redeemed for food and drink at starbucks. it is an interesting sort of connection between the two and maybe a way for lift to try and make sure it becomes morrell vanity. it seems we talk about uber constantly and lift not so much. >> were you one of the celebrities that saved uber? >> they didn't mention me but i like it. >> you have a high rating. >> i also love lift. >> lift is founded by a cornellian. >> bye-bye. good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. it is a busy day. cramer is ready for a lightning round this morning. watch bonds. claims at 255, the lowest in 40 years and crude oil fell below 50 yesterday.

big premarket moves on mixed results from cat, gm and mcdonald's. global volatility, a common theme. >> apple cut its spending forecast by about $1 billion. we'll explain why. >> qualcomm looking for $1 billion in cost cuts by trimming workforce by 15%. first up caterpillar shares taking a hit on a quarterly miss hurt in part by weakness in mining and construction in brazil and china. cats lowering their full guidance. doug oberhelman did talk about it. >> at some point, the economy will stabilize and business will pick up. it was too whose in 2012 and too slow right now. somewhere in between is where we will be. until that happens we have caught in this period where we have to hunker down and do everything internally day to day. >> sales down in every region

including north america. oil and gas not helping. they lowered the revenue forecast for the year. they keep the adjusted eps forecast. >> he is a very nice man. >> that's the key. >> he is a very nice man. >> you believe this is about him. what's your main head wind? >> he said it is the fact that we have 2 to 2.5 instead of 3 and 3.5. >> i don't know if anyone can run the numbers and get better. they represent exactly what's wrong in the world right now. they are china, mining minerals, oil and gas. what bothered me here was the construction industry was so bad in the united states. that was one thing a lot of other people were saying is pretty good. there isn't a line that i can find in this quarter that i liked other than the balance sheet is flush, not a line not a line not even a milligram of

hair that i could find that i liked about this. >> we're looking for 497 this year. last year was 638. 2012 was 890. eps has been halved in about three kreers. >> they made the worst acquisition in china. they bought coal equipment at the absolute top. this is a great american company that has to pull out of this funk and figure out how to make money in china. unilever made money in china. coca-cola wasn't a disaster. dove soap and coca-cola, people are still going to do that. nike made money in china. heavy equipment but in the wrong place. >> all the companies warned on china, uts, illinois tool whirlpool, ibm and then you have this leaked dalio memo that says there is no place safe to invest

in china and they have turned tail on them. >> two weeks ago, he was saying it was fine. >> it was interesting to read their take. now, they have become a lot more negative. >> i don't like that. i don't like that. when it was just beginning to fall apart, they liked it. i don't know. we can talk all we want about how bad the chinese stock market is. it is in a bull market right now. we can sit there and say the communist party can't manipulate. they shoot people and miss the quarter. take a look at the white collar punishments that they offer. everyone has written off china. i read his report about china when everybody hated china. he was complacent. i don't know. i think china is bad. i think china is slowing. in the end, i did a piece on the whole top of my show on "mad money" is that china is being fingered for everything qualcomm caterpillar, auto.

gm numbers were surprisingly better but that didn't include the crash and everybody is worried about china and the crash. i am pulling back. with when everybody worries about something -- >> it's a bad situation. >> i understand. it is not a consumer-led economy. we have always wondered whether the impact of some of these individual investigators losing a lot of money would be felt. they are talking psychologically, it will have more of an impact. the overriding impact of a slowdown in the chinese economy in general, which is what 70% export led, that is still a real possibility, is it not? >> have we looked at the brand? has that been climbing? did anybody look that caterpillar is at an amazing low. it is not like we just woke up. tim cook the ceo of apple said there could be speed bumps. i don't think china is good. the actual growth is no better

than our country. >> he said the worry is probably overstated. isn't it incredible that the man is adding more market cap. he just woke up and fell off a turnip truck. everyone in the world is worried. dow chemical had very good china numbers. i don't know how that is possible. honeywell had very good china numbers. i have kevin johnson, not howard schultz. everyone is worried about china just after it crashed. what i'm saying is china is a problem. if you sell like kruger couldn't sell in china. google up yesterday, not in china. chipotle. the world is separated between kpgs companies that don't do business with china, lamar and wells fargo, and now you do. now, you tell me when las vegas

sands numbers were really good now, you tell me i should worry about china. now when it is up to 1100 i should worry about china. now? well, that's really helpful. >> well you never know. >> it is helpful, really helpful. if kevin plank is worried about china, i'm worried about china. >> could that guy be more right. who does he think is going to win for president? anybody he endorses wins. maybe he takes a long shot. maybe kasich or rubio. >> did want to get to some mna news that has been circulating. i told you there was progress between the talks between anthem and cigna. there is a high likelihood that the two companies will announce a deal under which anthem will apply for cigna tomorrow. don't expect anything today. tomorrow. the boards people close to the

situation tell me they are expected to meet to approve a deal under which anthem would buy cigna for a price tag of $188 a share made up of 55% in cash and 45% in the equity of anthem. given that and anthems move as of now, we'll see what the actual price tag was. that's how they put it on paper. the two companies were very close to a deal a couple of weeks ago when i said progress was being made. they had largely doubled all of the social issues that proved to be an early impediment. they had talks quite some time ago. this he broke down. anthem decided to come with a bear hug on a saturday. it was afraid cigna was going to be able to buy etna. cigna did participate but ultimately failed to be the winner there, failed to be the winner for humana when etna stepped in and was able to acquire that company. all of this consolidation taking

place and will be viewed very carefully by the anti-trust regulators. over the last couple of weeks, i'm told there were a number of other issues that came up whether they be compensation-related or retention-related, governance-related. david cordani is expected to stay at the company. again, they are nearing a deal which will bring very significant consolidation to this hmo sector. would it go from 5 to 4 or 5 to 3? now, it appears it will be going from 5 to 3. most importantly, these two deals will be viewed within the same window meaning they will view one against the other. perhaps approving both perhaps approving one or perhaps saying no to both.

that is etna's accusicion of humana. cigna shares are up. there was reporting yesterday on this. i was moving towards it. the journal reported some things. 55% cash 45% stock. up from their previous offer, the bear hug, which was worth 184. not a big move up here in price. ta deal was 31 or 32 in cash. apparently cigna wanted more stock. cigna share holders will be significant owners of the combined company. >> that is some of the best reporting i have ever heard. that is unbelievable.

congratulations. >> thanks. most importantly, i think is antitrust. antitrust figures so prominently in deals that are out there. not my reporting at all. we have significant reporting that indicates the government may not be happy with the competitive quality of those that would buy the divested assets. you are not giving us a competitor that is a real competitor. the piece that was reported may not have been that right. that's a different angle. i didn't know that. to go back again to the cigna. if they can get away with this if the justice department allows this, everybody's rates would go higher. i hope they understand this. look at southwest airlines. they will look at it closely. they will dispute that. when they joined us the two ceos disputed that.

