don't you want out of the way of the train? >> but, you know, right now, i don't think the fed is the principle danger. i think the geopolitical things are more important. >> byron, thanks so much for coming in today, great seeing you. >> great to be here. >> steve, thank you for joining us, michelle, see you tomorrow. thank you for joining us see you tomorrow. now it's time for "squawk on the street." good wednesday morning, welcome to "squawk on the street," i'm carl carl quintanilla with david faber. meantime, futures weak as the s&p is 30 points above a 5% correction from the july highs. media earnings on tap, big upgrade for ge, by the way. ten-year yield, if closes here, lowest close of the year. italy officially back in

recession. the euroat a nine month low, and the dax with a 10% correction. no deals, fox withdrawing the bid to acquire time warner, sprint abandoning the bid to acquire t-mobile. giving back monday's gains, shares of ralph lauren lower despite beating estimates. we'll explain why. and disney beat despite lower profit at the cable networks. two big deals fell apart. 20th century fox withdraws the bid for time warner saying they refused to engage the highly compelling offer and sprint abandons the bid to buy t-mobile, and they plan to replace the ceo. i guess a name we'll have to get used to, a billionaire entrepreneur. >> someone who i think you get along better with. well, we have to get david -- the problem is that dan has

independ, and dan, wish him the best of luck, turned that company around, he was not necessarily the right guy for soft bank. the right guy for the troops, left after a good quarter, but jars for those that know he's a guy who was the godfather of the industry in the phase, wish him well. >> you knew him well, very well. >> you know, dan, known outside the office, and he did a great job, in a challenging situation. he fixed the nextel, and interesting once the government knew the deal was not going to happen, it was time for dan to go. >> all right. there's a look at what sprint's doing in the premarket. david is on the phone this morning. david, hope you have a good time wherever you are. walks through the two deals. what is more important, and what do they mean? >> what's more important is hard

to know, but, you know, i guess when you look at these two, sprint and t-mobile, i would argue, sometime down the road still a deal that very well could happen. when i say "sometime down the road" probably quite some time down want record, and that means a great deal of possibility that it will never happen, but nonetheless something you could see. you can argue time warner and fox also, but that feels more final right now. i don't mean in any way to say the door is going to swing open for either one, for sprint and t-mobile any time soon. it's not. this is about regulatory impediments here, particularly even after, you know, the offense that we want on for months and trying to reach a broad frame work of a deal, which they did, it was clear and what i've been told a number of times is made clear just about a week or so ago when the fcc put out rules about bidding, the upcoming aws auction, spectrum

auctions, not allowing joint bidding. they had a bitco already put together that would jointly bid. that was not going to be allowed. that was the last straw when they said, i can't even consider moving ahead any longer. it's just clear we'll never get this past the regulators. seeing that often, the feeling it was a great deal of risk for the breakup fee and taking on all of the execution risks as well for the combined company, so it doesn't mean it can't happen one day, but not in this regulatory environment right now. they went their separate ways at this point. >> well, david, i have to tell you that periodically the justice department seems to get involved, and where do they get involved periodically? in telco. why let the airlines merge, the rental car companies merge, and just hands off to a business that you and i both know has tons of competition in?

>> yeah, listen, you know, the argument being made all along and to a certain extent by t-mo and john ledger was that you're going to need scale to compete with verizon and at&t, it's not a fair fight in any way, despite all the success that t-mo, interesting, not unexpected, would be the run away, had over the last couple years, but you're right, jim, you know, they picked their spots, though. you're talking an environment where comcast is eventually buying time warner cable, at&t is buying directv. this deal would have come after they are conceivably approved, making it more likely in the view of sprint that it gets turned down, they could not keep approving all the deals where the consumer is such a focus. >> hey, david, on the murdoch front, levin on "squawk" this morning said it's not a diversion, but there's cost

discipline here, this is not the journal, and you got to behave differently, but others think if you believe murdoch is truly done, you don't know murdoch. what's your take? >> you know, my take is after speaking to a lot of the people close to the situation, carl, yesterday and this morning, that they are done. they are not coming back any time soon, and by that i mean conceivably years. i think it was a surprise to a lot of people. you know, i kept reporting on sitting next to you and jim about discipline, hearing this, the idea of a hundred being a bridge too far for fox, but there are few people who truly believed that, given as you said, rupert murdoch gets what he wants. when you pay for dow jones, you're not hurting the company. yes, you overpaid, no doubt about it, but it's in the nearly a great a penalty if you overpay by 10% on an $8 0 billion deal.

that was the fear there. they stuck to their guns, very much surprised by complete lack of engagement. coming out of the gate, they did not expect there would be no engagement whatsoever. time warner turning up the heat with things like cancelling the ability to act to call a special meeting and things like that, sent a sign there was no hope. as i reported a number of times before it was resolution opposition to the price at 85, and the idea they have to go to a hundred, and perhaps, we hear that from shareholders as well, something they were not willing to do at this point. jeff gets the opportunity at this point to run the company and deliver value they say is there for their own strategic plan, we'll see what happens, but you can't expect to revisit this any time soon. >> viewers have to understand the day this broke was the day of delivering alpha. i said there's not any price he couldn't pay. he said that's not true.

if there's too high, there's discipline. congratulations. that was your reporting. i did not hear once time warner say this was an antitrust issue and they'd go to the government. does that not meantime warner might buy someone? cbs, viacom? what a combination. >> there's an got to be anned why of those who form the programs, but when it comes to particular situations, cbs, there's a controlling shareholder and very much unclear to me what decisions, if any, will be made there in the near term. so, yeah, i guess i agree that there will likely be consolidation on the programming side. this was a deal many of the combined shareholders, and there was a significant shareholder base in time warner and fox believed would have. a good one.

a lot of potential synergies. could be other ones, but my guess, keeps it as is. deals have not been kind to the company in the past, and so my guess is they keep it the way it is to create value from here starting with today, and reach advertising on turner, phone calls this morning were not what people were hoping for. >> we got earnings growth at hbo, at turner, warner brothers, but they did not guide higher. >> that surprised me. remember, you are up against a difficult company which is disney. i know people tried to pick on disney's quarter, talking about espn. give me a break. all i heard that was substantive was how is harrison ford? that was a question at the end. how is harrison ford? bob told us personally, do not worry about the delay, ford will not delay us. that's the biggest risk. i'm a buyer of disney on

weakness. >> yeah, i know, jim. this morning, incredible. sorry i'm not there in person, obviously. all these things not happening, talk about time warner and sprint and walgreen's as well, jim, given the lousy quarter, lack of inversion, and stock down sharply. yet, again, the third sort of thing not happening that is punishing shareholders who were hoping it wouldn't. >> walgreen's incredible. what is interesting is they are literally saying no to a couple activists that, david, you speak to a lot, really smart people, jana, really also clear, david, this was a company that if they wanted to invert at least in the terms of money and spent in the shareholder base, they could have. this was the bridge too far too meaning they are america. they might not tolerate this, right? >> you could expect competitors made a lot of it. you heard the economic

