story here that longer term could be a problem if they had not already reinvented themselves. >> that's why they are shifting, yeah. >> this is another target competitor out of nowhere. cvs. i go to the cvs, like my rite aid. >> it's pricey. >> yes, it is pricey. you go there because you're pressed for sometime versus the giant target because i'm lost in a sea of, you know -- >> yeah, sure. walgreen's up. >> one of thee great success stories. i doubt if agree watson, owning

at 28.30. he got it right, coming back on the show and not lecture me about what an idiot i am. oh, cramer said he was an idiot. retweet that a million times. the success stories and target and walmart are the failures. >> do they invert? if they do, what happens to cvs? >> well, i mean, like, cvs in terms of kpestiveness? >> engineer something? >> well, no -- look. everybody feels under pressure. i talk to st. jude, a good company, they feel under pressure because medtronic is inverting. i know edward life science, a great company, not worried because they feel they have a better mouse trap. it is case by case. >> do we have time to play what eaton told you last night? we don't have it, but we'll get it. pressure is building on the tax inversions. >> yes. one of the things that sandy cut

cut cutler, it was a tough interview, but that's what happens. >> we can play it quick. this is what the ceo of eaton said. >> in every public setting since may of 2012 announcing the cooper transaction, we emphasized it was not the plan or strategic intent to divest the vehicle business. what i call in inversion mania, there's a number of investors who indicated they thought it would make sense for us to lay the ground for someone else to invert their business. that's not. our intent. >> not their intent. >> companies got the same nail drop of other dublin companies. i've been there, i never saw the eaton plant. there's not one. it's a mail drop. put people in there, and you is a mail drop. notes were going out saying they were going to invert or spin off their vehicle division, and the thoughts were dead wrong. >> took it off the table. >> maybe he should have said that ahead of time.

>> that's why we have to watch executives now, same rhetoric, if they got to get ahead of it. >> good point. >> up next, jim cramer's mad dash, counting down to the opening bell in ten minutes time, futures under pressure after a late day rally yesterday. dow off 55, more "squawk on the street" straight ahead. ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month and make this the summer of style. 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

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just about seven minutes to go here before the opening bell. time for cramer's mad dash ahead

of the opening. >> did anyone think he would not deliver an up believable quarter in aig? they do not understand how the 70-year-old guy came back five years, saving the company, good combined ratio, could be an inflection point who has been the right. he's been so right. people lost faith here, lost faith here. stop losing faith. it's a good story. book value 75. people say, well, it's phoney. it's struck clean. he left the company in fabulous shape. >> against the backdrop of the difficult quarter. >> hig not great, traveler's, fantastic. yes, the charts for most look horrible. i see this being pulled down by the futures just the way i see ones you circle back to, a remarkable quarter. >> up 3% on the news after the bell yesterday. right now, less than two. >> they are used to the

condition that if the futures are down, i shouldn't buy anything. it's been the opposite. futures down, that's when you use the futures to be able to buy the good ones, not -- i'm not going to speculate on target. >> no, right. you said earlier, that's exactly it. >> people are nervous saying yesterday was an aberration, and we look at the map and say to myself, will they invade? if they invade, you know, bets are off, but if they don't invade, you get a solution, and why didn't i buy something? it's russia. >> aig a name to watch as opening bell approaches in five minutes time. we'll be right back. today, life and death battles, terminal patients willing to take risks. drug makers with heart wrenching

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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. you're watching cnbc's "squawk on the street," live from the financial capital of the world, and the opening bell set to ring in 90 seconds. jim? >> when companies ring the bell, we don't talk about it like we should. washington prime is run by a serial creator of value. flipped the event on, and before that, people remember, and i remember seeing him behind the deli counter, flip to whole

foods, hired me at goldman sachs. it's a realty spinoff, federal realty. don wood, don't take offense. all the reit guys are friends. it's a winner. >> that's exactly -- >> i like realties very much. yeah. >> even after the rally? >> i like yield. i like yield. i like ben very much, i like washington prime because mark is a winner, and sometimes you go with the ceo. >> bet on management. >> yeah. look, up 84 cents, doing a major transformation in the company and nobody cares? >> a 7 % move. >> and cars.com. what are they waiting for? >> investors, during the splits, have been attracted to the broadcasting and digital businesses versus publishing. >> i like the combination. >> only poised to open above 3.5%. >> zillow's 5 billion. i love, love spencer.

go ahead, thank me on twitter. >> very active on twitter. >> you are fishing for a twitter call out. >> nice. >> well, looks like little in the way of economic data. two reports at 10:00 a.m., factory orders, ism nonmanufacturing orders. >> watching opening bells here with s&p poised to open lower by a couple points. we'll keep an eye on it. here in the big board, jim mentioned washington prime ringing the bell, and the nasdaq, it's meet me, a social network for meeting new people in the u.s. >> retail me not beat. >> that was ugly. >> i have great stuff on that later, saves it for my -- well, yeah. well, stock trading. woah, boy. >> begin here with coach real quick? that's the big news. talk about it bmpb the open, see how it's fairing here as we begin to trade.