hertz didn't dispute it but they didn't have any idea what the hell they were doing. the justice department has changed since the airlines. now, look. they could argue that maybe it is true for a couple of years. as someone who used to pit oxford against united health for 300 workers. i would buy cigna right here if they can get this. i would buy it right here. >> the possibility exists that neither deal will happen. >> that's why when you are playing risk guard, the spread is going to be very large. these are going to take a very long to be approved until the end of next year. >> did you see the spread on williams extraordinary? >> ete, these pipeline companies

keep collapsing. >> that is one firm being proekenproekbroken by people shooting against it. >> you look at that index. that is ugly. >> one hedge fund knows that their aim is to blow that firm up and buy those stocks beginning today. when that firm is gun liquidating, you are getting yields that you wouldn't believe. you have to wait until the blowout, until we all see it. >> we have a lot of earnings to get to. we will get that. everything from gm mcdonald's, 3 m, underarmor. pulte, duncan and texan and that exclusive with campbell's ceo, den denise morrison. we mentioned jobless claims coming in at 255, the lowest since 1973. back in just a moment.

record north american profits this morning. the strength came from truck sales and believe it or not, relatively strong performance in china. we had record in china, 503

million. margins at 10.2. some are looking at how you are boosting margins in a market where volumes are coming in and how long that can last. >> my charitable trust owns it. this is one of the dumbest things i have done by buying it. i was impressed by europe. this was a very fine quarter. i am still trying to figure out i just don't know how much g.m.'s numbers were going to be impacted next quarter by the crash in china. all these people are so woreried about china now. i am amazed by europe not just china. >> margins 10.5. everybody insists on staying in venezuela. why, i don't know. this was a much better than expected quarter. the shorts are going to have to scramble. >> 7% gain. there is mcdonald's. we talked about that earlier today.

126 beats 123. revenue down 10. global coming in .7. it looks like they don't give monthly guidance anymore. they are looking for global costs to be positive. >> again, i am a believer in this. i just feel the new guy has come in. the third quarter is the key. he gave guidance. i think you can turn around with the simplified menu. he has to build a lilt program, which i know he is going to do. he has to become much more mobile, which i know he is going to do. he turned europe he will turn mcdonald's. the stock is a buy, even at $1.50. >> 13 cents. 4 x hit. people talked about a relatively low tax rate. it has been a while since they have beat. a comment on some of the featured products did not achieve the expected consumer response. >> he was very abject about that. you either believe in it or you

don't. i'm a believer. he recognized he came in with a real bad hand. he is augmenting that hand. he is throwing in the bad cards and trying to get some good ones. will he draw an ace or a king? he has the possibility of drawing three of a kind. he can do that. >> duncan in this universe 50 cents beats by 2 cents. comps up and starbucks tonight. >> and kevin johnson on tonight, number two at starbucks. he will be doing the call. i'll have that live tonight. die think that starbucks has had a nonstop run unlike nike right in the quarter. they have been the great growth stocks starbucks and nike. >> only 8 billion away from mcdonald's. >> howard schultz is one of the most competitive people i have ever met. i will send him an e-mail at

4:30. at 4:31 he is back. i have to set the alarm to keep up with that guy. >> raising prices when coffee futures have come in 20% year on year. that's hard to do. >> he like chipotle they are very committed to the employees. there are costs to try to keeping the best employees around. starbucks, we can say, they are gouging. i say no. i say they are rewarding their baristas in a way that makes it so they won't leave. we know that training is the single biggest weight loss. i think mcmillan is finding that out at walmart. you have to train fewer people if they leave. that's what howard schultz has done. he has done it right. that costs money. >> this new york panel recommending a $15 minimum wage for fast food workers in new york state. miguel's quarter is not going to be as great. i don't think your employees are have to worry. we will get cramer's mad dash and take another look at the

proo he premarket. we have still just scratched the surface. a lot more "squawk on the street" from the nyc straight ahead. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

when you're not confident your company's data is secure the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

we have had very constructive discussions with this company, met with them multiple times. we are convinced the board and management recognize their issues and convinced they are try tog do the right things. we are optimistic where they are going to. we have advocated a number of steps, not just a splittup. what we think they ought to do is just a transparent review of the businesses and determine whether or not it makes sense to do either a partial or a full split.

>> jana partners took a more than $2 billion position in qualcomm. you heard what he was arguing for, not necessarily saying do a split but investigate whether in fact it would make sense to do a split. >> his numbers were quite good. >> yesterday, of course after the bell qualcomm announces a series of moves, including not just a review of the structure of the company and whether it would make sense. they will tell us by the end of the year. putting two members, basically, new members on the board recommended by jana. they will agree to a third when another member steps down. they also institute significant cost-cutting. 1.4 billion overall and 1.1 in actual costs. the other 300 million comes from stock-based compensation, significant reductions in workforce. we are talking 15% of the workforce. capital return program continues. they put in a $10 million buy

back. all of which i say to you, okay this is not looking so good and the earnings weren't so good and the guidance wasn't. >> this was very complicated, a lot of moving parts. in the end, they have the wrong products. samsung went away from them. they were quite weak in china. some will say, wait a second this is, again, a china story. i will not disagree with that. this has been high-end chinese phones. they are not there. not that businesses are not good. it is actual earnings versus governance. in the end, the business isn't that strong. that's the problem. san disc had a lot to say about the analyst that really got it right. they don't have the right products. they lost big customers. china is weak for them. i think that's a very very important when you have romachof

who hate the san disc at the high. you can make money in parts. they are good in getting the acquisition away from apple. they are hurt by china in a way that it was like shuffling. that wouldn't be fair. too much cash two new guys good. i'm not a buyer but to be a seller here would be a mistake. >> there you heard it on qualcomm. so many more to get to this morning. stay with us. we have the opening bell coming up next.

being a keen observer of the world has gotten you far but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea

powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. when you get up to 50% off thousands of hotels with travelocity it means you can also afford to get up to 50% swedish-er swedish massages. making it the place to find a place for summer escapes. go and smell the roses. benny's the oldest dog in the shelter. he needed help all day so i adopted him. when my back pain flared up, we both felt it. i tried tylenol but it was 6 pills a day. with aleve it's just two pills, all day. now i'm back! aleve. all day strong.

you are watching cnbc "squawk on the street." the opening bell in 45 seconds on the busiest day of earning season. caterpillar is the lead. 1.27 is in line. revenue amiss down 13%. they cut their revenue forecast for the year. we are going to keep our eye on that post when it opens for trading. sales in every region negative including north america, where oil and gas more than offset the strength of construction in this

country. brazil too. brazil unemployment now, 69. >> they have been the untold story of how bad this business has been. if you do business in brazil your business is down so dramatically. people should focus more. the world quarterly would have been unbelievable if it was not for brazil. whirlpool, u.s. construction, fantastic. i think brazil is another thing we have to keep on the radar screen. russia is bad. brazil's brick is just hard. there is an i in it and it is india. >> texas based tier read celebrating its listing today. an online banking platform for small bank lending celebrating its ipo. ferrari ferrari lifting for an ipo.

