pre-nump. dualing hurricanes on each side of the u.s., warnings of rough surf for beach goers on both coasts. the storms digging up massive waves, marie has spectators and surfers flocking to the beach to see some of the biggest waves to hit the area in some 25 years. join us tomorrow, and "squawk on the street" starts right now. good thursday morning, i'm carl quintanilla, and jim and david off again today. stocks look to sell off at the open despite a nice revision to the 4% gdp number in q2. europe is struggling as reports come in that russian troops move into eastern ukraine wiping out optimism of a deal between putin. a road map goes like this, two

different economic pictures, rosy morning for the american economy led by the better than expected economic number, and the s&p, another record close yesterday. >> dollar general hitting its earnings targets, but sales miss. more interesting, the ceo says full steam ahead with the takeover of family dollar despite a strong rejection from fdo. >> on this thursday, another data breach. a sophisticated attack possibly out of russia against the largest banks in the country including jpmorgan. >> time for another apple leak as they unveil new smart watches, recode says we'll see apple's version in september. first up, the economy grew by more in the second quarter than the government thought. the congress department revised gdp to 4.2% from 4%. jobless claims down and futures lower on concerns of tensions between russia and ukraine.

officials accusing russia as what they describe as a stealth invasion. they believe over a thousand russian troops are operating inside ukraine using a lot of the artillery there in the hands of the separatists. it's called a hybrid war as putin uses deception trying to make you think one thing and moving in another direction. >> appears on that end. shares dropping after further economic data confirms the russian crisis is having an affect there. there's not an end dipmatically soon. >> not as they had earlier in the week, apparently went well, and what we missed yesterday in all the news coming out of europe, and it's partly why the markets are sensitized to what's going on with ukraine is the minister said they knew in kiev, another russian plan to hold gas flows this winter to europe. that was immediately denied by the russian energy agency, agency minister, but cuts to the

heart, of course, of concerns in, for example, germany, the big industrial base, talking extra sanctions, france and germany doing that without this time it would appear prompting from the white house. that is the major concern. ultimately, you get an interruption on the gas supply, and it is said that is why they are trying to stockpile as rapidly as they can, but that's the nerve of the potential economic impact, carl, of where they are to be. >> now calling for the emergency u.n. security counsel meeting, but, of course, russia's on the council and can veto that at any time. not any clarity on what happens now. >> russian stocks beat off also, down 2% earlier. >> interesting to see what nato does. >> u.s. on the flip side better, 4.2%, and revised higher, back ward looking, but revised higher on increased corporate spending, 8.1%, the best since 2010, at

least corporate profits doing better, maybe that was the corporate profits number, the 8%, and corporations spend more and there was a decreased drag from trade, also a positive sign as we look forward. >> exports and private fixed investment, two big reasons for the upward revision. consumption is good, but -- >> yeah, not bad. >> better than alternative. >> revised down. >> what economists expected. >> of course, yeah. >> jim paulson, chief investment strategist with wells capital management, and brian westberry, and you feel weaver in the midst of the multiyear bull market run. when you have headlines like this from ukraine and russia, follow the strategy that worked all yearlong and buy the dip? >> well, i think we come up to 2,000, but we may be en route for a pause here over the next several months as we digest the

big valuation improvement we had over the last couple years here, and i'm -- i think what investors have to ask themselves, i think the economy's certainly notched up to 3%-plus growth in three of the last four quarters not including the first quarter, it's grown 3 to 4%. i think we sustain above 3. investers have to decide can we do that with the unemployment rate heading into the fives and unitization rate over 80%. can we do this without interest rate or inflation consequences? if we can, if we grow three-plus with interest rates at 2.30, we melt up in the market, but i think more likely, we'll see interest rate pressure, we'll see inflationary anxieties, anxieties about the fed moving up the exit strategy, creating tush lance over the next several months. i see the market ending at 1850

for the year. >> caution from jim paulson. brian, asking you -- >> sure. >> business investment increased 8.1%, the most since 2012. corporate earnings, 8%, most since 2010. if the stock market just tunes out the noise about qe interest rates, inflation, you have it, a reflection of corporate america looks strong. >> it does. i'm different from jim this year. we both are bullish for a number of years. i've always liked his company. i love jim. this year, we're different. i think the s&p 500 ends the year at 2150, and it's being driven by corporate profits, profits are up because productivity and the efficiency are up, and one of the problems we have when we look at the aggregate data, the overall gdp data, overall employment picture, is that it hides what's a boom in technology, whether it's fracking or 3-d printing or

cloud or apps. those areas and anyone who uses those technologies is booming. you have this sort of other side where it's a lot of redistribution, a lot of government regulation, and that side is hurting. put them together, and you get okay growth and unemployment that's still high, and that causes people to worry about the economy. really, we get to invest in this area. in the third quarter, now, we're already getting da fa for the third quarter, we just got second quarter data, business investment looks like it's going to be up 8.5 to 9%, maybe higher than that. we'll have another quarter of the great investment and i think profits as well. >> hey, jim, let me bring it short term if i may. what happens when we get through the labor day weekend, people return to their desks, presumably the volume picks up. technically what do you think that means for the market? >> well, i think that you always

wonder in the dog days of summer, ahead of labor day here, you wonder what it means, the market symbols. we won't know until after the holiday here, get the players back in the seats, simon, and i think the september and october will be an interesting period for the market short term. i come back to equity investers have to judge whether you can continue to drive this market even if as brian says, and i agree, we get good profits, can you continue to drive the market with a bond yield at 230, way out of sync with a 3% growing economy. it should be 3.50. >> it's 3.10 on the 30. >> yeah, i'm talking about the 10 46 year at -- >> telling you how distorted it is. >> i think it is. at some point, we have to reconnect the bond market to the economic cycle, and the fed's going to have to reconnect short

rates to the cycle, and most of the time, when we move from accommodation to tightening, historically the markets had a period of, you know, unrest and to turbulence, and we've gone through the mother of all monetary easing cycles here, and i think it's unrealistic to assume as we move away from that unprecedented policy that we won't have some since of turbulence in the equity market. i think we'll have that the rest of the year. >> historians point out that equities, they do start to misbehave in the part of the cycle you refer to, but not until well after the first hike. we're not there yet, and you say 1850 by year end? >> yeah not. i think -- don't get me wrong, i'm still thinking, carl, that longer term, this market goes quite a bit higher over the next few years. the recovery -- we might be in the midst of the longest recovery in u.s. history, but i don't think it's going to be a straight line move in the stock

market, and i do think we've gone from a multiple of 12 times earnings in 2011 to 18 types earnings now, increased the valuation of the equity market by 50% in terms of the value of the earnings in three years. i think it's going to take a breather and convince people that the water's not always safe. we're getting too over aggressive. >> i want to say one other eide in the pot when you say the fed signals raising interest rates. they wonder why the central banks talk about raising rates and move the goalposts. he comes to the conclusion the major reason for that is nobody wants to disturb the market until after we've gone through the bank's stress tests and recapitalizations in europe happening this fall, and that basically everything is on hold for that. they can't have turmoil going through it for all the things rehearsed through the european crisis on both sides of the atlantic, and, therefore,

