that does it for us today. scott, want to thank you for being here. >> thanks. >> and watch later today for scott and join us tomorrow. time for "squawk on the street." ♪ good morning. and welcome to "squawk on the street." i'm david faber, with jim cramer. we're live from the new york stock exchange. carl quintanilla is on assignment in rio. let's give you a look at futures again. we are set up for another lower open, perhaps another day lower on the broader markets. that would make what seven or eight in a row. >> eight. >> eight. this would be eight. >> yeah. >> europe, see how that's going if we want to get a tell it all on our markets. it's another bad day but not as bad yesterday at this time.

france the leader in terms of at least downside. the 10-year note yield you ask, show you where we are. 1.54 and crude is, of course, one of the key parts of the story here. it is up, but yesterday started up, and ended down. took us with it on the broader markets. it would seem oil once again starting to core core late with the market overall. we will be watching it closely. let's get to our road map this morning. and we're going to start with hillary clinton. getting a big endorsement from a major gop player, meg whitman, as the hewlett-packard executive calls donald trump a demagog. time warner takes a 10% stake in hulu and the company raising its outlook, strong quarter, stock up on the news. we will give you more. aig shares up nicely after that company beat earnings estimates. helped by lower expenses. announcing a $3 billion increase in its buyback. by the way we will talk to its ceo peter hancock later in this hour. >> there you go.

because that is the biggest upside surprise to them. >> yeah. >> aig is an interesting one to be watching. looks like it's going to be up decent percentage. >> for as much as kate spade is down. probably ask about kate spade. >> i'm sure peter hancock on kate spade where i'm going right away. >> so much today. >> let's get to some of it on the broader markets. >> i need you on time warner. >> we can't. we have to producers spend hours laboring over the show how they want us to go about doing it. >> i've been up since 3:30. went to bed at 12:30. >> it's not a contest in terms of lack of sleep. >> okay. >> ahead of the key report data released by adi showed private sector added 179,000 jobs slightly above street forecast. june payroll growth revised to 176,000. futures are lower one day after the dow extend the the losing streak to 7. >> yeah. >> i was not sure, 7 or 6. thank you. let's talk broader markets then

i promise we will get to time warner and talk about the hulu thing in particular. >> that's what i'm fascinated by. >> we got this adp number, jim. keep going down. the journal writing a fairly negative piece on earnings. >> another -- i don't know which one was more, that or the piece about biogen getting a couple bids. honestly, mcdonald's okay, mcdonald's wasn't as great as expected. >> no. >> the stock barely down. coca-cola off 0.58. >> revenue growth barely there, earnings down, multiples continue to be high and therefore do you buy this market or are you concerned. a gdp number for the second quarter not good. adp number this morning, 179,000 in july following net upward revisions of 17,000 to the two prior months, a bit ahead of consensus. >> keeps the fed on call. >> where are we? >> it's incredible. it's so variable, panera says that the numbers are really good. dine equity, applebee's is down

as much as panera bread is up. the mixed day to day, the banks going down off of oil but you don't have chevron going down off of oil. this is an inconsistent market to the point where you just literally can make no judgments other than on a moment to moment. the insurance companies, travelers had a decent number. the stock went down. aig had a decent number, the stock is flying. the reaction to stocks, fitbit has beaten the quarter for four straight quarters. today it matters. today. today it matters. hasn't mattered before. >> right. >> the market is putting various different spin on things is what i'm saying. it's very hard to figure out what it's going to spin i felt that procter & gamble was okay and the stock up on a down day. i thought cvs was good, stock up 4 yesterday. >> yeah. >> 4. it was fairly good. a fine merlot quarter. >> of course mr. merlot is the ceo of cbs. you couldn't have -- it's a good

one. keep going to it. >> yes. i have to. it's a good vintage. >> it is. >> i'm saying, the action, after a quarter, has been so insane that it's hard for me to make a determination of what's happening unless it's so clearly good, like time warner and then it makes it easy for us. >> and we want to talk about time warner. you know, it is nine years ago you talked about the fed you went on your famous rant. nine years ago. >> yeah. >> time does have a way of going by quickly. >> erin burnett works for time warner. >> works for the cnn network which is doing quite well. >> always glad that tim geithner thought i was spot on in that. >> here at cnbc it's like a national holiday we have to play the sound of you on your rant do you mind? >> it's fine. >> let's listen. >> my people have been in this game for 25 years! and they are losing their jobs, and these firms are going to go out of business and he's nuts!

they're nuts! they know nothing! >> i was sitting on the second floor at our headquarters in the back where -- where my desk still is and i was -- i wondered what in the world was going on. >> we hadn't started that -- >> i heard you throughout the building. >> because it was -- i mean, contrary so what some people might have thought it was about a couple brokerage houses i thought were going to go out of business and they did. >> proved you right. >> history has proved you right. >> i was trying to get people out of them, not into them. >> on that rant. and they didn't really know. i mean -- >> they didn't and, you know, you go back and look at the minutes that was released -- >> subprime is contained. >> did you see the transcript, five years later, where i was a big laugh line. did you see cramer. >> i know. >> they had it. laughs. >> like laughs. >> meanwhile, i don't think you feel that way about the fed at this point. >> i think -- i think that both yellen and then subsequently bernanke was very aware of how bad things got, but he wasn't --

>> he wasn't at the sometime. >> criticized me in the book. >> listen, they did not understand the way that so much of subprime was linked as a result of the vast securitization that took place. >> you did. >> slowly. it was an education. that was an education for all of us through '07 to understanding all the linkages and why we're in deep, deep trouble. >> i mean look, i was getting a call from one of the top ten subprime lenders saying listen we just had an expansion of minus 5% default loans to minus 9 over a three-month period. unheard of. okay. and then another subprime to say listen, we can hold it together. and i didn't know you were falling apart. the language was so bad. a broker that said that 2006/2007 vintage of homes was the worst vintage ever since 1934. and then called me back and said it's worse than 34. i mean you just had a lot of people -- and then we were just -- i kind of lost my cool. i remember the next day matt lauer had me on did i lose my -- was i off my meds and the post

made fun of me three straight days. you go back, it wasn't so bad. >> talking about not so bad, time warner was better than expected. that stock is moving higher this after earnings and full year guidance were raised. earnings above, the company announcing it's going to take a 10% stake in hulu and will join disney, 21st century fox, our parent comcast though a silent owner comcast has no rights there. it's part of hulu. in some ways, that perhaps the more interesting part of this, jim. i don't want to give short shrift to time warner because the numbers themselves were a beat on and a raise. the stock is up. the call is going on right now. we'll share anything we hear from the conference call. >> the stock was huge at one point, david. started coming down. >> it did. >> double digit affiliate fee growth, hbo saw affiliate fee growth. things seem to ramp up for time warner. >> and the stock was in the '60s when they had the faded analyst

meeting where he didn't say the numbers were going down but it was interpreted as numbers going down. an amazing buying opportunity of which jeff went on to kind of a charm offense saying listen it's not as bad as you think. >> recall this year, there was a lot of discussion about potential activist. finally i think at the time i reported was not going to happen but generally speaking a good year for time warner. i want to get to hulu though. >> people were thinking they should spin off hbo to bring up value. just a trade. >> yeah, it was. >> stock is going to be still up. the hulu deal is interesting, jim, in part because it does seem they are moving towards creating a streaming service at hulu. separate from their subscription service to get ads or not ads and access to tv shows. but the streaming service is going to be very interesting because it is going to have a lot of networks on there. including, of course, now tnt and the turner networks. and when you think about where they're going to price that and

that's interesting and we don't know and they're going to roll it out next year. >> netflix -- >> no, no. they will price it. it has to be higher than netflix. hulu priced similar to netflix, all the video on demand stuff but this is going to be a streaming service that is -- >> robust. >> in offering you a lot, local stations as well. so this will replace your cable. all right. this will be auto true over-the-top offering. sling tv out there, sony out there, but this could be more significant. >> other than -- >> now time warner at 10% stake. fox and disney the key owners here. >> give this thing away a couple years ago. what happened? >> well, they're -- they've changed the makeup of it. they've done pretty well in terms of attracting people who want hulu as an on demand service. >> right. >> but i think streaming will be the key. we continue to hear from everybody, video subs are not going anywhere. when there are robust streaming alternatives over the top where

you can get it on your broadband and fill your entertainment needs it will be interesting. >> except espn. >> they will have sports. fox. some fox sports. >> you're right. becomes important about sports but a nonsports interested family, maybe it's enough for you. the price will be key. i'm really curious to see where they're going to price this service when it comes out. >> very big cable bill and part of that is because i do want some sports, probably of course -- >> may be one of your other homes, many other homes, maybe you are just happy with that. you keep the sports to the home that you're using when you know you're going to be around the weekend, but for the other house that maybe you use once a month, twice a month, that one. >> can i tell you my late father once said after one of these shows that i think you're over extended in this home thing. because i listen to david faber. dad, i'm not over extended. i think you're over extended. david faber wouldn't be saying this. he's a very good reporter. >> no. listen, we can't invest in the stock market. you're putting it in the charitable trust --