patriotism line coming from the administration over the last few weeks, starting with the delivering alpha conference, and don't be mistaken, inversions are complicated, require a deal of different things to be able to work, and apparently, they didn't view it as a possibility to be able to work the way they wanted it to, in particular, the opposition ver bbally from othe that work against them. they don't make them, they just sell them. >> right. we're seeing double, triple cap the of the deal. all right, david, enjoy the week, see you soon. >> you got it, guys, enjoy. >> david faber on the newsline this morning talking the slew of media deals not happening. >> picked the wrong week to take a vacation. it's the best. let's get to the markets. indexes coming off the loss with futures pointing low, concerns

about russia and ukraine continue, of course, all ten sectors led lower led by energy, but we have to get down to 1891 for a 5% correction. do you think we can get there? >> i'm adamant it's russia. seeing this this morning, the high water mark inversion, we're not getting good numbers today, probably not able to get to that. no one's coming forward in europe suggesting, perhaps, a demilitarized zone in ukraine and georgia, the other side of the border, actually giving us some solution saying, listen, we're not going to put ukraine in nato. no one is being creative. putin's obviously not playing by anybody's rules, but i come back and say if putin or merckle has a demilitarized zone, a frak work for diplomatic peace, what

you see overseas could reverse, italy in recession, germany numbers not good, all the pieces with russia. it's russia, not inversion or break down of deals, but russia driving us lower. can we go down 2% to 4%? yes. i want to buy the percent. i do not believe we will, indeed, go to war over russia. i'm waiting for merckle to say, let's carve out that area. how about that? when that happens, if you're short stocks, it comes down, you'll get your head slammed. >> maybe if he senses separatists are on verge of defeat, maybe he'll agree. >> has not backed down on sanctions, but i think there is a frame work that's out there. i just don't hear the frame work. someone has to come forward and offer a solution that lets russia have face saving and not kill a lot of people. his solution seems to be not the kind of solution that the western powers are going to let

happen. >> or that the markets are going to like for that matter. >> no, no. italy -- europe is slowing down quickly. >> when we return, spencer rascoff to the quarter results, and russian hacker stealing more than 1 billion e-mails and pass words. how do protect yourself in the digital age, we'll talk to fireeye in an exclusive. the fed approved the m&a's resubmitted capital plan. >> not what i expected. >> futures are negative know. we'll get more from "squawk on the street" in a moment. moment,

the fed approved the capital plan to allow to return to share hollers, and you'll recall they recalled the prior plan after the accounting error, but that fix with the fed. disney beat estimates, revenue beating as well, and the ceo was on "closing bell" yesterday on what led to the profitability for the quarter. >> we had great results at parks and resorts, profitability at the interactive group,

tremendous story of consumer products, and, of course, the studio with great results for movies like "captain america", and, of course, the lingering effect of "frozen," the highest grossing pi ining film of all t. >> more than in three quarters than any full fiscal year ever. more in three than normally done in four, but cable network operating down 7. you have to pay up for baseball and soccer. >> right. what i loved about the quarter is he teased "star wars," the footage seen so far is spectacular, worthy of the fan frenzy and excitement. we're so far from it, but it's generating frenzy. the franchise is here, the second tier players this weekend, not real superheros, but, like, you not, not that bad heros, like pretty good heros, they generated good numbers, and

can it continue? i mean, coming back says, look, this is what we are. this is what we produce. they are talking about the idea of the mega -- a few years ago, didn't have megamovies. you with make movies and franchises, but he's done more franchising and merchandising, nice numbers. >> more "star wars" in the parks still to come. >> as long as he's there, this is the stock to own and buy for your kids. if russia, italian gdp, if german car sales, this is the stock to go to, okay? this quarter was perfect. >> asked on the call whether or not they were going shopping, like so many other media companies appear to be at least thinking about. said, we got a good hand. >> yeah. >> does not seem to be interested in another -- any kind of deal so to speak. >> well, how about this ae, how about the espn's structure.

i mean, you know what? this is ain't broke don't fix winning hand lots of w's in playoffs, probably super bowl, why would you trade anybody? >> yeah. we'll watch disney for sure and talk more about it later on this morning. >> yes. when we come back, cramer's mad dash, opening bell, and a look at the premarket. more straight ahead. what if there was a credit card where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com

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time for cramer's mad dash. a quote on m&a, after the fed approved its now capital plan, the bank increased the dif depd to five cents a share from one. that's the first increase in seven years. >> bank of america went from 16.5 to 15 when rejected. it declined, but not as much. interest rates higher make big numbers. >> yeah. >> okay. now, this morning, we have a poll from morgan stanley. carl, i have not seen retail trade as gloomily as it has in a long time including target after the breach and challenging the consumer. this is the best retail idea. selling at 12 times earnings. they have a strategy, and when you see amazon's going to parachute stuff to you, i feel like amazon's anticipating right now that i want that beach chair

and it'll be there. >> they probably are. >> right. look, cramer, beach chair, boom. i get home, click, it's there. macy's has the omnichannel, a good call. careful, retail is in a big function. speaking of big funk, general electric has been in a funk, the trust stock that's disappointing. bernstein says it's hated too much. it's hated. they are doing things they are not getting credit for. enough is enough. go to a buy. it's going to be industrial, not expensive, going to be able to change the capital structure, but what i find interesting about the call, carl, you don't get them often is, you know what? it just isn't as horrible as you think. >> the name of the report is "you're not imagining it." >> yes. >> this is not a joke. >> no, and they had 5% ogranic growth, better than almost every sing single industrial i follow.

it was not falling to the bottom line. if they can, the stock goes to 30. this is 24 on the downside. 30 on the upside if they get it right. i think the report's worth reading. >> you're critical of the stock. bernstein's target is 33. >> aggressive. >> manageable, more industrial exposure than in a quarter century. >> yeah, you know, my problem is, look, you know, sometimes you can't catch a break. europe is bad again. that means if -- the -- people flee from the industrials. ge is snake bit when they do something, something else goes away. i think that if you feel europe's going to turn, feel that russia's going to ask for the zone, if you think there's going to be big easing in europe, you'll get to 29.30, but it's not -- this is glacial, okay? i saw them in alaska. it's going to go, like, what? i don't know if we have time. do we have time before the break to show you -- anyway, you get the picture.

