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 got this. so just proving everybody wrong. it is interesting, though. the amount of commentary, carl, that talks about how time warner would sell itself if only comcast, at&t potential bidder for that company were not already digesting deals of their own. you can't have a competitive auction process and get the highest value for shareholders when so many competitors in the space are preoccupied. >> of course, the other big story, sprint. let's get to this piece of tape. t-mobile's ceo legere on the possibility of a deal just a week ago. take a listen. >> we've always said in the long term scale is extremely important. i point out we have multiple options to create long-term scale for this company, one of which has been long rumored and is one possibility for the business. >> jon steinberg, i know you love deals and the gossip that survounds dealmaking.

what do you make of these going away in a hurry? >> the insight i have, when the two holding companies were looking at merging they said google and facebook were the competitors. look at media companies, disclosure, advertisers are our, the key is they ultimately are competing in digital video. it's all going to be going over the top and for them to have scale to compete with youtube, able to compete with facebooks, video instream product, they need to be able to have more scale to go out to advertisers. that is the point of these mergers. if it doesn't happen this time with these companies it will happen with comcast and somebody else. ultimately, everybody bulks up because google and facebook are powerful and have so much scale in video now. >> scary for the other carriers at this point. t-mobile was already aggressive in the moves. you think if they teamed up with sprint, they would have had to at least slow down or go through some kind of digestion process, but now that t-mobile at least for the time being looks to be on its own, i mean, the uncarrier moves seem likely to continue. not clear the end game for john

legere, but changing things a lot. >> of course, waiting to hear -- >> you've got two deals. basically you have the sprint/t-mobile deal, dragged out. and the fox deal, quick and left. i don't quite understand why rupert walked away so quickly. everybody was convinced he would play hard and try to close it. i don't think it's diversionary, but i'm baffled. >> legere said, lots of possibilities in this universe. waiting to hear, on today's earnings call, begins at noon. but back in may he discussed the possibility of a t-mobile bid. >> t-mobile is sprint, to make a decision on, we just can't compete in that process. they'd have a lot of synergy and there's logic to what, why they would want to go after t-mobile. looks like a tough regulatory hurdle based on what people have said. you could go broke betting or washington. if, in fact, sprint didn't proceed or denied, t-mobile

would have strategic interest, yes. >> see if they make a move. fcc's tom wheeler says he thinks it's a good thing for them to abandon this that the fcc would have been busy with all the deals on the table. one group not happy about this, the bampgs. analysts banking in some of this revenue from the deals they don't get paid if the deals don't close. nover knew what the fees would be for a possible sprint-t. mo deal, it never got announced. estimating the banks would have raked in $274 million in revenue overall, $138 million possibly for citigroup alone. just for these advisory fees. 234 not even's counting financing for a jumbo loan that a deal like this would require. so for this windfall to be taken away at a time when interest rates are low and the markets are cooling off? >> right. i'm surprised -- surprised the

market is not down today, to be honest. everybody discussing it earlier in the morning on "squawk box." deals falling apart. faber called it titanic tuesday. a sign of negativity in the economy. people not doing growth. people not doing big things. surprised to see everything in positive territory. wonder what art thinks about that? >> didn't it feel is was getting out of hand? going too far? the equivalent of jumping off the top bunk with your red cape on thinking you were supermarch. >> i'll have that image of mu murdoch in my mind for a long time now. >> allowing them to scale completely across the web. jon, not overreaching but necessary that all of these guys have to do. >> and indeed. meantime, a lot of other things to watch, too. september apparently the month for upgrades. apple will hold an event september 9th where it's wildly expected to introduce a new iphone with a larger screen. not to be outdumb, sang seung