no symbol given. >> everything he does is exciting. he is the lone one from fiat. he is a very forward-thinking guy. fiat and unilever are both the two stars in their different businesses. remember. they are not headquartered here. they are beneficiaries of the strong freaking dollar. >> the super freaking dollar. >> got it. >> some of these san disc is up 15%. 66 cents. >> the analyst, i want to praise roman shaw. when everyone loved it at 105, he downgraded it. he reiterated to sell at 81. he said at 67 still at risk. july 20th he upgrades it. that's what we want from analysts. people got too negative. i went through the call. they have a lot of new products

and interesting nings tothings to say. it was oversold. if you look at the morgan stanley piece, buy to sell, people were short san disc. it was an annuity short. sandisc is back but it is not sure. >> they double the estimates with 66 cents. >> they have new products and did a lot. my hat is off to them. they preannounced. >> texas beats. >> you mentioned seagate. >> at the same time, i think when you look at p.c.s, there is just very little hope in p.c.s. i know microsoft everyone was really down on p.c.s. i thought the microsoft quarter wasn't nearly as bad. if it is p.c.-related and coal.

those are the two weaknesses. >> iron ore is not doing too well. >> iron ore has a problem. iron ore comes out of everybody's building. >> they are just tossing it out. they don't know where to put it all. i have new core on tonight, a user of iron ore to be able to make steel. >> we are friends with china. >> talk about dumping something. sisco got rid of its box business. >> they take no prisoners. they buy for 6.9 billion and sell technical for 600 million. this shows me robbins has no sacred cows. i am going to buy it. my charitable trust owns sisco. i would buy sisco right here. robbins is saying we are clearing the desks.

get out of these low-margin businesses. cisco is a buy. >> you mentioned companies benefiting from low input cost. southwest airlines is up about 8%. $1.03 beats by a penny. gary kelly on "squawk" says the outlook remains good. last year, one of the best stocks in the s&p. this year down 17%. >> gary kelly came on "mad money" when stock was much much lower. he was saying enough. whoever is saying we are going to do that it is not going to happen. doug parker had been on "mad money" for the americans saying if they are going to add a lot, we are going to add a lot. spirit simple save did not save money for investors. they got killed. this gary kelly was that confident gary kelly we expect. he is still the best ceo in that group. i say buy delta off of that.

i was really appreciative that kelly came on and told it like it was, straightforward as he always does. he is a great ceo. >> axp last night, you have a special place in your heart for them. $1.42. >> that's not my heart. small shame is somewhere over here. heart is located in this area. >> yes, it is. it is going to be crowded. how many guys can you put on a wall of shame. we have to take pete rose down. >> who is actually on the wall of shame? >> this is close, though close to the lowest level since 2013. >> i struggle. i struggle over that. i still carry it. everybody is leaving home without it. when you talk to a great buy like charlie sharp. >> when you talk to a really great guy like charlie sharp at visa, it is not in the discussion anymore. it is not in the discussion. and the costco deal hello. mike korvat citi making good

inroads. >> when you speak to people who were involved in that deal they will tell you the numbers being asked for by costco simply made it not a profit deal for american express. >> i always regarded that materiality as should have been disposable earlier. they have to make a comeback. i know they can. every time i try to make a case for it. i get hurt by the facts. the facts get in the way of that story like you can't believe. >> those facts are what? >> business is no longer as good as it used to be. you can't cut your way into growth. you can't. >> so what is the strategy for them to get back on track? >> let me get back to you after this commercial break. i'll mull it over. >> not that you don't have enough to think about. >> honestly it is not a secular decline. the other guys have a better mousetrap right now. it is a tough situation. it is a great brand. they are locked in. you can't just throw it over board. it has been the right thing to throw overboard. >> a ten-year chart of under

armour closing in on 95. that's a 6% gain. this was a $3 $4 stock in 2009. revenue up 25%. 384. >> he is breaking my heart kevin. i just get the e-mail he is overseas in germany and cannot come on. kevin kline is maybe one of the best competitors, up against mark barker in nike. people think it is tremendously overvalued. his products are superior. he too is a great american ceo. >> the stock classification doesn't bother you? >> no not at all. >> this is a technology company masked as an apparel company. he has a great community of people with his fitness group. let's remember why he came up

with the product initially. it all comes back to being when he was at the university of maryland and he used to bench press. he was known as the world's sweatiest man. the apparel works. it is a technology stock. i am still betting with imhad. he is scratching the surface. endorsement right, business right, develops new product. a tireless worker a 25-hour day. go to the stores. do your kids wear anything else other than the $250 nikes and this? >> do you wear the under armour sneakers? >> no. >> have you tried the pants, the boos? >> no. >> have you tried the shirts? >> maybe have a km ofcouple of shirts. >> when i was guarding this weekend, there wasn't any part of my body that wasn't covered

by under armour. >> before we get to bob reiterate our story at the top. an anthem is poised to announce an acquisition of cigna. anthem shares are up. and so is cigna as you might expect. a 55% cash 45% equity split. the purchase price is going to be said to be 188 but, of course, you are going to have a ratio. things are moving around in terms of anthem stock prices. we'll see where it ends up. antitrust is going to become a key issue for this potential deal and human that's acquisition by etna. i will say there are those that say the pricing umbrella has changed completely. they have to have a medical show of 85%. it has to be seen through that prism but it is a different world. >> it's possible. i just think the justice department feels very grieved by what they did with the airlines

and they are trying to get tougher. they are playing defense. i think the justice department has woken up from its slumber. it was the only republican outpost in the whole democratic regime. >> we could probably talk forever. we do want to get to bob pisani on the floor and see what else is moving. >> europe and china are stronger. the action is right here. it is around earnings. >> energy stocks materials and industrial stocks are very much to the down side. i want to concentrate on 3 m and caterpillar. 3m 151. that's a new low for the year. caterpillar at 78. that's probably a four-year low for caterpillar.

certainly, a new year low. 3 m lowered the guidance of weak lower growth. i kim emphasizing the strong dollar. sales were lower by 7% because of the strong dollar. it is not just weak or global growth. that dollar is a major factor in what we have been having to deal with. caterpillar said the same thing. about 60% of their business is outside north america. they talked about weaker demand. not just in china but latin america as well. they are big there. they brought up the strong dollar here. the sales guidance was lowered by $1 billion. they are buying back $1.5 billion in stock. they are going to buy back almost 3% of the stock in the third quarter. that's a lot of stock buying. they have to. look at their earnings per share. rates are going to go way up if they don't buy back stock. $6.38. they are going to go below $5 in