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you're watching cnbc's squt squawk on the street," opening bell in a minute, busy day shaping up, futures in the red. a lot of things familiar with still going on, russia, the ewe crepe, we have a cease-fire in gaza, but the inversion at walgreen's not happening, jim. >> no. >> a lot of m&a pulled in the last 24 hours, but your point going in you have to watch what nato says about ukraine, what putin and white house says about russia. >> i mean, you don't want nato forces directly facing russian forces. you want buffer states. i wish people would be creative in solving this rather than have poland say maybe nato, eastern flank we have to watch. you know, i don't want -- hundred years ago world war i start now because of treaty obligations. countries -- it's sleepwalking, a great book. you don't want sleepwalking into this situation where we just have a lot of alliances and

everybody's back is to the wall, don't have a plan that allows us to get out diplomatically. watch for something. remember, a lot of -- i think the putin wouldn't mind ukraine being more western because he gets paid for the gas. >> absolutely. >> he doesn't want to have -- c again, i'm not pro-putin. i think what he's doing is wrong, but you have to put yourself in his shoes for a second, as lonesome as that is, say, all right, the guy, you know, he's trying to protecting. >> yes, yes. with that, there's the open, and look at the s&p at the top of the screen, negative breath, obviously, at the open. the big board, 24th annual hong kong dragon boat festival takes place in new york this weekend. a semidevice conductor supplier doing the honors. if you pick one to watch at the top, jim, would wag down 13 surprise you?

>> i'll take some off the beaten path and say that what i think would surprise me is if we did not see something from cbs that is better than what we are getting now. they are down about to do an inversion, decide not to. they had a good quarter. watch -- walgreen's, people pressure greg watson, and watson's saying, listen, the president's against it. we have are a neighborhood store. this is america's apple pie. cvs is not caught up in this thing so it's a buy. watch cvs. >> page one in "the washington post," a story that the chief met with chuck schumer and said congress has to do something or we might be forced to do is too, and schumer says dozens in the works, you'll hear about it all through august. >> i know. what i pressed secretary lew was the irs could do rule making.

if democrats and republicans want the comprehensive reform, remember what the irs did to us. have a home office? rules say, you can't have it. there's a lot of rules. lew was saying, hey, you know what? yeah, first we thought you needed congress, but then, next thing, you know, you have to have a few more people over there, and then all these lawyers who have been issuing the comfort letters come back and say, well, we made a mistake. they put the merger in place a long time ago. they haved too a restructuring. years to undo this thing. i just say be care. . buying stocks because you want inversions, selling cvs because there's no inversion, think about earnings. not going to earn 550 in fiscal year 2013, earns less than that. a global power house, you want to buy walgreen's here, not sell it.

i know people don't want to hear that, butment to join the fray. jim, jump overboard. no. cvs had a good quarter. >> walgreen is the worst component, down 16% now. >> that is nasty. >> ralph lauren we have not mentioned, 1.80 versus 1.76. looking for comps. >> traditionally offered conservative guidance. they are flat lined. overall, buy -- i don't have a hedge fund, but divide by ten. realize this stock's been trading 14 to 16 forever, and i think the macy's call says back to school could be good. i would -- they are a hard stock to trade, down five to six, but you come back. it's a boomerang stock. >> going back to jeffrey's yesterday, putting abercrombie

on the franchise list, as they call it. >> like, hey, it's going to get a bid. i hate teen apparel. i hate teen apparel. i have one teenage daughter who just turned 20. dad, i hate abercrombi, why did you spend $2 00. you look at the bill, they go to aero, j. crew. they rotate, least predictable, we love them, but, boy, unpredictable, woah! >> time warner, mentioned at the top of the show, down $75. that puts you down to the average, jim. >> they say on twitter, guys, if you hate me, don't follow me, don't obsess with me. time warner, jim, why don't you say he should hang in? the answer is because i think he could take the stock to a hundred. yes, i wanted the big guide up, but you know what?

this is a company doing a lot of things right. we wanted them to clean up the books, rid of time inc.they got rid of the newspapers, but time warner's a winner, not a loser, a buy back is this place. the people who own time warner stock are not your friends. they have, like, hey, we were in this for a takeover, we have to go. let it turn over, and then you can go back to those. those are not the first day stories. buy a cvs on a first day story, disney, but not in there and take the r's out. let them sell. they are panicked, don't know what to do. >> initiation today, two out perform, demand is good, the target's are reasonable, an underappreciated growth trajectory. they take the price target to 316. >> what does retired tired ceo

say with the trajectory? the most under appreciated growth trajectory ever seen. that said, tesla's charm. you know what else is charmed? netflix. on the disney call, bob calls how much he likes netflix. i mean, these stocks, you got to admit, held up fairly well. >> that's true. >> netflix has nothing to do with putin, and tesla does not sell to russia. what does that say? complacency or stocks to buy, buy procter & gamble because it was not bad, put money to work. seems like there's money coming into the market. wow. >> yeah, well, i think people realize no one knows what putin will do. this could go on for a very long time. >> yes. >> in the meantime, data points will come in. >> right. there's rumors, buput through t

demilitarized thing, going back and fort offering solutions, and, frankly, if major leaders offered solutions, then i think what you'll have is that rumor, which you go over the weekend friday, and people cover the shorts with the idea there's something going on between merckle and putin. they correct each other, german, remember putin was a kgb agent in east berlin. >> yes. >> east germany, and merckle from east germany understands russian. these two people together can hammer out something. i believe that. that's the hope this does not devolve into bloodshed more than it has, but if you sell off for russia, you know you have to recognize there could be, like that, if merckle makes the right phone call. >> see if that happens. meantime, s&p 1914 here, and bob is on the floor. hey, bob. >> jim's right. you talked earlier, jim, it's

not just the ukraine. europe was ugly today and has been for a month right now. italy slipped into recession here, decline in gdp for the second quarter, 0 preponderate 1% in the first quarter, two consecutive quarters in decline of gdp, and look, italy's down, germany, portugal, greece, ugly for a month. the four-week numbers, put them together, thank you, kristin, for doing this, greece down 10 %, italy down 9%, spain, you get the idea. this is a continuation of a trend, did not just all the sudden start today. the s&p's only down 3% in that same period. this is causing flight to safety in the united states, not just in the target, but in the bond market, comments about the ten-year yields, see them? sitting at, like, the lows of the year. that got comments, guys, and they don't talk about the bond market. gold spiked up. take a look, up almost 2%.

sectors here, telecom's weak, utility's weak, technology, and consumer discretion naary on th weak side. there's the state of retail, stores not doing well, i've known steve tanger for 20 years, great company, excellent management, tight management, came out in line with their earnings, important thing here, look at the numbers here, despite concerns on retail down, a respectable 3.3%, same stores, the same companies year over year, up 1%, and occupy rate up 80 points from the prior quarter. despite all the concerns, still, get companies well-managed, rotate out companies not working, put in stores that are working, you can do well in

retail. also, take a look at papa john's, came out with the earnings below expectations, a little disappointing, but look at the same store sales. they talked higher costs, cheese costs have gone up, a problem for all the pizza companies, but look at the same store sales up 7 .5%, international, 8.6%. a great example of the big national companies taking share away from the small mom and pop companies. got their internet sites to click on easy. watch that when you talk about pizza. back to you. >> thank you very much, bob. keep your eye on the 10 year. to rick santelli in chicago. good morning, rick. >> morning, where do we begin, carl? perfect day to be back. why? on an intraday basis, took out the low close of the year, anyone who watches "the santelli exchange" may 28 th knows of the low, intraday traded through it, but it's the comp.

look at the yield curve, 10st to 20s flattening again, eight basis points of the flattest at 13 and a half months. fives to 30s, roughly flat, but had brief steepening. that's reversed out. let's look at that five-year chart specifically to about mid-may. you see the effects. long end is going down faster, five-year still not breaking through some of the may low yes. let's look at june 1st of the last year of the ten year, closing below what we traded already, we'd copping back to second week of june. still now at 245 comping on the 28. look at boom yields, 109. look close. why? you've never seen them before. these are historic lows for boon yields, and we talked about europe, many times, gdp, bob mentioned it, italy, two

quarters down in a row, tech anily recession, but the banks rewrite that rule, but nonetheless, the dax at 90. watch the 9,000 markets. look at the euro versus the dollar, weakest level since september of last year, and the catalyst today, obviously, some of that weak data out of italy. carl quintanilla back to you. >> thank you very much. bank of england tomorrow. another busy one. >> something to get that economy moving, boy, do they ever. >> yes. when we come back, rascoff here for a cnbc interview. dow is down after the break.