holding an event september 3rd introducing you a galaxy smartphone. the company has burned through almost $2 billion since the surface tablet came out in 2012 including a loss of over $350 million in the latest quarter. jon, can we take this september 9th invite to the bank? >> i think so. re/code has, over at re/code, a good track record with this thing. expect them to allow for maybe a week, week and a half's worth of shipping ahead, pre-odor pre-or shipping ahead of the quarter. september 30th. expect china to be part of that and samsung jumping in, too. the competition this holiday season for hardware dollar, expecting a watch, beats in the mix, accessory wise. new phone, new tubablets coming out. marketing will be good. >> go to daily mail in north america, for one. >> and, carl, the note from sang

seung they sent out said it's a note, a note to attend this event. going to be the note, the giant phone. when i was saying these giant phone was a huge thing everybody thought i was crazy. apple giant phone, 5.5 inch, samsung note, 5.7 inch. it's how big can it get? we're going to need bigger pants. i want to buy levi stock. >> what about between apple and s samsung and international markets? can they bleed stateside? >> when companies get into patent disputes, s they toned settle. not got for the companies and partners in some respect. remember, samsung makes some chips apple uses, blows my mind they can be so antagonistic and also partners this is what they want. >> reach for the lawyers just like the bankers are getting bad news of the deals not going through. it's the international lawyers

who suffer when these battles end up going down the drain. carl? >> they garve them the aed vice to drop it. they built a few hours along to that decision. >> figuring out way to get paid. i'm no expert in that stuff. >> what about the markets? >> used to be companies would get absolutely sunk by these losses. these are the things that put palm down the drain. these are the sort of things that ended companies. now that you've got these giants like microsoft, amazon, going into zero margin hardware, able to sustain losses for much longer, tell you, a few months ago i was saying no think the zero margin hardaway thing can continue forever. there's going to be a reckoning. it's getting closer. >> microsoft, $32 billion in marketing cash. it they weren't plugging $2 billion trying to get back on the market and find a new compliant base for, wouldn't you worry about that? if they weren't? >> weren't investing in the hardwa hardware?

no. wouldn't worry. plenty of other things to invest in. >> 1.7 billion isn't a lot. otherwise not able to have new products and innovation. look at the motorola write-off google did. 1 billion 7 is not what it used to be. >> good point, in the face of rising inflation, i guess. stick around. back to you in a few moments. enjoy l.a. life in the meantime. we want to get a check on the broader markets which turned positive after tripping a technical level this morning. they opened to the down side given the standoff in ukraine. the abandonment of a bunch of mega deals. look at markets now. dow up 46. s&p up 5, still near a two-month low. nasdaq for its part up 16 points. shares of bank of america in the green after anews toing it would increase its dividend for the first time in seven years. increasing it to a nickel from a penny. that after the fed approved its new 2014 capital plan.

it will drop that $4 billion stock buyback plan that had been saving for, but because of that miscalculation, it can't pursue that for the moment. finally look at tesla, also rallying ar settling a patent dispute over the tesla trademark in china. the automaker free to expand in the world's largest auto market. tesla shares on that news, carl, up nearly 4%. >> nice gain. actually not up that much at the open. a nice improvement during the course of the day. when we come back a look at the all-new foursquare, dennis crowley, ceo, joins us later in the hour. plus shares of groupon plunging and trading. what's wrong with the company and others in that sector, and are we close to the holy grail of energy storage? behind research that claims battery life could be tripled in as early as three years. "squawk alley"'s back in a minute. honey, we need to talk. we do? i took the trash out. i know. and thank you so much for that.

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welcome back, john stenberg city will us from out west. groupon stocks hammered, along with disappointing guidance for the quarter. losses grew despite at 24% bump in revenue thanks to larger costs in marketing and building new product lines. shares down almost 50% so far this year. jon steinberg, went through a period where we didn't flow if the company knew what they wanted to be. appears they do. is that enough? >> really interesting.

