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♪ welcome to "squawk alley" for a wednesday. joining us this morning, what a treat, mike santalli, senior columnist at yahoo finance at 30 rock and kayla and me at post 9 on a day where a lot is going on. oil inventories, but the headline of the hour is dudley speaking in new york about the markets, about september, about december, let's get to steve liesman who is already in jackson hole prepping for this weekend. steve? >> carl, thanks very much. bill dudley speaking in new york on the regional economy. actually came out after his statement with a different statement on monetary policy. in which he used the term that everybody is going to be talking about, that september is less

compelling and i only push back on sara eisen a little in the last hour that he took it off the table. he did not take it directly off the table. said it's still a possibility. listen to that sort of ad hoc statement that dudley made the last half hour. >> from my perspective at this moment, the decision to begin the normalization process at the september fomc meeting seems less compelling to me than it was a few weeks ago. but normalization could become more compelling by the time of the meeting as we get additional information on how the u.s. economy is performing. >> what he said was that international events that have been going on, the strength of the dollar, the slowdown in china, the repricing of emerging market currencies, increasing risk for the u.s. economy. but he was pretty clear that what's going on overseas is not going to determine outcomes for the u.s. economy it may take some of the shine off of the growth and he said the u.s. economy, the data looks pretty good. he said it's important not to overreact to the market turmoil.

he didn't want to comment on that. saying this could all shake out. it could be a few days of market volatility and then by the time the meeting comes around. things could be quite calmed down. he said the fed remains, this is boring, but data-dependant. it will have an impact on the market timing from what's happening overseas. but ultimately the fed is going to follow the data in the u.s. and it's forecast for how overseas development affect their u.s. economic forecast. carl? >> steve, thank you for that. steve liesman will be talking to you increasingly as we head into the weekend. mike santolli is in new york city, that's the bridge we get until fisher speaks on saturday. your take? >> yeah, it seems like the fed officials want to say we're watching, we're attendive, we're not going to be dogmatic about when we finally have lift-off. but they don't want to give into the impulse to saying we're catering to stock market moves and we're essentially trying to give the market what it seems to

be perhaps begging for in a very loud way. so i'm not too surprised about that. i think what's also hard to handicap. it's exactly how the market might respond to an outright deferral of a rate hike. but we don't know. we don't know what we're priced for now. it's kind of exhausting to remain on this cycle of thinking we have to keep pushing off the date. last october we had not as severe, but also a relatively sharp market break. people thought it would mean qe was made indefinite. it didn't happen. so i do think it's just one of the factors that has a lot of people back on their heels in this market. >> mike there's been the sense that the majority of the volatility around a rate hike would happen before the rate hike. not necessarily as soon as it happens. we heard dudley say he wants to see more economic data showing that the u.s. is on track. but we saw an incredible durables number this morning. we saw good revision for june. housing, consumer sentiment seem

to be stable. what say you? >> well, exactly to that point. if in fact we do have a continuation of that trend, a domestic data being good and giving some cover to a september move. then absolutely. the market might take that as a net positive. provided of course the rest of the world decides to stop falling apart. >> mike, i don't know if you've seen, deutsche is out with a note, buy risky assets on dips, because global central bank money printing will continue to force investors out the risk spectrum, including into u.s. equities. they don't believe that the global economy is at full capacity yet and they don't see it being any time soon. do we chase that cow bell so to speak? >> it appears that the rest of the central banks are in that mode and have been for a while. what we're wondering about is i think the marginal benefit or the effectiveness of that. to me the better reason to buy risky assets is they've gotten

cheap, discounted too dire scenario. you might want to make the case for stocks. i still feel like the stock market is trading on its own kind of internal dynamics and emotion, now that it busted out of that range. it's not really trading on value yet. to me the idea of having faith that will have central bankers panic out again, it's a tough call at this point. >> what do you use at your guide post 0 to say the u.s. and the european markets will be able to decouple from asia. that even on a day when we see china fall 1.3%. that we will trade on our own fundamentals and we won't fall back into this cycle of waking up to the headlines from china and all of a sudden panicking? >> well we thought we had that about 26 hours ago, right, when we thought we were decoupling from shanghai and i think we probably have. a lot of people look at the chart, the shanghai market and say that maybe is going to have to retrace the entire doubling move from a year ago. we didn't get a lot of benefit