2015. their revenues are dropping 10% a year. they are dropping right across the board. take a look at their divisions. resources, we know what that is. resources are mining essentially. that was down 12%. this is the most recent quarter. energy and transportation. we can blame oil. that's down 12%. a lot of people were baffled by the 18% decline in construction. they were huge sellers in that business. there is the china data showing up as well. sales here in the united states were not that bad. speaking of construction i want to point out united rentals. here is a company that is huge in the rental business not just in home construction but in energy. their guidance on the rental rates, which is the key components for that. how much they are getting for their rental were revised downwards. i'm not quite sure what's going on here. it was weak outside the energy patch. that's why it is down so much here. they have already given some leeway to them for weakness in energy.

better news is in home building. we should be seeing good news across the board. generally, we were. pulte had great numbers. demand was really strong. 11% increase in the value of new orders. only 1% increase in sales. they are selling higher priced homes. they are selling numbers add-ons that are more profit aor oriented. backlog, 9,000 homes that they are still building on a backlog. that's an excellent number for them. finally, solme follow-up on the nyc outage. they announced they will help each other. if the new york stock exchange is unable to have a closing option they will use the nasdaq. you can trade nyc on the nasdaq

and vice versa. if there is a problem with the closing auction, they will use the other's prices for their stocks here. the key point is, you can trade these stocks on other exchanges. essentially, they are announcing a double backup here for each other. it is certainly a very good idea and a good move and a sign of how important that close is for everybody else. >> the dow industrials, down 36 points. back to you. >> thank you very much, bob pisani. you may recall at the very beginning, i pointed out the many roadblocks that teva would face to acquire that company, not the least of which was this stichting. a foundation that had the right to exercise its options to take control of mylan in the event it saw something occurring that it did not like or think was in the best interest of the company, share holders and employees.

mylan is a dutch company. the key one that teva made was not having to try to acquire them before the share holders voted to have it invert and become a dutch company. here we are at this date. this morning, press release from the stichting, it has stoken and said the following. we are going to issue these preferred shares and exercise our call option represents 50% of our total outstanding since the issuance is a temporary nature. the stichting wants to know that it does not intend to keep the shares for any longer than it needs for its purposes. it wants to create a level playing field. members of the stichting have been in the u.s. talking to share holders of mylan and teva. they have established that both

have highly dissimilar business approaches and culture, financial models and related compensation schemes going on to say after conversations they are are taking out some of the top players and bringing up the antitrust concerns here as well. for any number of reasons and there are more than that i highlighted a handful of them they move to do what we expected they would do of course. teva, for its part has bought over $1 billion worth of mylan stock, 4.5%. what is that going to get it special will i there? given the fact that the stichti in. g has gone around the world. hired lawyers, hired bankers. they have done the due diligence to come to its conclusion. we would have to wait and see. teva has said we strongly disagree with the stated analysis of the stichting.

it is unwarranted, relies on false assumptions and risks for the value inherent of these two companies. they say they are well advised on dutch law and indicate they are in a position to take the necessary sear actions. 101 in mounting a hostile bid is keep the pressure on. we haven't heard from these guys in weeks, if not months. there was no pressure. then we get to the perrigo side. which is when will mylan set the date for a vote of their own share holders for a pair i go bid? they have their own decisions to make in terms of a tender offer there under irish law and what would follow. yesterday, with he had miles

white come out and say, the pair i go acquisition is something they clearly endorse. my own assessment of that as a shareholder of mylan, it is not likely to happen. >> on that one, couldn't agree more. we will see what happens from here. >> it had been a while. >> a lot changed at 8:30 eastern. we saw the big drop in jobless claims. down 26,000. what's going on? there may be issues seasonal issues, plant closing, residual implications from hol isidays. there could be percentage working in labor force participation. maybe a lot of the people that would have issues with jobs aren't counted. they aren't in the system anymore. what's left and the type of

workers and positions they may have may have leveled out. those that want to work are in demand to some extent. i am not sure what the pay scale is for that demand. for my hit, it doesn't really matter. look at the way the market has responded. look at the first chart. 5s to 30s. flattening. you see that number. immediately, the investors jump to conclusions that this brings the fed closer. look at that spread going back to may 29th. lots of flattening. yields moved. they popped. if you look at an intraday, boom. it yields, popped. pound versus dollar dollar versus yen. dollar versus the south korean yen. the dollar is at the highest level in three years. it isn't normally the currencies we follow. whether investors are right or wrong at this point is no concern.

what their foot print in the marketplace is telling us is they are a bit nervous about the tightening of rates. we will continue to monitor how that translates into market movement. skrarl back to you. rick santelli union pacific out with earnings this morning. we all know the trouble they have been through. the ceo is going to join us live. first on cnbc. in the meantime cat nearing a four-year low. amex, low. we'll be right back.

♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. share your summer moments in your mercedes-benz with us.

♪ ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. because it's so challenging a research project is teaching ibm watson to see.

in the future, it could help clinicians spot key patterns quickly and precisely. ibm watson is working to make healthcare smarter every day. markets have their difficulties today after these weak earnings from cat and 3 m. airlines are holding up. southwest, highest since may as they beat by a penny. margins up. i would say good things about the outlook for energy going forward. we'll get stock trading with jim in just a moment. but to get from the old way to the new you'll need the right it infrastructure. from a partner who knows how to make your

enterprise more agile, borderless and secure. hp helps business move on all the possibilities of today. and stay ready for everything that is still to come.

perrigo time for cramer. cybersecurity, if you want to play the etf, that's fine. fire eye, cyberarc and most importantly, palo alto networks all on fire. i wish we could say that we have

stopped cybersecurity. it is still in its infancy. fort net billings were extraordinary. you bet against these companies. you are a fool. companies must step up their security. those are best in show names. >> what's up tonight? >> we have the new core. i have to if i can out what the heck is going on with iron or. kevin johnson, standing in for howard schultz tonight and nick akins. i am talking coal the death of coal is really the death of iron ore. they are dead. rigor mortis. >> we'll see you tonight jim on "mad money" 6:00 p.m. eastern. we'll get mohamed el-erian.

don't go away. ♪ ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep them all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberyy apple scones smell about done. ahh, you're good. i like to bake. with at&t get up to $400 dollars in total savings on tools to manage your business.

at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. good thursday morning.

welcome back to "squawk on the street." i'm carl quintanilla. >> markets or the dow reacting to weak earnings or guidance from big components like american express 3 m, caterpillar. that's hurting us to the tune of about 50 points. oil back below or still below $50 after falling below that for the first time since april. gm, that stock is actually surging today after a big second quarter beat. nice profits in china, north american. record there. we will have more on gm later on. let's get to rick santelli who has lei. rick? >> yes, lei up 0.6 for the month of june more than expected. we had two 0.7 in a row but may was revised up 0.8. it stands at the highest level of the year last may, the highest level since july of

2014. 0.6 is the current read. the initial jobless claims. the lowest number since 1973. that seasonally adjusts. it doesn't catch any of the seasonals. the big topics is maybe shutdowns and a lot of factors contributing. that moved the market. rates up dollar up all the things that may bring the fed forward in the mind of investors. back to you, gang. in the meantime trouble in china. a major theme among companies reporting. joining us is mohammed el-erian. you have companies like apple saying these worries are overstated. we have bridgewater turning tail on china. after obsessing on greece for so long where does china rank on your radar right now and how?