a good note. trades at four times gross revenue. ebitda to growth revenue, less than half of what amazon does, going into the local space, we discussed on the show. so competitive. going's there, amazon, the information had a great article how much money google is losing now on doing that local delivery. people literally in the store. basically in the most competitive space, with a weak brand. it's so tough. >> there has to also, jon, be a value proposition to what they're doing. look at revenue, yes up 24% but billings up greater that than. leading you to believe they're not making as much, not getting as big a piece of the pie as they used to from merchants, in a strong growth economy, you really can't -- you can't push deems the way you could, can't push coupons and incentives to merchants to participate. will this keep eating away at the company? >> a miss on revenue.

not to look for bright spots, point out something not everything everybody is saying. they made up 400 basis points more on gross margins on the goods business, when they directly sell stuff. see a light at the end of the tunnel, a few possible sign there's could be margin improvement. >> is this living social having an effect, jon fortt or something larger? >> the model stank from it beginnibegi beginni beginning, i think. didn't particularly like it early on. didn't make out that well. unlike yelp, didn't have the same kind of customer loyalty and value it was building socially and review wise internally to propel forward. even those players like an angie's list or a yelp are trying to participate in revenue with retailers per transaction, trying to grow volume in a different way at the local level and like jon said, the competition in this space is huge. we had amazon announcing today they are getting into same-day

delivery. >> six more cities? >> yes. including this area. those of us prime members are happy about. if you're groupon, that marks it really hard. >> yes. >> one more point. i worked in local at google, we did a channel program to sell adwares to small businesses. i don't like the local space. only what you go after when you've totally saturated what you can do in national. it's a bit like getting like the last bit of salsa out of the jar. not the kind of thing you want to go into, if you've got other possible -- kind of racking up dollars in 500 dollar or $20 chunks instead of $100,000 and $500 million chunks. >> that last bit gets moldy, too. is there somewhere we can expend that metaphor? >> get a new jar of salsa. >> have fun at spalgo for lunch. >> california jonny, what can i say? >> thanks, jon, so much. claims from a team of researchers at stanford university including former

energy secretary steven chu. claiming there are just three to five years out from bringing a pure lithium battery to market, trichaling battery life for cell phones or give electric car as 300 mile driving range. not all battery makers are optimistic. joining us, ceo of battery maker a 123 systems. jason good to see you. >> great. thanks for having me. appreciate it. >> when you read this story, researchers at stanford found a breakthrough, holy grail, game changer, what's the first thought you have? >> i think these announcements are great for the industry. no doubt about it. and labs around the country are working on these game-changing technologies from boston to silicon valley to an harbor, michigan, where we're at today to austin, texas. it gets us talking about alternative energy. the risk here is that these breakthroughs are still in the lab. they have a long way to go before they go into high volume production especially in the auto industry. so great to talk about, it

drives investment in the industry. we have to be cautious that ebb it these veeshgs are years away and consumer electronics probably for near term given the lesser requirements for that application, but maybe five to six years before something like this would ever see production in that kind of application. >> jason, as you seem to kind of allude to, if i had a dollar for every press release i've seen about a battery breakthrough i'd have enough to buy a tesla by now. why don't these things ever pan out quite the same way the press releases do out of the labs? >> well, you know, i live in a glass house, too. we've put out a few of those press releases in the past, and really it's about getting momentum and excitement behind the industry. all trying to build a new industry, and these are not really breakthroughs. the problem becomes that where you advance the technology in one direction, you typically regress in another. in this case, where they really improved energy density they're struggling with life of the

battery and so when you hear them talk about 150 cycles, you wouldn't want to replace your car battery after you recharged it 150 times. we look for 3,000 to 4,000 cycling in the auto industry. you can see the gap. even in your iphone. you'd like your battery to last more than a year. so you think about it. i charge mine every night. that's 360 cycles you'd like to get on that battery, at least to last a year. quite a big difference when you move in one direction you typically regress in the next, and that's the challenge. for all of the research, working in this space. >> jason, for those who have watched a long time, all the vcs, praying for this day to come eventually, if and when this happens and the chemistry improves, is it going to make itself most plain in phones? in cars? on the grid? where is it going to pay off first? >> i think you have to think of it as slow but steady. look at the progress tesla is making. they're in the second inning of