from the upside in shanghai. but right now i feel like people are inferring so much about the tough market in china, about the actual economy and the relentless collapse in emerging markets currencies. so what i'm actually looking for is for those things that led news this mess, that u.s. stock prices were ignoring for so long like junk spreads, emerging markets, stocks and currencies. if they find a bid, maybe even oil that would suggest that u.s. stocks in the tumble was kind of the lagging indicator for this little crisis. >> then you have finally, mike, to your point, if this in fact ends up being a prolonged growth scare, with regard to china, then our stock prices come in. dudley said it not whether the stock market moves, it's whether it moves and stays there over time that it begins to impact consumer behavior. that's when you got to start worrying about the william-sonomas and the russells, right? >> exactly. we're back to a level in the stock market we first reached 15 months ago or something like

that. it doesn't seem as if it's been an important surrender of that wealth effect. but yeah, i do think that the psychology is pretty fragile out there. i don't think the consumer is going to take much to necessarily start to get even more conservative. so yeah that is going to be the question. i think the fix for an investor or trader right now is that that evidence is not going to come until after a september meeting. we still have the suspense. >> it's going to be an interesting couple of weeks. great to have you. mike santoli. tech is an interesting story. facebook, am down, google, netflix, all finished in the green. netflix amazon and google leading the nasdaq 100 this morning. let's bring in rbc's mark mahaney who upped his price target on netflix. you don't feel uneasy doing this in the environment we're in? >> well, the environment that

we're in is one we just got netflix shares presented to us, 20% cheaper and at the same time really coincidentally, we had three surveys out internationally. one in the u.s., one in the uk and one in brazil. that showed to us. stronger fundamentals for netflix. greater broadband penetration particularly in the uk and brazil. we became more confident in this company to generate long-term description power. fundamental results that came out of our survey work. >> the comparison was made to beer and what we saw earlier this week was just the froth being taken off the top of the beer. maybe a name like netflix is finally drinkable. but that's not necessarily to say that the stock is going to go up from here. i'm wondering what catalysts you see for netflix from here on out given now we're looking at a one-week chart down 14% still. >> yeah, and you could argue that, kayla. i get that point and the stock is also up still materially,

triple-digit percent year over year. calm of things to keep in mind. next week we have the japan launch for netflix. also italy and spain. the three relatively large market, japan is a very large market, international launches for netflix if they go well. that's a positive catalyst. we think in the back half of the year, the company going to be able to add more u.s. net subscribers than they did in the the last year. there were issues with credit card, home depot, credit card theft issues that we think create easy comps for netflix in the back half of the year and the next catalyst has to be the slew of more international launches they've said they're going to do in 2016. and if they are successful, it's a big if, but if they are, shares go higher and the brazil result we saw the uk result we saw gave us more confidence in that. >> is there any danger, i mean we've been talking about netflix as international expansion for months. but is this the time that you would be plowing into emerging economies and even developed

economies overseas like japan and china? >> no, i get your point. but we, brazil gave us a really interesting data point. we surveyed 1500 internet users in brazil and we saw very heavy adoption for netflix. more than two local competitors. more than the two local competitors. and that's in a relatively short period of time. so they're doing something right. satisfaction levels, amongst brazil, internet users. brazil netflix users was extremely high, over 90% high levels of satisfaction with the netflix product. we think there's enormous global demand for video streaming and for the content that netflix has. this is green field opportunity for them. it's not priced into the stock, we like the shares. >> and that's possibly why mark, your note is called ole, ole, ole, the bullishness on china. what about brazil? can they get in there now? >> what about china. >> this was a bit of a misstep

by netflix. or delayed step. whatever you want. they had announced that we would have a china launch in the third quarter of this year. then they delayed that until next year, along with that, they're going to have the next theatrical release of hidden dragon sleeping tiger. but that movie will be out. the launch will come next year. we don't know any of the details about it. i'm not sure that netflix does, too. we've seen some missteps in china. we don't know how well they'll do in china. we've seen something with universal appeal. in europe, north america, latin america. chances are it's got global appeal. it will be tested next week in japan. >> watching your note closely. good to talk to you again today. thank you so much. when we come back, a lot of green on the screen. with stocks back in rally mode. of course china remain as worry for the global economy. we're wondering if it will hold into the close. a top tech investor will join us from beijing with a closer look. got to watch europe's close, the