arianblarian b -- arguably, jim, the coast is clear until november. >> let me jump in and suggest that the fed is already started to tighten. you know, we heard last year that when the fed starts tapering, it's going to blow up emerging markets and hurt the economy, and yet emerging market stocks are up over 10% this year as if more than that from the bottom. the u.s. stock market is at all-time record highs. today, we're having a little bit of a hiccup, but bottom line, tapering has continued and the market and economy kept going. second point real quick is the fed is starting at 0. even if they raised rates to 1% or 2% tomorrow, they would not be tight in their monetary policy, and that's what i look for. if they get tight, i get worried, but moving from 0 to 1 does not make them tight, and then the third thing, real briefly, we put in, in our

models of the stock market, we put in a 4.5% 10-year treasury yield, stress testing our market models. even if you put in a 4.5% 10 -year, it's cheap, and it's cheap because the markets grow 12% a year. >> interesting times. leaving it there, gentlemen, lower yields again. jim, brian, good to see you both. in the meantime, dollar general reports second quarter earnings of 83 cents a share, in line with what the street expected. revenue in for low consensus though as did same-store sales. meanwhile, the ceo says the discount retailers is firmly committed to acquiring family dollar, that rejected the $9 billion offer in favor of the smaller bid from dollar tree. dollar general still thinks they can surmount the antitrust issues, which are important, of course, offering to close 700

stores nrd to get that through, but still obviously in play. >> comps, though, up, it was a miss, and a lot is moving because of consumables. again, it's the candy, the cigarettes, the food, and the snacks. >> speaking to the fact that's why there's a bidding war shaping up for one of the dollar stores of the three. they offered a $4 premium to dollar tree's offer, and, obviously, the rejection due to antitrust, a back and forth. there was a question in the earnings report, what happens next in the pursuit of family dollar? firmly committed. look at the analysts' notes and investment chatter on the deal, they like that tie up better than with dollar tree because of the synergies and overlap in terms of who the customer is, and it appears the saga continues, but no word yet from the target. >> yeah. amid reports apple is on the verge of a smart watch.

samsung trying to get a launch on the rival launching its own. the wars heat up big time. betting on the cloud, walk day out with results, nice quarter again, a beat and a rise. stay tuned for john ford's exclusive interview with the company's ceo. look at the premarket, for once, downside action expected in the open. more "squawk on the street" live from post nine in just a moment. c summer collection is here. ♪ ♪ [ male announcer ] during the cadillac summer's best event, lease this 2014 ats for around $299 a month. hurry in -- this exceptional offer ends soon. ♪ hurry in -- this exceptional offer ends soon. chocolate, soybeans, thisand apricots. made with

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apple reportedly set to launch a wearable device on september 9 with the new iphone. it will connect to the health kit, health and fit program, and samsung unveiled a smart watch with a curve display to access 3g wireless networks. apple will be in the game and there's a time frame. others want to say let's get in before they suck the oxygen out of the room. >> excited. >> you're excited, i know. >> it's a week on tuesday, the 9th? >> 11 days or so? >> why are there not more leaks? it's almost silent. you'd think we have more at this stage, but that's -- it controls my ac at home, controls my

motorized blinds. >> i think there's a lot up known. the health factor is interesting, and there's a big market for that. already, getting the numbers from wallstreet, morgan stanley, for instance, says apple could say 60 million unites in the first year, and ibc says the wearables markets, watches and other wearables, 19.2 million in 2014. that would be triple what it was last year. obviously, this is the next frontier, and -- >> you can imagine reinventing the app cycle as well. if people have -- what can i do with my wrist? what do i need to control? that's a new door. very exciting. >> especially for a lot of the apple watchers who assumed that because there's reported delays in the watch, maybe you get the phone in the fall and the watch a 2015 story to elongate the new product cycle, but goes back to what apple said in the summer in that the pipeline has -- >> has never been better. >> in their view, best in 25

years. >> maybe they will deliver on that. the stock has been on a tear. >> maybe they announce shortages, making it more a must-have item. >> all right reports they have trouble -- >> to the point. can you get a hole of one like the google glass, quite hard to get a hold of. >> people are excited about the phone as well and changes in that. revolutionary product, and people are due. i think the bigger question is the ipad too, right? ipad sales slowing down. >> again -- >> what was said about that? >> now reports of the largest ipad trying to make a big play for the enterprise, ibm at their side going for government business. changing the character of the ipad, right? >> popular in asia, i guess, bigger is better, right? >> true. >> at least with the phone. we'll see about the ipad. i don't know about that. up next, we only speculate, right, with apple -- >> i love speculating. >> wall street veteran art cashin sharing wisdom to the opening bell.

futures, the concerns overseas, russia, ukraine weighs on this market. coming off the record highs, but the dow set to open down 73 points following europe's lead. more "squawk on the street" when we return. company? company? that's enough time to record a memo. idea for sales giveaway. return a call. sign a contract. pick a tie. take a break with mr. duck. practice up for the business trip. fly to florida. win an award. close a deal. hire an intern. and still have time to spare. go to comcastbusiness.com/ checkyourspeed if we can't offer faster speeds - or save you money - we'll give you $150. comcast business. built for business. if energy could come from anything?. or if power could go anywhere? or if light could seek out the dark?

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just about seven minutes before the bell, art cashin this morning, director of floor operations at ubs joining us this morning. good morning to you. >> morning. >> we should have known the meeting with putin was too good to be true, right? >> looked like it. putin was looking supposedly for

a cease fire which everybody worried would give him the chance to rearm insurgents, but that didn't come off, and they still have excuses. they are talking about some of the guys in russian uniforms being people on leave who decided to voluntarily go across -- >> yes, foregoing vacations to help out. >> yes, absolutely. not a lot of detail, though, carl. some people speculating that the russians who entered ukraine did it south of the ongoing hostilities and may be looking actually for a corridor, a land corridor to go to crimea, changing the complexion of this. from the stand point of the markets, we talk about con play sen si a lot. i worry we are complacent about geopolitical surprises. short term events, people see them as buying opportunities. they just disappear. one day, one of these is going to come up and be more problems than we think. >> we are looking at a sell off at the open, something not seen in a number of sessions.

what are you watching? volumes, i know, extremely low, historically low as the target continues to notch record highs. >> last session has been the slowest of the year, four in a row. >> is that -- i mean, does that make you trust the rally less? >> yeah, i'm always suspect. you know, it's like a vote with a limit number offed peop epeop 37. >> there's big money that cannot afford to miss out on the rally so it sits there, does not move. in many senses, that's positive, isn't it? >> talking about money already in there? >> yes, well, i mean, the fact there's no volatility means people made their mind up. >> well, every -- one of the models other than this has been against it. performance hedge funds this year is abombdismal.

as you aptly said, the seasons are about to change. russia will have a much stronger hand when the weather gets colder over there. so we can have strong implications, and, again, the european economy is not that strong. whether it's sanctions or whether it's withholding fuel, we are at economic risk here too. >> and the central banks don't have much left to fire at it if there is a problem. >> well, you're already at 0. i mean, where do you go after that? >> gdp, a lot of people looked for a downward cut to that 4%. we didn't get that. >> no, it was an impressive surprise p i think a lot of people thought that the components, inventories and other thing, called for a mark down, and, instead, we got a markup, which i think surprised a great many economists. >> yet the bond market does not react as you think it would react to better economic data, and we continue to see yields down, and the 30-yield is

unbelievele. >> getting help from the geopolitical scene, a flight to safety. >> sure. >> looks like interest rates all around the globe are pressured now. i think it gets back to europe and the possibility that actually deflation might break out there. look at what's going on. japan is easing like crazy, and deflation is a threat. ecb has got rates way down. deflation still a threat. this could last for a very long time. this is not normal. carl was talking about what happens when rates tick up and i -- i think it was brian westberry said, well, you know, you don't have the market go down until after the raise. this is not normal times. i think you put an as risk with the history here. it's not what we've seen before. >> art, thanks. >> my pleasure. >> opening bell a couple minutes away. we've had a tempur-pedic for a while...