a long game that's probably going to go into extra innings. doing very well. i think that will continue to grow within the automotive industry. i think you'll see smaller batteries that are lithium ion in cars first and within the next five years most cars globally speaking will have small low volt of lithium batteries in them to improve fuel economy. doesn't mean we'll be driving evess. first, consumer electronics. don't need the cycles or temperature extremes you see in car. hardest application, probably is a car. you've seen great increase in the use of lithium ion over the last ten years. gadgets in your house, trimmer, lawn mower, electronics, the demand increased, and that's helpful for companies like mine, where we see factory utilization going up and costs coming down and ultimately leads us to electrified vehicles. >> true. many cautionary tales. jason, one day we'll get that

game changer. for now, thanks for joining us. >> thanks a lot. appreciate it. when we come back this morning, dow is up about 34 points. also the firm that uncovered another massive data breach, 1 billion passwords, hundreds of sites, the ceo coming up next. the next generation goes past check-ins. how the company's new app is taking on yelp, google and a whole lot more. menu. veggies you're cool... mayo, corn dogs...you are so out of here! ahh... the complete balanced nutrition of great tasting ensure. 24 vitamins and minerals. 9 grams of protein... with 30% less sugars than before. ensure, your #1 dr. recommended brand now introduces ensure active. muscle health. clear protein drink and high protein. targeted nutrition to feed your active life. ensure. take life in.

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welcome back to cnbc. i'm michelle caruso-cabrera. the leader the russia, vladimir putin responding when can um comes to sanctions impose and russia. putin ordered government agencies to restrict imports of food and agriculture products from the countries that have impoetzed sanctions against russia. help signed the decree earlier forward and it's posted on the kremlin's website saying such imports will be banned or limited for one year. the decree does not name specific countries or products, but contains an order for

government agencies to spell them out. areas of agriculture in the united states, carl that would be vulnerable, chicken and also pistachios. russia is the second largest importer of u.s. chicken broiler male behind mexico. last year bought 27,000 tons of it or 8% of exports of broiler meat. that's department of agriculture data brought up by reuters and that was 7% of all exports so far this year as well. in total, russia imported about 1.3 billion in u.s. food and agriculture products last year, carl. so we're just beginning to see his response, and we expected this would happen, and there's potentially more to come as well. back to you. >> definitely not progress if you're looking for de-escalation of the whole scenario. thank you. michelle crusoe cabrera back at hq. uk about to close? >> positives in this country lifted europe off its low and

italy down over 3% earlier today. a lot of the weaker banks weighing on the national deign seese. you'll see that at the periphery of europe. take you through you that in a moment. a lot of professional investors focused on what's happening in germany. the dax went earlier in the session into correction territory. 10% fall from where it was on train day high of june 20th. come back slightly on that. obviously a lot of german industries, very dependent, a lot of heavy industry is dependent on the energy that um cans from russia and the prospect that you might get retaliatory action on that from putin. tomorrow a lot of headlines concentrating on the fact italy technically has gone back into recession. it's marginal. a contraction of 0 boyne 2% last quarter after 0.1% before. two quarters of contraction. that means recession. you've seen a lot of the banks sell off around europe, but in italy as well. there you see, talk that the bond market has also sold off on its lead nap is true. the yields ticking higher.

just get a grip on the context where we've been on yields so far this year for both italy and spain, though spain is flat for the session overall on the bond market today. the greek banks have also sold off quite heavily today. that apparently also has to do according to traders quoted by reuters with the stress test which come through in november and the belief they have to be recapitalized for a third time as a result of that process. one more i want to mention to you. that's for the whole of europe, of course. all the major banks. one more to smengs important for the chrysler merge perp today suspended many times because the price on the market at6 euros 4 fallen below the price from friday. above $7. many existing shareholders will find it advantageous to go through the company's cash exit and therefore attempt to break through the half a billion euro cap. it's kind of complicated, but