>> but you're right. in that this is the battleground. the stock, the disney quarter, is viewed as a complete battleground in referendum on the hulu versus the disney. >> right. >> i think this is really important because people keep saying, you know, how do you feel disney long term. long term will be fine but short term this is in the grips of it, right? >> yep. this is important. >> it is really important. >> yeah. by the way, the investment i'm told is around $560 million, others have it at $580 million, valuing hulu if you want to do the math at 10% stake, around 5.6 to $5.8 billion below what some people anticipated the company itself was worth. and on time warner to put it out there, epps is the range, 530 to 540, had been 535 to 545. i'm sorry, 535 to 545. their range goes up a bit and that's why you're seeing the stock up with the affiliate fee

growth. let's get to politics a bit here. hewlett-packard ceo and republican fund-raiser meg whitman, once running for governor of california as a republican, endorsing hillary clinton saying she has the global experience for the job and facebook post whitman slammed donald trump saying, quote, his unsteady hand would endanger our prosperity and national security. his authoritarian character could threaten much more. whitman, of course, first sounding off about trump's character on "squawk on the street." >> yeah. >> five months ago. >> we needed to stand up and you can see now many people across the country are standing up against who i think would be a dangerous president. i think donald trump is a din honest demagog. >> she was early when her man christie she was supporting went to trump she immediately came out very forcefully denouncing both christie and trump and that was actually during our typical

quarterly earnings interview that we do with meg, but she was -- >> she's -- >> many months ago. >> called him basically a terrible businessman. >> i asked her will you vote for hillary clinton and she kept deferring but now made that decision she will support the democratic nominee. all right. aig is one of today's gainers on earnings. and we're going to have a live and first on cnbc interview with ceo peter hancock coming up. take another look at futures here. you can see we are set up for another lower open, perhaps another lower day, would be eight straight if the markets end lower. more "squawk on the street" live from post nine when we come back. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person,

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aig as you can see up nicely in the premarket. the company posting quarterly operating profits 98 cents a share, above estimates, helped by lower costs, strength in underwriting, aig authorizes $3 billion in share buybacks. we're going to have a live interview with aig ceo peter hancock later this hour. up next, cramer's mad dash as we count you down to the opening bell.

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♪ all right. we have about ten minutes before we have the opening bell. you've come across interesting research, jim, that i think is worth us discussing here which involves the pension fund of japan. >> yes. >> and the government pension, buying enormous quantities of u.s. stocks. >> yes. james gentily came up with this, pun dering why is the market so strong the bid underneath during the fact when oil was coming down, when this government pension fund we've been saying, joe ki buying anything, a billion and a half of alphabet,

old google, $100 million worth of whirlpool. do these aggressively you moving the stocks. how thin this market is. >> the time period -- >> this is the most recent filings at the beginning of august. just came out. >> the willingness of bank of japan to buy anything and everything. big part of the strategy. etfs, stocks, real estate, bonds, buying it all including our market. >> well i'm wondering whether we -- remember, in this thin market you can move a kummins. >> why are they buying individual names? who's making these decisions? >> are they smart? maybe japan is actually, you know, thinking these are under valued. david, i find that the again tilly story astonishing and did not know this. trying to figure out why the stocks act well. eaton up big. for all i know the japanese are buying on the quarter. the japanese used to come in '87, that was individuals, and move the market up. this is concentrated buying by

the government. they had to have been the biggest buyer of ge in the last month. >> $2 billion is a decent amount for the marketplace. >> when you go in and buy -- >> whirlpool reported a quarter. >> huge market cap company. >> quarter just okay and look, i mean remember, if you can come with guns blazing in this vin market and buy something like whirlpool, they bought -- they bought 180 million in eaton, $150 million worth of roper. $75 million of intech. ame. i mean, they're buying like industrials that people have forgotten about. it's crazy, david. it's just crazy. >> well, and a lot of people say it's -- >> they're nuts! >> it's hard to understand nine years after the rant you may want to go on one about the bank of japan, negative interest rates and everything else. >> your suit on -- >> similar to what erin was wearing that day? >> she never wore it again. >> hanging in the closet somewhere. >> it is. crazy. this is crazy. >> fascinating.

we got a lot more stocks. we're going to be talking about when the opening bell arrives few minutes from now. stay with us on "squawk on the street." you're here to buy a car.janei.

you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell will be ringing a few minutes from now. and this is the point at which i turn to my co-anchor and ask, today, wednesday, august, what is it 3rd? the key to this market? >> okay. i know that this is going to sound a little nutty, but i'm actually looking at a company that is going to determine a lot of the semis that's been the hot group and looking at corvo. this qrvo. and they reported a quarter where it had bad gross margins and at mitted we screwed up on a product. they would have read through it to apple which they shouldn't. ubs said good things about apple but be aware corvo had been doing great along with skyworks,

broadcom and this is confusing people. but if you read through the quarter it is corvo, but there will be a read through on the red hot group that is the semis that has been very strong throughout. because of takeout. there's no takeout coming for -- >> consolidation has been the key themes amongst us and you mentioned it many times, why there is a need for these companies doing similar things. that's not a good number from them. >> no. and again go through the quarter to realize it and some guys are saying listen it's one time only and do not worry about it. i would have normally said aig is keyes to this market but i think this market the key has been tech and tech strength. and be aware that kwoer vo doesn't fit with the thesis even though i think it's an individual issue. i also was thinking about coors not the tap, but michael kors. >> kors. >> because of kate spade a read through of kors and coach that's negative. still have that apparel theme

that's bad, but this kwoer vo worries me. if you take down the semis, anything can be taken down. >> let's talk about the bond market a bit. i kind of like to do that every so often when we get the opportunity. about $11.5 trillion of sovereign securities trading with negative yields. imagine that. >> that's why i look at a -- i know i have clorox on tonight and i was studying the quarter, some people say it's an out and out miss. i actually regard it as the opposite. volumes were good. but what is clorox? what is proctor? what is kimberly? these are bonds that have growth. and that can raise their interest, their coupons. >> with their dividend. >> and normally you would think that these just don't have any lift up here given how low the yields are now, but huh-uh, they keep moving up. >> phil knight on tonight. >> i love shoe dog, went to mark

parker, he's been talking nike, adidas, under armour and endorsements and life which is storied and fabulous. >> speaking of bonds again and borrowing, i'm sure you noted microsoft did a huge bond deal this week. >> yes. >> yesterday alphabet seems getting ready to price a bond yield. the 10-year, i think alphabet borrowing cheaply than microsoft. >> well -- >> i think they were up 90 for treasuries and alphabet 80. >> these are the companies that have the most cash. cisco has a great deal. but the alphabet cash, like $80 billion. remember who the cfo is there. routh porerat, probably one of the great cfos of our time who has that company on a tight leash, in expense control and take a look at that capex budget. >> the opportunity to borrow in this market given negative yields is just -- probably they think once-in-a-lifetime. they're doing 50-year paper, 50 years. >> but a lot of people feel the government should do that long

and do an infrastructure bond but that's not what -- the treasury knows it hurts them short term. treasury should take a longer term view and take the hit. look at the demand for more [ inaudible ]. >> there it is. opening bell wednesday, august 3rd. here at the big board, skin care products retailer, kiehl's and the american foundation for aids research, taking off life ride, a motorcycle ride from new york to philly, raising money for hiv/aids research. now, over at the nasdaq, pharma suitcles doing the honors. >> you can see a good amount of green on that. we haven't talked oil. let's get to that. because it does seem to be having a significant impact on our equity markets as it guy rates one way or the other. >> the inventories, look, this is the turn because i did a piece last night, technically, with carly garner, dead right about oil, look out, 35 coming.