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zillow shares trading slightly lower -- couple bucks, come on, after reporting mixed quarter results -- well, micced if you're a minitpicker. what's happening is that they are merging with trulia. we are lucky to have mr. spencer rascoff here. we talk about how he's here in spirit a great deal. >> yes. >> spencer, when i interviewed you in the spring, i said, come on, if you can't beat, join them, buy truila. you said, we'll beat them. what changed? >> ask and you shall receive, jim. why don't you buy? we now intend to buy trulia. i think the combination of the companies provides benefits for employees, shareholder, and industry participants. there's no question that there are a lot of cost savings of the companies combining, revenue synergies, and excited about the transaction. >> what i'm concerned about, you

have a lot of people signed up, amazing. could you run out of inventory to sell? >> we have 57,000 subscriber real estate agents buying from us, but the traffic continues to grow. we have 89 million users last month. as traffic grows, more to sell. we have lot available for agent advertisers. >> people say, wait a second, home sales are slowing, mortgage numbers, and you do a preapproved mortgage. in reality, you're not lever to that. >> no, what's happening is the consumer is rapidly changing their behavior from shopping for real estate in the newspaper classifieds to the internet and not even on a desktop, but mobile di vice. that is swapping macro head winds. housing is slowing, but the user shifts so quickly to the internet we benefit from that. >> visitor growth, desktop deaccelerating. mobile making up for

deceleration? >> more than making up for it. 2 00 homes a second on mobile, and three years ago at the ipo, it was 20 homes a second. in three years, 10 x mobile growth. astounding. >> what i thought was most interesting, i'm from summit, new jersey, and you did a special about a broker, and i just want you to walk people through. this is a broker meaning some -- i know the broker personally probably, but talk about the number of leads generated with $ 5,000 a month. i want people to understand why the brokers initially reluctant to use zillow are now all in. >> agents that advertise with zillow, they spend money with us and make a lot of money. we met this agent at the zillow summit, meeting hundreds of agent advertisers, and this agent was telling me, thanks me for how much money we helped him make. when he gets a lead, he

following up quickly and converts that lead into a transaction and makes the money. that's why our average revenue per agent grows quickly, now over $300, the typical agent advertises a month. >> yelp had good arpa basically, but didn't get the agents. you didn't sign on as many as some thought. why do you get a pass on that? >> revenue is growing so quickly. the premier agent revenue growth is up 82% year over year, the fourth quarter in a row of accelerating agent advertising revenue. you're right. we are focusing more on a smaller number of top producing agents willing to spend more because they value the audience more meaning we bring on fewer total subscribers and advertisers, but at a higher rate. i'll take the trade off, and it's working, clearly, total revenue continues to grow, which is what the law of good numbers, harder to continue to increase your growth rate as numbers get bigger, but we find a way to do it on agent advertisers.

>> journal does a piece on oklahoma city people move there because they are priced out of the coasts. the millennial story is moving not because a job is better in another city, but houses are cheaper. do you think that's true? >> well, it is true, but there's an anchor on american homeowners which is negative equity. many are upside down on the loan. could be a job in a fracking state of north dakota or oklahoma, but they are underwater, doesn't matter if there's another job, they can't sell. that opens job ability lower than we'd like. >> this preapproved mortgage, people felt that was just dying on the sign, but the numbers there, you revealed that program when you were on the show last time. >> that's right. >> how can that be going up in this environment? >> we created the product which is the only place on line where you get preapproved for a mortgage. normal preapproval experience is painful; but you you get

preapproved and have a letter to go look at houses with. that's a big deal. >> i imagine trulia, what you put through, and preapproval, and you don't need all that spend, that ad spend they are doing. >> look, you told me years ago, buy street easy. we did. you said buy trulia, so what's next in. >> i'll get to you, but aren't you cohosting. >> you're cheaper than an m&a investment banker, and your deal flow is better. >> oh, spencer, thank you. jim, why aren't you harder on him? stock was at 20, stock's at 140, save it for the guys from 140 to 20. spencer rascoff, thank you. >> good to see you. stock trading with jim in a minute. dow's down some seven points, and "squawk on the street" will be right back.

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my small plate mexican restaurant. we make a fortune selling beer. you know who makes a fortune selling beer? molson coors. that's always been one of my favorite situations. look at that stock. they are cleaning up. if you believe in molson, be a buyer of constellation brands. that sold off corona and modello. this market can do no wrong. they love the markets and consolidation. may not allow sprint to merge, but beer companies can get together. why? because craft beers are the alternative. ipas. you have beer companies -- miller could be too -- this group remains hot. the hotter the summer, the better the numbers. constellation, my favorite, but well done molson. >> yeah, even though global volume down one almost. >> they make -- it just doesn't

matter. i don't know, $6 for a beer, doesn't really cost $6, but people know it's a profit margin, you lose on the avocado and make it up on the beerskis. >> what's on mad tonight? >> i have a worry of tech slow down. it's so much europe. who has a better handle on net? rick hamada allowed us to find out whether there is a slow down in tech. if there is, the market is too high. >> great to see you. >> great to have you back. >> great to be back. i like the chartnado. >> it's a learning experience. >> yes." mad money" tonight at 6:00 p.m. eastern. where do we go from here? david kelly and jp morgan funds

navigate it, and the ceo of fire eye joins us for an exclusive on the hacking ring, all passwords and e-mails stolen. be right back.