saying if it isn't capped at 457b million euros potentially the crisis merger as structured may not go through. i imagine they'll revisit that. back to you. >> busy day. it glad to have you back, simon. >> it's good to be back, kayla. >> all right. when we come back what does the next generation of foursquare look like? ceo dennis crowley explains lew it goes way beyond check-ins's that story up next on "squawk alley." you used to sleep like a champ. then boom... what happened? stress, fun, bad habits kids, now what? let's build a new, smarter bed using the dualair chambers to sense your movement, heartbeat, breathing. introducing the sleep number bed with sleepiqtm technology. it tracks your sleep and tells you how to adjust for a good, better and an awesome night. the difference? try adjusting up or down. you'll know cuz sleep iq™ tells you.

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alley." cnbc rapid update. better than expected trade deficit 234r59 flat erg the gdp's rising by 0.3 percentage points to 4.2% with a range of 3-9 to 4-3. helping out forecast for the third quarter, up 0.1% to 3.1. looks like economists estimating, put together two good back-to-back quarters with a range on the third quarter of 2-7 to 3-6. over at action economics, 3.5 for the sheard quarter. and goldman sashgs, 3.2. morgan stanley, big revision upward at the bottom of the pack before. now at 2-9 and credit suisse among the more pest misimistic the quarter. 2 poirn 7 to 3.5. going the way we're going now, carl, all things equal, put together two solid quarters here in the second and third quarter. >> yeah. don't want to give too much back, steve, for sure. thanks, steve liesman. social network foursquare's

recently siphoned off check-ins to a new app snd join us with a full relaunch of the app, moving away from more of the check-in based social network to a recommendations type network. dennis crowley, the ceo, joins us. congratulations on this. what do you tell people that's new? clearly not just about check-ins anymore? >> always about local search and discovery. built one of the best local search engines out there. everything is super personalized to you. we ask users when they sign up, tell us specifically the things you like. is it hot chocolate? cocktails? fried chicken? romantic italian restaurants? tell us what you really love and we'll help you find places great at those. >> not just a particular food or drink. often just a vibe, right? >> it could be anything. an object at a place. hot chocolate, amazing coffee. it could be a vibe. it could be a specific attribute of a store. a little of everything.

>> seems like the key feature in this, expertise. >> yes. >> the sense that certain people's opinions are more important than others, it's the thing that kills me on yelp, which i still use quite a bit, you have to scroll through the inane reviews for people who gave it one star, because some waiter looked at them wrong. >> yeah. >> this should fix that. do you think this could at pcou ahead of yelp? >> we all use yelp, same search results. seems incredibly broken to us. how do we make sure everyone is getting personalized search results? and for specific places, highlighting what you think you'd like about the spots. take the reviews that aren't so interesting, bump to the bottom, the stuff we think you're really interested in, bump it to the top. >> this information could be incredible valuable. you could deliver you like hot chocolate to a merchant, sell

the ad. you get revenue. >> interesting targeting already based off check-ins and checking in at certain places. one of the things our company's gotten good at over the last years. as foursquare gets smarter what we encounter in the world we'll get better ins future and building better products for advertisers and local merchants. >> what are you going to be the best at going forward? that's the danger with pivots is, like, well, if was this. now kind of that. what is the company really about? are you taking down yelp? are you going to do something really special in local despite what we see happening with groupon? >> localized personal search for us. all the stuff in the world, how do we find the most interesting places and local merchants and make sure you're finding places you love all the time? >> the best what? >> best local search. >> okay. >> and what is swarm become now? expect people to logon to both simultaneously or can you use one without the other? >> yeah.

use foursquare without swarm and vice versa. they work best together. swarm we moved all check-ins to. people love foursquare search, not everyone loves to check in. kind of polarized. we moved that into the swarm app. >> you're five years old, foursquare is. has hundreds of millions of users. 6 billion check-ins even through its various iterations. wondering, how long do you see foursquare being a stand-alone company given all the competition in local? >> always opportunities to work with other companies and do deep partnerships and talk about other things. the interesting thing that's happened this year and last year, the company generated a sing consent amount of revenue. triple digit growth this year. first half of 2014 already bigger than all of 2013. the copiy is getting a tremendous amount of traction working with advertisers and local merchants once we get those parts figured out it opens up opportunities for us. >> profitable when?