still long lo positions, speculator positions and they haven't been liquidated. they've come down but 200,000 longs is typically where you get a bottom. not at a level where there's been capitulation among the speculators. david, should we talk a little shakespeare, julius caesar. >> certainly. >> the rubicon project, a company that does advertising, facebook, google, alphabet, and rubicon that is going to control the advertising on the web. >> okay. >> while they reported a horrible number last night and i think they crossed the rubicon, no coming back -- >> that's not to be confused with the alan parson's project. >> no. >> or the experiment. this stock is down 4. what's interesting alphabet consolidating its position, rubicon project no no coming back once you've crossed it. and i do point out that alphabet had a -- i know. ruby -- why would you call it that? >> i don't know.

it's so -- >> po, the arno -- >> the rubicon project. >> no, no, no. >> no. >> time to change that name right now. >> yes. >> amazon, no. tanking. >> rubicon -- >> they wish they were the alan parson's project. at this point. i want to talk about biogen. >> oh. >> no laughing matter, that biogen. yesterday late in the day, "the wall street journal" reporting interest from allergen and merck. saying it doesn't mean it's going to lead to a deal. unclear whether biogen had interest necessarily in selling itself but the stock soared up almost 10%. >> a lot of people were short it. >> only thing i can tell you, allergen has no interest. >> there you go. >> allergen -- >> he just got 40 -- >> [ inaudible ]. >> no interest at allergen. >> internal said he is interested. could they know more than he

does? >> i don't know. maybe they know his inner thoughts. >> i mean, like live long and prosper. >> correct. >> one of those things. i thought -- i don't want to say what i thought that article was, because it would, therefore, reflect people who are hard working but that was terrible. >> biogen reversing a bit, but certainly still up from where it was prior to the reports. will there be consolidation in the biotechnology industry, perhaps, of this size? biogen is an enormous company. one of the largest deals we've seen. allergen not going to participate. can't speak for merck. they have not gone down the road. >> style at all. david, i always turn to you, at this time and ask you, isn't it possible, mondelez, hershey, whatever, wouldn't you pitch that? biogen's leader list. >> bankers talk all the time about the potential for consolidation in industries and happy to sort of discuss it.

can't take that as meaning anything. i don't know about merck. i have no reporting on that. i can tell you allergen, they're not interested -- by the way, an important alzheimer's drug under development at biogen. >> that's a hard disease. >> hard one also, if it -- if they don't get the research and doesn't look good, there's a lot of market cap that is going to come out of this company and do you really want to take that risk on if you're a potential buyer. >> i don't think the ms franchise is as strong as people think. the thing that bothered me, it was so well timed, the story, allergen, closed with teva. allergen, brent cares where the stock is. stock would have been up because it got the money. and instead it's down within about 30 seconds of when he got the money they floated the rumor. >> did another small deal, $500 million to teva as well. and it will be interesting to see what allergen chooses to do with the money. the expectation it will largely be if they do acquisitions more

of the bolt on variety not the bet of a company like biogen would be. >> i mentioned clorox as one of the keys. the stock up nicely, the company on this evening and this is again, this example, david, of what people really want is income in replace for what you can't get in bonds. but i -- allergen does not yield. pfizer does yield. i thought the pfizer quarter was okay, pfizer getting hit again. >> yeah. it will be interesting, speaking biotech, the medhivation is going to be sold and there pfizer may end up being potentially a buyer. >> and i had thought if sanofi, reagainer in ron -- >> sanofi wants to buy medhivation, pfizer very interested in pursuing it. >> sanofi is the big buyer for regeneron, obviously, and regeneron has done a remarkable job. the stock was at $5 11 years ago. money is made in that group. this is a fascinating market because you really -- today is a

fulcrum day. eight straight down would be big for the dow. the oil money, inventory comes out, the job growth was a little better than expected, the earnings were all over the map. i want to focus for a moment on dying equity. now that -- people know that is i hop and applebee's. applebee's was shocking to me. i have julius stewart on all the time. applebee's minus 4% com. i was looking for 1 to 2% minus. you have restaurants where you have the negative leverage. you've got wages up. >> yep. >> sales ticket down. >> all right. some chanting going on here. before we get to bob, fitbit, we mentioned up 9%. of course -- >> i like the quarter. >> off its all-time lows of 11.65, at 14.39. >> right. >> it had been as high as 52 bucks. >> well, i mean fitbit historically what's happened with james park the ceo, on many

times on "mad money" he'll announce a quarter that blows away the previous guidance and then he'll guide forecast so low, that everybody gets scared. finally, he guided for what the street is looking for. and it was an impressive quarter, i mean this is a quarter a lot of people felt the real strength in fitbit is this, a gift fad, not unlike gopro a couple years ago in 2014 when it hit 90 and this was a strong quarter but no holidays this quarter. it was people are buying the fitbit for health and wellness. and i think that's very important. that's a changed story from thinking it's a fad. but also the stock is down huge. a lot of us got burned because we kept thinking if you keep reporting better than expected numbers wouldn't your stock go higher but not if you cut the forecast. this time he didn't cut the forecast and you're having a nice lift. >> to bob pisani who can bring us more on what's moving this morning. >> mixed market at the open but we've been obsessed with earnings all week and stay on that topic.

oil being a big topic, big exploration in production companies, reported devon energy and occidental, devon a loss of 19 expected, that's good, occidental in line. here's what's important to watch the trend of what the companies have been saying overall the big oil and oil exploration and production companies, first off, number one trend, everybody is out of the prediction business. nobody trying to figure out where the price of oil is right now. the second trend, production is still high. all these companies are producing and continuing to produce. why? because they need to keep the cash flow up. they're cash flow negative between the capital expenditures and dividend they're negative. keep production up to keep the cash flow going at this point. they are continuing to do the two things they can do, continue to cut costs and sell assets. a lot of assets they have are not economically viable. occidental their dividend continuing to be safe. problems in retail land. we had it yesterday with the

autos hurting a lot of reta retailers, kate spade earnings miss and comp store sales up, lowered the guidance. what happened, well, they're talking about challenging tourist trends in a difficult retail environment. we knew that already. this was a surprise to the street, particularly that comp store sales miss. kate spade is down big this morning. s and they're taking down a lot of retailers in sympathy with it. coach down, that's not a typo, 20%. coach down, michael kors, macy's, they were hit notably yesterday on the auto sales. disappointing here. clorox was a tad light on earnings, a real darling of the dividend crowd. 2.4% dividend, off a historic high a month ago. they are tough to move the needle here. just like procter & gamble. but they have been even though their revenues have been flat for several years, their earnings keep going up because their cost-cutting champions. 474 in 2015, they will do 5.08 and then 5.40, slowly but steady

keep increasing revenues. one of the reasons it's been a darling of investors for a long time. want to note a lot of concern down 7 days and 8 days. the dow has only moved 1.3, 1.4%. in those down seven days and so it's not a good trend, but remember, we're not seeing big down moves right now nor are we seeing big volume. back to you. >> thank you very much, bob pisani. >> clorox is 130,000, i thought it would be 500,000 shares. that's like the old days. one guy coming in and buying it. >> not much. >> to the bond pits and check in with rick santelli at the cme group. >> good morning, david. i enjoyed the fact that you were talking about negative rates earlier. many are, whether it's institutional investors, retail investors or just innocent bistanders. it is a huge topic considering up until today, it seemed as