retailers in focus this week, more in the back half of earnings season, a season, generally speaking, outperformed expectations and not just because of the buy back phenomena on the revenue side, on profit margins as well. coach's up. do they hold there? >> if you get, in the end, men's business moving, driving men's business, 700 in global sales, surpassing sales in china at last. look, i think getting moving versus, like, a great retailer, people like growth in retail, and that's no longer short. how about that? no longer short. >> checking in on target and cvs. fargt talked about the higher than expected expense related to the data breach and troubling developments with traffic more recently. share's down 3.5%. >> yield, yield, yield. >> further they are down, better the yield looks. >> look, you're not going to get a high quality retailer in a clause with this yield without

taking a hard look at it. i want to see what the ceo's going to do. they have to pull it. >> more to the target real estate story you think? >> no, not really. buy washington prime or federal realty. i just think target, again, look, can they regain what they did -- i mean, are they jcpenney? people shop at target and walmart. they have retailers that don't do anything. that's what i fear. >> bloomen brands down 10%. outback steak house, that missed by 15 cents. >> that's disappointing. that's been a good one. >> yeah, revenue light too. >> texas roadhouse is good. the unbelievable strength of garden has been the steak business, but take a hard look. a winner, disappointing. >> what's the view of garden

here? >> it's a yield play. activists are pushing. we keep getting stories where they go down so much that they give you a good yield, and, i mean, look down so much it gave you a good yield. i like to look at bottoming as per yield, and that's where i'm interested, pull the file, garden up 2.5, and it's up 3 now from when he left. said he left it in good shape. i don't regard that as true. >> speaking of restaurant ceos leaving. panera's ceo is leaving. >> people want to own panera in a bad way. i don't like cfos departing without a transition. not a transition there. more of a release. >> what happened? >> they were an issue of through pit, frankly, maeds the menu complicated, couldn't get through, on "mad money," listen

the mosh pit of waiting for orders is unacceptable, did not upgrade the technology. i think they pull it off because panera 2 in north carolina, the numbers are spectacular, the 2.0, but it has to roll out. there's a lot of panera's, it's a show-me situation, but not a short. >> office depot, unexpected profit. >> sipper ji is better than expected, and people there should be buying -- well, no, it's challenged by costco, challenged heavily by amazon. we forget amazon is there beating the heck out of a lot of companies. >> yeah, back to school, all the office supplies. >> movers in the auto space, not related, but toyota, avis budget. >> can we talk avis. >> they have currency, what about it? we have -- >> there's tremendous consolidation in the rental car

space, all right? just like three companies, but avis is the leader, a well-run company. this should have been no surprise they did the number. when we were at the delivering alpha conference, you should think about hertz. doing a lot of work on these, there was a lot of price cutting by hertz for fleet sales. that ended. buy hertz, stay long avis. >> even with the competition of upstarts? >> it's all slap happy. don't worry about it. the justice department doesn't want to hear it, but they did bless us. >> you can use something like lift. >> zip car. >> zip car. that's avis. brilliant acquisition. >> there you go. >> well-run, the old guys keep surfacing doing good things other than the ones in jail. there were two, remember, the senate bought, and there was the -- silverman, and everyone taught by silverman was a winner

brought down by the bad, and all the people emerged, doing fabulous thing whether it's mlb.com or the people who -- one of the guys, the cfo from jones that sold the company to sick more. there's a lot taught by silverman, and richard smith, he delivered the "wall street journal" article, a guy from the big family. >> talking about the two sectors leading the market here year to date. health care utilities. under pressure. >> they hit it. southern -- >> people looking at yield saying, well, is it a yield story? seemed to be an earnings story ail. >> factory growth, you think numbers, ap comes on, factory growth, you see a a lot of electrical output. stocks are so-so. edge comes down. aep okay. southern has a good yield now. a lot of people are worried about coal.

i'm not. on the health care, activists reported a number -- which is good -- a guide down, i like activists, a cooperman name, and it's been tere terrific. i like health care here. >> the s&p 500, up 4% a down market right now. interesting they are getting into the flavors, made an acquisition in the summer. >> iff had a number they don't like. international flavors and fragrances. it's been weak. doug's been on the show a number of times. the flavor side disappointing. iff, a great growth story, but it will pause here. >> trying to find a macro. i can't find one. >> i was surprised. i thought they were nutritional, the ogranic trend. >> well, they helped make food taste better that's ogranic. the fragrance business is a

driver. say there's a kelly evans fragrant. you don't come up with it. you go to iff. there's a laboratory. you say what you like the smell of. it's the evans. >> that would be your fragrance. >> i'm not celebrity enough for a fragrance. >> the stock is on sale. >> looking at the market generally, jim, s&p off by 7 points. the dow's off 50. were you surprised by the late stage rally? touched almost a hundred point gain at one point. >> there's a belief it can't be as bad as last week. i find until there's clarity on international issues, you're out there on your own trying to figure out, well, will russia -- conversations -- why did the bp's ceo d.c. talk to the ceo lately, a million barrels per day. said, oh, no. i said, what about putin? no. you have to see conversations.

merckle and putin have to be doing talking. >> this is a story of european -- american energy companies. >> but many, many of our companies have huge european businesses. >> russia exposure. >> all connected. >> and under rated. people want to talk about the fed, and the fed is not controlling national oil wells and how much technology is held back in russia. stock down a dollar, not controlling exposure to russia, mastercard or visa, but easy that talk baht the fed. they are in town, really good, give you releases, and putin is not issuing releases or playing ball. cutting numbers putin does not work. >> you are going to get hate mail for that. fed's doing a good job. >> hate mail, like i'm a stranger to hate mail. bob is on the floor tracking numbers. >> no hate mail from me, jim, i

love you. utilities, all on the, say, out performing side, materials, industrials, they are under performing the overall market here. earnings generally good. we approach 10% on earnings growth for the second quarter. 5% on revenue growth. that's good. we are getting all the outliars. the big day today is on target. target an outlier or simplematic of another problem? the sales breach thing, but not a surprise, lowering guidance that much, that was a surprise. it's down there. discounters had a difficult time, independently of target s issues here, to the downside today, and pressure on the consumer in general, and you see that today in what was reported with blueman brands. you know about them. talked about them, outback steakhouse, but what was interesting they missed and

lowered the outlook as well. stocks set a new low for the year. liz smith, the ceo over there, she said it's emblematic of the problem consumers have, traffic did not recover as expected following the weather events of the first quarter. there are companies very closely tied to the consumer, and this is middle level consumer as you get clearly continuing to have problems. there's companies that are just minting money. i agree with everything you had to say, jim, avis. i had to represent a car in san francisco, i couldn't believe the prices i had to pay, and i use avis regularly, and it's amazing what you pay right now, believe me. prices were up and volume up. . they are raising prices and getting vehicle consume on that. stocks firing on all cylinders. agree with everything you had to say. did you read the coach earnings report? they talked about the need for a brand transformation. of course, everybody thinks the brand is dead. it's not.