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markets in the green. the fears over china not going away any time soon. our susan lee is live in hong kong with the latest. hi, susan. >> hi, carl. it wasn't a terrible session for

china today. a lot of the declines we saw in the selling took place in the final hour of trade. but going into today's session, no one thought the interest rate and reserve cuts we saw were going to rally markets since it's seen as being too little, too late. but the key was stabilization, that things were not going to get worse from here. hong kong today mostly followed china. i guess the big story has to be the volume coming back onshore in china. one of the most active sessions we've seen in recent weeks. 49 billion u.s. dollars being traded onshore. we saw a lot of volatility swing up and down through the session and trying to clamp down on the volatility. we have restrictions imposed in futures trading in china and margins being raised for nonhedging purposes to increase the costs for day traders. brokerages were the big sector decliner today. sold off on the announcement that the five biggest in the nation in china are being investigated for insider trading and possible securities violations. i want to put aside china for

the session today. because we saw a huge day in japan and korea. japan saw $50 billion in turnover, double the usual amount for this time of year. what's encouraging when i talk to brokers who cover these markets. we saw local buyers coming back in in japan, korea and taiwan. they're usually these mean reversion traders, that means they go in, when stock prices are down and right now they are stiffing bargains as opposed to say what foreign buyers do, which is more of the momentum type stuff. so yesterday was a lot of short buying, these short covering in these markets. today i'm hearing investors are starting to seriously go long again. that's right. so sentiment overall still cautious, no one is opening up new positions, but they're still adding to the ones that they already have. which some say is optimistic given the sell-down we've seen so far this week. back to you in new york. >> susan lee in hong kong, thanks. shanghai down more than 25% just this week alone. but what impact will the market

collapse have on china's start-ups? and what's the investor outlook on the ground? joining us live from beijing. paul holland, general partner with foundation capital. paul, it's great to have you. in any market where you have a crisis of confidence, it hurts valuation. how is it affecting china right now? >> well, it's fascinating to be here on the ground at this time, kayla. i've been key noting a confidence here. thousands ceos, investors, entrepreneurs and government officials here. i would say my opinion on this is what's happening on the ground is either slightly or significantly different than what i'm hearing mostly from stateside media. >> in what way? >> so the, on the primary point i spent yesterday, i had lunch with a senior government official and i got sort of an

education of sorts on in terms of how they're thinking about this i have to say i agree with this point of view based on what i'm seeing here. you've got four legs of that are driving economic activity. you've got the government, the people's liberation army is considered to be one of the largest companies in the world, if not the largest. that's quite stable. you've got the property and real estate markets for the moment, those are also quite stable. you've got manufacturing. now manufacturing has been a bit weaker. some of that has been strategy, part of the plan for the government. that's also been fairly stable that leaves you with the stock market. of course the stock market in china as you just kated has been very volatile over the last several weeks. in fact for the last couple of months. the biggest impact on the volatility is hitting the middle class, less so the very wealthy, less so the very poor. but the middle class, the emerging middle class, which is quite large. the size of the entire american

economy is embodied by the middle class in china. and so we're starting to see some of the folks who did too much speculation in that market start to get burned. i got one anecdote that was unfortunate. there's a service worker known by some of the folks here, he has about $50,000 in lifetime savings. lost 60% of that over the course of the last few weeks. so that kind of activity, to the extent that's going to be carried on across the middle class, the concern there, it will begin to dampen domestic demand. if that happens, then that's where a lot of these underlying concerns are happening. the official i spoke to said the way we see this is we're shooting for 7% growth. maybe it turns into 6% growth. the bottom is not going to fall out. the impact of what we're seeing in china feels a bit overstated from what i'm seeing from other reports. >> when we wake up in the u.s. in the morning and see the reports about the chinese arresting top executives at securities firms, we have no way

of knowing if that's true or not. do you believe it is? >> i wouldn't doubt that's the case. i mean china is a big very dynamic, very at times very volume tiff economy and a business environment. so i, i wouldn't say that that is or isn't true. what i would try to impart is i wouldn't try to suggest that they're sort of panic here. i've been out in the streets every night and i've spoken to people and spoke ton remember reg people that are working and so forth. there's a portion of people that are bummed out that the stock market has blown off the top of it. there's kind of steady as you go business environment here at the moment. there isn't a sense of panic, and there's really an expectation of things kind of progressing like people thought they would. >> we have seen the heavy industry data coming down. we've seen bhp billiton take its