>> it is slowing and because it is slowing, all sorts of issues are coming to the surface, in particular, the financial excesses. i am not a buyer, carl that this is a crash. i think china has the ability to control its soft landing but china is no longer a locomotive of global growth. that has implications for companies and commodities markets. >> i was just going to say, mohamed, is that the message out of commodities, the china or the federal reserve inching closer to an interest hike? >> i think both. if you look at bricks four of the five countries are having problems. brazil is having problems. russia china and south africa. only india is looking good. if you look around the world, there is no longer a dynamic source of growth. that's one issue. the second issue is the market is starting to price in the

likelihood, the high likelihood that the fed will move this year. both are having an impact on the commodities. >> you have this conundrum where the u.s. is the best house again in a bad neighborhood economically. what does that mean for u.s. assets, stocks bonds, the dollar? do you still want to be there, because it is actually seeing better growth or do you want to be where the central banks are in easy policy mode? >> a few things. one is if you are betting on fundamentals and the market is telling you this today yet again, difference yea tors matter a great deal. you had a great discussion earlier about how companies are run, how an underarmor is doing so well. so differentiation is going to be an absolute key issue for the stock market. it is no longer betting that liquidity, be it from central banks or from companies putting money back into the equity market to buy back dividends. that's no longer the theme. it is going to be good

old-fashioned fundamental differentiation. when you go global it matters what market you are trading in. central bank differentiation es going to matter a great deal. it is going to be pushing not just interest rate market but the currency market too. >> you know mohamed, it is very rare that somebody said something that really stands out, even maybe six or seven weeks later. you were quoted as suggesting that as far as you you were concerned, i think it was with your own personal money, you felt the public markets had been overinflated by central banks and, therefore, if i'm quoting you correctly, for your decision, your personal decision, you were not invested in public markets. for that i would take to mean the stock market and the bond market. you were looking elsewhere, i think the interest was, to private equity. can you talk us where you are and the judgment that you are making? you are exceptionally well connected here. when you say something, people should listen. >> you are kind. i'm not sure people listen. the point i was making is become

more barbelled. don't chase prices where central banks are heilman incompetent pew lating markets, in the public markets. take some of the money you have in the public markets and barbell it some in cash to give you optionality on likely corrections down the road and some into higher risk but less liquid opportunities, because central banks cannot reach those as easily. so my method was barbell more exit public markets that have become very crowded and very manipulated by central banks and wait for the optionality, the resilience that you get here. also don't give up on some really exciting opportunities that are happening in the start-up world, in the private equity world. there is a lot going on specially in tech. >> if i can paraphrase you, though, to say, don't invest in the stock market which i think is what you are saying, what is that optionality for those

further down the line that don't have the choices that you do as to where you can put your money? what is the optionality? >> i didn't say don't invest. i said invest less. public markets are still there in your portfolio but invest less. rather than don't invest. that's an important distinction. the reason you want optionalette is because we are coming from a period in which liquidity has been the major driver of asset prices. you see this in the terms of correlations. any usual metric tells you we have been in an extraordinary period of liquidity. central bank liquidity and companies putting money back. what the market is telling you today, you know what that is no longer sufficient to maintain prices at a high level. you need something more. that something more is fundamentals. that's why differentiations become so important. >> the old necessary but not

sufficient. we've been having that conversation for a few years, mohamed. we mentioned brazil unemployment to 6.9. the economy contracting. is there any part of the world where you think risk is still underappreciated. >> there are sectors. the most exciting thing for me carl, is the extent to which people can come in from tech with core competencies that speak to technology and disrupt traditional. what uber is doing to urban transportation. you are going to see it in finance and media. it is a very exciting time because we are getting major disruptions. rather than look at countries, i would tell you to look the athemes. the most important themes is people disrupting from other worlds. they are disrupting because their core competencies are coming from outside the sector they are disrupting. that's a very powerful

investment theme. >> you say people don't listen to you mohammed. but the wire is picking up things we have told you just now. we appreciate your time and look forward to seeing you again soon. >> mohamed el-erian. shares of mcdonalds up after the company reported the seventh straight quarter of falling sales. steve easter brook said while our second quarter results were disappointing werks disappointing, we are seeing early science signs of momentum. can this turn around strategy work? here is david palmer, restaurant analyst who has an outperform rating on the stock. it has been optimistic about mr. easterbrook. did you see any signs about an actual turn around? >> it was pretty much in line from a comp perspective in the u.s. the international side was worse than expected. that's the area of their p&l that's going to get better more quickly in the second half. the u.s. is a real grind.

they have some things going on. everything from minions happy meals to new platforms or the breakfast all day that's coming fourth quarter. i believe they are very excited about the prospects for that. >> you think that will actually lead to positive growth in u.s. sales. >> we do. we believe the second half is going to be a positive comp for the u.s. it gets to be more significantly positive in the fourth quarter with the all day breakfast, because that's certainly showing some promising early test results for the company. >> i wanted to highlight something the cfo said in the meantime. we continue to evaluate additional ideas to further drive shareholder value through actions that deliver sustainable long-term growth. is it about buy backs and cutting cost or something bigger like spinning off the real estate? >> it has been more openly discussed by this company in conferences than we would have

expected them to be talksinging about at this point. darden is going through an experiment that everybody is watching. they are pursuing the rate. whatever cap rate they get for that mcdonald's would go through that and could become a provocative reason for them to pursue it. first things first. they need to make sure their franchisees and system is on good footing. >> some say all day breakfast would be funky enough. it is an easy headline. everybody loves the idea. with the infamous memos that leak all the time how would that work? what would it do? what happens to kitchen complexity? >> we don't have a clear read. certainly, a high margin with huge equity. they are number one at breakfast. it is wonderful for margins from a unit perspective. the operational kinks have to be

worked out. they are going big with the testing. they clearly believe in a big way. he is going to try to make a case for the franchisees. i don't work mcdonald's but apparently the complexity of serving all day breakfast alongside everything else is immense and may be insurmountable. are breakfast items given that they can cannibalize what you serve during the day, a no-brainer, a margin? >> it is not as much of the proteins. >> more eggs more flour and less protein. so it is a great margin business. the other thing is the complexity angle is a form of creative tension right now with the system. they are doing some things with the drive-through menu board. they just did where they streamlined what's on the drive through menu. that's supposed to help not only the margins but the through-put.