the north american sales, i was surprised, 17% decline. 21% decline in the prior quarter. say, all right, the trend is better. oh, it's awful. china sales are better. that's what the conference call is about, brand transformation. when we have more on that, i'll let you know. the play on the flord home building industry, not fairing better than anyone else. new lows of the year, orders up 32%, not bad, but light on earnings and revenues. finally, following up on santo from yesterday, the portuguese bank helped out, bailed out, whatever you call it, by the portuguese government. the largest independent shareholder outside the family in that bank. they own 14% of the bank, earnings out, took a write down of 708 million euros. entire investment by credit written off as worthless, zero.

obviously, there's bail in here. somebody's got serious risk. also, essentially worthless. >> still ahead 9%. they have a lot of capital. >> what? >> they have the best capital position in the french banks. >> not clobbered for it. thanks, bob. let's go to chicago, rick santelli in the bond pits. >> you know, market's trading fairly steady, but europe seems to be a focus as bob point out. you know, we had stress tests in europe, tried to see reform in europe, but at the end of the day, really, it's an accounting issue and depressing for the outlook of questions regarding the banking system. now, to that end, the dax down wednesday of last week, down thursday, down friday, and it was down yesterday. look at intraday, up a bit

today. so now let's look at yields from booms, yields for booms trading up a bit, not a lot, several basis points. look at the ten intraday, trending with, open the chart up to early july, and you see we are definitely forming a base. four year close at 244 to 26 6 range. go to euro versus dollar to september, just by a little bit we're still comping to november in terms of the lowest level against the green back. the next chart index highest level since september, euro is 57.6% of that, so it's just a mirror image of the euro. kelly, back to you. >> thank you very much, rick. coming straight up, congressman darrell issa tells us why startup companies are important to the u.s. economy, and gotman sach's equity strategist joining us live with the take on where the markets are headed."

squawk on the street" will be right back. don't just visit rome. [ thud ] visit tripadvisor rome. with millions of reviews, tripadvisor makes any destination better.

who says you can't have fun? >> that was intense. >> chartnado. my producer said -- prevailed pop me to have charters come to the show. i don't have charters typically, and a facebook, amazon, netflix, and google. >> a write up about the st. louis fred in the washington

poegs today. if you want data or anybody else, you go there and get it. >> i love that. >> noed why you were big a geek as i am. that used to be meltzer that started that in the '80s. >> so much information. >> fabulous. down 16 when the numbers came out, people said to me, jim, what's the amount? i said, nothing, rethink the way you think. it's came out tremendous numbers again. this is the drug that's great, a closely watched drug, and could be good, and i call it that, and it's -- they are going to buy 30 %, the low 20s. sell because you don't know what you're doing. that's okay. a $300 stock. it can fluxuate. >> what else? we have tenant?

>> right, this is just a little company that tnet, that does outsources for hedge funds, terrific win. didn't talk about mcdonald's. still killing them. these terms are tough. when you had that beef pull, people don't come running back, okay? they just don't. there's a change in habits because this is the food chain people don't like, the industrial food bureau, the fictitious group made up by what you think of the food chain, winning over people. >> a pair of upgrades. >> that was a great upgrades avoiding it, and, i like both stocks because they have field, although, i don't like the product. e-cigs a fabulous gateway to

e-cig. i like it, i shouldn't say that. >> have you used one? >> yes. my nephew, my head writer, swears by them. >> really? >> yeah. >> because they are real, sexy? >> bogart and i get confused when i smoke them. i'm not telling people to smoke. >> offered in workplaces too, using that in meetings, and it raises eyebrows. >> it's a gateway off tobacco. i was being facetious. >> we may circle back and wonder if they are as healthy as people -- >> sure. tobacco is evil. it doesn't matter. >> all right. don't tell that to the tobacco executives. >> they probably buy into it, just feel bad about it. they give a lot of money to the arts. i don't know. said that. >> we'll wash lorillard and stock trading with jim looking a

half hour after the market opened, "squawk on the street" will be right back.

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trading. >> people said, well, how did it happen? how did the stock go down? the company assured you changing the way of algorithms was not going to hurt that couponer online. why did they feel that way. the ceo at a conference in june right after the ranking assured people, not to worry, he said, and thing i think the time thing to say about panda, the name of the algorithm used, i will say about panda is two days after the announcement, i took my family to peru for two weeks, i felt like things were in happen. that gives you indication how we feel about it. well, yeah, i don't know what to say. i mean, obviously, he didn't know how bad it was going to be. peru. >> back in january. they had, what, six months? >> june. >> a couple months. >> don't mess with google. if they change the algo, don't be ri assuring of the business because you don't know. google's in charge, not you.