>> profitable when? we don't talk about that. we can see the plan in the future, as stuff happens. as a private company, don't have to disclose it yet. keeping tabs on us, and -- >> was it your vision to be independent this long? or had you thought that far ahead? >> really, just mostly focused on building things we love using. things we love using. things our friends love using, things our community loves using. always opportunities to work with advertisers, work with potential partners. i'm happy whip the amount of growth we've seen around our fifth year anniversary. >> how patient have investors been? sometimes you don't get that much rope to go through as many changes as you have and what are they saying now about this latest change? >> a really good question. we've been very fortunate that we have very a-list top-tier investors, people has lived through the growth of many other companies. whether it's the facebooks or the twitters. they know they have to be patient it takes time to get the ad modsals working, often an

adolescent phase in the middle. we went through that in the last two years and just came out of a board meeting last week. everyone is super excited. hit the launch buttons back at the office. the company is superexcited. lots of good stuff happening in the future. >> i lurch watching tweets come in. watching dens kill it on "squawk alley." one writes, i miss from the old days. do you? >> like, we made a lot of changes we did because we didn't think mechanic was working as well. mentioned expertise. how do you become the expert in your city, in your neighborhood? in sushi raunltestaurants? >> you don't need to be the expert if you're the mayor. >> it's something that, expertise, wanted to do since 2009 and couldn't fig ter out. spent a lot of time working on it, launched something we're super proud of are and psyched about both products. >> overall, we love to throw people like you a valuation question. across all deals and environments do they seem el vamted to you, in line, cheap? >> i guess it depends on the

company. i think there's some companies way up on the top end and there's companies like us still continuing to prove ourselves. i guess it depends on the company. >> great having you in. >> thanks. >> please come back. >> congratulations on the launch. >> please, downed load. love to hear what you think about it. >> tweet me back, i'll let you know. >> i will. when we come back, when it comes to r & d, which creates the best? look at apple, answer might surprise you. answers in a moment. first, rick santelli, what are you watching? >> 246 yields in tens, believely under that significant may 28th low yield close of the year at 244. we're going to talk about things like, is the stc fed stretched? how do fundamentals pan out for the rest of the year with regard to equities? and exactly what is the long-end telling us? you're going to want to tune in after the commercial break when we tie up all the loose ends in a nice, pretty, little box.

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investors, don't be fooled by rupert murdoch. he's not finished yet. and ever wonder what happens off the desk that makes the halftime trader so fierce on the desk? continuing today with a look at joe terranova's freezing passion when not trading. all straight ahead, top of the hour on the "halftime report." kayla, over to you. >> we'll be there, melissa. which companies create the best in research and development. back at hq with answers, dom? >> like we showed you earlier in "squawk box," highlighting companies that are efficient allocators of research and development, r & d capital. prompt an marie knot at washington university in st. louis. chroniclining how well they do. matching consumer products, apple versus hp. we all know what a juggernaut apple's become, but is it a more

efficient spender in research and money. ranked 37th on the rk, research kwoesh ntd 50 list, apple fell out despite the fact they spent almost $4.5 billion on research and development last year. hp, only, i say only, tongue and cheek, spent about $1.1. it's possible am isn't spending enough to keep growing at that healthy pace. meanwhile, highlight packard under ceo meg whitman made a commitment to spending on innovation, paying off for the company in ways. shares outpaced apple over the course of the past year and r & d efficiency may be a part of the story. stay tuned. our next matchup in the "halftime report" is is a toy story. barbie versus transformers, g.i. joes versus my little ponies, and for the full list go to