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world, opening bell in 20 seconds, and a very busy morning in the dog days of summer. yes, volume is light, but we got russian troops reportedly making their way into ukraine. basically, a break down of cooperation over this, and then, of course, the gdp member revise not lower, but higher. down here at the big board this morning looking at the s&p at the top of the screen, bovine medical, and nasdaq is a maryland based reit, united development funding, and we have not mentioned all retailers that report the. abecrombie is a mover, comps down 7, comps down 10 at hollister reinventing the fashion portfolio, not yielding fruit yet. >> they were asked with the 10% costs, searching for a president according to the chatter from the earnings call, and, of course, very focused on growth. the analysts's community was

positive on abercrombie with a better read on back to school, raising expectations in the fall season. >> full year comps now down mid single digits, and prior view down 3 to 4. they brought the view down a bit. analysts put it on the top of the list, mainly on valuation. >> it's a cutting story, they will take prices down, there's no cost cutting story within teen retail, and more importantly, they make a big call that fast fashion from europe, hm and zara will trash the fashion companies in the country and that wall street is completely underestimating the pour of what they've done in europe with the fast turn around lines and the cost cutting. you see abercromb irgs e and tempting to do that with relocating operations and speed up production time, but it's clear this is a major trend that people are not taking notice of. you see a little in forever 21,

i think, i don't shop there often. >> thing with that is, and it's happen over the l.a. few years, and a lot is attributed to the weakness in teen retail, and you've seen this hm, forever 2 1, fast on trend and ail to offer them at a discounted rate. the "new york times" with a piece out how teens now, another reason why -- >> great article. >> you saw it? >> yeah. they don't care about clothes. that's really it. >> right. >> they care about tech. >> they want the season's iphone rather than jeans. that's the whole shift. >> mentioning guess while we are here, they are falling heavily at the open, but have results today saying the fall collection has not gone down well as ale. they are lowering estimates, down 7.5% in the frame we zeused. >> williams-sonoma reported disappointing. >> 53 cents was a meet, but

stock's up 29% so far this year. their direct to consumer business, one of the big strengths of the retailer, up 9, sounds good in retail, but it's the first single digit since q1 of 2012, and thanks to kevin kingsberry at the journal for that. buy backs may come in as cash levels dwindle, and morgan stanley cuts them to equal weight? >> sun trust said it was widely expected it was a beat and raise. there's something going on with the margin. they have to correct or not contribute, spending on factors going through. we have to mention, though, all the foot fall is really very poor in all the retailers. >> traffic. ? that's what you see coming through. the shopper track, shopper track, monitors 40,000 outlets across the country says look at any month over the last two years, traffic is falling at a steady rate of 5% per year.

you sigh it in target, walmart, right the way through. >> big and small ones. something we talk about with lauder yesterday, dealing with slower traffic, growing online business and travel business, very important for some of the retailing consumer products as well. can i mention a nonequity right now? the euro swiss franc. it's a cross current. it's rallied to the strongest point against the euro and got 21 month, and that is triggering talk, and no central bank wants to see the currency get so strong, triggers deflation, hurts exports further, and the swiss port intervened. watch that in the opening as well. you see record low bond rates, all sorts of extreme currency moves. beyond the u.s. data and tensions geopolitically, there's a question, sigh mop, whether

the ecb does something, and all of that is sort of playing out across the market. >> i feel we've been here before. let's move on. >> the ceo will be talked to this morning, 11 cents loss, narrower than expected, revenue better, according to an analyst, the eighth straight quarter they had a beat and raise, although, i see comments they are not going to disclose any longer their customer count on the quarterly basis, the magnitude of this blow out lower than the past ones, but that's going to be one to watch especially with talks to the ceo tonight. >> in the 10:00 hour. that's coming up as well. cignet doing better. this is a jewelry company, and i mention it because last week on the show we talked to an analyst saying it was a good one, and that's going to be a mover in today's session, up nicely after earnings. looks solid. talking about the execution, the

operation behind the team of management. >> keep your eye on the banks. probably have seen in the mainstream media this morning that the fbi reportedly looking into an intrusion, they call it, into the banks' computers over at jpmorgan, and some report four other banks. fbi's not commenting right now. various theories who it might be and why they are doing it. jpmorgan issued a statement, look, we weather cyber attacks every single day with multiple layers of defense. it might not be too market moving, but something to watch. >> jamie dimon spoke about it before, ramping up to defend it, hiring employees, and how much they are spending to fight sieb r attacks. obviously, there's vulnerabilities in the system. >> what's important to note, there's not been any major theft at the moment, just detected intrusion. it's not -- it may not be material to the stock, no great

compensation. interesting enough, again, appears the hacker originated in an employees' personal computer, got this deeper through the system having achieved that. >> given that, i think they'll figure out the motivation, whether it was really for financial fraud, since there's not loss or gather intelligence. we don't have the answers on this at this point. >> cody, the beauty products maker, three cents a share, take out items, two cents shy, revenue shy of forecasts as well, pointing to factors, but it seems like anybody who makes anything or tries to sell anything, at least on a consumer level is talking about increased promotional activity. mar gyps are an issue at anf today, and they are a 4 % loser i saw. >> fragrances, already struggling, seeing this in the results, the celebrity fragra e fragrances as well. cody's in the middle of the restructuring program, they divided gee grafgly. they are working through this, analysts say give it time to get

through and really start to see the results, but, only, disappointing quarter today. >> all right. is bob ready? >> i'm here. >> all right. bob, take it away. what's going on on the floor. >> good to see you, all ten sectors down at the open led by financials, on the downside, tech on the down, gold up a little. all started overnight. the futures, s&p futures, the overnight. you see the chart to the downside, dropped just around 6:00 a.m., concerns the president of ukraine cancelled the trip to turkey, meeting with defense people. europe is down across the board. germany down 1.3% or so when i checked. that's weak, german index you can see. down across the board, and, of course, we have the 10-year in the united states at the lowest level in the last 14 months. let's move on, talk about other things here. williams-sonoma, key point, while they maintain their guidance, guidance for the third quarter is slightly below

expectations. that's a little bit of a concern overall, but end to point out, the two-year chart, an all-star of retail. the guys have been monsters. it was $35 two years ago, now it's a $70 stock, essentially, down to 66 today, but a great team in a difficult retail environment. this stock performed very well. abercrombie, a tougher time of it, lowering the sales plan down to 6%, down 4% for 2014. they talked about down 4 to down 3 earlierment that's a problem. they are down 5%. revenues light there as well. i want to talk about volume. i keep getting questions, bob, why does the volume drop? it's not because it's august. volume dropped for years now, and i want to give you an explanation what i think is happening. there's long term events here. number one explanation is there's less prop trading going on because of what's going on can dodd-frank. banks are not involved in the market and trading. that's a factor.