that's what went wrong at retail me not. they were blind sided. they believe the trip to peru trumped the google alkg myth m. >> you were not a fan of the company. >> no. they serve at the mercy of the big portals. i hate that. ecom, channel adviser, smart company, but companies that advise companies, rocket fuel. sign it and buy it in the agree hay day of 2000 and 2001. >> eaton last night, who is on tonight? >> here's a company that uses the web, a cloud based company, steve singh, continues to win, they expanded it to air bb and to ober. one-stop shop, new technologies, wouldn't keep in technology, but i think they do. steve is a winner. >> it's chart week. >> it's chart week. chartnado. >> i love that. straight ahead, goldman's

kostin joining us and the heels of the company spinning off a print business. shares are rallying. we'll be right back. kost

kostin. welcome back. rick santelli live in the pits of chicago awaiting june factory orders, july ism nonmanufacturing, and we're going into right at 2.5%, but equities weakening meaning buying treasuries at lower rates, but the data may make the difference. factory orders up 1.1%. it's june and may affect provisions second quarter of gdp, up double expectations, but last month, down half of 1%, revised down six tenths. ism for july, nonmanufacturing, strong, 58.7. that matches december of 2005 right on the nose. you have to go aways back to comp the largest swath of the economy, and this definitely fits into the improvement seen in the u.s. economy. europe seems to be the glitch in the system at this point. back to you.

>> wow. 2005. back for ism nonmanufacturing. thanks, rick. with reaction to the data, bringing in steve back at hq coming on top of much better ism manufacturing numbers last week, steve. this sets up well. >> both reports, manufacturing and nonmanufacturing tell the story of a fairly robust u.s. economy with growth north of 3%. i will tell you the way that the ism predicted gdp growth, the numbers have not necessarily cooperated until at least recently. i'm looking at the details here, particularly the new orders. very, very strong. 64.9. that's something that points the way down the road. prices paid easing off a bit, but still at a high level. 60.9. looking for the employment indicator right there. that also strengthening. obviously, most employment in the economy is in the service sector, that's 56 and 54.4. the factory orders number helps

on second quarter growth doing well. 1.1% after a minor downward revision to may. seeing good strength across the board. i'm not seeing strength that people remark on is the business investment proxy here, down 0.3% after being up 0.1. that raises questions with business investment, but ism services and manufacturing suggesting a good and robust growth in the u.s. >> yields popping up to the highs of the day, 251 on the ten-year. thanks, steve. >> thank you. >> steve kostin is with us from goldman sachs, joining us exclusively after the recent call. you had a note today, but first on breaking data. setting us up for another strong quarter of growth. do you buy equities on the news or stay away on fear of higher rates? >> i think the conclusion is you want to own stocks, own stocks

from a strategic perspective, looking out over the next several years. the dominant narrative in the market over 12 months is about the fed and what the policy will be in terms of hike in rates, goldman sachs view and view of the market. it's going to take place in a year's time, third quarter of next year, and we think about how stocks trade in the year ahead of hiking rates. tends to do well. stocks do, you know, reasonably well. >> cautious in the short term right? months of weakness? >> concern would be on last week as they reference a note, a tackty call point of view, went from a high of 1998, and concern was relative to the other asset classes, less attractive on equities at the time. going forward, the key issue is the markets still expensive, and we'll have to earn our way into results, so we look in the second quarter, now about 75% of the companies reported, and so

far we've seen revenue growth, median stock increase of 5%, and if you think about earnings, earnings up 10% for the companies. that's a strong set of fundamentals in terms of the drivers. there's obviously macroeconomic data points, but microis indication things are better. >> if you bought a ten-year bond right now, you have an annualized return of 1% between now and 20 18, when you believe the fed funds rate reach 4%. what do you do in the meantime? did you have to buy bonds, buy everything with short term duration as possible? how do you play this? >> basically, you get a modest return, risk adjusted return is pretty much in line with the history. looking around 1 % as the fed funds begins to normalize the rate over time, you get, also, ten year treasury yields climbing. curve flattening. historically speaking, that's what happens. it's an environment where you'll do okay in the next couple years

and taper off. we know from experience. we know from 1994, 1999, from 2004, the experience suggests that when the fed starts to increase the fed funds rate, that multiple of the market tends to come down. that's because it is a challenging environment for significant returns after that. >> are you assumes it's smooth? in other words, you hear a growing course of strategist traders saying they are behind the curve, it's bumpy, forced to act because of the data and what's happening in the yield curve? what is it's not that orderly a transition? >> the baseline case is we move with respect to the data, information, and take the first rate hike in a year and move slowly, you know, to raise rates to a neutral rate of 4 %. obviously, there's a lot of reasonable people in the market where there is a different view. the view is mutual rates are 4%. others can be lower than that, 2

%. that's implications for the return to stocks versus bonds. our baseline scenario is over the next 4.5 years, it's a 6% annualized return on u.s. stocks. it has to be 500. 6 % annualized. if you adjust for inflation, you grow and get return at 4%. that's in contrast with bonds, lose, expect to lose 1% annually for five years. >> for the retail investor sitting out the market, unfortunately, whether it's waiting for disposable income to buy stocks, do you think now is the time to get in or now is the time to buy and hold? >> well, i think this is a view of your investment whorizon. if it's over some immediate term, that's a good thing. fundamentals are getting better. i think the growth aspect returns we are likely to get in the next couple years are certainly less, in my opinion, than the last few years, big pe expansion, trades add roughly 16

times forward earnings, median stock higher, and historically speaking, that's a high multiple. that con trains the returns. horizon, bottom line, investor over time, it's a reasonable time. >> your wheel house is earnings. we have more three quarters of companies having reported already. in terms of the quality of the revenue growth you talked about, is it there? is it enough to keep momentum going in stocks, and do you worry, for instance, about russia? jim cramer said the market under pricing this risk if it hurts your companies and trickles over into u.s. multinational earnings. >> well, two-thirds of the u.s. revenues are domestic. the focus ought to be here inside the u.s. and what's the underlying demand and economic environment is improving, getting better. that's consistent with a story of better revenue growth and better earnings, and margins, interestingly, have been holding in just at roughly 9%, just