>> to push people to buy soda. >> and the custom i zation by drive-through market is how the individual market sells through. they want to push you through things that can help them move the line help their margins. they are trying to make concessions an improvements. they need to find ways to remove skus off the menu and decomplex this system. >> how patient do investors need to be? >> this is real willly a second half thing. you wonder how much the data points will bleed out now that they have gone away from monthly comps. we are going to have bigger drum rolls around these earnings. third quarter will be a step in the right direction and probably the fourth quarter will be a bigger bang because of the breakfast rollout if it happens. >> dave palmer, optimistic on mcdonalds. rbc capital market analyst. >> we do have some breaking news. japan's nikkei newspaper will

become the new owner of the financial times. there has been rampant speculation about possible buyers. currently owned by britain's pierson. they are now reporting that nikkei has sent an e-mail to subscribers saying he has bought for 1.29 billion. it had been reported that springer was buying the fft. that's big news for media brand. those are the other three. $1.2 billion. is that all it is worth. >> caterpillar releasing earnings. the big question really. why does the ceo continue to buy back the stock? we'll talk about that after this break.

the ceo of caterpillar defending his decision. a steeper than expected 13% drop in sales. he told them that the heavy giant did the right thing in repurchasing half a billion of stocks. >> caterpillar is a 90-year-old company. i am convinced that those $100 shares will look cheap. they certainly look cheap today. you look at it as a long-term basis. i don't want a lot of cash on our balance sheet. >> joining us i ann dyckman, a

machinery analyst at jpmorgan. they are accelerating the buyback stocks. are you convinced? are the analysts convince snd. >> i don't think so. fundamentally, you have a backlog that's down 23 percent. you have long last reserves rising customer past dues rising. we don't know where this is going to end. i think investors would be more comfortable if caterpillar will hoarded cash. >> the ceo is clearly a bright man. he says he has been at the company for 40 years. why would he not cut the share buy backs in your view? >> it is a cyclical company. their analysis suggests that over the long-term, prices are cheap and will over the long-term, return value to share holders. it is hard for us to argue plus or minus that except that the fundamentals right now look like you might be able to buy them

back cheaper in 3-6 months. >> will you keep having this debate about heldman and the culture at caterpillar is interesting for anyone who has ever covered it. >> today, he tried to argue that this is all about global growth being 2, 2.5 to 3. others say, you shouldn't have bought bucyrus and spent $8 billion going in. is he to blame or not? does he need to go or not? >> we have this debate every quarter or every couple of quarters. there are things they can control and things they can't control. right now, they can't control their end markets. they can control the operating side. they did deliver 17% inkrimt incrementals. you could argue they are not cutting fast enough or deep enough. we would have liked to have seen

that. snna was down 3%. we would have liked to have seen that cut further. he is controlling some of the things he can control and, you know, we can't look backwards and say, you bought a mining business at the peak of the cycle. it is what it is. >> how do you make money in this sector at the moment ann? what are the stocks to watch? is it too early to buy on the basis of a cyclical upturn? >> yes, in my view it is too early to buy anything in the machinery space. in general, the machinery sector tends to skrundunderperform the s&p in an environment where interest rates are rising. if we are going into an environment where interest rates are dpg togoing to continue to rise slowly, it doesn't body well for machinery? >> thank you for your time ann. pierson has officially announced the sale of the ft to nikkei.

you don't think 1.3 is a good price? >> i presume he has lost making it. >> circulation is pretty good. >> i wonder what the japanese will do. this kind of empire building as we used to have years ago where you want to take all four corners and map them up together i wouldn't have thought there were huge synergies between them. >> they do cover international better than a lot of other papers. based in london. it has that viewpoint. i think the rumors a few years ago were for billions. 1.3 sounds high. coming up, an exclusive interview with the ceo of campbell's soup. that company joining a parade of other food companies announcing it will eliminating artificial flavors and colors from the food products. we will be back to discuss that with denise morrison.

you focus on making great burgers, or building the best houses in town. or becoming the next highly-unlikely dotcom superstar. and us, we'll be right there with you helping with the questions you need answered to get your brand new business started. we're legalzoom and we've already partnered with over a million new business owners to do just that. check us out today to see how you can become one of them. legalzoom. legal help is here.

a lot of earnings movers to get there today. under armour is moving higher.

shares sharply higher after sales and earnings beat expectations. they raised their guidance on sales. it is hard to find guys in the consumer space, retail and consumer products. 29% sales growth. that's what under armour did. if you break down the results, apparel sales up 23%. footwear up 40%. they had the steph curry sneakers and accessories up 40%. international, coming off of a low base. they managed to grow at 93% in the quarter. >> q-2, net footwear revenues up 40 for a business that people laughed at. people laughed at the idea they could take on nike and shoes. you sign someone like stephon curry, you are going to have some success. they are talking about taking curry on a tour of china where they believe he is just beginning to touch his potential. >> he is not the only winner. the challenge for underarmor is building on this momentum in categories where they have

complete dominant market share. >> if you look is your pressed by the investments in them. >> we mentioned earlier, it was a $4 stock a few years ago. it is now $97. it will be interesting to see which hits 100% underarmor or feet book which are both around $97. >> and both growing very fast. nike also showed strong growth this quarter. several weeks ago. it was up 5%. nike is much more exposed internationally. >> when we come back shears of general motors surging today up off the highs of about 4.5%. we'll have details on that quarter. north american profit. pretty good results in china too after the break. ♪ every auto insurance policy has a number. but not every insurance company understands the life behind it.

those who have served our nation. have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life. are you moving forward fast enough? everywhere you look, it strategy is now business strategy. and a partnership with hp can help you accelerate down a path created by people, technology and ideas. to move your company from what it is now... to what it needs to become.

i'm sharon epperson. your cnbc newsup date. ice sis violence has been a bigger terror threat than al qaeda. he made the comment last night. comey adding that the fbi has arrested a significant number of people over the past two months who have been radicalized. chrysler has filed for an ipo of ferrari and plans to spin off