number two, rise of etfs, easier now to trade indexings with the etfs without underlying stocks, hurting trading overall because you just get volume in the etfs, not in the underlying stocks. low volatility reduced high frequency trading. low volatility means less profit opportunities for them. they are trading much less in the last several years, and finally, what i call reversion to the mean here. take a look at the volume at the nyse for ten years. back in the old days, 2004, january 2004, we did 2 billion shares a day on average in the month of january 2004. thanks to the move to electronic trading, by may of 2000, we went from 2 billion shares, then the financial crisis hit, the other

factor, driving volume through the roof, 2008, 7 billion shares a day, and from there it dropped because the financial crisis abated. may 2011 3 .2 billion, and now back to 2004 volume. the point is this may be a secular decline that it was the move to lek tropic trading and high frequency trading and financial crisis creating a big move up, a bubble essentially in the volume, and we've moved back. what do you need for volume to be back? more volatility. looking at the vix, we're not getting that now, and it would take a lot to get volume up here. i say the vix has to go double, has to go to 25 and stay there on a sustained level to get significant moves up, really significant moves up in volume, all that does that, vix at 25 for a long time would be notable other kind of crisis. not sure which one, but that's what it takes. >> the etf factor is the biggest, including the volumes,

you can buy a contract, not the shares. >> $2 trillion indexed to etfs. leaving it there. good morning. >> morning, simon. we are starting off to the downside, if we end down today, only the third time in 11 sessions for the nasdaq. in fact, when you take a look, despite the fact we've seen the blue chips at record highs, this month, it's really been all about small caps and more risky tech stocks, nasdaq out performing driven in no smart part by bioteches up 13%. big caps are not doing badly either. amazon with a good month, and amazon in addition to being a retailer and in addition to having a hardware sideline in addition to having its web services, getsing into the content business taking on netflix, now launching five new shows as of today, which is a

television heavy hitter and netfl netflix, though, a good month. shut out of the emmy's nonetheless, but it is among the out performers here in the big cats. do pattons matter or the pat ton wars n wars anymore? there's not a permanent injunction against samsung because apple is so innovative, patents have not been a big deal at all. apple on track for 10% of the gains this month. back to you. >> anticipation of the new products. thank you. time to go to the bond pits, rick santelli in chicago with the action. good morning. >> well, i'm not sure if all the action's going on. you know, we're not at historic lows. remember, a 138 historic low yield on the ten. stock market on the other hand is making true historic passes at higher levels, although make

not tea. okay. let's consider what's gong on in the rest of the world and remember the fed has been tightens buying less, but they are buying, that's going to run its course because it's been about curve steepening. we can debate as to what the depriving forces are, geopolitics, weather, global relative value of gdp and economies, but there's no denying the flattening surve has implications, shorts rates are just too low. now, let's look at a month today to two year, yields higher, month to date of five, basically a wash: the long ma jurities a month to date to tenth. down, and let's look at the enter day of ten year bund yields, and what's interesting is like everything, at 8:30 eastern with the better than expected gdp, we all know the next quarter's not looking like the last quarter, we saw

whatever popping rate would be around correlated with that time. now, look at month to date, the same dynamic, and look at the french, the british, the italian, the spanish, it all basically looks about the same, so the draghi force continues to be draghi, the whole world's checking to you to see what you do, and with regard to foreign exchange, yes, the dollar is a beneficiary of activity in japan and europe. euro versus dollar hovering darn close to the one-year low. carl, back to you. >> thank you very much, rick santelli. earnings beat sometimes is not enough. weaker than expected sales weighing on the stock. a rougher road ahead for the teen retailers? that's next. also, the exclusive with the ceo of live nation on the state of the summer concert business, and where technology pits in the company strategy. the ceo of abbott labs joins us

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teen retailer reported weaker than expected second quarter sales. the retail analyst, good morning. >> morning. >> a pull on the stock, $40 price target, what do you think of the earnings? >> pleased with them. i understand why the street was worrying about sales, but there's a lot of pos tis here. the chain was almost comp positive for the first time in two years. you had international margins increase, and the company raised the amount of cost savings they can take from 175 to 200 million. the turn is happening. >> some say it's not about cost savings in teen retail, but getting the fashion right and fast. >> that's true. they are doing that too. i think abercrombie is further along in getting rid of logo product. that basically died. we need something new here. takes a year to change that, and if you look the stores right now, they have less logo product than ever in their history. >> just to focus on that, why did the logo die?

is this about one size not fitting all across restaurants, across so many areas of the economy. >> what happened here is that kids don'tment to be billboards anymore. they want their own independence, their own toys, and, frankly, just saying someone's name on the logo is not exciting. we've seen this pause the sector, but more in the young generation who don't want to be billboards anymore. >> i don't know if you know stacy, but if she was here, she says categorically it's all wrong. you don't understand of the power in europe, and hm could kill a thinker of the business of the entrenched retailers because they are cheap and they can't catch up. >> that's a huge thing. that's really -- look at the end results from the lower enplayers like aeropostal and american eagles, worse results than abercrombie, it weighs on the entire group. we have to be smaller, niche group, higher fashion, people will pay if it looks right, but

has to be the right fashion. >> you cover guess, a terrible open today. what's the view on that stock? >> if i were to to guess, a two-stage turn around, thought the u.s. would turn first. did not happen. guessments the consumer to pay $930 for a pair of jeans, extremely difficult. the u.s. and european business is turning well, but that is not this year's story. that's next year. >> good to see you. >> thank you. >> thank you for the time. investors who bought stocks in the market dip weeks ago smile ear to ear. find out what names we're talking about next on "squawk on the street." ssrooms and exhibit halls, mentoring tomorrow's innovators. we build it raising roofs, preserving habitats and serving america's veterans. every day, thousands of boeing volunteers help make their communities the best they can be. building something better for all of us. ♪

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the fastest speed dial. the fastest office plant. so why wouldn't i choose the fastest wifi? i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. some investors who went bargain hunting three weeks ago profited in a big way. we are at hq with a look at the number of buy the dip stocks at the center of it all. >> it's a cliche, right? the depths of the financial crisis, buying the dip, but it's true in the last couple years. this chart of the dow, this here shows a greenish line. what that is is something called the 200 day moving average, longer term trend line, batting average of the index. each time it hit that line, the markets bounced up for new highs. use that last bounce on august 7

here, the last circle as a catalyst, reason to buy, you are up 4% in today's session. some stocks did better than that over that time. 23 you look at the large cap stocks in the russell 1,000 index that out performed, look at internet services, a standout group. shares of twitter, fist of all, during that time, great in 2014, but these shares are up 14% -- rather 12% since that august 7th low here. that's more than triple what the broader market is up here. look at the other companies, this is rack space, a cloud computing company. an activist invester takes the stake, gaining 12 to 14% also in the same time period as well, and there's an internet review site, yelp. put just some of the shares on your shopping list to buy on a broader market dip, you'd be up over 20% in just the last three weeks. the question then becomes willed traders let the gains ride or

take the profits now that we're back at record highs, regardless? the right shopping list, they help traders make the money in the last few weeks. carl, stock picking matters, especially if you have a reason to get in on the market at certain times. this is just one factor, bun one talked about. >> twitter shares, highest since mar p today. if you take out after hours action, but shows you the year is a series of v's and con founding a lot of investors it's paid every time to buy into the dips. >> hate when we have 20 dlsh 20 vision, buying at the bolt tom of the market, up 200% now. no one buys in. >> maybe they do, august 7 was my birthday. >> so much more complicated than that. >> broadest market is 5%, pays to be a picker, but feels increasingly they are macro driven markets and not a stock pickers' market as we hear. opening lower here, down 70 points on the dow because of

overseas, geopolitical tensions, and volume. i think that's important. that's what we learned, right, from art cashin. >> when we come back, weighing in on tax inversions, a live interview, and riding the cloud to higher revenue. ford with an exclusive of the day, a ceo of workday. keep it right here. how about over there?