there, that's the case for four years. while that's a concern for environment if you saw mar gyps rolling over, margins stayed strong. that's an important indicator that management is vigilant. now, the capital spending is a key story. we're seeing pretty robust growth in capital spending, and the companies spending money have been outperforming. that's a positive story in terms of encouragement for companies to step forward and reinvest in the business. >> judging by what? when you say companies spending, out performing, give us an example. >> think of uses of cash in corporate america. you have companies that can either -- not either, but some focus more on capital spending, some return to cash to dividends or buy backs or cash m&a, and from an investment perspective, companies that have been investing significantly in cap backs as a share of the equity cap have done well. we got guidance from significant

number of companies suggesting that cap x spending rises 8% this year, a meaningful number. >> all right, dave kostin, everyone's talking about the note today. glad we have copies for ourselves, stogs versus bonds. steve kostin, chief strategist at goldman sachs, and dow down 635. domm chu? >> watching a battle for allergen, recommending the shareholders support bill ackman's persing square efforts to call a special meeting of shareholders. at the special meeting, they have the opportunity to voice support for the removal of the six incumbent members of the board of directors. shares down nearly 2% in trading. valia valiant, down 3% in the trade today. back to you. >> the saga between the companies, dom, continues. we are watching the story with

ebola, more patients in the u.s. treated for the deadly virus. that's dominating headlines. jay gray is in atlanta where the second ebola patient arrives in the u.s. today. jay? >> reporter: hey there, great to talk to you. nancy wright on the way to atlanta now in a specially outfitted medical jet in an isolation pod, transporting her missionary colleague, dr. kent bradley. expected to land shortly, and cleared customs, but to refuel and on the way herement once landed at the reserve base, she'll be rushed here to emery hospital, again, with her colleague, share an isolation unit here. they have their own rooms, but in that unite as they begin what is going to be a difficult, very long treatment and recovery. right now, doctors guardedly optimistic saying that both of the patients seem to be

improving, but they also stress it's a long process and one that includes a couple of crucial, critical days over the next week or so to get them back on track. c >> we'll continue to follow the story and thanks for the latest there. when we come back "squawk on the street," the deal of the morning, spinning off the publishing business. the ceo with us fufirst on cnbc. after the u.s. was downgraded, we are back on the network to defend the call. "squawk on the street" is back in a moment. 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

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media giant announcing to split the business into the owner of the usa today separating the broadcasting and digital businesses from the publishing division and announcannounce ed deal to buy a portion of cars.com, but it didn't already own, the price tag on that deal, $1.8 billion. joining us is the president and ceo of gannett. good to have you this morning. >> thank you very much. >> it's a popular move in the media industry, news corp., tribune, time warner, why is this the right time for gannett? to follow the leader strategy? >> not at all. it's just the right time, we've been o on a transformation

journey for two years, stabilized rkts revitalized, doubled the broadcasting portfolio, doubled it with the acquisition of cars.com. our digital portfolio, so we have great businesses of great scale, and now is the moment to have them be able to achieve their growth characteristics unendumbled by regulatory constraints and obstacles. >> the structure of the deal would see that it seems that you're doubling down on broadcast and digital revenue there up 88% and cars.com and some of the other nonnewspaper websites go with that company. print, though, seems to be separate from that. wonder if you could talk about the strategy to put the digital assets with the fast growing broadcast business and the print company, just have newspapers? >> yes, with respect to our broadcasting and digital company, our digital properties, cars.com, career builder, are high-growth, high-margin

businesses that join our broadcasting business which is also a high-growth, high-margin business. on the publishing side, we will be spinning that virtually debt free. it generates a substantial amount of free cash flow and able to make smart, disciplined acquisitions in the publishing sector that will be very acretive to earnings and also will add tremendous shareholder value to that business alone. >> well, it raises an interesting question. there's 81 daily newspapers, usa today is one we all know, but what's the future of the business for newspapers and publishing as we continue to see the ad dollars go to digital and broadcast? >> yes, and i think that we at gannett have done a fantastic job over two and a half years stabilizing the business, revitalizing it, and understanding the content we produce we need to produce and provide on every platform consumers want it on whether

it's print, mobile, digital, desk top, whatever platform. we are fully able to do that in the publishing sector. spent a lot of time, energy, and investments 2in positions that business to do just that. >> with two stand alone corporate structures, two different business models, different growth trajectories, did seems either one of the businesses is perfectly positioned for a potential merger with another player in the space. have you gotten inquiries for potential suitors as a sign of the business, and is that something you entertain going forward? >> we always entertain anything at the company that ultimately create value for the shareholders in the near and long term. we never rule anything out, but we are focused for the next year on integration of cars.com, a fabulous digital business with strong growth in revenues as well as revitalizing our publishing business. >> how much money does cars.com make? >> as we mentioned in the earnings release, in the release

this morning, we have increme incremental performer cash flow from cars.com on $155 million on a pro forma business in 2014, based on the new affiliation, cars.com alone on a pro forma business is $170 million. >> many of the viewers are income-focused investors. we saw gannett announce a 20 cents quarter dividend weeks ago. how will that income be split among two companies and how you decided where the dividend goes? >> that's not fully determined at this point, but as we said in the press release this morning, the combined dif depz of the two companies will be at least the 20 cents per quarter dividend, the combined company is currently paying downright now. we'll determine those capital allocation policies as we get closer to the spin of our