10% of its steak to pay for the five-year, $50 billion investment plan. it is expected after mid-october. defense secretary, ash carter making an unannounced visit to iraq. he came to assess the government's progress in healing the sectarian division and the military taking the key city from isis. two bombs hit the capital injuring more and killing 26. that's cnbc's news update at this hour. back to you. welcome back to "squawk on the street." i'm jackie deangeles reporting from the floor of the nighymex. a build in stocks of 61 billion cubic feet a little less than traders were expecting. they were looking for a number around 70. we were trading higher before this report came out. it continues to be bullish for nat gas, trading at 2.92 at this point. the thing to remember, this is a

number that's backward looking. we weren't having temperatures that were so hot but things have certainly heated up across the country this week and the ten-day forecast is saying the same thing. so some people are expecting to see nat gas prices hang out around this 290 range but they don't expect it to stay here for that much longer. remember, this is also a story about total stocks which are in good shape, well above where they were at this time last year. back to you guys at post 9 gm one of the big movers of the morning. up almost 5% after the big second quarter beat. our phil lebeau has been all over the story all morning long and in chicago with details the gm conference call started about a half hour ago. mary barra is noticeably upbeat talking about the opportunities in the future. here is one reason for her optimism. look for the numbers or the second quarter for general

motors. that was about 21 cents better than the street estimate. revenue light of expectations when it comes to revenue. what drove the profit in the second quarter. the two big markets. general motors. in north america, a record quarter. $2.8 billion in profit. china was up more than 100 million to 503 million. here is the important point. both these regions had operating margins above 10%. still, there are a number of questions regarding the chinese market. in just a few minutes ago on the conference call this topic came up. here is cfo, chuck stephens talking about their expectations in a chinese market that is slowing down. >> our view for the year is that china is going grow. the industry will grow in the low single digit level. it grew about 1% in the first half. we expect 2%-3% growth for the

year. we expect to see improvement in the second half of the year driven by launch cadence, seasonality and our own launch products. >> in china, all about suvs and luxury product. here in north america, it is all about trucks. gm is hitting out of the park when it comes to pickup sales, up 25% year to date. people are launching on to this. we expect to have stronger results in the second half of this year. they already earned 5 billion in the first half with 10% margins. guys, they expect that to be the same, if not better in the is second half of this year. we are going to hop back on to the car and more later on. >> campbell soup holding investor day yesterday. upping the 2014 profits. cost cutting strategy working as global sales environment remains there. denise morrison president and

ceo of the campbells soup company. you started off investor day yesterday by saying that the food industry is facing a revolutionary change. how difficult is the environment for companies like campbells soup? >> i see seismic shifts whether it is the change in the consumer with demographics or socioeconomics, change in the composition of the american family, a shift with a shrinking middle class in the united states in developed markets and a burge juning in middle markets. consumer preferences for health an well-being is really big. we can't underestimate the impact of digital technology. all of that is converging in what i call a seismic shift. >> as a result of that you are reinventing this iconic company. >> talk about some of the changes. >> we are reshaping campbells for new generations of consumers. we are diversifying our portfolio. we are making smart acquisitions. all of these in response to

changing consumers. >> i was talking to paul grimwood of nestle usa yesterday what he was saying about the consumer change was the speed, just how fast the consumer is moving. some of the concerns that investors have with the food industry is that a lot of these changes should have happened yesterday and beyond that, they are going to take a while to implement into the supply chains. >> we have been working on new products and new ideas to deal with the changes in the consumer for quite a while. our transition and our journey is reaching a really good point now. >> no artificial flavors? >> right. i think health and wellness means different things to different people. we are foraging into flesh,resh. we did announce we are taking artificial flavors and colors out of our products. we don't have a lot but whatever remains, we are committed to taking it out. >> bolthouse has been a key source of growth.

i know you are putting money behind that brand. that is the packaged fresh food. >> health and well-being means different things to different people. fresh is authentic and means healthier to a lot of consumers. they give us a platform coupled with the acquisition of garden fresh gourmet. we took it so seriously, with he formed a $1 billion division to go after the fresh space. >> if fresh is the future what is the future of canned soup? >> we believe in strengthening our core business and expanding into faster growing spaces. we are loved about 100 million households. in fact 80 campbell products are bought every second in the united states. we still have a large and growing business there. >> zero based budgeting, cost cuts, this is the name of the game for consumer companies like yourself. it is why you raised guidance. when do we transition from a period of cost-cutting to actual top line revenue? >> sarah, it is a good point. you need both top line growth and you need to operate at the

lowest imaginable cost. you need to be responsible about cost to reinvest for growth. that's the formula for success at campbells. >> do you have an skrout lookoutlook, a time frame for when that might come? >> we are working on it. we believe as we have reshaped our portfolio, we have brought in new brands and made improvements to the food in our core business to reach a better growth trajectory over time. >> the garden fresh was the most recent one. it was a little less than $300 million. any plans to do something bigger, more transformational into the fresh food space? >> we have a very smart approach to external development. it has to be a strategic fit and make economic sense. we really evaluate deals very closely. we have a good balance sheet. so we can do more. >> you can do more. >> we can. >> you would be open to bigger? >> yes we would. >> the macro environment doesn't help. i know you do have some international business even here in the u.s.

besides the consumer preferences changes. you are also dealing with a consumer that hasn't fully recovered. talk about what you are seeing? >> we nl that. we think that consumers are still very cautious. the middle class has not been part of the economic recovery. one budget they have control over is their food budget. we believe that we have to make food that's accessible and afford i believe for all americans. >> do you believe we are starting to see that recovery in the low to mid income. >> we are seeing some green shoots. i do think it is going to take a while. >> always good to catch up with you. >> investors certainly like your strategy. i sh you say outperforming the group. up more than 8%. denise morrison the president and ceo of the campbell's soup company. the guest host tomorrow on "squawk box" is someone you know quite well your sister maggie wilderotter. that is a powerful family of women. >> she is an amazing woman.

>> for now, simon. coming up a gaming company started by the founder of my space just received one of the largest mobile gaming envechlts in the world. what does it mean for the future of the industry. co-founder of my space, chris dewolfe will join us. after that railroad released the second quarter results, we will talk to the ceo of union pacific. the stock keeps falling. no fifth grader's ever sat at the cool table. but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. now get a swiss gear backpack for only $10. office depot officemax. gear up for school. gear up for great.

in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day.

more "squawk on the street" coming up next.

we are paul darley here. you make fire trucks and fire pumps along with other defense type products. >> that's correct. >> you are here to talk about the import export bank. this is a really touchy subject. i appreciate it. this is a tough one. how many fire trucks and fire equipment and pumps, what percentage of your company, profits, revenues come from that area of business? >> our company is about $170 million in revenues. we are a family business 107 years old as you said. ruffle, half of our business is fire fighting related. of that half gets exported around the world. >> you bring up nigeria. the way the process works is nigeria may need different infrastructure, fire equipment pumps, because they are not calling you to order because they don't have the funds.

import/export banks for whatever reasons finds it in a foreign policy way. 50% of the financing to emerging markets is done through import/export banks. they create loans and credit lines and once that is done that infrastructure, people like you from all around the globe go to nigeria to try to sell them products. am i describing that accurately? >> yes. >> if the loans don't work out and nigeria can't pay out, you sell them a fire truck. you are sales. you get paid. >> that's correct. >> tax payers may be on the hook. you and i had a debate off camera. cbo and certain accounting standards put the profitability, import export bank. some say it is small profit small loss. what i am trying to get at is demand for trees products and something the import/export bank

does. you are not dealing directly with the companies. >> sometimes we will be with them. at some point in that negotiation, they will say the only way we can do this is with support from an outside country. >> you are a fan of the import/export business? >> absolutely. >> you think it ought to be reupped? >> yes. >> i would do. >> you get orders and you get to sell around the globe to many companies that could not afford it. if nigeria could go around they wouldn't need an import/export bank. >> that's correct. >> do you see any down side to not dealing with the demand? >> i don't agree. there is a demand in the third world country, particularly where xm is participating. there is a huge demand. >> to compete with other import/emport financing like in china which most likely have a high degree of cronyism?