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welcome back to "squawk on the street," breaking news from the national association of realtorsment pending home sales in july up 3.3% up, down 2.1% year over year. this is a measure of signed contracts in july, not closings. these were folks shopping for homes and putting names on the contracts in july. important to note that because in july of 20 13, that was after we saw interest rates go from 3 preponderate 5% to 4%, and those sales dropped dramatically, we are still below the july 2013 number, we are, however, seeing gains month to month. regionally, pending home sales in northeast up, and in the midwest down 0.4% month to month, in the south, up 2.4%,

and in the west, up 4%. it beat the street's expectations, looked for a half percent point gain month to month, but down for the year, the realtors expect total exists homes to be down for 2014 from 2014, and economists do not expect 20 15 to be a breakout year for housing. >> mixed picture. thank you very much for the breaking news. more on today's economic data plus a look at ecb action, potentially through the action, cnbc economics reporter back at hq. it does appear the data both in the u.s. and europe confirm the screw that the central banks move in opposite direction. >> yeah, and pending home sales helps, another number that beats. jobless claims at 298,000, second week in a low below the 300,000 mark and the fourth in the last six weeks telling economists another 200,000-plus

jobs report is on tap, which comes next friday for the month of august. we have positive revisions to gdp suggesting the pickup in the much missed business spending category. there it is. up two-tenths on gdp, and investments up from the prior forecast. equipment up 3.7% inside the investment number, and exports, trade balance better because exports revised higher, imports revised lower. while the u.s. economy seems to be improving, weakening in europe, and inflation falling casting mario draghi as hamlet, to qe or not to qe. there's strong opinions in the united states with the former fed governor saying yesterday they need shock and awe they are so far behind the curve. what a former banker tells me, aggressive qe in terms of government bond purchases is difficult to execute and creates big political problems. the banker points out if qe is done proportionally, 30 % of the

purchases would be german bonds and that could cause a political backlash and with bond yields so low, he asked will there be any benefit? here's the theory of how qe works. there's a credit effect, drives down rates, portfolio effect for thing those in riskier assets, and this is key, the expectations effect that convinces markets central banks are all in. rich says, quote, when a central bank is involved in quantitative easing, that involves a commitment to reflat the economy, and that could be effective in the context of europe. critics point out the economy could suffer the slings and arrows of outrageous capital misallocation and ills of market distorti distorti distortion. those are fears that qe creates. my understanding is that the ecb weighs this right now, hoping before it has to decide the existing programs are under krrgs, long term financing operations and the end process asset backed securities do the trick instead. simon? >> steve, bringing you back to

this economy, if i may, because you painted a bullish outlook with the data you have in the talk as it were. have you seen this rutgers university survey out today if. >> i did. >> announcing 71% of americans believe that the recession exerted a permanent drag on the economy. that's a much more pessimistic view than came through five years ago. where does that sit in the reckoning of the global factors, do you think, given importance of the consumer in the economy? >> well, i think it suggests less borrowing and less spendsing and perhaps more savings. although, you wouldn't know it in the car numbers, simon, back to where we were in terms of how americans shop. you want to be careful to sort of kor late what americans say about the economy and how they actually shop. i think there's scars. that may be -- that is, i know, a big reason behind the concept of why potential growth is lower for at least a period of time here. the great depression, simon, of

which is an analogy to we went through left a permanent scar taking decades to up do. we would be in that place now. what does that mean in terms of numbers? in terps of the 3% economy, maybe a 2% economy, and that's where we've been. >> interesting that bernanke used the "word depression" to describe the market. thank you very much p concerns about ukraine and ngzedded sanctions between russia and europe. global chief investment strategist at black rock. morning to you, russ. >> morning, simon. >> the elephant standing in the room, of course, is that in the last 24 hours, your firm is an as provider to the ecb to investigate how it might by asset-backed securities across europe. what does that mean? they say there's not conflicts of interest, can we talk about europe? >> well, happy to talk about europe. i think, you know, per steve's

comments moments ago, the challenge in europe is you've got a very slow recovery, the continent on the verge of deflation, and the question is what else could the bank do? to steve's point, it's not clear that lowering german bund rates from nine-tenths of 1% to 1% is going to have a large impact. perhaps a larger impact is up clogging the credit channels where small and medium sized companies can want get a loan. think about purchasing bank loans, that might be a more effective act by the european central bank. >> what's that mean for me invested in the russell 2,000 and dow jones industrial average? >> may not mean much. it's interesting because these things do tend to interconnect over the interimmediate term. for example, as we've seen small caps struggle this year, i don't think it's a complete coincidence that markets are coming back. in other words, what people view

as the risk trade at any point in time changes. did we see aggressive action by the ecb, could be a catalyst for money going back to europe, maybe taking a bid off some of the risky assets here in the united states. >> hang on. surely if a bank is force feeding cash into the economy, which is what qe is, the likelihood is the cash comes across the atlantic here, there would be more liquidity here surely not the other way around. >> there will be more liquidity, but i push back a little bit that i think the actions of other central banks other than the fed don't leek as much into the global economy as dollar denominated trades. the point is if you do see the ecb act, the most direct way to play that is cyclicals in europe, the biggest beneficiaries of ecb action. >> even if we get the ecb action and that propels asset markets

like the target as you say, russ, why aren't more than american companies or american investors worried about corporate earnings from europe with data deterioration seen overseas? >> well, i think it's a reasonable concern, but reality is, sarah, u.s. companies have done a good job of generating earnings growth in a slow economy, not in the united states, but globally. now, there's been a number of devices employed. very aggressive cost cutting, seen share of buy backs, flat per share of growth, but the assumption is that u.s. companies can manage a slow growth economy. they've done so for the last four or five years, and they've done it well. >> so are you saying we're going to head into a period of increased share buy backs and tricks that get the etf line facing a stronger u.s. dollar, slower growth in the emerging markets world, and in europe? >> we've already seen that. >> right. >> there's no doubt that the buy

backs we've seen are one reason the u.s. companies have done as well as they have on a per share basis. so this is one of the factors that's flatter per share growth over the last couple years. >> russ, it's not just balance sheet maneuvers, but m&a over august, topped a hundred billion for the first time since i think 2000. that's kinder morgan, but the gdp estimate up today, private fixed investment i mean, are they beginning to do more than just shuffle chairs around? >> well, clearly. m&a is the other big driver, but it comes down to something which is interesting. you think about the slow growth world we've been in, and in a lot of ways, it's flattered the markets. m&a, buy backs, cheap money lower the cost of capital in the slow growth lowering the cost of labor. this has gone a very far way to flatter corporate margins, one reason that margins have sustained high levels that many

thought would have to fall back. >> okay. russ, out of time, but we're failing on the markets here at s&p 2,000. we keep kind of just breaking through, and then falling back again. where do the markets go in your view to the b the end of the year? >> trouble in the fall, the low volatility makes me nervous. the fundsmentals are in tact. we'll see the markets move higher, although with a lot more volatility than was the case over the last couple years. >> good to see you, russ. thank you for the time to join us this morning. >> thank you. >> russ, chief investment strategist at black rock. when we come back, jpmorgan and four other u.s. banks hacked in the series of coordinated attacks according to officials. some reports claim it's the work of russian hackers. we will see. talk to a former assistant director of the fbi who worked in corporate security at bank of america about that attack, and then later, the ceo of abbott labs joining us, a rare exclusive interview to explain why he supports tax inversions.