publishing business. >> the deal will close middle of 2015. what's left to happen between now and then? >> yes. with respect to the spin, that will close in about the middle of 2015. there's, obviously, various tax opinions and other regulatory things that we have to have happen. we have to do more planning in determinations with around the various pieces of our business. we expect to be done with all that in mid-2015, and ones cars.com saide, we expect to complete that acquisition in the fourth quarter of this year. >> finally, just a more macro question in the media business in general. there's debates around whether media remains on a large scale national basis or whether viewers and readers are interested in more hyper local news. we saw aol, obviously, struggle with the acquisition of patch, but, again, national media struggled with two macro stories

as well. i wonder what demand you see from the audience that gannett had in the last decade, and how that audience is shifting? >> we have been fortunate to have an iconic national brand in usa today, the number one publishing and digital property in the united states. we also are in 81 local communities through our publishing business and another 46 through our broadcasting business. we believe that that sharing of content between our national brand and our local brands is very, very important, and we'll continue to do that after our spin. recently, wed added a local addition of usa today, a national edition to usa today in 35 local newspapers, and the reaction from consumers has been just fantastic. we roll that out to further markets. we believe national and local content are important to satisfy consumers media consumption habits today. >> are you surprised your stock

is up a quarter percent, 8 cents? cramer said it was value created, and you sound like you are creating two competitive businesses. >> you know, over the last two months, our stock has been up about 25 %. we are in -- not in this just for the return today. we believe the true value and the benefits of these companies and the acquisition of cars.com will be well expressed in our stock price over the coming months. >> of course, barrens predicted this would happen, when the stock ran up clearly. investors have been benefitting from this thesis for at least the last couple months. we'll p continue to watch the company and congratulations on getting the deal announced and out the door. >> thank you very much. >> the ceo of gannett. with that, dom chu has a news alert on baseball. >> that's right. the man at the center of the biggest doping scandals in

baseball history surrendered himself to law enforcement. he turned himself earlier this morning. bosch is charged with a criminal account of conspiracy to distribute testosterone. he surrendered at 9:00 a.m. this morning and nine others were arrested in the ring allegedly distributing steroids among others to the most well-known ballplayers in network including alex rodriguez. of course, rodriguez serving a one-year or season long suspicion for that substance abuse issue in major league baseball. again, sarah, a pivotal man in the court, i guess if you will, case, anthony bosch turning himself in this morning to drug enforcement agency officials. back to you guys. >> thank you very much. a lot of folks following that one. coming up, three years after

downgrading the united states from aaa, standards and poors is back first on cnbc with us next to defend the infamous downgrade and where we go from here. we'll be rights back. the cnbc realtime market exchange snapshot is sponsored by interactive brokers. hi! can i help you? i'm looking for a phone plan. it has to be a great one, and i don't compromise. ok, how about 10 gigs of data to share, unlimited talk and text, 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.

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app upgrade? with us now is the managing director of sovereign ratings for standard and poors, john chambers. good to see you again. >> good to see you. >> i feel you defended this call for the past three years on the downgrade, but things changed a lot in three years. where are we now? >> some things have, others have not. we have a stable outlook. which indicates the upward and downward pressure is balanced. probably the biggest negative on the rating right now is the political bringmanship that led to the downgrade contributing to the down graid in 2011, and which we think our call was validated in object of 2013 when, again, we had the brink of default with the discussion over raising the debt ceiling. >> we don't have that right now, not a date looming. surely, we have political problems and there's a gap between the two parties, but we don't have a deadline, and we have a better fiscal position.

>> on a floor basis, it's better, i grant you that, but on a stock basis, level of stock to gdp doubled since the recession. now, that in itself is fine because you would want to be able to respond in that matter with a deep recession, but you need a median term plan to have a debt as the share of the economy decline over time. that plan is not on the table in regards to raising the debt ceiling, imminently no, but our reading is after the midterm elections, that problem could resurface depending on the outcome of the elections. >> midterm election, and gop poised to take control of the senate, according to recent polls, do you think that would be enough to at least alleviate some of the gridlock? >> i think it'll -- you'll have to wait and see what the numbers are in the house. one outcome would be that the administration would look in the last two years to try to make

compromises with the gop to try to find room to negotiate. on the other hand, it might embolden the gop to try to reverse some of the signature programs of the obama administration like the affordable care act, in which case, that could become quite ugly, and the debt ceiling could be featured in that negotiation. >> you received criticism. we have a quote, actually, i'd like to pull up from three years ago on this day during the s&p downgrade of u.s. government debt, and the whole thing was about political instability. we have the quote here. american's governance and policymaking is less stable, less effective, and less predictable. >> uh-huh. we stand by that. >> is that holding us back from aaa right now? >> the political settings on this one aspect, which is that there is a possibility, a low

possibility, but nonetheless a possibility, that because of the intrance of raising the debt ceiling, the u.s. could default on debt, a characteristic of no other highly rated sovereign that we rate. >> do you think we compromise the reserve currency vet of the political crisis, the center point of the research. >> the dollar, as a key reserve currency, central element to the file. the debt ceiling is one of two or three other elements that is beginning to, i think, chip away at that status, however, the united states still has the deepest capital markets, highly credible monetary policy, it's got open capital markets. it's -- the dollar has virtues, a single government that stands behind it. these are things that other currencies don't have. >> john, in your most recent