in a way? >> perhaps in a way. there is different regulations relative to the omc that cover the set regulations for countries like america that maybe china and refresh ya aren't russia aren't exposed to. >> if you look at the other side exports, imports, corporate welfare for the boeings and the pen taxes, they are big. i'm a huge fan. >> xm their annual report says they generated $675 million in profit last year, created 164,000 jobs and plus in addition to those, all of the suppliers that supply companies like us. >> listen carl we are out of time. i want to get you back when we see what happens. in the end, i would rather see poor counties in this country get financing to buy your product. in the end you are out to sell products. i have no problem with that. >> carl simon back to you. >> that's going to be a big

debate. rick santelli. when we come back the ceo of union pacific will join us for a first on cnbc interview. we will get his take on how commodity prices are impacting the bottom line. stocks at a new 52-week low. we'll be right back. so what else can you give me? same day delivery. the ottoman? thank you. fico scores are used in 90% of credit decisions. so get your credit swagger on. go to experian.com become a member of experian credit tracker and take charge of your score.

>> a lot of big movers today. the businessest day of moving season. one that's moving more than the others. dominic chu has s&p 500. sandisk shares soaring more than 17%. you can see up by 17.5%. after the flash storage device maker reported a quarterly profit that doubled what analysts were looking for. analysts had been aggressively cutting their profit estimates for sandisk before this report. they were hurt by sales of solid state drives but did beat estimates in terms of sales. so sandisk shares had been beat up hard going into this report. so now getting a nice bounce simon. >> no respite from earnings this morning. for investors in union pacific. solid pricing enabled the country's largest railroad to beat by three cents a share. but revenue was down almost 10%

led by plunging volumes for coal. joining us is union pacific president and ceo lance fritz. mr. fritz, good morning to you. >> thank you, good morning to you, simon. >> it's a tough environment if the power stations are switching to cheaper natural gas and they don't need to transport the coal any more the volumes of coal are down what 30%? >> the coal volumes were down 30%. >> how do you respond to that? what do you do with the business? >> we've got a wonderful broad diverse franchise that right now is getting an outsized impact crude oil pricing and natural gas pricing and to some degree in the quarter, weather. and all of that translated as you point out into lower coal demand and also in lower demand for our commodities that serve shale-related energy production. those had outsized impacts on

the quarter. a and we had some bright spots, somewhat driven by the consumer economy. automotive shipments were up. domestic intermodal product were up and we saw bright signs in our chemical products line particularly in plastics and lpgs. >> people would say given the extensive nature of the network. a good bellweather for the economy. what do do you in response? 32,000 route miles across 23 states. what do you do as a management team when you see those big tectonic shifts? >> we go aggressively after right-sizing our resources to the demand profile. we're in the process of doing that right now. we can do that through making sure we get head count right. making sure we get our fungible resources like freight cars and

locomotives right. all of the commensurate, overhead structure that goes with it. we're right in the process of doing that. we're behind the curve when in terms of volume. volume was down 6% in the corridor. that's tough to catch up to in the short-term for us. >> autos was a bright spot in terms of volume growth. do you see that continuing into the second half of the year here. the demand for autos in this country. >> we sure hope so sarah. the average seasonally adjusted sales rate was something just over 17 million units in the second quarter. and it was stronger than that at points late in the quarter. we do look forward and think based on what we're hearing in the marketplace, that a 17 million-plus number is likely for the year. and that has been very good for us. it's been good on finish vehicle shipments, as well as auto parts. >> the business is so vast the technology, when you introduce

technology, has a real outsize impact. for example if you can prevent trains from breaking so often, that could affect the bottom line. i see that you have rails that you're putting in that are as long as one and a half football pitches, in order to cut costs, can you talk us through the innovation that you're seeing at union pacific? >> yes, innovation plays a big role for us. it comes in the form of technology. that can be a specific a system that we're deploying that makes derailments less likely and takes care of other risks on the railroad. it can also come in the form of process improvement. we do something called the u.p. way that gets every employee engaged on designing their work and being active in improving it from a safety perspective, quality perspective and a product perspective. and all of that is benefitting

us in the quarter. it just got overwhelmed by a 6% drop in volume. >> just before we let you go what would you say to shareholders about where you are with the share price now? with the 20% full so far this year. what hope can they have at what point? >> we have great hope i like all of our shareholders have experienced this decline and i'm chagrinned by it. we're not happy with our second quarter performance. in the long-term, we have an industry-best franchise, it's diverse and it's broad and it gives us great exposure to growth opportunity all over this economy. and so as i look forward, we're very confident that we will find new opportunities to grow our business development pipeline is sound, and we're pursuing new business aggressively and one other thing to look at in the quarter was a 4% real core price improvement. >> that means we're pricing for

the value of our product and there's room to be able to do that as we look forward to the future. >> fuel costs down over 40%, mr. fritz, busy morning for you, thank you for sparing the time. quick mention of pearson shares which did reopen after it announced the sale of ft to japan's nikkei. >> let's send it over to jon fortt in san francisco with a look at what's coming up next on "squawk alley." good morning, jon. >> of course we're going to be taking a look at amazon earnings which are coming up after the bell. what are the key numbers to watch? also uber seems to have won a round with new york city. but there's more battle to come. and qualcomm tough announcement after the bell yesterday, 15% layoffs. can they bounce back from here? we'll talk all that and more coming up on "squawk alley."

if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. hurry, before this opportunity cools off. share your summer moments in your mercedes-benz with us. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep them all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberyy apple scones smell about done. ahh, you're good. i like to bake. with at&t get up to $400 dollars in total savings on tools to manage your business.

(trader vo) i search. i research. i dig. and dig some more. because, for me, the challenge of the search... is almost as exciting as the thrill of the find. (announcer) at scottrade, we share your passion for trading. that's why we rebuilt scottrade elite from the ground up - including a proprietary momentum indicator that makes researching sectors and industries even easier. because at scottrade our passion is to power yours. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought.

can a business have a spirit? can a business have a soul? can a business be...alive? good morning, it is 8:00 a.m. at qualcomm headquarters in san diego, 11:00 a.m. on wall street and "squawk alley" is live. ♪ ♪

good thursday morning, welcome to squawk alley joining us from one market roger mcin a mcnamee. google reporting strong earnings, it's been a rough ride for technology apple, yahoo, microsoft disappointing. that brings us to amazon tonight. reporting after the bell share did hit a record interday high. so roger, after having a few examples now of how this this quarter is starting to work how do we look