though japan and their japanese government bond market was leading the charge with the sell-off in price and a jump in rates. but it seems, though, it was more about positions than about the strategic value or lack thereof using negative rates. let's look at one week charts quickly. our 10s, has been a rise in rates. the far left of the chart and right aren't that far apart. look at bunds very similar chart, smidgen more aggressive. as you go down the list of italian bonds or jgbs we mentioned earlier, still at minus 8 basis points, now flattening and holding or yields under 80, what you see is a pattern similar in all the sovereigns but it seems as though some of the weaker sovereigns actually are moving in a fashion that's less aggressive than one would expect. now if we look at the dollar/yen, that really still is a bit aggressive and makes sense. a one-week chart shows us that

the dollar has lost value and yen has risen along with those rates. a four-year chart tells you how much time we may spend at 100. david, back to you. >> thank you very much. mr. santelli. up next a live and first on cnbc interview with yeah, a man who is the ceo of that company aig peter hancock with us at post nine after this short break.

the dollar has lost value and peter hancock with us at post yen has risen along with those nine after this short break.

shares of aig are moving higher after the company reported an increase in profits. aig announcing the additional repurchase of $3 billion in stock. aig's president and ceo peter hancock walked over from headquarters and joins us at the exchange in first on cnbc interview. nice to have you back. >> good morning, david. jim. >> i was looking at notes because i keep a big file on aig given for a while, the fight if you want to -- i would call it that with icahn and paulson and

peace breaks out, additions to the board, a standstill and in my notes it says here, must have been talking to somebody, now hancock has to perform. he's under the microscope. so, is this a quarter that shows that you, in fact, are and aig is performing? >> well, i feel very pleased with the progress we've shown in this quarter. we exceeded all four of the metrics that we laid out in our strategic plan in january. that's on expenses where year to date we're down 11% year on year, it's on return on equity where we're 200 basis points better than we were a year ago. and it's also in the core underwriting margin where we've improved as well and also returned almost $8 billion of capital to shareholders in the first six months and year to date. so i think that on measurable progress we feel really good but we also feel good about the

shift in mix to sustainable earnings which would give us -- >> tell me what you mean shift in mix. what does that mean? >> if why you look at our earnings a year ago, a lot of it, the sources of those earnings came from investment income above normal hedge fund returns, and market to market gains on our certain noncore holdings. as you know we've been divesting noncore holdings sghoo getting out of hedge funds. >> reducing our allocation to hedge funds. market sensitive assets are today down to about 7.5% of our total assets from 11% a couple years ago. so what we're getting our earnings from is serving our clients and our core business of insurance which has a much more repeatable element, higher quality earnings. >> okay. let's talk about your shareholders. carl icahn. will you later today have a briefing with him and tell him, listen we're buying back stock below book value, we know you like that, or -- because they -- carl icahn was not in favor of your business structure but your

business structure is yielding results that are superior this quarter to many other insurers. >> well, i'm happy to say that as our new board members have participated in the detailed review of our business plans we've found a lot of common ground. and i think that we continue to have an excellent relationship and discussion of the tradeoffs of pace and focus and we're delivering on the prompts we made to all of our shareholders and recognizing that we serve them all. >> we had mr. bashle on periodically in the old days and he is has done a remarkable job in your investments. explain what's when you get a man of that quality looks at your books and decides how to invest and clearly hits the quarter. >> doug duesheel has really brought to our investment portfolio an asset and liability perspective at a moment where that's never been more important with interest rates more volatile than ever, and dug in

deep on the liability side of our balance sheet to better understand what assets best offset those risks so on a net basis we are, as minimally exposed to things outside of our control so we can focus our energy on our core earnings. >> one of those key things is improving the loss ratio and property and casualty and many analyst says one of the most powerful levers to pull on. you did improve it significantly in terms of that ratio. can you keep doing that. >> so we laid out a plan to improve it by six points over the two-year period from the beginning of this year to the end of next year. and this four-point improvement suggests we're well on our way. while not a straight line the third quarter in particular, has elevated expected catastrophe load, when hurricanes tend to

come through, but we feel more confident than we were when we said these goals that we can accomplish the full six-point improvement and, in fact, beat the pacing of that improvement. >> right. >> based on the way in which our employees have been really executing the mixed shift of our commercial business. >> it continues to be a question, i'm sure you get, about being a systemically important financial institution and why you would not take efforts the likes of which metlife did, obviously ge, although a different area, because they were clearly moving out of ge capital, why not try to desiffy? >> as a company and as an industry, there are a lot of dimensions to how we add value and the most important one is what we do for our customers. our customers rely on our industry to be heavily regulated. the fed is one of almost 200 regulators that we're subject to. all of the u.s. states, all of our foreign jurisdictions and some of them have too. for us to be overly focused on

any one regulator is a distraction from the core mission which is to deliver value to shareholders and to our clients, by being more efficient and focusing our capital, our talent, and our technology where we matter most to our clients. >> peter, can you explain to our viewers who are a little less sophisticated that your stock, as long as it's below the tangible book value, is a buy for you, and that that may be why you dramatically increased the amount of stock you want to buy? >> so, you know, we have today a compelling value proposition to return capital to our shareholders and we have laid out our plan to return $25 billion in the form of dividends and buybacks at the beginning of this year and we're almost $8 billion into that program. and the compelling value proposition comes from the fact that we are buying stock below intrinsic value and intrinsic value is our own internal view

of what the company is worth, which is not precisely represented by the market or book value, but you need to triangulate between them. so we believe in our future as a company, which is why we have confidence that reinvesting and doubling up on our own shares is a good use of those funds. at the point at which that is no longer the case, there are other purposes for that surplus cash flow in terms of increased dividends and other uses. >> right. >> but we're not in any way skimping on investing in the future. we are -- while we're making expense reductions and buybacks we're investing about $700 million a year in new initiatives, new technologies. >> you don't feel like you're starving the company. our final question here is on expense reductions, down 11% as you said year over year. can you keep going or is that -- have you sort of met your targets in terms of where you want to cut costs? >> it's taken as a long way to the targets we laid out for the two-year period but we got some

way to go. but we absolutely are not starving the company for investment. pouring money into increased investments in improving our technology, adding engineers as we anticipate the needs of our clients with new types of perils whether cyber security, whether it's the internet of things, where we need to leverage these changes in technology to help our clients reduce the cost of risks. that requires investment and we're making those investments. >> we always appreciate your coming on and joining us for the updates and a good day for the stock. >> stock is flying. >> up almost 7%. peter hancock, ceo of aig, thank you. >> thank you very much. >> we're going to have stop trading up next with jim.

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it's that time. stop trading with jim. >> brooklyn etsy, remarkable quarter, stock flying. 39% revenue growth, 64% adoption of the mobile app which is good. they're a technology company and that's right. i just -- this is the natural and organic amazon, doing well. >> doubled off the lows. >> and deservedly so. >> already seen what you've got on mad tonight but worth mentioning phil knight and a bunch of well-known names.

>> tom quinnlan, clorox, a market leader with aig, excited about tonight's show. phil knight personal hero of mine, buck knight. >> i know i can buy it. just throw me one. >> my sister and i both of us said best -- best biography -- autobiography we have read in i don't know, ages. so fabulous. he's a great writer. >> i will see you tomorrow. >> thank you. >> coming up donald trump's national finance chairman as the gop chairman faces criticism within his own party. keep it here. your dentures seem to fit fine when you first put them on.