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welcome back do "squawk on the street," road map begins with the markets in the red, but climbing back. worries from europe weigh on the dow. >> on the sound of two deals falling on wall street, a hundred billion dollars worth of m&a ending, time warner, sprint, fox, t-mobile moving this morning. >> as earnings continue, disney, time warner, looking at fire eye after a massive data breach in an exclusive interview with the fire eye's ceo. >> the deal moves forward, but not with the tax inversion. walgreen's staying in chicago. not taking the news lightly. >> markets from earlier losses, but still in the red as europe weighs on u.s. stocks, bringing in david kelly, chief global strategist at jpmorgan funds. nice to see you again, david. >> glad to be here. >> how did you feel yesterday in the middle of the afternoon seeing the dow accelerating down 200 points on the suspicion that

russia might invade eastern ukrai ukraine. what did you tell? >> well, i think the -- it is, obviously, scary and worrying that the pain is concerning, but i think you have to balance that risk, and there is a risk there, again really good numbers. the trade numbers this morning, going to revise up to, and 11% year over year, and because of the worries in ukraine, ten year trading below 2.5%. there's a risk, a lot of stuff in the u.s. economy also. >> yeah, but i mean, people are in two minds. i have your note here dated august 4. on the one hand, make hay while the sun shines, overweight equities for the reasons you gave us, but two paragraphs before that, on friday, you noted the s&p 500 fell on the

week. the market reacts negative fashion, and you say make hay while the sunshines. >> that's right. key thing is to invest how you think, not feel. it does not feel good with the headlines around the world, but you have to go through the scenarios, what does it mean, putin could be bluffing, in which case, clearly, markets are higher, but if it's worse than that, if there's an invasion, likely to get bogged down. hurts the european economy somewhat, not the global economy that much. does not negate the fact there's earnings growth in the u.s. and low rates in the u.s. that pushes money to equities. >> i don't know, david, part of the good earnings growth in the u.s. and especially revenues growth has been derived from europe, a bright spot for multinational companies in the united states. why are you so convinced if europe has a downturn, seeing that in germany factory orders, italy back in recession, does not affect corporate earnings?

>> the story in europe is more mixed than that. improving unemployment rate going on and improvement in the peripheral. they are doing well in terms of growth here. also, you know, i -- i think the effect -- so i think the effect of the european economy won't be that great, but one of the reasons earnings are up because of the dollar, not just that europe is better, but we're not hitting the dollar head wind we hit in recent quarters, so, you know, overall, i think it is still a genuinely good earnings season, a lot of potential profit in american companies. >> okay, so, david, if i buy in totally to what you say, and many, many millions of people who will, how high does the market go, and what will win? >> i think that's the key question because even though, you know, i like the u.s. stock market, over the next few years, only gives you mid-single digits overall. temp expectations given the

levels we start with. what wins look at cyclical sectors, sectors that do well as interest rates rise. things like consumer discretionary, technology, financials, those areas will lead the market forward going over the next two years as we get past worries and rates rise again. >> thank you for the advice. david kelly, thank you. moving on to time warner, company reports earnings as 21st century fox withdraws the bid for the buy. we have the latest after a busy 24 hours. >> absolutely. this gives ammunition in the battle to show investors that time warner is best off on its own. earnings at 98 cents a share surpass expectations by 14 cents on cost control. strength at hbo, revenue grew 17 % benefitting from a jump in subscription revenue overshadowed by questions about

m&a. this is as the company reaffirm the outlook, noting, quote, does not include the impact of future merger or unplanned restructuring or charges. we will hear more on the earnings call starting in a half hour. yesterday, disney reported better than expected results. we sat down with the ceo to talk about his record earnings with studio profits more than doubling on "captain america" and "guardians of the galaxy," and they are well positioned to be a significant driver of disney's bottom line results for the next five years. >> this is not only about a good movie. it's about the fact that the marvel brand arrived and is very healthy, and if you look ahead at "avengers" and sequel to guardians in 2017, the pipeline there and across the studio is in great shape. >> for the parks and resorts,

they plan to expand star wars's presence and opening day for shanghai disney soon. magic wristbands should boost profits starting this quarter. >> great success domestically. we had higher attendance and higher spending, clearly demand for the parks in the united states and other places around the world, hong kong and tokyo, very, very strong, great intellectual property there, fine operation, great experience. >> and for all those parents out there, i asked him about the massi ivdemand for "frozen" toy and the division is ramping up so there shouldn't be shortages. i'll monitor the time warner call shortly and get back to you with the headlines. back over to you. >> that'll be interesting. interesting to hear what he says about the deal that fell apart. thank you. here's how media stocks react to all the news, broken deal news. tame warner, as you see, down 1 11%.

fox up 5%, and disney after the great quarter, up about half a percent. more insight into the entire industry, barton crocket. start with time warner, jeff about to get on the call, how does he explain it to shareholders? >> i don't know he has a lot to explain. fox came out of the blue, made the offer, rebuffed it, gone back home. you know, meanwhile, fox -- time warner had a great quarter and continued to make the argument this is a, you know, mid-teens etf grower longer term, which i don't think is fully discounted in the stock at this price. after the dust settles, argue that you can buy the stock and hold on for 18 and change a year or so down the road and be up to 90 bucks by then. >> you have faith they go at it alone, don't see a bigger buyer, not many choices that could acquire the company and you think they are successful at doing it? >> well, look, if there's a takeover for time warner, it's

gray city. the business works on its own, that's why fox was interested. i think that fox was in an unusual position to make a bid. i don't see a lot of people out there in that position. you know, both being in the industry and large enough to digest it. the question is whether fox comes back and, you know, i readjust the tone on the way they got out of it quickly. the verbiage around it. i think it's unlikely. i wouldn't hold my breath waiting for fox to come back. >> as far as your concern, did murdoch make the industrial case for the deal? >> you know, it was a very interesting overturn. no. i don't think they made a full court press to the public on the merits of the deal before they withdrew it. i find it odd in terms of approach, but it is what it is. i think time warner stock works without a deal, fox stocks work without a deal, and the saying, you know, quickly forgotten if they don't come back. >> what about disney and the block buster quarter, firing on all engines as julia ran us

through, the parks, the media, the television networks. it really is, according to the journal, one of the financial power houses that could do this deal if it wants it. do you see disney going that direction? unlike bob who tends to focus on smaller acquisitions. >> no. i'd be shocked if disney went after time warner. disney has enough leverage where they are to battle cable consolidation. they are focusing on iconic, you know, really kids, you know, properties, and there's some of that at time warner, but nothing disney covets to get in m&a. i think lucas, marvel, those are working for them right now. they have enough with that to be happy for the moment. >> we had a discussion this morning whether or not they buy something. do you think murdoch's pulling of the bid marks a near term top in overall media consolidation? >> you know, i think it does.

you know, i think that if fox and time warner got together, you know, people would have thought about it, would have increased, you know, the talk from investers, would have been more top in mind in board rooms. i think that's not happening takes the pressure off, gets the bid out of the stocks, and, you know, that's a healthy thing. i don't know consolidation beyond fox and time warner is plausible given family control and companies have leverage to grow fees, and we'll see that play out with cable consolidation. >> all right. seem like a happy man. thank you for joining us on the deal news today. >> yeah, great. >> looking at sprint, down 16%, wireless giant putting a new ceo in the hot seat, claure, currently the ceo of brightstar. withdrawing the bid due to difficulties they would have had with regulators. we have an out perform on sprint. jennifer, good morning to you.