note from june, you say we could raise the rating back to aaa as a result of two things, one bolder fiscal policy in the median term, but the second thing is a more robust growth trajectory. now that we have second quarter gdp must remembers, looks like a snap back, second half is far stronger. what do you need to see of a growth perspective to feel better about the country's financial position? >> well, most economists lowered their medium term growth potential for the united states. the cbo has a 2% median term and half of that is the population growth. the united states, like most developing countries, has -- looking at a decade or more of sub par growth. because of an ageing population and because, you know, the productivity has not delivered the way it did, say, in the 1990s. >> are you surprised to see the

debt? after the downgrade, rallies and record lows and see 20 14, another year of low yes. >> well, in 2011, markets sold off. the low yields is a combination of the accommodative monetary policy and is surplus of savings that needs to find a home. >> still, the u.s. is considered it. >> you dr. >> despite the fact we're not aaa. >> the bottom line is germany borrows at lower cost. >> good point. good to see you. >> thank you. >> head of sovereign ratings for standard and poors. coach up as you see after falling sharply on weakness yesterday. why international is key for coach next on "squawk on the street," and don't miss disney's ceo. he'll be on to talk about

earning after the closing bell to talk about the release. we'll be right back here on cnbc. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours.

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since december of 2005. three stocks on s&p 500 three lows today, pvh, first energy, and timber. recovering losses. >> many movers watching today, shares of coach trading higher after a fourth quarter earnings ballet beating estimates on top and bottom line. company helped by a 7% rise in sales in international markets. the senior analyst at stern joining us now to talk about coach and recap the quarter for us. ike, good morning to you. >> morning, thank you for having me. >> were coach expectations too low? >> yeah. i think when you look at the coach numbers on an absolute basis, they are clearly a little concerning. there's a lot of margin erosion in the business and the comps in the u.s. are still down in the high tens. on a relative basis, couldn't

have been lower especially after analyst days weeks ago about the investment spend and negative traffic continuing into the next fiscal year. >> what do you see as the trajectory for the company? stock's down 35% over the last year, 11.5% of the available float borrowed to short the company, and north america seems to be slipping, profits, sales, both falling year over year, even though they beat, helping the stock today, long term, how healthy is the company? >> you know, they still have a lot of cash on the balance sheet, generate, you know, free cash flow. all i say is that the environment's different. a lot of competitors coming into their space, michael kors, kate spade to name a few. they have the work cut out for them. new designer whose line launches in september, and i think a lot of their success is going to lie on how consumers react with that.

it, you know, visibility is low. it's a wait and see right now. >> what is it going to take to turn this brand around? i mean, how do you long term transform a brand damaged so much in the core market of north ameri america. >> well, i think they are taking the right steps, closing 20 % of the north america retail footage and starting to close and stop opening a lot of the factory outlets. that's going to be a step in the right direction, get out of the real estate that was poor, and, you know, putting investments then behind the brand, that's what they have to do, and question is will it take a year, or three years, and, again, visibility is low. >> stemming over exposure here, ike. we saw china as the bashton yesterday, and europe was the best growing segment for that company. do you worry the companies will make the same mistakes internationally because growth is so big they over expand and get overexposed because

consumers buy these products? >> it's always possible. i'd say that in china, china's 8 to 10% of sales right now, 125 stores relative to the u.s., around 400 stores, so it's a little bit different dynamic in the category growth in asia, and china specifically, is in about 20 to 25% versus high single digits here. the category's growing faster and less stores. at this point, it's not a near term risk. >> it's kors over coach, eating their lunch in terms of market share. is that still the case? do you look at other brands like kate spade, doing better than coach? >> kors continues to do very well. i don't think the concerns on kors is the top line in the market share taking abilities, but the margins. with their industry leading 31%, it's starting to come down. the name we prefer in the space

is kate spade. i think that brand, the smallest of the three, a lot of momentum behind it, new customer acquisition going on there, made a lot of investment in things of omni channel initiatives, online, kate spade saturday sub brand, which i think will be a home run, but in the space now, the best idea is kate spade. >> before we let you go, were you on the coach analyst call this morning? >> i was. >> a lot of analysts on twitter talking about how they played elevator music and prepared remarks for five of six of the calls. many hard hitting questions that were asked? >> you know, i think people asked the relevant questions about the u.s. same store sales, the balance sheet, the cash flow, and importantly, the company's basically adamant they will continue to pay their annual dividend, a point of contention between bulls and bears right now. you know, i thought they answered the questions the right way and the right questions were asked. >> all right.

thank you so much for joining us to talk coach this morning. >> thank you. >> coming up, sharing a never told steve jobs antedote, dreams of free wifi and why it never came true. markets coming back, still to the red, dow down 35, nasdaq down 8. "squawk on the street" is back in two. 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.

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busy earnings morning. let's go to dom. >> watching cable visions, a rise in quarterly sales as

higher advertising and increased prices helped offset a fall in video subscribers. in fact, the company lost 20 28,000 subscribers, twice than the first quarter as a result. the shares off the first session lows, off by 4%. back over to you guys. >> thank you very much. cable vision under pressure. along with the broader markets. a check now, we are declining, but cutting losses with the dou down less than 50points, and the nasdaq down almost 10. two better beats when it comes to the economic data, factory orders up 1.1%, and the services number, biggest part of the economy, strongest reading since back of 2005. after yesterday's bounce, under pressure, but not as much as at the open. coming up on "squawk on the street," getting your hands on legal marijuana got easier. we have the uber for pot, next. , customizable charts,

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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. there's a startup making it easier to get medical marijuana. it's called ease. ease launched a new on-demand delivery service automating patient verification and driver dispatch to hand deliver marijuana straight to your door.