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meanwhile, checkpoint shares also at least right now down -- down on the day here, but only up 7 percent so far in the year. and palo alto up to date, a big theme, but not everyone, carl, is riding the wave higher. back to you. >> thank you for that. sticking with cyber security for the moment, talking about how the reports that the fbi and secret service are investigating those reports of cyber attacks on u.s. banks. according to some reports, investigators believe russian hackers are responsible for as many as five banks including jpmorgan, that's. truck? a series of coordinated attacks this month. joining us from charlotte, former direct educate offer fbi investigations, serving as a corporate executive, chris, good morning to you. >> morning, carl. >> how does the russian theory come out of nowhere? >> well, the russian organized crime groups are the usual suspects, the most prolific

intruders, hackers in the world. i mean, they do this for a living. >> and so we just take it -- we just -- we're assuming it's them, but could be any number of players or are they far away the biggest threat out there? >> the russian criminal networks are dominating this area, this is a sr. profitable crime model. they really are only limited by how -- you know, their access to the people in the bank who have the information, so they are targeting -- speer fishing to get information. usually targeting the top four banks in the country. >> of all the targets they could put in their sights, retailers, the government, defense, are banks their favorite? >> for purposes of criminal hacking, they are far and away the favorite targets, bank or bank customers, and over 90% of

the intrugsions target someone n the bank, a phishing e-mail with an attachment and know who to target. >> i mean, we don't know the answers to the questions why, what they have, but for the most part, what do they do with the information? assuming as we're hearing, no consumers have taken any losses as a result of this breach. what are they using it for? intelligence purposes? >> no. what they'll do with the information, this financial information, is sell it on the black market, looking for user ids for banking, account numbers, credit card numbers, sell that information on the black market after they parch is out in belongs of a hundred or so. there are -- deep in the dark parts of the web rs there's black market auction to sell data, and those individuals that buy that information, those groups that buy the information,

they monetize it, they clone credit cards, hack using use ir ids and passwords, take over people's accounts and drain accounts. it's ray a consumer's worst nightmare. >> chris, if -- i don't know who did it whether it's the united states or israel, are able to develop a worm that knocks out the iempbi iranian center fujs, why can't we knock out the russians and their operation? >> well, i think they limit the techniques to more in the counterintelligence tool box, don't want to compromise those techniques on criminal organizations. they are valuele. they don't want to compromise those. >> must be a point -- >> for example, terrorist organizations. >> i get it, but there must be a point if you have hundreds of millions of people potentially affected, it becomes a question of national defrs, doesn't it? if you disrupt this country and

others. >> very much so. one of the critical infrastructures, of course, is the financial system, and this definitely undermines the financial system. there's different ways of looking at it, state sponsors wants ability and terrorists want the ability to shut down the financial system at a strategic time. this is everyday stuff that takes place thousands of times a day targeting the banks so it's something that the banks and the bank customers need to deal with, but i don't think they bring out the things like stucks net to combat this. >> finally, chris, you know, hearing viewers on twitter saying i recently had any chase card replaced. how do you know if somehow your data has been part of the hack, and isn't that information worthless in the bank has, in fact, replaced the card? >> well, frankly, the banks will not replace the card right away, but wait to see if there's fraud occurring on thing the. it's exceptive to block and

reissue expensive for the customer to change their user id and password. they'll wait to see if there's fraud taking place. there's 50 laws in 50 different states how and when you notify customers, and banks navigate through that, but for the most part, the banks are generally waiting to see if someone is actually exploiting the data and monetizing it. >> chris, interesting stuff for anyone who uses a card, which is all of us. chris, a former fbi assistant director and former corporate security executive at va m thanks. >> thank you. coming up, shares of workday rising 15 % over the last month, though in negative territory on the results today. how does the cloud tech company keep it going? the ceo will join john ford for an exclusive interview when we come back.

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workday beating estimates for its second quarter, but the stock moving lower now. john ford on the floor of the new york stock exchange with the workday's ceo and cfo. john? >> thank you, sarah, 74% rise in

quarterly revenue, strong subscriber growth, and company raised full year guidance, but the stock, as mentioned, is lower right now, and said not to expect profits any time soon, and the ceo of workday joining us, and the cfo. guys, thank you for joining us. straight to the big picture here for you guys, the market gave you a cap above $16 being, and clearly expecting growth from you. you delivered that. from my eyes, year to date, you're about even with sales force in terms of what the stock has been doing. tell me, why are you going to be able to continue to grow versus the increasing rhetoric from sap and oracle doing the cloud stuff as well as you can. >> well, first of all, we're excited about the quarterly results we published yesterday, and we see the growth opportunity continuing in front of us, which is very early on in

the transition from, and especially in the context, capital management, and financial management, and despite the rhetoric, the reality is that all the leaders in the cloud, companies started with a clean sheet of paper and built with the cloud data, and interfaces with an architecture that scales out, and while there's quite a bit of relate rick out there, the reality is that we have happy customers and a much better product. >> mark, dive in for me. a lot of the feedback i get out on social media and talk to companies like workday is are you just investing all the money just to get noticed versus the largest companies, but i notice in your numbers that while marketing expense, sales and marketing is about half of revenue, that is about the same as sales force.

you are spending more on product than sales force is spending. tell me how you think about where you're spending your money over the next several quarters and how that fuels groout because it's different what your peers are doing. >> john, we think we really have a great opportunity. the overall market for hcm is about $10 billion, but the market for financials is two or three times the market per hr. we are making big investments, but tea in the hcm platform, we concern the largest companies in the world, and we are striving to do the same thing with financials since we're making big investments in the financials products as well as other products to help serve customers' payroll and recruiting as an example. >> you said you're nearing 100 customers on financials. you're at about 700 on hcm. recently signed bank of america as the largest customer that you

got. what's it going to take for you to be able to not only grow quickly in financials, but expand into europe, into asia, those areas where the adoption of the cloud has not been as fast? >> well, we had a really strong quarter in europe, and i think that's the first, you know, tail tell sign in the cloud or shift in the cloud happening outside the u.s. in the next couple months, we can announce large accounts s n signed in the last 45 days in europe. we are startliing to see the sa pattern of adoption in europe as we've seen in the u.s. large multinationals in europe have the same requirements that the large multinationals headquartered in the u.s. have. we expect we'll see the same phenomena in the asian pacific region, although it's a newer region for us. >> now, i believe you said that in q4, you'll give more solid guidance for the next fiscal year, but you're going to give some color in the coming quarter

as far as what to expect. you sound confident with all the geopolitical stuff going on, why is that? what give you confidence besides your occurring revenue model to invest in growth and not be more cautious going forward? >> we're going through technology transition that happens once every 10 to 15 years. the benefits for the customer are so compelling, the cost savings, the improvement in productivity. that does not necessarily change begin economic, you know, the economic environment. in the downturn of 2008 and 2009, workday grew 50% as customers looked for a better return on investment so nothing's recession proof, not saying we are, but the message works in good economies and bad economies. >> well, guys, thank you for joining us. stock coming back, down 2%, impressive quarterly results. carl, back to you.

straight ahead where the former ceo of krogers calls his own benefits package lewd kris. that's off the break. thank you colonel. thank you daddy. military families are uniquely thankful for many things, the legacy of usaa auto insurance can be one of them. if you're a current or former military member or their family, get an auto insurance quote and see why 92% of our members plan to stay for life. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity.