china steel demand down. but your portfolio has a lot of companies that work in this consumer and enterprise services division. which is that the crux of the transition of the chinese economy. with a are you seeing for demand for those companies. and is it more stable than it appears at the outside? >> yes, i think you're hitting the nail on the head. i think for the new economy elements for what's happening in china, the aspects of the economy are growing much faster than the old economy. the resource-based economy. that's here. as you know, the very significant strategic initiative by the government, to move to the china we all essentially grew up with, cheap currency, cheap goods, to move to a china with a more mature economy, that's got a stronger domestic demand, that's got a stronger

regulatory environment and ideally hopefully over time more transparency. they're still a long way to go and i think the complaints and they're legitimate. there's still too much opaqueness in the market. still too much of a black box. and to the extent that that can start to mature i think over time that's going to pay benefits for china's economy. >> we're all watching firsthand how this plays out. paul, we appreciate you staying up late for news beijing. paul holland of foundation capital. rally mode again today with all major u.s. averages up more than 1%. nasdaq up 72 points. what will be the catalyst for today's session. the past trading sessions are any indication, the european close, happening in just a few minutes, we'll bring it to you live.

as if the day weren't busy enough, breaking news on an ipo. kate kelly on the floor with that. >> albertson's, the large

grocery chain based in boise, idaho, filing with an ipo with a token amount on paper of $100 million in size. underwriters involved in the deal. a source telling me it's likely to be $1 billion in size once it's closer to fruition. the other interesting point to make, safeway, a unit of the albertson's company combined with several different food distributors, this will be safeway's third ipo in history. an interesting story. one we broke on this show during the spring. carl so back to you. >> i'll take it from there, kate. busy fall for ipos stacking up first, data, unavision, soul cycle. the doing is up 433 points, now up about 250, tech the best performing sector, up 2.25% this morning. courtney ragen is live at the nasdaq with more. >> the nasdaq composite did begin the session with gains, we are holding on to them.

but off session highs, i think it's fair to say there's apprehension about how long the board and the charts are going to stay green and look this way. more stocks are turning negative in the nasdaq 100 over the last hour. yesterday's late-session fade still fresh in investors' memories. the nasdaq was the index that held onto the gains the longest before eventually it succombed and closed lower. the tech sector leading. consumer discretionary not far behind. big momentum players are among the top gainers at the nasdaq. if you look at a couple, netflix of course gaining again. off session highs and still down 14% for the week, off 19% from most recent highs. apple higher again today. oodle about 15 points or so to the nasdaq 100. still down 7% for the week and 21% off its most recent highs. so still room to run as we watch some of the momentum names continue to climb an and try to get back to where they were. breaking down the tech sector

into subsectors, the s&p and subservices group. up by 2.6%. down from the days highs when it was up more than 3.5%. losing a little steam right before the european close. we'll see what happens towards the end of the day. back to you. >> thank you very much courtney. we have do get through the european close. for that, simon joins us as post 9. simon? >> there's a big disconnect between this side of the atlantic and europe. it's red, but the europeans are playing catch-up on the erosion of the gains that you had in wall street at the end of yesterday's session. they were looking a little bit negative. a lot of the stocks moved to the down side like energy stocks, oil majors, china-focused stocks like standard chartered and burberry. the chief economist of the ecb has hinted that the inflation outlook has looked worse in europe and it could lead to another round delve bait over whether the european central

bank needs to do more. don't forget you've got qe on these markets and still they're moving into negative territory. let's look at the august track for the broad market. yesterday of course had you the big bounces up 5%, almost in germany. but it has been eroded. further into corrective territory for the month of august. down over 11% as you can see. meantime one of the biggest losers today or the biggest loser is syngenta. as monsanto walks away from what was a $47 billion offer. the swiss market underperforming very strongly, that's a zurich quote as you can see. the rest of the story is m&a. within gaming and the uk today we've had an almost $8 billion merger announced between these two guys, they're competitors, an online story. big brand names there. they're in negative territory and oil services are looking interesting in europe as well. in the wake of slumberje announcing its purchase.

there's a feeling that some of these guys around europe and. >> one i would point out is petrofac, goldman reiterated their buy. it was 40% upside before the open. partly because of their exposure to the middle east and future iran contracts and also because they say the free cash flow would suggest that there's further stock buy-backs, but oil services in an environment where oil and gas are down in general is one of the top gainers in the wake of the schlumberger bids. >> simon, thanks for that. when we come back, stocks in the green off the highs of the morning. the man you want to hear from, art cashin standing by will try to make sense of it all. google, a nice gain, we will talk to heather bellini, the analyst who made that call. these two oil rigs look the same. can you tell what makes them so different?