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i'm a developer. i'm gonna need monday off. again, not my call. ♪ good morning and welcome back to "squawk on the street." i'm sara eisen with david faber and mike santoli live from post nine. carl quintanilla is on assignment in rio. we will see him there later in the week. the dow jones industrial average is completely flat. we'll see which way we go and whether the dow ends up breaking its seven-day losing streak. s&p flat, nasdaq positive, oil up a percent. breaking economic data to get to right here at the top of the hour.

ism services is out. rick santelli has the numbers. rick? >> yes. the nonmanufacturing read is sequentially lower a bit lower than expectations at 5.55, triple 5s, expecting a number close to 56. last month, still stands at 56.5. how does it stack up, you ask? well 56.5, last look, last month, was the high read of the year and it goes back to the best since november of last year. the low read, actually was the month before. it was in may and may was 52.9. look at internals. we lost a little bit on the ism employment side, 52.7, our last month. 51.4. but still above 50. if we look at new orders this actually climbed a handle from 59.9 to 60.3. so, of course, this may make it more interesting to pay attention to friday's big july report after adp today. one other point we want to make,

interest rates are somewhat quiet today and holding a range that was established early last week. back to you. >> yeah. that 1.54 on the 10-year. thank you very much. we are watching the market, the dow down 5 points here, continuing losses for an eighth day in a row as weaker oil prices over the last 24 hours or so continue to weigh on stocks leaving investors with a bearish sentiment. let's bring in seth masters, chief investment officer at alliance bernstein and barry banster, strategist at stifle nick cohis. eight days of declines but sort of marginal, calm, steady declines. is that a healthy pullback from what was a strong july for stocks? >> yeah. i don't think it's unhealthy. reflects the fact that sentiment continues to be weak and people are nervous and growth is very modest. we think what we're going to see is a continued environment where there's lots of volatility and upward trends but at a relatively slow pace. that's a frustrating environment

for most investors. >> barry, how would you characterize what we have seen in terms of the bumpy start to the month of august. higher treasury yields an lower stocks which is a reversal from what we saw in july? >> yeah. i think the august news flow that's held the market back is things like the japanese fiscal stimulus was a lot of -- was disappointing in terms of the size. the chinese manufacturing pmi was weak. european bank stress test was not really thoroughnough and not moving decisively in italy and the fed is still sending mixed signals. >> seth, a cover story on the "wall street journal" about the earnings picture, the economic weakness, weighing on earnings. what sort of message are you getting from earnings? it's hard to tell what we can gather about the u.s. consumer and the health of u.s. business? >> yeah. i think that's very patchy and specific. and that's the problem, is you have some areas of serious weakness, energy has been weak, some areas of strength, though, and some tech companies have had

great numbers and the challenge i think in this environment is to be very active, both about managing the opportunity, when there are companies who can surprise and managing your risk actively, trying to avoid areas that have been overbought and price and unlikely to deliver. >> in this environment where nobody is confident that growth is going to be accelerating and all asset classes seem expensive you've had people buy stocks for income for dividends and buy bonds because they feel as if it's an easy trade and you can actually make money as they goup in value. what -- can this persist for a long time? do you see any vulnerabilities in that setup? >> yeah. chasing down and consuming yield is not really a strategy. it's more of a cry for help. deflation weighs on the market. whether you're chasing dividend yield or earnings yield through a higher p/e, the problem is still deflation. you know, within 18 months i wouldn't be surprised if the fed

flattens the yield curve down to ten years at 1%. >> yeah. i would agree with that. i would say more that a lot of this sach for dividend yield -- searched for divds yield is a search for safety. many are not growing at all. and that's a problem. secondly, many are interest rate sensitive. for both reasons bidding up their price a lot, safety stocks at a 30% premium on valuation, normally trade at a discount, a long way to go down if things begin to look less safe. >> what is safe then? >> i think in this world, safe is being very diversified and not putting too many eggs in any one basket, recognizing we're in a dangerous world? at alliance bernstein you take a long view, looking at dow levels here, 20,000. how long is it going to take to get that? >> we originally made that forecast back in 2012 and said we would get there within ten years, which would have been 2022. we're ahead of schedule and think it's likely to happen by

2019. the important point with the volatility and the fact that the market's rate of growth is slow, the question is how many times will we trade through 20,000. we will be zigzagging around. >> 3% annualized from here. >> right. it's not a huge gain. i think the key challenge is going to be for people to keep a level head as we move up and down through levels like 20,000 and not get whip sawed every time which by the way is what most investors have been doing so far this year. >> and barry, you keep the 2100 target on the s&p which would be a whole lot of nothing from here. >> yeah. it's looking very difficult. there is an implied option, a called option on the value side of the market where there is earnings leverage and ability to increase return on equity. it hasn't been realized yet. it has large upside, low probability. so that's the upside for 2017 if we're looking ahead. >> and with that the dow turns positive, gentlemen, up 13. seth masters from alliance bernstein and barry banister from stifle nicolas, thank you

very much. >> coming up politics in focus as another business leader endorses hillary clinton. what it means for the financing and future of this campaign. we'll speak with a former dnc senior adviser and former romney, bush and reagan adviser. later, steve mnuchin, trump's financial chairman will join us live. stay with us.

from stifle nicolas, thank you financial chairman will join us as a supervisor at pg&e, it's my job to protect public safety, keeping the power lines clear, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it.

public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live. we need to make sure that we have a beautiful place for our children to live. together, we're building a better california. turmoil in the trump campaign. chief washington correspondent john harwood joins us now with the latest. john?

>> you know, it's a difficult time for donald trump's campaign. he has since the conventions his was chaotic, the democratic convention was successful. he's been falling behind in the polls. and he's sustained an argument with this gold star family, declined to endorse paul ryan, that has really rattled the nerves of people within donald trump's staff. i had an exchange last night with a friend of trump chairman paul manafort who said manafort is no longer challenging donald trump, he's mailing in, the staff is suicidal, that's a metaphorical statement, but that rattled condition is evident throughout the republican party. meg whitman, the california gubernatorial candidate in 2010, yesterday, announced to "the new york times" she will vote and raise money for hillary clinton. aides to top republicans like jeb bush and chris christie,

said they were supporting hillary clinton as well. difficult time for trump and not clear he can -- knows what to do to turn it around or whether he can change in a way that would turn it around, guys. >> yeah. well thank you for that. john harwood reporting from washington. john just mentioned hewlett-packard enterprise ceo republican fund-raiser, once ran, of course, as a republican for the governor of california meg whitman, announcing she is endorsing hillary clinton. whitman first sounded off about trump's character here on "squawk on the street" five months ago. >> we needed to stand up and you can see many people across the country are standing up against what -- who i think would be a very dangerous president. i do think donald trump is a dishonest demagog. >> at that point, whitman was not ready to say she would vote for hillary clinton. now she is. for more we're joined by veteran political strategist, former dnc senior adviser steve mcmahon and former romney, bush and reagan adviser ed rogers.

what does trump and manafort and the campaign need to do to try to get back on track? >> get sane. literally. talk about things that matter. have some messages, disciplined, message that is truly republican. don't attack john mccain. don't attack paul ryan, don't attack american heros, dead soldiers. get into the world of the lucid. it's a real problem. and something john touched on, and i hear i don't know if it includes manafort, there's a mutiny brewing within the trump camp. >> what does that mean? >> some critical mass of staff may come forward and say, we're wasting our time here. more of the same is undesirable. we're not contributing to the party. we're not contributing to anything that we care about. if things don't change we're out of here. >> given what you've seen and know, is there any evidence that mr. trump could get back on the track you're describing? >> well, i guess he could.