cnbc.com/rq50, carl. back to you. >> really interesting stuff, thanks. dom chu at hq. over to julia bourse stirn ju boorstin off the time warner call. >> the call just wrapped up. the ceo said they wouldn't talk about the offer from fox or the withdrawal but did answer a question about his perspective on m & a in general saying that they are open to looking -- m & a opportunities, that they don't have the to do a deal because they have massive scale, repeating a number of times they're the leader in the studio, in the movie space. but he really said that each scenario needs to be evaluated separately. both to look at the opportunities in terms of synergy, cost savings, et cetera. also in terms of the risks including things like regulatory scrutiny. another big point he made in the call, opportunities in hbo, saying that he's not philosophically opposed to doing some sort of over the top offering direct to consumers through a company like dish or

comcast. says the key is to make sure that selling hbo directly to subscribers would reach people who wouldn't be paying for it otherwise, to make sure it's incremental growth, not stealing from the rest of their sup xrix business and talked about making hbo go, their app, a destination for all sorts of tv content, both hbo and tnt and tbs and maybe even other content that's not owned by time warner, and throughout the call he hammered home this idea that it makes sense for time warner to be a stand-alone company and untapped's kpunt across various divisions names a couple things like kids programming, consumer products, d.c. comics looking broadly at all the ways to mine those app eds, back to you. >> mentioned the children's business a couple different times. i wonder what he's seeing? >> interesting. mentioned kids business, of course, cartoon network. potential growth, both overseas

and the u.s. there. and mentioned d.c. comics straight on the heels of disney's earnings, interesting to see what kind of comparisons there are to be made. obviously, disney had massive successky marvel and the question is, could time warner replicate some of that? strong assets, batman, superman, but is there more to be done with those d.c. comics characters? and then with the kids programming, one thing we see with kids programming, it does translate well overseas and kids and parents will buy those dvds and buy video on demand whereas a lot of other movies that aren't kids oriented, people want to just rent instead of buy. >> julia, growing up we always used to say about comic book, marvel had the better artists but d.c. had the better characters. do you get a sense out there investors feel time warner hasn't taken enough advantage of that versus the success disney's had with marvel? >> the thing that's interesting about marvel, able to mine those characters not just the big ones.

iron man was not one of the biggest characters but now reaching really deep into the marvel library, comics like guardians of galaxy. d.c., superman and batman, can go deeper into the library and have success. d.c. and warner brothers have not had quite the success with those characters, green lantern, not the massive hit say iron man was. i do think the folks here in hollywood think there's more to be done with the d.c. characters. >> in marvel can make guard yangs of the galaxy, where's my teen titans mother? >> ouch. that's going to be heard around the world. get through fox tonight. interesting, too. >> definitely. >> julia boorstin in l.a. rick santelli with "the santelli exchange." rick? >> hi, carl. just checking out the dow, still holding on to some gains completely not white washing out yesterday. a lot of things going on, you know, and i've had great trained discussions with traders on the way home and will kind of re-create some of those

conversations. we're going to look at all of the major areas, on treasury, been a lot of debate as to, will zero interest rate policy be pulled forward? meaning, are we going to end zero rates sooner that are ran late jer many point to what's going on with ten year rates dropping, challenging the low yield, close of the year and doing that today. that is telling us, no. to pulling forward. sorry. at least in my opinion, i don't agree. once again, we talk about the yield curve. okay? the yield curve is basically looking at short rates going up and long rates going down. that's flattening. it's not that the low rates and the long end are telling us anything about zerp. i contend it's telling us about the relative strength of the economy base and history. underperformance, but still performs. it's the short end. when we talk about fed funds, i have an issue with that as well. in the old day, fed funds had a predicting value, were an indicator what the next meeting

may hold, but it was always one, maybe two meeting ahead, once on the path of easing or tinting, but when on the inflection point of the first, and in this case the first of a tightening i contend the fed funds aren't telling you exactly what they think they are telling you in the past. with respect to boons, as they approach 1%, traded 109 today, many saying it's geopolitics. to that i have a great analogy. if you're at the top of a hill and somebody pushes you, falling in a much different issue than if you're standing at the bottom of the hill and somebody pushes you. so, yes. geopolitics may affect the european companeconomy, but bec they're teetering there, anyway. most debated on my train, one. guys said, he's a big trader. he said, listen, it's not about the fed. it's not about the end of zerp orred end of qe. it's that the stock market has to catch up to fundamentals.