>> morning, carl. >> can they build a sub base on their own? >> i believe sprint can. i think today's reaction in the stock is a total con pitchlation, and if you look at the company and the things they've been doing on the network, it's been a slow grind, but we're kind of seeing the light at the end of the tunnel here. >> discussion about what they could launch or unveil in the fall in terms of reintroducing themselves as a stand alone to consumers. what's that going to look like? >> that gepdepends on apple, actually. the key part of sprint's strategy is ability to use their old clear wire spectrum, 2.5 gig hertz, and nothing supported that. if apple introduces one with the chip, it's a game changer for sprint. >> do they circle around on this given all the lobbying effort that was put into the deal? >> circle back around and try it again? >> yeah. >> no.

i think they fought the good fight, but he's a smart man, and i think if it was not a 50/50 chance of getting it approved, he made the right decision not to proceed. >> at $6 here, what do you do with a company that lost money for, what, the past seven years? >> well, i think we have to look at the asset value urn this stock. i mean, when you include the spectrum, sprint of the carriers has more spectrum than four playser including at&t and verizon in the statement. if you have other companies not in the wireless industry like yahoo! and google talking about wireless and mobile being in your future, there is a fine night asset here, and sprint has the most of it. >> well, what about t-mobile, jennifer? what do investers do there? do you think the billionaire behind the french operator takes it out, and if so, at what

price? >> i'll yad confirmed the price for roughly a 57% stake in t-mobile. i don't think they were taking that overly seriously. i think they said as much they would reject it. hard for me to see that with under 2 billion could realize the synergies promised here. i think for t-mobile there's a lot of logical dance partners, but not sure they are here and now, so i think it's a waiting game for them. >> what about charlie and dish? opportunity for him? he had that failed bid to soft bank last year. >> i don't follow dish agtively, but when people mention charlie, they mention options, and he got a few more today. >> finally, jennifer, i hope i said the name right, claure, is he well-known? >> bought the majority of bright

star and bought reminder he has not owned. been on the sprint board since january. he knows the issues, well-respected in the industry, used to running a low margin business. i would think he's good with cost control, what sprint needs right now. >> arguably any company. >> right. >> jennifer, it got interesting. thank you for the time. >> thank you, carl. coming up, a massive data breach. the news that hundreds of thousands of websites, over a billion usernames hacked. the ceo of fire eye, david dewalt, joining us after post g ing results that beat the street. walgreen's staying put in chicago, but making a big deal." squawk on the street" will be right back.

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cyber threat landscape is continues to rise. the latest revelations around the russian hacking group is somewhat expected, actually. i mean, we're seeing a lot of large retailers, large banks getting breached on a regular basis, vulnerabilities in the core infrastructure of big companies are vulnerable to hackers like the russians, and they are stealing the credentials for consumers as well as for, you know, professionals, and, you know, this is the landscape we're in, and, unfortunately, it's ominous, and we're seeing more of it. >> we're talking, obviously, almost half a million websites, everything from household names, things we visit every day to small internet sites. in general, though, if you parse them in categoriecategories, whe most vulnerable? what sites are we most vulnerable when we visit? >> well, what we find is that the corporations are the most vulnerable. we saw this with a lot of large breaches that have been reported including, you know, target, and the news they just had, and, i mean, these companies are

getting breached at a very rapid pace these days, and, i mean, our reports show that more than 97% of all large companies are getting breached. they are getting breached regularly, and some of the current tools used are in inadequate for being able to again defend against the large groups. fire eye comes in with more advanced technology and advanced people to help with the problem, but it's a large scale issue right now for a lot of companies. >> yeah, without question, david, there's, obviously, a commercial opportunity here for you guys. hold security gave a detail on the russian breach to the "new york times" and they have detail here. hackers placed in a small city in south russia, they know each other, possibly have been helped by somebody else. what i don't understand is if the guy has the detail on who the people are, what the held is the nsa doing not preventing them from operating or the cia from taking them down?

surely there that has to be some national commercial response to this at the highest level. it can't, with respect, just be left to you guys, can it? >> well, i tend to agree, simon, hitting the core issues. the internet now, our cooperation globely, we got some challenges. the cross border communications and collaboration to arrest criminals and to work together is not there. the russian market, the united states's market and chinese markets are not working well together in cyberspace. >> david, i don't care if they arrest them, but i want them to shut down the server, and i believe the government, like israelis, are capable of doing that. my question is, what will it take for them to get on with the job and simply shut them down? >> well, this is the point i'm making, simon. it's difficult to shut them down because the servers they operate in are in russia. it's a difficult process for our criminal agency in the united states like the fbi and cia to shut them down and takes

collaboration between nations to do that. what happens is these groups operate. they have been operating since 2011. they will continue to operate. until we come up with better governance models, better cooperation, we'll see crime groups and nation states continue to operate successfully. >> what we know on the hack, what do they want? >> well, they want personal identifiable information. that identifiable information is credit card information, password information, username information to sell on the cyber black market. it's sold to corporations, believe it or not, and it's sold to corporations that do things like e-mail spamming and other types of advertising. it's also used to perpetrate crime, that might come in the form of credit or debit card theft, but valuable information sold in the black market money,

and when you have multiple of them. >> can you stop it from happening? >> i think we can. it takes new types of architectures and securities to stop the problems. in some cases that we've seen, we can identify who is doing it, where they are doing it, like hold security found out. the problem is the people and process part of large companies breaks down. it takes a combination of products and expertise to solve the problems. i think that's where the new generation of security has to come in play to solve these types of issues that are happening around the world. >> david, we'll keep our eye on this, obviously, we'll have the discussion much more times. thank you for the time. >> thank you. >> david dewalt with fire eye. more on the markets as we climb back from the lows of this morning, down 11 points on the dow. look at walgreen's, the decision to stay headquartered in this country, buying abroad, and not to do a tax inversion when

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we're going public! [cheering] the fastest in-home wifi for your entire family. the x-1 entertainment operating system. only from xfinity. another sharp stock move, but not another tax inversion. w walgreens is buying alliance group in europe of that which it doesn't noz own, but will be headquartered in chicago for tax purposes, so no tax inversion. here's the ceo on the conference call this morning. >> the company and board looked at the full range of issues, both the potential opportunities and benefits as well as the risks that may be associated with the inversion. i can't emphasize enough this is a highly technical and complex area of the tax code. >> interesting. it would appear -- this was always going to be a test case, go beyond health care and, in

particular, into consumer-related companies. you know, 8500 stores across the country. was it fearful there could be a public backlash with the tax inversion? take a hit on revenue or the fact that treasury says that maybe the administration is able to pull back to prevent invergs on its own? >> clearly, they succumbed to political pressure instead of investor pressure. i have a note the company would have saved $4 billion in taxes over five years if they would have gone with the inversion. on the other hand, there were reports that senator durbin sent a letter to the ceo of wallgreens saying that if they go through with this, it's turning your backs on the very people that allowed walgreens to thrive and profit. >> you feel strongly. >> there's no laws in place right now. that's the logical thing, not pile pressure on writing letters and calling ceos saying it's