there's nothing i've seen that suggests he thinks it's required. i think he lives in a world where he is flawless, where every utter rance is destined for granted and he can do no wrong. it's getting worse. more and more hearing the "c" word, crazy. people are saying the man is crazy. they're saying it in a way that suggests they mean it and aren't being insulting. >> top republicans are still endorsing him. >> well a lot of people that are flat footed and stuck, they want to support the nominee of the party. they're certainly not for hillary clinton. and so you have a lot of people, my partner, hayley barber included, i'm not for hillary clinton, the race is now bye nary, i will support the republican nominee. a lot of people have been at peace with that, even that is eroding. because of trump's behavior. >> steve, normally we set these

up to have a disagreement but i'm not sure you are necessary here. >> i was going to yield my time to ed. >> i'm sure you guys will fig it out. i guess when you look at the clinton campaign at this point, do they perhaps fall into the trap of being complacent in any way? >> i don't think so. i mean they understand that they've got some work to do themselves. hillary clintons numbers on honest and trust worthy aren't where they want them to be. this is an opportunity to burnish her credentials and trust worthiness and things they want to build and point out the problems with donald trump. your seeing now respected moderate republicans saying things like ed rollins said, about donald trump. you see a mutiny boiling inside his campaign and i think -- i've heard that there are many that might be about to walk out. and then you now hear today stories about the republican party and their rules for replacing a nominee. and, you know, i think this thing is a classic case where the wheels are coming off the

bus. it's becoming apparent to everybody inside and outside the republican party. and the only real question is how long people like haley barbour and others who themselves are respected establishment republicans will continue to support this man when he is -- he's a real problem as a nominee and would be very, very dangerous as a president. >> ed, you want to respond to that? how long will it be? >> that is the developing consensus, this is broken and not going to fix itself. >> what about the reference that, you know, it's starting to -- that he would withdraw somehow. i mean, it sounds ridiculous. i assume it is ridiculous. >> it should be. it's never happened before. but i do know that there is under way independently, parallel of each other, a lot of different looks at party law and rule over what happens if a nominee is deemed to be

incapacitated, unfit, and cannot serve. that is being critiqued by smart lawyers in washington, d.c. >> working for who whom? >> i don't want to guess. i'd throw somebody under the bus. >> on "morning joe" this morning, joe scarborough told a story that eamon has reported that of a foreign policy expert briefing donald trump on the nuclear capability of the united states and trump's questions were, why can't we use these nuclear weapons if we have them. this man is not fit to be president. >> but none of this, i mean, is any of this going to turn off his supporters? they've been strong with him from the beginning. he's had comments like this from the very beginning. he's had problems getting the establishment republicans on board. >> that's what freezes a lot of republicans, rob portman or senator tomb my house candidates first 35% of vote is trump vote. they can't alienate that vote.

they can't break their pick with trump and keep their re-election coalition together. that's the big problem. >> it is a big problem and 30 or 35% but 30 or 35% if you're running for president is not sufficient to win and at some point people like rob portman will have to look at the 65% that think trump is certifiable and wonder how they're going to build on the 30% base they have to get to their own 50% because rob portman isn't going to win with 35% of the vote and standing with donald trump is probably the best way to ensure he doesn't get to 50. these people will have tough choices to make and starting to make them and you will see more and more republicans respected establishment republicans, walking away from donald trump in the weeks to come. >> all right. last word to you, steve, steve mcmahon, ed rogers, thanks to you both. >> enjoyed it. thanks. coming up on the show, it's the competition to keep you fit. our diana olick who always wins the competition is live from a

fitness boutique trying to change the game. diana? >> sara, i know it looks like i'm on enormous set of twister or dance revolution but big money and technology behind the new way to get crazy fit. i will show you coming up next. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

take a look at shares of cate spade, kate, getting crushed down 20% right now. after missing earnings estimates and cutting its full-year sales forecast. the company's ceo citing the retail landscape as a whole and blaming tourist headwinds for the weaker results. this is a company that last quarter posted 19% comps. this quarter 4%. was clearly way below expectations. and that's the downer. it was one of the favorites in retail outperforming over the last few quarters. this was sort of -- >> the street didn't have that many of these consumer discretionary retail leverage names to play. a lot of people were warming up to coach, which, of course, is a competitor and had its troubles and been coming back from them in recent weeks and now that's being taken down along with it. it just kind of feed into the

general concern of serial discounting, the department stores vulnerable. >> sure. >> still an outlet. even if kate is a better operator and has, you know, a little bit better kind of brand positioning at the moment, you know, it seems like the market keeps these stocks in such a short leash. not a cheap stock with that going on. >> kors and coach are down ahead of their earnings reports. is it a broader consumer retail weakness in the u.s. or more company specific for these brands expanding so aggressively and rapidly from the lower base? >> right. especially when people don't have confidence in the handbag cycle is coming back. >> there's a handbag cycle. >> there had been. the coach people used to brag they -- how many handbags a year women bought and that they took credit for expand that number. >> i have not bought any this year. >> that could move the needle when you get back in the market. >> thank you, david. >> you're welcome. the fitness competition is heating up and the workouts are getting weirder and weirder. diana olick joins us from a

special workout studio. only you. >> well, sara, as you said with this space getting so much more competitive, these studios have to keep taking it to the next level. so we're here at asphalt greens ag 6 studio on manhattan's upper east side like video arcade meets crossfit. you work in teams and you work station to stay following the lights on both the floors and the walls and the shapes. and it's all technology by a spanish company. they started as a flooring business but have put in over 30 of these workout studios mostly across europe. but they tell me they will double that in the next year. this is the first one in the u.s. but it clearly will not be the last. >> we feel that a ton of calls -- fielded a ton of calls, a lot of people interested in the technology. now it's up to them to head over and check it out or come here and then make the investment. >> now jennifer says as an instruct fer you can use an

iphone you can run this system. i tried the class last night and it was not easy. it targets not only your body but brain and that's the whole six part of it, six senses using it to train athletes and while the tech appeals to millennials old folks like me are doing too. >> it's ridiculous. never sweat so much worked out so hard and fired when i was done. >> now the folks tell me based on the success here at ag 6 asphalt green they're going to expand on the east coast first and in chicago. the technology, of course, is very cool. we're going to talk more about getting even crazier fit with aerial yoga coming up on "power lunch" but want to see that now go to cnbc.com and yes, i'm hanging from the ceiling. >> yes. and we want to see that. diana. my question with some of these things how much of a fad is it going to be or does it have staying power? of course as the market, you

know, considers some of these companies actually going public, like soul cycle, which ones have staying power? >> well, that's what i asked them, how many people just come here as a novelty or how many are repeat customers and they're starting to get a lot of repeat customers. they've only been here two months now. they do sell package deals so you can buy ten classes or 20 classes at a discount. they are seeing people come back. the folks i talk to whether aerial yoga or this crazy workout where you are bouncing against the walls, they said you've got to keep mixing it up. they get bored doing the constant cycling or something else, nothing but soul cycle but they want to keep mixing it up. that's where the companies will win. >> i'm stuck in the 80s liking step aerobics. thank you. >> i like dance dance revolution. >> that's a good one too. diana olick, on the latest fitness craze. when we return trump's national finance chair will share the campaign's brand new fund-raising stats for the month of july. first right here on cnbc. also we're keeping a close eye

on oil which is higher this morning. up 1.3% after dipping below $40 a barrel yesterday and overnight. we'll break down where it goes next on "squawk on the street." it's time to discover that in a lexus suv... ♪ ...there's no such thing as adverse conditions. ♪ come to the lexus golden opportunity sales event this is the pursuit of perfection. images, videos, social updates. we call it dark data. 80% is invisible to most businesses. the ibm cloud has tools that can help see dark data and put it to work. hello, my name is watson. working with watson in the ibm cloud, we can help an energy company predict pipeline corrosion.