but we don't know that's true. they might be fed stretched and on central banks all three meeting tomorrow, bank of japan, bank of england and, of course, ecb and want to see exactly what they say. especially the bank of england. the pound used to be at 170. no longer, walking back some of their ending of some of the great lemonade they've been passing out from their central bank. sa sara -- sorry, kayla and carl, back to you. >> rick, thank you. we do change the desks a lot here. rick santelli in chicago. when we come back, how can drones fight california's record-breaking drought? live on the ground to find out when "squawk alley" continues. , we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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the three-year drought in california is making history, not in a good way. officially the worst drought on record for the state. bad news for wine growers and farmers. many of whom are turning to start-ups for help. josh lipton joins us from a winery in california with more on that story. hey, josh. >> reporter: kayla, in the wine country in california, grape growers know their business will dry up if their water source evaporates. now they're going to look for new ways technology can help them utilize what little water they do have, and here at the francis ford coppola winery,

they've teamed up way start-up called teravion. they fly over and give images to tell farmers which areas are getting too much or too little water. the start-up already has about 100 customers and says demand for its service is strong. >> we see a lot of interest from growers because of the drought, and it definitely helps them find irrigation leaks and manage water more effectively. >> reporter: now, they charge about $30 per acre for small farms. a cost that the coppola winery believes is worth spending on its vineyard and is now testing on some of its partner growers. >> after having that technology, we've been able to fine tune so finely that now we have so much more confidence and comfort in how we irrigate. it's changed everything for us. >> reporter: now, there was a $500 billion market for water products and services.

so no surprise that the company has big named fans, including whycombiator. >> beautiful live shot. incredible country there. josh lipton out west. when we come back, the nasdaq recovering from earlier losses. tell you what's lieading the wa higher, when "squawk alley" comes back. 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 we do? i took the trash out. i know. and thank you so much for that. i think we should get

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welcome back. >> and oversea, impacting trading as well as tentment. the look at the big movers on the nasdaq 100. two specific stock stories to point your attention to. an i.t. company, reporting earnings, tech investors look for earning from these firms for a better gauge on i.t. spending. the ceo's comments disappointing the street citing weakness among certain clients from north america and europe. shares lower.

look at rocket field, one of the hottest ipos of 2013. ad tech firm beat wall street estimates. revenue up year over year, lowered full year guidance, shares are selling off due to this. and rocket fume announced a digital marketing firm for about $100 million. back to you. >> thank you, seema mody. we haven't mentioned big cap names with news today. bank of america getting that revised capital plan approved by the fed. and then a big upgrade of ge. over at bernstein. bid on neutral for two years went to an outperform with a price target of 33. >> especially with the earnings season rolling on. bank of america we heard from several weeks ago. the move today, up as high as 1536. today now up 2%. actually hit its 52-week high, carl, of 1803 back in march when the dividend and the buy back

announced. that plan off the table. >> still the first dividend in seven years, getting people's taenchts dividend increase. >> keep our eye on that. that does it for us on "squawk alley" for now. melissa takes over the "half" in a few seconds. >> a lot to talk about including a pullback we've seen and also going to delve into the calls of the day. interesting one on macy's. we'll talk retail a little in the hour. see you then. wack to the "halftime report." i'm melissa lee in for scott wapner. josh brown is with us, pete najarian, and joe terranova, and mike murphy, and let's get straight to the markets and stocks bouncing back today after the s&p and dow hit lowest levels since may, but the blight to safety is still on. treasury yields are near multiyear lows. what is going on here? and how are you trading it? the fact that yields are so low on