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deal. >> sales driving. >> up more than 3.5%. i know the dollar general call is going on, we have color from the news room, talking about the struggle on the low and myle income consumers, a scene in retail, particularly helped in the dollar stores. >> yeah, the ceo is saying that out of necessity, folks reduced their overall consumption referring to the consumers. she is struggling to overcome the sustained nature of the head wind she's facing but adds we'll lap head winds troubled spots last week like the government shut down and end of the year benefits, that could add comps to the back half of this year. >> seen that with walmart, all the big box retailers as well. look at the losers on this session right now. some of the retailers are losers. whole foods getting hit even harder, one of the worst performers on the s&p 500 this year, peabody, fossil group. i mentioned retail, a theme as

we close out the earnings season. we do have word from abercrombie, williams-sonoma, under pressure 5%. analysts optimistic in the quarter, but sales were a disappointment. facing the battle, and williams stock under pressure after a record high, had a strong run, and the reed from roadway till is challenging, no matter if it's teen retail, big box retail, macy's, across the board, wouldn't you say? >> absolutely. williams-sonoma is a winner, that's why it's coming off today because people had high expectations. >> the back to school pick for citi. >> it was one of them. >> 29% year to date gain, a multiple of what the market's done overall. >> supposed to have changed and be fashionable, but there's still a shirtless man at the entrance. >> they are not changing

completely. >> what about the strong scent, still overwhelming? >> i don't go if, i just walk by. >> you get a whiff when you go buy. retails, did you hear the former kroger's ceo thinks the pay package is, quote, ludicrous. the argument was the pay was republican until the stock was at an all-time high. it was not high compared to the competitors. this happened in a candid discussion in july saying, stim, you argue, it was pretty damn high. ceo pay is high. average, i think, according to the economic policy institute is $15 million. he was below average, but in cincinnati ohio, he was the second highest ceo next to bob mcdonald the procter & gamble. >> interesting he's candid on pay as companies, when offered the opportunity to have a vote on a say on pay, are not moving

that direction, right? they are not giving shareholders a say on how the corporate office is giving salaries. >> in private if they know they are ludicrous, quote-on-quote. >> the argument is not ramping up because as long as they justify with the equity price rising, and they are tied to the performance of the share. >> depends if the share price is rising because of the performance of the company or because the -- >> with kroger it was. >> the fed is pumping up assets. >> we should just thank yellen. >> either way, criticism is down. we can debate whether the stock market is rising, but they have performed. >> up almost 29 % this year. that's one of the best -- >> you just want to blame the fed. >> he's the former ceo, though. >> a former ceo. correct. when we come back, the ceo of abbott labs, rarely heard from, but weighing in on tax inversions and why he believes

they do not abuse the tax code and how they are not unpatriotic. we'll be right back.

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welcome back to "squawk on the street," shares, stock moves higher after the jewelry retailers set second quarter sales soared by 38% driven by a boost of the acquisition of zale, and they own cay jewelers, and jared, the stock up 6%, so, sigh mop, seems like he and everyone else went to jared. back to you. >> as tipped recently on the show, sarah eisen. >> said it was the single best buy, and pretty good quarter. >> okay. over to the cme group, rick santelli with a special edition of the santelli exchange. take it away. >> yes, the guest is the chairman ceo of abbott labs, mil miles white, thank you for the time. >> good too sew ewe, rick. >> there's a multitude of issues with inversions, and simplest

place to start, what is the truth about inversions as you see it? in other words, what are the conceptions you'd like to underscore? >> you know,ic i think rhetorics flying out there, misrepresented. people think somehow companies are dodging tax responsibilities. they are not. before inversion, they paid a tax rate in the united states, pay the same tax rates in the united states after inversion, pay the same tax rates overseas and in all countries around the world before and after inversion. what changes is if they bring back overseas' profits today, they pay another tax. >> okay. stopping there. you're talking about the repatriation of foreign profits? >> correct, correct. when you bring back foreign profits to the u.s. today -- >> nothing else changes, pay the same tax rate in the netherlands -- >> correct. >> pay the same tax rate in the u.s. what changes is, and we've had amnesty in this regard over the years for a couple time, i

believe, is the pool of money made in your profit centers overseas, is double taxed. we're the only g 7 country to do that? >> that's krcorrect. we have the highest tax rate in the world and only country among major countries that apply it to every country in the world. we tax all profits in the world at u.s. rate. unless we leave the profits overseas. when we bring it up, it's the top u.s. rate. we're the only country that does that, putting american businesses at a disadvantage relative to the foreign competitors. >> get into that. where's the disadvantage? explain for the viewers and listeners that if this process was -- by the way, in your opinion, is there a legal question as to the irs tax code, as crazy as it has, with the ability to do this within the con finds in the letter of the law? >> there is no legal question. characterized as a loophole. there is no loophole. it's spelled out. it's the law. it was not invented to circumvent the law.

it's in the law. it's legal. it was contemplated. it was specified. it was described. it's not illegal. >> competitiveness. put a face how it makes you less competitive or any company less competitive regarding tax policy. >> look at it several ways. tax is a cost. it's just a cost. it's a cost in business. if we have higher costs, it's a disadvantage. take the example of an acquisition, if i try to acquire a company overseas, a foreign company is competing with me to acquire it, there's a lower hurdle rate to buy the company than i do. in fact, look at it in reverse. they buy american companies and subsidize it with the lower tax rate. you know, it's like hanging a forsale sign on american companies. we're for sale. apply your foreign tax rate after you buy us, not the u.s. tax rate highest in the world worldwide. it's a competitive disadvantage. and the world has changed. we are more globally competitive. we need policies in this country

that help this country and its businesses be globally competitive because that's what creates more economic prosperity here and more jobs. trying to block inversions does not do that at all. >> as horrible as the analogy is and feel horrible using it, there's a cuban aspect to this. trying to build a wall around the u.s. so companies can't get out. that is not the worst part. in many ways, it's going to keep interested foreign parties who want to domicile in the u.s. from coming in. there's no way you can justify this and will take it one step further, when it comes to the rule of law, some of the congressmen and even the administration, treasury secretary, maybe the irs, are going to try to retroactively change this. how does this in the last 30 segs, how do you think about that? not necessarily as a ceo, but as a citizen of a country where we're supposed to be free and know the rules and knowing the rules, of and same for everybody makes us great. what are they doing to that? >> i'll tell you.

the american public would not support retro active applications of changing of any law. that undermines the institution, the rule of law. you might try it, but it won't stick long term and public will not support it. that is a very bad idea. the public knows it. if they want a public issue made of this, the people that support blocking inversions, it's not working to do it retro actively. on the blocking inversion. fix the right thing. fix the tax code. make the tax code competitive. done revenue neutral? it can. kemp and baucus tried, a compromise never went anywhere with the president. had things people like and didn't like, it was a good law, but we need to do this comprehensively, not just fix one piece. >> now, if you were looking at the situation that we now have in congress and with the administration, obviously, difficult to get anything through. i don't hold out hopes that over the next ten weeks until november midterms anything's going to get down, but do you have hope and at some point

people put in washington are going to pay less attention to the people that fund their campaigns with all these little rules. you know, we talk about loopholes. you know what the tax code? a favor for this. a favor for that, a favor for this. are we so far down the rabbit hole we will not appropriately even attack what is obviously a flawed tax code? >> we won't be doing it in the next ten weeks. >> i understand that. >> we won't do it in the next two years. ive hope that we'll be able to do it in the first two years of whatever the next administration is. i think that's the first time we can realistically hope for cooperation in the realm of washington to comprehensively address this. i'd love to see it in the next two year, constructive for the united states, but we will not see it for another two years. >> a great guest, the america that does great, not only the

cleanest shirt in a dirty hamper, but the america we want is predicated on rules. we need good, simple rules, i don't know how tall the tax code is, taller than me, but we have to do something about it. thank you. >> thank you. >> sarah, simon, back to you. >> great conversation, thank you, rick santelli. up next, google led a $1 million investment that helps you find and hire local businesses and professionals called thumb tack. what makes them so special? the company's cofounder and ceo is joining us live right after the break. ♪ time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade.