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good morning, everyone, i'm sue herera with your cnbc news update. virginia governor terry mcauliffe says they know who the shooter of two journalists in virginia is and an arrest is imminent. identified as vester lee flanagan, 41, believed to be a disgruntled employee of the station, wdbj, based in roan eke, virginia. wdbj reporter allison parker, 24

and cameraman, adam ward, 27, were covering a story at a shopping center in virginia when they were shot and killed on live tv. a new study finds u.s. roads are more clogged with traffic than ever before. with motorists stuck in traffic about 5% more than they were in 2007. washington, d.c. suffering the most followed by los angeles, san francisco, new york and san jose. russian president putin meeting with egyptian president al assisi in moscow. and pope francis talking about the power of prayer at his weekly audience in st. peter's square, greeted by a large crowd as he rode around the square in the pope mobile. his 100th general audience as leader of the roman catholic church. let's get back to "squawk alley." carl.

>> highs of the session, dow up 433. is today a repeat of yesterday? art cashin is here at post nine to talk about that. we remember you to talking to pisani near the close about the balance. sell orders how early will we get the signal today? >> you can begin getting an early peek after 2:00. that's i i think a lot of people are confusing what what's been going on the past several days with margin calls, you also get margin calls around 215, 230. so people are pointing to market movement. think what happens is you begin to see what the market on close looks like. now yesterday for example there was $500 million to sell on balance. at 215, stayed the same at 230, 245. that's not really very consequential. shortly after 3:00, it went over a billion and then it built to

3.5 billion at the bell. you saw the cascade from 3:00 on. i think the viewers want to watch carefully. there was some feeling that some of the selling was institutional. people liquidating mutual funds, maybe even etfs, we'll see if it builds up towards the close. the other thing i would suggest the viewers keep an eye on is crude, west texas intermediate. the dips below 39. if it shoots up above 40, you may see some buyers. >> we saw reports that morgan stanley had sent out a note to its prime brokerage clients that it had seen record buying, recommended buying at the lows we saw. are we seeing retail get involved in this activity this week? >> i don't think you're seeing a great deal of it. you're getting their attention. the ratings at this station and everybody else dealing, are up. people are back watching again. what's going on.

there's a certain nervous underpinning to it. i don't think they're heavily involved. i would like to point out, however and we discussed this here, corporate buy-backs have been running at a very high level for two weeks. lousy timing. they paid some dreadful prices. >> they have a history of doing that. >> we can't call it smart money by any means. so i think the institutions are back dabbling. but nobody has got this down pat quite yet. and the key thing will be to watch particularly in the final hour again today. >> dudley, top of the hour, q&a, says september hike seems less compelling, but says that could change in the coming days. off the table or not? i know it's, well you know -- >> i believe it's off the table. as you heard by simon, several of the associates at the ecb were talking about the lower commodity prices and how they can be driving deflation. well that's not going to stop at the water line, okay?

if commodity prices are risking deflation, it will be in this country, too. and i have pounded the table as you know again and again, this is a risky point for the fed. if they force a move when they've been warned by the imf. when they've been warned by dalio. when they've been warned by somers and everybody and something negative happens, their credibility going to be shot. people are going to say what kind of professionals are you? >> you don't think the selloff has conditioned us for it in advance, even a little? >> i don't think that we're quite there. i think it's still related to what's going on offshore. what's happening in china, they don't seem to have a handle. we probably began this week or ended last week with the assumption that they were going to defend stock market prices and they found out that's a very expensive lesson. there's not much more powerful on earth than a free market that changes its mind. so they've stopped and now

they're trying these other methods and it's not working so far. >> the debate will continue. art, for today's trade you've been saying that retesting lows is an important distinction, retested 1867 on the s&p. what are you watching today? >> i would have liked, this was a problem for yesterday's rally. we never got back to the high of the day before. the same thing is happening today. and the volume is again unexceptional. a good deal of the volume came up in the final hour of trading. >> others would say we didn't hit the panic low of monday, 1537. >> so that makes it rather indecisive. that's the real problem. if you're going to have a good rebound rally, you better take out the highs of the previous day. >> art cashin at post 9. up next, google one of the best performing stocks, after being added to the conviction

buy list at goldman sachs, the analyst who made the call, who rarely does television, will join us live. but first, rick santelli, what are you watching today? >> well you know, cnbc covered william dudley, the president of the new york federal reserve bank and he was talking fundamentals, after that, you really ought to tune in to the king of technicals coming of after the break. tom demark. no sixth grader's ever sat with the eighth grade girls. but your jansport backpack is permission to park it wherever you please. hey. that's that new gear feeling. this week, these folders just one cent. office depot officemax. gear up for school. gear up for great.