unpatrioti unpatriotic. >> durable intercontinental, we think was approached by startward, but never confirmed, but apparent through earnings yesterday there was a second approach according to the "financial times" from wyndham's, and after a tax inversion in the case, but we know, surprisingly, when last we interviewed that ceo, he was looking for deals. take a listen. >> we look at deals all the time. our dna is m&a. we've been built through acquisition. we are constantly looking, always in the prowl for something that makes sense. >> interesting not a huge amount of movement on stock today. >> certainly is going to dominate conversations, the idea of inversions, faber said expect to see more of them. broader markets now, the dow just turned to positive territory, not a lot, but up 14

points now coming from the back morning lows. art cashin is here, concerns here, focused with russia and ukraine, why have willie come b? >> i thought the line in the sand was the low of yesterday of 1913 in s&p, but my friend pointed out right below that was the hundred-day moving average at 1911. that's what happened. we opened at 1911 for the low of the day and bouncing at a heavily oversold market. what's rather disappointing to me is it's a limp bounce. ordinarily, with this condition being as oversold as we are, with that bounce over the morning low, you'd be up 75 in the dow. >> can you clarify what you mean when you say oversold? >> the various metrics where the

market has declines in advances, more new lows. >> relative strength. >> relative stength put together indicates we're at the extreme. it's like a patient's health, vitals come back, and the doctor says, we have to slow it down. ordinarily, when you're a oversold, you get a reflex rebound, not necessarily a turn back to the bum market. this was a bounce off the hundred-day moving average. that average worked time and time again, and so it was a perfect spot, but the national rebound was not much, and i think that may be because of the geopolitical concerns that were pointed out. yesterday, everybody was talking about the headline and gold never really moved. now it's up 22. was up 25 at one point. that's -- >> because of the strong dollar? >> i think it is more -- well, the dollar is strong for the same geopolitical reasons.

i think you're seeing this flight into gold temporarily. it's just a reminder. it is not a raging signal. it is just saying to people before you get ahead of yourself, remember there's a geopolitical problem out there. >> further context on that, you know, looking at the index, a lot has to do with the euro, and that is under pressure, italy is back in a technical recession. >> nine month low. >> sensitizing the euro for what's happening there, and what did you say? eight month low? >> nine month low. >> that's dead right. there's other problems in europe besides ukraine, and the threat of deflation comes back with italy being back in a recession again, and -- >> but maybe that means more qe from the ecb. >> well, we'll hear from them tomorrow. >> yeah. >> yeah. >> and see where it goes. i believe that they can't do a truly functional qe. we'll see what happens. >> art, good to get your take on

the sentiment out there in the markets. with the dow positive, we have breaking news on inventories from the imex. >> there's a decline of 1.8 million barrels of crude in the past week according to the eia, and big decline in gasoline, down 4.4 million barrels. part of that is the fact that refinery runs declined. we have an outage in the midwest. this is the time of year when refiners come down for retooling for the winter, retool to produce heating oil and the winter grade gasoline. some folks are concerned that that might mean lower utilitilization, lower draw downs with gasoline, but so far, we have a fairly bullish report here for the week. a lot of analysts, carl, are talking about how much of a geopolitical risk premium should stay in the market begin the situation with russia and the ukraine. mike fitzpatrick says he thinks

that it's something that is going to really underscore the market, and they are recommending if we see a pull back, if you're looking for a long play, that's not a bad one right now. back to you. >> thank you so much. when we come back, more stocks move this morning including ralph lauren and alan simpson with santelli in chicago when we return. developers are all about speeds and feeds. it's all about latency. it's all about how fast does it run. i often sit with enterprises who ask me about how mission critical and how's the performance of the cloud. and i tell them, if you can make gamers happy, you can make anybody happy. speed is made with the ibm cloud. the ibm cloud is the cloud for business.

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ralph lauren, they are lower, coming off the lows of the session, down a percent this morning following results that just beat the street, revenue just shy of expectations. let's talk about the retail trade. liz, senior retail analyst. liz, perhaps disappointment with margins, although, we knew they were investment mode to grow the footprint. why the stock selling off today? >> yeah, i mean, i think these results were very much in line with actually a little better than guidance, and so i think the disapointment is just in looking at what the company has on tap for investment spending. there's a lot of spending planned for the balance of the year and beyond, and so while i think it's the right way to go, i think the market's judging differently today. >> now that we've gotten ralph lauren, michael kors, and coach, there's been surprises and take aways. how do you trade the three in the same category fighting for same consumer?

>> yeah, i think soo far from earnings, just starting with bulk of earnings ahead of us, but i think it's very much an expectations game. if you look at michael kors, a beat, but stock traded off on retail margins, coach was, you know, pretty weak report, but the stock traded up. >> right. >> it's about gauging where expectations are. >> and yet, if you look at the macro trend with the retailers, the journal put it nicely, a sustained decrease in foot traffic for retailers. which one is handling that challenge the best? it's not just about buying more online, but also changing buyersbuyer buyers' habits, more knowledgeable and sophisticated buyers. >> more pricing transparency than ever, and they are armed with information about price more than ever before. retailers with a promotional stance gearing up to be a promotional retailer like macy's are best positioned because they

meet the consumer where they want to be. they have a market place of goods so consumer, you know,mentknow, me wants a variety of goods, and macy's is best positioned now. >> what about coach? cheap enough to get in the stock list? >> a wait and see story. excited about fall and stuart bieb bieber's collection, there's hope there, but it'll be a year before there's signs of life there. they are gearing up for a pretty bad fiscal year. >> yeah, and executives eluallu to that. great to see you as always. simon? thank you very much, alan simpson in an exclusive interview with our own rick santelli. what's it like when musk builds a private launch pad for space rockets in your backyard? the mayor of brownsville, texas tells us coming up on "squawk on

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welcome back, i have a special guest, retired senator from the great state of wyoming. as we call him in chicago, "the incredibly quotable" alan simpson. thank you for taking the time. >> i have a size 15 shoe, i have it many my mouth a lot, that's why they do that. >> i have a quote we have to read for the viewers, one of my favorites, and this is the senator on some of the previous spending cuts in tackling some of the issues on money of the day. let's put it on the screen. that's a spar row's belch in the midst of a typhoon, and anybody giving you anything different than that, walk out the door, stick your finger down your throughout and give them the greenie weeny. only you can phrase it in such terms. listen, back in 2010 when

simpso simpso simpso simpson-bowles had the report, we really missed the boat on that, didn't we, senator? >> we did. that was an old infantry term from the army. when you messed up the order, the green weeny was oak leaf clusters. we messed up. look, in the business, you can't -- no wonder corporations are doing what they are doing, and individuals are all confused because the tax code is a true mess. has over 18 0 things in it called tax expenditures that cost a trillion one hundred billion a year, and the corporate people, they have the worst corporate tax situation in our country. we -- they are not competitive. they can't bring the money back without itting taxed twice, and we have the highest rate of any country in the world, 36%, and we put it all there to bring it