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looking for a plumber? maybe someone to paint your living room or photograph your wedding? turns out this startup wants to be your one-stop shop to all the service needs, and with the recent round of a hundred million in funding, looks like it's got a thumb's up in silicon valley. joining us the ceo of thumb tack. good to see you. >> thank you, appreciate it. >> you've driven a lot of investor interest from google

and tiger global. what is driving the interest in the company? what's the pitch? >> so it's a big problem that nobody solved, and we have the first solution that's really sort of changing the game. you know, we've all spent time, wasting afternoons trying to track down a plumber, and for the first time, we've built technology that puts that away, helps you get connected with the right person right away. people love it. with that, we've been able to attract a bunch of great investors who see the opportunity for us to take this and, you know, to everybody, and that's what we plan to do. >> and from an investor perspective, sounds like yelp. they are not about services, but is it yelp meets craig's list? >> it's different than yelp. yelp is a directory that you as a customer go through, search, browse, find what you are looking for. thumb tack is very different. professionals come to you. tell us what you need once. we then send that out to the network of pros, and the ones who are the right fit are introduced directly to you.

fi finally, you don't have to waste an afternoon calling to figure out which plumbers or professionals are available in your town. they simply come to you. that's a lot better come to you. a lot better for you the customer and also the professionals. >> how many professionals do you have currently in the network? >> more than 75,000 in the network, all paying, active professionals. bigger than the list and almost as large as yelp. >> marco, i understand to be the social media equivalent of the yellow pages will one day for someone be a huge business. my question would you, what i want to know, the contractor that you pair with me is really good and not a crook. and i'm not sure with wait that you match them that you're not going to deliver to me somebody who's just paid you more money than somebody else, or somebody with whom you have a stronger business relationship. >> uh-huh. >> do you understand the point i'm making? more about a referral on quality

and price than maybe the way you're structuring it? >> absolutely. the end of the day, it's about fit and value. everybody's trying to get their job done for the right price in the time they have for it and we are only going to be successful if we can reliably deliver to you those people. we do a lot of work to vet our pros to meet our quality standards and work hard to get a bunch of reviews and content such that you can make a confident hiring decision. we don't send you just one pro. we send three to five. you have a true choice. can see all the content we have about these businesses and make a confident hiring decision. we're only successful if you're happy with who we send you. >> i'm curious about just the valuation and what you're living through now. snapchat, 100 million users, no revenues. as you go through this process yourself, what do you make of these type of valuations, including that of your own? >> i think we live in a special

time, and the advent of smart phones, everything is digitized and remade through software will only happen once and we're living through that right now, and so you're seeing a lot of opportunities that never existed before. you know, thumbtack couldn't have existed five, ten years ago. so there's a lot of excitement about what we can do in new areas that companies like us can go in and help make a lot better. >> what it's your dream scenario? do you want bought by amazon? go public? >> no. we think this should be a stand-alone, independent franchise forever. it's a big idea, and we want to be an ebay or amazon for services. that's the dream. so we got a long way to go still. >> all right. keep an eye on you, marco. thank you very much. the site is thumbtack, online marketplace for professionals. >> thank you. speaking of special times, it's almost time for "squawk alley" on cnbc. over to kayla and what's in store. >> good morning. i'll take that. it's about time.

the smart watch market reportedly set to heat up next month with apple. joining samsung in that race. what should you expect? we're discuss, and how successful have summer concert series been and what's ahead for live nation stock? an exclusive conversation with the ceo of that company. and netflix' in-house money man jim jeffries joining us to talk about the future of comedy on demand. up at the top of the hour when "squawk alley" starts then. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea

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welcome back to "squawk on the street." in our apparel maker taking a hit. cutting its full year guidans after posting weaker than expected second quarter profits. those results dragged down by its hat retailer lids. stock currently down 7% and sara, also the company behind johnson and murphy shoes and belts. back to you. >> good to know. all right, dom. big decliner and a down market. big waves, high surf from storms far offshore hitting both the east and west coast today. big surf there in santa monica in southern california, waves as high as 15 feet from now tropical storm marie slamming into those beaches from l.a. all

the way down to san diego, about an hour away. also a shot here of cape may, new jersey, where there's been rough surf all week as well. this is a result of hurricane cristobal off the east coast. yesterday the storm moved between the carolina coast and bermuda. today quickly moving away from the united states. that should bring a lower risk for ship currents for the labor day weekend. you know what they say? simon, these surfers love these kinds of waves coming from the storm. >> absolutely. certainly on this part of the northeast at the moment, going into the weekend. >> yeah. seeing that. are you going surfing this weekend? >> am i going surfing this weekend? i don't think they surf in this town. i'll get back to you. the markets, down 50 on the dow. >> a low for sure. >> down day in general because of concern about what ukraine is saying is an invasion of their territory by the russians. there's various moving parts on that we need to keep abreast of. coming through the european

close in about half an hour's time. europe hit to a greater extent and that sent actually bond yields lower in europe to record lows, despite kind of bounceback from their rampant speculation we had on ecb easing yesterday. >> keeping an eye on key levels. coming off of record highs today as we head throughout the day. op-ed 2000 mark in the s&p 500, an eye on volumes, off the low es. >> notice we kind of come above 2000. >> back and forth. >> with the employment reports. >> with that, over to you, carl, for "squawk alley." >> thanks, guys. good morning. it is not quite 8:00 a.m. at apple headquarters in cupertino, california. 11:00 a.m. here on wall street. "squawk alley" is live. ♪

and good thursday morning. welcome to "squawk alley" with us as always, jon fortt, kayla tausche here at post nine. a lot going on. dow down triple digits earlier, currently down 54 points. a lot going on in tech today. apple set to launch its first wearable device on september 9th alongside the new iphone. re/code says the smartwatch will connect to apple's health and fitness platform and home fit controlling connected devices. meantime, samsung, access 3g why wereless networks. senior editor scott stein join us us from midtown today. welcome back. >> thanks. >> re/code tries to couch this. saying things could change, sure, but sounds solid. doesn't it.

>> sounds like watch guns at dawn, as far as smartwatch landscape goes. everybody is showing their cards and a ton of different products. already a bunch that came out in june. now another samsung watch. the sixth. the samsung gear-s. second lg watch. lgg watch r a mouthful. apple's, motorolas moto 360 on the horizons and others requiremented, too. a ton. >> kind of a mess, isn't it? from samsung. gear 2, runs android. the galaxy gear 2 runs android. gear neo, doesn't. gear s running tyson and using nokia maps not google maps, an other android wear devices you mentioned coming from lg and motorola. isn't this going to confuse the heck out of people? >> it a numbing mess right now. and you have round watching, ones that act as cell phones,