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jim lebenthal lays out his top high-quality buys. commodity crush match-making, on the heels of the $13 billion deal in the oil space, we'll lay out the companies that could be the next pa pair you have. japan and europe have been two favorite bets on the desk. find out whether the traders are sticking with their international exposure as the u.s. dips into correction territory. in the meantime, shares of google having a nice day on the heels of the big upgrade from goldman which sees 31% upside potential. google raises its price target to 800. joining us is heather bellini, managie ining director at goldm sachs. pleasure to have you back. good morning to you. >> good morning, carl, how are you? >> i'm good. we saw a lot of upgrades after that quarter, after porat.

>> i think we have a better entry point to get into the stock after the selloff of the past week or so. >> how much of it is the amount it's coming in and all the internal dynamics, secular dynamics that you think are building within the company? >> i think there's a couple of things, the pull-back makes it more atrackive, they don't have any china exposure, they have a sound balance sheet. they have a lot of cash. there's a lot of positive reasons that the company is in very good shape. then they've got good secular backdrops and they have changes that they're making internally that the new cfo is spearheading. there's a host of those and we can go into more detail if you want. >> i would love to go into detail on the new financial disclosures you are hoping for from the company we saw what breaking out web services did for amazon. something similar afoot at goog snl. >> we think there's a lot of

potential for that. they told us that they're going to separate the company into different segments, you'll have google proper and then you'll have the rest of the operating unit we think you're going to see a much cleaner picture about what the core operating margins look like at google and how much of a drag the other investments, whether it's been fiber or robotics or self-driving cars have been doing. both in terms of the cap ex allocation and in terms of the operating expenses that they've been layering on top. >> but heather, do you expect the disclosure to go beyond google and other? yes, we'll see what google core business margins are. but then there's this black box that is the rest of the businesses. >> i think one interesting way to think about valuing the company going forward is going to be okay we're going to have google proper. we think operating margins there in the capital intensity of that business is much lower than what it appears to be today. where we're trying to guess what

those might look like on a stand-alone bases. it might help the valuation of google proper. and the rest of the businesses which will be kind of all combined into everything else, i think you'll kind of look at as you would a biotech portfolio, right? you'll take a look at where you see the potential and over what time period do you see some of these different businesses that they're involved in. generating cash flow or in some cases maybe even some of them might not be successful and not generate positive cash flow. much like you might evaluate, early stage, late stage, mid stage pie yoe tech companies and you might look at the valuations you might assign on a venture capital basis. >> you're getting to the heart of how people are trying to understand this company post alphabet. we keep asking people are you buying this on a moon shot basis? a biotech-basis or is it a amazing cash machine the way we thought of it in the past? >> and i think it's going to be

a combination of both. i think the other thing to layer on top of it is this just isn't better disclosure. there's things we talked about in our note today where we discuss some very strong secular trends. it's good for google, it's good for facebook. but one, tv dollars shifting from traditional tv over to digital. the key beneficiaries of that are going to be youtube, they're going to be people like facebook, right? that's a good secular underpinning. the other thing we talked about is over the last kind of two to three months, what we've heard when we talk to people in the field, is that you're starting to see the cpcs, or the cost per click that google generate on mobile start to accelerate on a faster pace than what we've seen in the past. the delta between the price they get for an add-on desk top and the price they get for an ad on a cell phone is starting to converge at a slightly faster rate. that's going to take time to close. but the positives and the things around cross-device startinging that we're starting to see

improve will help become a secular driver for the company. >> do you think their sgna discipline is ephemeral? >> i think what you saw in the first quarter and the second quarter was a lot to do with patrick, the prior cfo. i think what you're going to see from ruth porat is going to show up in calendar '16. i think she's going through the planning process for calendar '16 now with a different business leaders over at google. and i think with not a lot of effort you could see a lot of improvement. in terms of what their opp-ex for employee look like. >> heather bellini, we appreciate your time on an important call. >> when we come back, keeping an eye on the markets, we're now up fewer than 200 points, losing some steam. we'll check in with rick santelli in a moment.