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get some of our most advanced products at a great price with over $500 in savings. call today and ask how to get these savings plus a $250 prepaid card. comcast business. built for business. i'm sharon epperson. your cnbc news update. an emirates flight from india with 300 people on board crash landed at dubai's main airport causing a fireball and black smoke billowing into the air. there were no fatalities. all the passengers and crew were safely evacuated. the plane was a boeing 777. at least 22 people went missing after a bridge collapsed in western india due to excessive pressure from the swollen river below. officials say a major search operation was under way. a judge has cut nearly all of a potential $562 million fine against pacific gas and electric in a criminal case alleging it

violated safety regulations before a deadly natural gas explosion in california in 2010. 8 people were killed in that blast. a recall notice for a grand jeep cherry was mailed to the actor seven days after killed in a freak roll away accident. according to his family's attorney. his parents filed a wrongful death lawsuit against the vehicle's maker fiat chrysler. that's our cnbc news update for this hour. back to you. >> all right. thank you very much. oil meantime has entered bear market territory closing below $40 a barrel since april during trading on tuesday, falling 20% over the past six weeks. after rallying in the first half of the year energy stocks are following crude prices lower. weighing in on oil's future michael cohen head of energy research at barclays. michael, we went up in west texas crude oil from 40 up towards 50, from april into june. and now we've made a round trip.

was that increase not based on fundamentals? what's dragging us down here to the levels? >> right. so i mean what's happened over the first half of the year a lot of disruptions in places like canada and nigeria, things in libya got worse, so the market generally tightened at the very same time that people were concerned about how much people were going to be driving over the course of the summer and preliminary indicators in april and may were showing gasoline demand in the united states was in the range of 4 or 5%. but actually what we saw this week is that the monthly indicators for may and what we've seen already for june and july are showing that gasoline demand is growing by about half of that rate. so eessentially what happened the expectation for a very strong summer driving season missed the mark and so what we've seen over the last couple weeks is that as inventories of gasoline have started to grow, the market is starting to turn its attention towards the next shoulder season.

we've basically gone through the most -- for the most part half of the summer and so now with inventories at the very high levels, we have to see the market adjust. >> as you talk about inventories we're getting the breaking news now from the eia to jackie deangelis with the numbers. >> good morning, sara. actually a very market moving report here. the eia saying inventories in the u.s. for crude were up 1.4 million barrels last week, expecting a draw not only from plats but the api last night. this was a surprise to the market. we had a 50 cent hop in oil prices this morning in positive territory. we gave that back, we've turned negative now and again under $40 a barrel. the things to think about here certainly this morning, maybe some of the buy the dip mentality, technicals move this trade and everyone has been ignoring the drop we've seen in the dollar index which would be supported for crude. when it comes to the inventory numbers and production you can see that takes the market lower. that's what everybody is concerned about right now.

the fundamental stance on this. u.s. production has come down in the last year or so, but remember, globally, the other producers still continue to pump the oil glut problem continues and that is going to be a problem for oil. back to you. >> jackie, thank you very much. so michael what's your reaction to that? where does that leave us with regard to the supply issue? >> right. i mean for the most part i agree with jackie that supply outside of the u.s. has not seen much reduction so far, but there are actually a lot of indicators airbnb around the globe where we can see production falling at a faster rate now that prices have been low for at least the last 12 months or so. and so, you know, whether it's mexico, canada, the north sea, all these places are seeing production lower and what that leads us to is that for next year, we expect demand to be back in excess of supply. so we expect inventory draws on a global basis, possibly even as soon as q4 this year, and we think that that brings about a

tightening of the overall market balance. the problem is we've built up this very, very large level of inventories, so essentially that will lead to a cap on prices, you know, getting up into the 70 or $80 range. >> and where does that leave us i guess in the interim before next year, go down and test lower levels deeper into the 30s before we can have balance back in the market? >> it's certainly possible over the next four to five weeks before we start to get into the season where refineries are turning around and stopping we are going to be in a period of severe weakness. and whether that's from a macro perspective or a physical oil market perspective, things look weak out there. absent any other physical disruption in an at risk country. so in our view we think that prices will rebound by q4 and we think that that trend will continue into the first half of next year. so we think that this dip is temporary, something we've called for since the spring, but it is likely to lead to an even further pain for producers

globally as we look into the next year. >> well, pain for producers and highlighted the fact that it's the refined product we have an excess of. the fundamentals have not been great for the refiners either whose stocks have been weak. >> right. refinery margins have continued to tick lower and so we think that that is essentially going to be the case. at least until we get into late september or october when the refineries usually conduct maintenance and we've seen refineries in the east coast normally, you know, what they will look at is say look there's not as much of an incentive as before to produce refined products and they're reducing their run rates leading to a collapse in the spread. >> all right. waiting for that supply response. michael cohen of barclays thank you very much. >> thank you. >> when we come back, donald trump in the hot seat as more republican business leaders turn their support to hillary clinton. what does that mean for campaign fund-raising.

we will speak with donald trump's national finance chairman steve mnuchin who will share brand new campaign numbers for the month of july, it has not been revealed yet. but he will do so live on cnbc right after this break. "squawk on the street" will be right back.

corporate america is talking trump, five s&p companies have mentioned the kacandidate in recent earnings calls, which companies and points they make, find out, more "squawk on the street" coming up.

i believe it's 517,000 donors. think of that, that's in a month. we raised $35.8 million, a little more than that, and the average price of the donation was $69. how incredible is that, right? >> that was republican nominee donald trump on monday talking about his campaign's july cash

haul but the campaign just releasing its official july fund-raising figures, now saying it raised $80 million for the month and joining us to discuss the numbers exclusively, national finance chairman for the trump campaign, steven mnuchin. give us a little color and context on the numbers, does this include, for instance, the rnc and break it down, small donors, big donors, new donors? what are you seeing? >> right. first of all, thank you. it's great to be here with you this morning and we're super excited about the news. the total raiseded for the month was $80 million. the number donald mentioned was our digital number. this number includes $64 million of small dollar donations and $16 million of donations with the rnc. that's up from $51 million last month to $80 million this month. huge, huge increase. a million unique donors. i think this shows the incredible ground support there is for donald trump out there. >> did it come off the heels of

the republican national convention and can you give some more specifics as to what you saw at the end of july and into early august here as the poll numbers started slipping? >> well i think this is -- our numbers have been huge in the last week, they've been big into the convention and out of the convention. there's just an incredible amount of support and we'll end the month with $74 million in cash between the campaign and the joint fund-raising. so a lot of cash in the bank. >> it looks like hillary clinton and the democrats managed to raise $90 million, which is above the trump numbers, still that gap is narrowing. there are persistent concerns about the deficit in fund-raising by the trump camp versus the democrats. >> first of all they've been doing this over ten years. we've been doing it two months. it's pretty incredible that we're at 80 and they're at $90 million and they're spending a lot more money than we are. so a lot of cash in the bank and

a lot of excitement going into the election. >> how dependent is trump and are you guys right now on the republican national committee for fund-raising? i ask because there's some serious questions about the cohesion of the republican party right now, especially with trump signaling doubts about supporting house speaker paul ryan for re-election? >> i think there's plenty of support within the party and in the rnc. they couldn't be more helpful to what's going on. and donald said all along a lot of the fund-raising he's doing with the rnc is specifically to help the party and everybody on the ticket. >> what's going on inside the campaign? john harwood, our washington correspondent, reporting, tweeting that an ally of paul manafort says, quote, manafort is not challenging trump anymore, mailing it in, staff suicidal. what's going on inside? >> again, i think this is all stuff that the press is just

making up and talking about. i was a campaign headquarters all day for the last two days. people could not be more excited about what's going on. donald's on the road today, i'm meeting him later in the week and this weekend at fund-raising events. a lot of excitement, a lot of ground support for this campaign. >> steve, where is mr. trump in terms of his contributions to his campaign and how much of that will be reimbursed? >> again, he contributed another $2 million this month. we did another $2 million match which was very exciting for the on-line that brings his total commitments over $56 million. and he is required to or the campaign is required to reimburse him for use of aircraft and other things and the $2 million far supports is in excess of his reimbursement so effectively he's paying for all these things himself out of his pocket and making a campaign contribution in addition to that. and it's only because of the federal election committee rules we do it this way as

reimbursements. >> when it comes to contributions some people are seeing where he's contributed charitable and the like we would if he was willing to release his tax returns. are you -- any thoughts from you on that and his unwillingness to do so? >> again, i'm not really sure what the relevance to the american people is of his tax returns. he's released a balance sheet and released information. people have the understanding of what his financial situation is. i think it's very clear and he's contributed a lot to the campaign and another story that's not relevant to the american people and we see that in what's going on from the huge ground support we're getting. >> you know, in the last 40 years, every candidate has done so since 1976. it's certainly not a rule but something that seems to have been followed by every candidate and certainly some would argue they want to at least understand where his money comes from. >> i understand that and look, donald trump has done a lot of things different than other people. it's the first time we've had an