to explain how it works and where the funding can coming from, keith mccardy, the ceo and founder of ease. good to see you. >> you as well. >> sounds like a high-tech drug dealing service. >> yeah, look, i mean, we certainly understand the stigma. my mom asked me the same thing. really, the health care delivery service accessing medical marijuana easily, quickly, and professionally via the mobile device. >> going into colorado and washington where it's recreational and be a high-tech drug dealing service? >> so, today we're just in the medical marijuana. starting in california, of course, launched in san francisco on tuesday. we're keeping an eye on the recreational markets, but we are starting in the medical marijuana space, focusing in on mechanic. >> you got an interesting track record. microsoft bought a company for 1.2 billion, helping to fund it?

where do you get the funding from? >> i boot strapped the company thus far, but we are looking for funding. >> you're in the process of raising now? >> correct. >> kevin, the business model for eaze is actually prescribed marijuana for medical reasons. i'm wondering how that verification process works, and could users game that system? >> yeah. so the verification system is pretty simplistic, right, for the end user but meeds industry standards for verification. how it work, users go to, or patients in this case, go to eaze.com ease with a z. eaze verifies them using industry standards. after verified they can go, order their medicine. simply click their strain, the quantity will automatically detect their location and click request delivery.

we're hearing from patients that whole process from registering, getting verified to orders and actually receiving medical marijuana at the for step in some cases is taking less than 13 minutes. >> where do you see the debate going? the "new york times" came out with a widely talked about op-ed to lift the marijuana prohibition. do you see this becoming a national movement in several states in the near term? >> that's what we're seeing. we've hit an inflection point, but, you know, time will tell. >> are you faster than domino's delivery? which can we get faster? medical marijuana or pizza? >> medical marijuana, definitely. >> all right. we'll keep an eye on you. keith mccarty, ceo of eaze, uber calling themselves for medical marijuana. >> interesting. talk to a customer to see how it works on the back end. >> and whether it's faster than getting a pizza. >> we'll see. talking android, samsung and one stock getting crushed this

morning. and sharing steve job's dream of free wi-fi for all. why we never got there. all coming up next. 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.

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over to the cme group, rick santelli with "the santelli exchange" in chicago. hey, rick. >> hi. thank you, and i would like to welcome our special guest, dr. vern smith. thank you for taking the time this tuesday morning, sir. >> it's great to be here, and thank you for inviting me. >> listen, i really enjoyed your op-ed, discussing the hidden costs of bailouts, at time when we're all observing banco espirito in portugal we could debate, but in the end, it's more of the same. can you tell us what some of the hidden costs are and be cog sant of the fact the president before the recess, in an interview in the "economist" poked fun at titans of industry as to lingering complaints, but your op-ed seems to justify their complaints. can you explain? >> well, there's a hidden cost that people are not aware of. whenever incumbent investors and

banks in the economy, wherever they are, if they are bailed out, if they are rescued then they get to share the return on new activity as it comes along. i like to use a, a comparison, an analog. henry ford started building a model t around 19. >> man: -- 1900. okay? floued a plowed all profits back into the business. suppose he had been required to share that return with the carriagemakers, the stables, horse farm, all of the forms it going bankrupt at that time, and his technology was replacing. then there would have been less for him to reinvest. and that's true generally in the economy. >> let me interrupt you there. i love your analogy. make it more clear for me. in the instance of the bailouts in '07-08, who are the buggy

whips of today that are drawing this capital? be more specific. >> the -- the investors who -- who took their risks but were bailed out and didn't have to take their hit. it means that they share the return on any new lending activity by the banks. that reduces the funds available to new activity. you see, it drains off -- >> how can we correct this, dr. smith? seems we can't go back in time. i agree, so does the cbo, the s&p guest this morning talked about on three-year anniversary, the mark down of the economy, we're going to have subpar growth out for many years that's going to be under 3%. what can we do right now to change this? >> what we can do is do all we can to stimulate new enterprises. really. and i don't mean subsidizing them, i mean reduced bure cra

crazy -- bureaucratic costs. reduce businesses, especially young, new firms plow owl of their returns back into the business. this is the way we 0 grow. almost all of our growth comes from young firms. some of them get large very quickly. for example, google was an example of a relatively young firm that grew rapidly, and it's very important to -- in fact, business taxes generally you see come right out of reinvestment and new economic activity. >> marks sense. it dr. smith, we're out of time. all i could think of, to correct inversions they want to build a wall around the country to keep business in. it's unfortunate that we both know what the solution is but it doesn't seem congress or the administration is very anxious to make these corrections. thank you for xplarni inexplain theories on the aftermath of t.a.r.p. and the bailout. sara and gang, back to you.

>> thanks, rick. very timely with the news out of portugal. take a moment to check the broader markets. because as art cashin just says in a notes, stocks are zigzagging around. the dow down 63 points. s&p down 4/10%. off the worst levels of the session after bet egg economic data at the top of the hour. mainly services coming in as strongest level since 2005. factory orders up 1.7% better than expected, kayla. check the ten-year treasury note yield, the focus of equity investors. 251. fear as the news comes out better on the economy, the fed might have to shift towards a policy stance. that's why watching rates is so important and what's been spooking equity market investors. this helps explain a little why the slide we saw last week, worst week for stocks and the s&p of the year. >> yeah. and even with that good data, sara, the dow doesn't see a clear story to the down side today. intel, united health, chevron,

leaders to the down side today. no clear sector story. no clear data story there. we are seeing retailers bounce on back to school, bucking the trend, but we'll follow the markets as we continue "squawk alley" from here. thanks so much, sara. good to see you, and "squawk alley" begins right now. it's 8:00 a.m. at google headquarters in mountain view, california. 11:00 here's at post nine on wall street and "squawk alley" is live. ♪ welcome to "squawk alley" on this tuesday morning. first up, for the first time ever, usage of