marks losing steam after a solid open. the s&p trying to avoid its first seven-day losing streak since september of 2011. rick santelli is at the cme with the santelli exchange. >> i would like to welcome a very special guest, tom demark. anybody who has ever looked at a chart knows tom demark and his reputation. thanks for taking the time this morning, tom. >> always great to be with you, rick. i don't mean this to sound in a negative interpretation for new

york fed president mr. william dudley. but there are just literally thousands and thousands of fundamentals and mr. dudley was talking about them. after it was done, all coy think of is many made fun of technical analysis. but modeling human behavior is much more consistent and sometimes as your work shows, much easier to get good signals, let's start with your most recent success signal on the chinese stock market. the shanghai index. what did you see and how did it turn out? >> well, we've had a number of calls in the chinese market since december 4th or 6th of 2012. and fortunately we've had a high success rates identifying the tops and bottoms within one or two days of the top or bottom so we've had a good string and hopefully this is another. we were looking for a top back on june 12th. we were there the day of the high, just like we were there on the nikkei market on june 24th and we projected down side to 3200 on the shanghai composite.

and this past monday the low was 3193. and that fulfilled our downside objective. right another we're at a very, very critical point in the market. it's really a two-day affair. >> tom, your methodology is everybody tries to keep up with you. my question is, as a technician as well, when you get so much government intervention and manipulation like you have in the chinese stock markets doesn't that distort the aggregate moneyed-up human behavior that's the cornerstone of technical analysis? >> we're not conventional technicians, we're more market timers. we look at the market in more of a mathematical sense rather than drawing the lines on charts. what we look at when there's intervention or an outside influence such as nrl banks or the government. we look at the reference points, i was on the air four or five weeks ago i said there was a market low influenced by the

central bank in china and devaluation subsequently. i said markets do not make lows on good news. you can go back historically. when federal reserve makes an announcement after an extended decline, invariably, going back to 1971. bretton woods, the announcements come out. the reflexive action for traders is for the market to move higher. instinctively that's where the curve is but it only lasts anywhere from a couple of days to a month. >> tom, we're almost out of time. we're almost out of time. you know my favorite market is fixed income. i've been saying something is not in phase with fixed income, rates seem more acclimated to the upside. your final technical thoughts on the fixed income market? >> we receive a sell signal on the treasury bonds. the u.s. futures on friday at their high. and we should see another short-term rally. if we do, it's an opportunity to sell. so we're negative. >> tom, always a pleasure. neff enough time.

keep sending those charts. carl, back to you. rick santelli in chicago. the dow up 214, the s&p up 25, we were up 40 points not long ago. "squawk alley" will be right back. a new sea chance to tryew look. something different. this summer, challenge your preconceptions and experience a cadillac for yourself. ♪ the 2015 cadillac srx. lease this from around $339 per month, or purchase with 0% apr financing. having a perfectly nice day, when out of nowhere

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dow up 209 points, all the components in the green, it was around this time yesterday, don't need to remind you that merck was the first component to go into the red. coke is barely hanging on to the green. we'll keep an eye on all of those. striking today, the range of performances in the oil space, you get cameron being bought by schlumberger, the best performer in the s&p. yet transocean with negative news. the worst performer on the s&p. >> we should note that cameron is being bought for an effective share price below its 52-week high. i believe in the announcements it was in the $66 range, about $10 away from its 52-week high. >> the sell is-off has happened since friday and the 10-year has been a key to watch. would there be a rush to treasuries as people exited equities. today not the case. yield is off the highs, we're still at 212, 213. cramer's opinion this morning was that it's china.

it's china selling treasuries and we know they own a lot of them to build firepower to eventually hold up their market. >> had was a headline that china has unloaded $100 billion worth of treasuries, the money they would have used to buy treasuries, they're using to prop up stocks. let's get to mcc and the half. ♪ ♪ welcome to the "halftime report," let's meet the starting lineup. they aren't the three gs, they are the three js, jim lebenthal, josh brown and jon najarian. our game plan looks like this, opportunity among the panic -- each of our experts has a game plan for you to tune out the noise and find gems in the rubble. housing holding up -- that sector is outperforming the market. is there still a buying opportunity? and what has been an overlooked area. first, it's been a big roller coaster ride for the markets this week. in case you haven't noticed. on