down on how to keep them from scrambling. >> just insulting to the american voting electorat because when it's not near election, but we don't call these things loopholes, but the tax code. the tax code designed by the people that call it loopholes when it's elector efficient, and, of course, they want to get re-elected. the long and short of it is when treasury secretary jack lew talks about the band-aids and dick durbin arm squeezing the likes of walgreens because they comply with the tax code, your thoughts, sir? i mean, to me, it's just completely insane that these become loopholes. these were all written and well thought out and well lobbied for. >> well, here's one for you. only 20 % of the american people use 80% of the tax code. when you're hearing that babble about the little guy, you want to remember who is getting the grapes out of the tax code, and only 25 % of the american people

itemize so 75% of the fellow citizens don't know what the goodies are in the tax code. that's a tough one to swallow. that's what's out therement you got to do something with that. we said get rid of it all. go to a broaden the base, lower the rates, and if you make 0-70 grand, pay 8%, 7 0 to 210, you pay 10 k and anything over that, pay 23%, corporate 26 from 36 and have a territorial system when you don't bring it back. no wonder they leave. >> i want you to weigh in on one thought, and that thought is simple. what would you say to jack lew, sitting next to you with regard to the comments you're not patriotic if you do the tax inversion trade. what is your final thought on that comment? >> i would just tell all the n congressmen to get patriotic so they don't screw the

corporations that give people jobs. they are chicken. they pander to the pace. either you a patriot or a panderer. if you're not a patriot. get out of the race. >> senator, you're a great american, thank you for the time and want you back closer to the election to see how it's squared with the electorat. back to you. >> you bet. >> a tough talk there on taxes from alan simpson. thank you, rick. coming up, the mayor on the town where elan musk is building a launch pad in texas. we'll be right back. ♪ during the cadillac summer's best event, lease this all new 2014 cts for around $459 a month

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as a crude producer by 20 35, things have to be worked out in the industry. first, of course; how to get the oil out of the ground, but how to move it around and how to do that safely. now, smart industry's answer to pipeline safety, we here in min integrity dig with enbridge, where pigs were used to detect problems in the pipeline system. areas that needed repair. now, pigs can be quite large, bedepending on the pipe size. this one is four feet in diameter and enbridge spent about $4.5 billion on intreg grate tools like this to keep 50,000 miles of pipeline safe. safety a big ish whew it comes to the debate on the keystone pipeline as well. concerns over safety. a main reason for the delay seen so far. consider the oalternatives. rail, barge accidents we've seen of late showing industry experts here that this may not be the best way to move large volumes of crude. not to say that pipeline

accidents aren't an issue as well. they are, but companies like enbridge are working on safety initiatives to get the incidents down 0%. focusing on that spending billions of billions of dollars and technology like the smart pig is helping them do it. cool about it as well, this pipe as being repaired is moving oil through it. this line moves 2 million barrels a day. doing this smartly, and efficiently. guys, back to you. >> all right. jackie, thank you very much. jackie deangelis. great live shot. >> great pink hard-hat. how do you get those? at the company launches a takeover splitting up into two separate apps, dennis crowley, founder of four square later this morning on "squawk alley." dow is up 17. 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

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a quick check on shares of tesla, which are up over 3% so far this morning. pacific crest nishgtitiating a . elan musk, south texas-bound. building the world's first

private commercial rocket launch site in brownsville near the mexico border. texas governor rick perry says the project will bring 300 new jobs to texas, and pump around 85 million dollars into the local economy, speaking of which we're joined now by the mayor of brownsville, texas, tony martinez. tony, welcome to the program. how do you feel about the project? >> i can't tell you how excited i am about this project. i think it's a game changer for brownsville, for the valley and for the state of texas. >> did you have to fight hard for it? were there lots of negotiations? i mean, are big tax breaks on offer? how did you win it for texas? >> well, geographically, we were well positioned to compete in this effort. we've spent about 3 1/2 years putting together packages. i can't tell you that all of the incentives were the main goal of mr. musk, but i think was a

collaborative effort by everyone here in brownsville and the rio grande value, and theley and th incentives totaling a nice package which allowed him to come to our area. >> do you guy, do the congressmen and the senators locally have to get more political? because, of course, the big game for elon musk is to challenge the federal government giving up, is it $70 billion worth of space launch projects directly to lockheed and boeing over the next few years. do you guys have to get in on the lobbying on capitol hill and try and get more business as the years tick by? >> well, you know, i tell you what, i think this area and the musk organization is a perfect match. now, as to what any lobbying efforts, or how do you go about challenging anything else that's going to other companies, i'm not quite sure, but i suspect that they'll be a -- a number of activities that will take on that we're not even aware of at this particular time, but we're

ready. >> mr. mayor, did you meet elon musk? >> i did. it was a wonderful conversation. i did go to hawthorne and tour his facilities, and talk to his staffs, and it was quite interesting, and he certainly is a dynamic individual with a very futuristic and visionary look at life, and so it was fun. >> yeah. i wonder if you got a sense of his view on american manufacturing? given he's been such a strong proponent of the gig georgia fact vi and now this in brownsville? >> we're hoehoping that will co. all the facility and manufacturing that comes with this industry, we're looking forward to cultivating it and, again, ready for the challenge ald the opportunity, and looking forward to it. >> and if, mr. mayor, at some point in the future he offered you the chance to go up into space in one of these rockets, would you take it?

>> i'm afraid not. and i'll defer to my age, currently like it probably wouldn't be healthy. >> yeah. me neither. good to meet you, sir. thank you for your time. tony martinez joining us from brownsville, texas, the new home of space x launch pad. >> an important job on planet earth. they would miss him. want to check on a photo of the week, simon. good to have you back. you were away at your sister's wedding. there's another sara in simon's life. >> yeah. >> and that is his sister. >> yeah. i gave my sister away back in the uk. it was -- an amazing thing. you know? actually, one of the greatest days of my life. she is very much in love with her new husband rich. an amazing couple of days right in the middle of nowhere. an ordinary house. one of the most beautiful brides ever, i think you'll agree. >> and you look beautiful as well. >> i was trying hard not to get emotional. the point we walked in. don't break down at the beginning. at least give her away, which i

succeeded in doing. rounding out the hour, look at gains. the dow now up almost 40 points. s&p 500 up about a quarter przage point and nasdaq up 0.3%. leading to the reversal in today's trade, obviously a fragile day. >> and over to you, carl. did is 8:00 a.m. at t. mobile headquarters, and 11:00 a.m. at post nine, "squawk alley" is live. ♪

good wednesday morning. welcome to "squawk alley." joining us today, jon steinberg bringing west coast action to the show. and from l.a. today, with us on set, jon fortt and kayla tausche as always. good morning, guys. lots to get to. two potential deals falling apart. first 20th century fox announcing withdrawing proposal to buy time warner saying the company's board refused to listen to its highly compelling offer and sprint dropping a bit to buy t-mobile, getting regulatory approval was proving too difficult. what all of those companies are doing this morning. a big topic of discussion, kayla. the effect on the overall market these deals are being pulled. i would argue the takeaway now is that rupert truly is done and this is not some sort of diversionary tactic. >> or maybe just choosing this route because everyone said he would push on until he