outsider out of washington be the nominee and he would be in great shape to take over as president and i think you see the american people are very happy with that and supporting it. there is tremendous support out there. there's a lot of cash in the campaign and i think we're excited about where things are going. >> steve, you mentioned you've only been doing this a couple months. what does that mean for the campaign spending priorities? you have a plan? do you have budgets? how will this be deployed? >> our number one focus is on the ground game. and i think that's what's critical. we're working very closely with the rnc. we have over 750 people in the field with the rnc. and about 5,000 volunteers that are being trained and geared up. that's the number one thing. this campaign is focused on social media, free tv, there will be some paid ads but this is not a conventional campaign. and i think this is really the american people want to hear about security, they want to hear about the economy, they're not happy with the low gdp

numbers, and the people understand that. so the number one focus for the campaign budget is get people out to vote, make sure the ground campaign is there. >> on the economy and on business, in this election yushg' a business guy, how do you feel about long-time republican meg whitman from silicon valley, very vocally and publicly now backing hillary clinton and calling donald trump a dangerous demo going to, expecting more -- demagog? expecting more defections from the party. >> people have the right to back who they want to back, okay. we have lots of business people, will baross, and others, supporting this. the american public understands the economy is not in good shape. we need a president that's going to be focused on growth. we have a tax plan that's going to be focused on growth. we're focused on lowering business taxes, making sure that u.s. corporations are competitive around the world bringing back cash from all around the world that's sitting

offshore and i think the american public is focused on that. >> we need a strong treasury secretary on july 20th you said there's no decision that's been made and you're to be considered. any update on mr. trump's consideration of the important job? >> again, i was with him yesterday, and his number one focus is winning this election. he's not focused right now on who's in any position. i would be honored to serve in any capacity with him. he and the rest of the campaign is focused on less than 100 days left to this election. >> all right. thank you for joining us. steven, with the breaking campaign numbers. steven mnuchin from the trump campaign. raising about $80 million during the month of july. mike? >> all right. thanks. let's get down to the cme group in chicago. rick santelli has the santelli exchange. >> thanks, mike. i would like to welcome my guess chris. thanks for taking the time this morning. >> thank you. >> you do an awful lot of writing and studying about the japanese economy.

so right off the top, what's your feeling about the most recent rendition of the stimulus package and of core rhodas last week? >> oh, dear. i'm always for team japan, of course, i've been with the bank many years, they hahave bit of problem in terms of the exchange rate. it's no secret the bellwether of where the japanese economy is going to go if exporters are getting 120 yen per dollar, for their products overseas, okay, thumb's up, if only getting 100 yen to the dollar things aren't so good. right now unemployment is a very, very low level, it's interesting that they're trying to boost growth. >> let me stop you there. when was unemployment at a high level in japan? >> i guess it was during the lehman crisis. the lehman bankruptcy. >> and what was that figure? >> what was that figure? >> 2 percentage points higher.

i can't remember where it is right now. it's actually quite low right now. it's not going to go any lower. it can't go lower. let's put it -- it's like the u.s. >> you know, when i look at japan and core rhoda and the debt to gdp many easier ways that are cheaper to devalue your currency and as far as all of that goes, with regard to unemployment, you know, it's a pretty homogenous society. a lot of issues there. which leaves us with the gorilla, elephant, hippopotamus in the room, why do we have 25 stimulus programs in an economy and a stock market that's still a near fraction of where it was in 1989? i mean, i know you said you're a fan, a fan of team japan. >> right. >> seems as though team japan isn't going to the financial olympics any time soon? >> yeah. it's an interesting society in a way it's kind of showing the way for what might happen in other countries around the world

because it's very much an aging society. i'm always kind of interested what that means when the actual population level starts falling because don't forget, most of your economic growth is really based on, you know, an influx of the population, a growing population, so it's kind of a test ground for the rest of the world frankly in japan right now. >> so what you are really saying is forgetting the ef kasy of the stimulus if you can call it that, i don't think it is, the sheer demographic time bomb is going to swamp it even if it was more successful? your final comment. >> yeah, but don't forget the unemployment rate is quite low right now. the unemployment rate is still the bellwether of how the economy is doing. they're not seeing job losses here, but yeah, growth is not going to be much to write home about. it's going to be difficult for them to get sustainable growth like many g-20 countries around the world. >> chris, thank you for your thoughts. greatly appreciated.

sara, back to you. >> rick santelli, thank you very much. when we come back, rio getting ready to kick off the summer olympics. amid zika virus concerns and major athletes dropping out. we speak to one of the players who decided to say in the game. matt kuchar joins us live, next. your dentures seem to fit fine when you first put them on. but, during the day, they can move! in the morning... noon... evening... enough is enough! it's time to use fixodent plus adhesives. with just one application... ...they give you superior hold, even at the end of the day. so you can keep enjoying your evenings.

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>> all eyes on roi ahead of friday's opening ceremony for the first time in 112 years golf is returning to the olympic games as an olympic sport and it does so amid concerns about the zika virus. joining us is matt kuchar from the travellers championship in connecticut. >> good morning. thank you for having me on. >> we have to start with the fact that the top four ranked golfers in the world will not be attending the olympic games in rio. how much does that take away from the big event? >> it's a bit of a shame but the event is going to go on very well and be an exciting event. when somebody is crowned with the gold medal it will be an

amazing moment and something they look back on thinking what a great experience to be an olympic athlete and have a chance to win a gold medal. it will be thought of as a fantastic event. >> i wonder if it will help boost the profile of golf. do you think it will help with that? >> it will help with worldwide growth. golf is a relatively new game. a bit of an obscure game. the game of golf is strong. the game is in great hands with the best tour players and there's so many great avenues they're doing so well here. getting people into golf. i have two boys that are 7 and 8 and they did the drive chip and putt yesterday here and what a

great experience that was for kids. the game is strong here but the olympics can only help grow the game internationally. >> i would hope your kids if any would be interested in golf. do you have to be more aggressive in the way you play golf versus a normal tournament? it's different top three get medals and that's what matters. it's not the tier prize money system. >> there's no protecting a top ten finish at the olympics so i think you play it. it is a typical four round 72 hole event. you're going for gold but you have to be smart at the same time. >> one of the differences is in golf and professional golf you have an international competition among the best in the world pretty often. not just every four years.

does that change anything in terms of the dynamic? whether you're familiar with the other players or the other elements? >> the golfers will be more seasoned in the experience. there's so many great events. every week we have, what you could equate to as a major championship. for some people, for me in particular, we're at the travellers championship up in connecticut and i'm treating this as a major event. i want to put my name on this list of past champions or list of champions as bad as any but when we get to next week i'll be focused on playing next week but i'll have that familiarity with these events and a lot of the same players so it will be like some of the events where it's once every two years they have a major meet up. we see each other and have great events on almost a weekly basis. >> thank you so much for joining us as he heads from travellers in connecticut to the olympic games in rio where golf is

making a big return. when we come back, squawk alley is coming up. brandon gayle will talk sports partnerships ahead of the games, the new instagram stories feature and more. bill gross, why he says he done like bonds and most stocks. he'll be joining power lunch at 2:00 p.m. eastern time. squawk alley is coming up next with the dow turning around here, up 22 points. ♪ approaching medicare eligibility? you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you.

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welcome back. the federal reserve board today has ordered goldman sachs groups to pay a $36.3 million civil penalty for unauthorized use and disclosure of a confidential supervisory piece of information and order to implemented an enhanced program to ensure the proper use of confidential supervisory information. this is all stemming from a 2014 incident involving the former employee of the new york fed that worked at goldman sachs. also going on to say it's instituting enforcement proceedings against a former managing director and sng