welcome back to "squauk," the dow will open up 1,900 points higher and the nasdaq up about four points. thank you for being here. join us tomorrow, "squawk on the street" joins us right now. good morning, we are here at the new york stock exchange, carl quintanilla is at the olympics in rio and he'll be with us in just a minute. you just saw the futures, we're looking for a slightly higher open. european markets, how are they fairing at this market? largely positive, in fact, all

positive. the leader as of now, the ten year note hanging around 1.58, 1.59 and there's that crude, falling below .40, but down ever so slightly. our roadmap this morning starts with the start of retail earnings, both gap and coach stocks we'll have more, and valiant, the earnings were not quite what investons ars and an vifvif investors. and a fight on the board of lululemon, some intrigue there. first let's get to carl live in the olympics in rio. with lots of news to share. good morning. >> reporter: good morning. we've been talking about swimming all morning long. the u.s. won six swimming medals yesterday, five of them from

first time olympians. take ryan murphy, 20 years old, rookie, wins 100 meter backstroke. the u.s. has won every olympic since '96. murphy will go for two more golds and he did talk about swimming at these games obviously a life-long dream. >> i don't really remember this, but i guess when i was in third grade, i made this book called "my swimming life", and i went through my past a little bit and i went to put my dreams and aspirations and that was to win a gold medal and it was cool i was dreaming that big when i was young and i think it's that type of mentality that's driven me the whole way. >> reporter: speaking of swimming, the big craze on social media is #pheplsface, sharing the camera with his rival, of south africa, they go

head-to-head tonight in the 200 meter butterfly. they haven't gone head-to-head since london and he's the only one to beat phelps in that event since 2003. no love lost between those two, as phelps said he does his thing, i do mine. u.s. at 19, leading the charge above the likes of china, japan, and t and the and italy. you'll hear from team usa rugby. we caught up with the team c captain, madison hughes, and the coach bringing that back as an olympic event for the first time since 1924. guys? >> all right, carl, it is terrific. when was the last time we had a genuine villain, like this south afric afric african guy?

we've pfermented this kind of thing. when did we have darth vadar at the olympics? >> i don't think we need to feed this one. coming out of london, he said he would be like ali frazier and that's how it's shaping up. you can see the tension and that drama will become reality tonight in this butterfly. >> i think he's making a big mistake with phelps. >> it's true but he's beating him. >> carl, i've got news for you. >> reporter: it's not bad. >> no, but carl guess what arrives tomorrow at my house? >> reporter: olympic party? >> insect shield, dogs of summer shield. mosquitoes fall off this thing like there's no tomorrow. >> reporter: interesting. their business is up, like 125%. >> it's a great story. >> reporter: their mail-order business has doubled. >> can i just say my wife was

captain of the trinity women's rugby team. i have new found love for her. since those women were killing each other. >> reporter: i think we gotta have a home league, right? i know our director, tom, plays. i'll bet you david could probably join a scrums. let's do this when i get back next week. >> he's my wingman, my wing stop. >> about 20 years ago, i would not want to be anywhere near a scrum. i'd be running the other way, not very fast anymore. all right, carl, we'll be checking in very shortly. >> reporter: okay. >> and one thing they haven't needed, according to mr. quintanilla, is that shirt you were discussing. there have been any mosquitoes, or certainly not many. speaking of selling things it has been a tough morning for coach, falling after posting a ref new misrevenue miss, and gao lower by a steeper than expected

drop, and banana republic were down 9%. >> i'm going against both of these. i thought about the slow down at gap stores was positive. old navy is fine. you can sell the stock. can i say coach took the aggressive action? they're going to be moving at a 25% of their department stores where they do quite poorly. i'm a huge believer in victor luis. i think both of these stocks are buys. coach was up big last week, even in the wait of kate spade doing poorly, and i'm not calling it a turn, but this is a retail week where a lot of the bad news is discounted. now i listen to doug mcmillon, brilliant interview and it's no doubt about it if you're in the cross hairs of walmart or amazon, you're going to have to give some price. i thought both coach and gap come under the not as bad

valiant like view. >> we want to talk about valiant in a minute. >> we have a very aggressive second half things. >> you and i have got to get into that. >> we did hear from mcmillon. here's some things he had to say. >> knowing where we're trying to get to is really important and in our case we've got the 28 countries, this different store formats, we've got a growing business in china, mexico, canada, and what we hope is that those markets and our leaders will continue making progress for commerce and e-commerce, and help us innovate in some ways we wouldn't have alone and faster and we're going to take those ideas and put them all over the world. and that's kind of the opportunity that i look at and one of the things that's caused me to be so excited about this. >> is it fair to say you're gunning for amazon? >> we're gunning for the customer. >> there it is, gunning for the customer.

mr. mcmillon and mr. lori, who founded jet.com, will be running will americas in terms of e-commerce. so we didn't get that answer yesterday, in a release, but we have since. >> i think it's very important initiative because that's the only other company that can lose money, and think about it, nordstrom, mentioned possibly, t twilio called, and i will talk about later when we do stop trading. there are many companies trying to be in either space, which is the buy it online and pick it up, or just pure commerce like wayfair and i gotta tell you, only one guy has got them both now and that's walmart. i just think walmart's the sleeping giant. he could be phelps-like. >> he could be. and you raise an interesting point that i think people may overlook sometimes which is walmart is also a controlled companies are not by one shareholder. >> thank you. >> but by the walton family. to your point they can -- not

that i want to lose money, but they are not in danger of any activists coming along and starting to rattle the cages, that's not going to happen. >> great point because they can play the long game. >> they can play the longer game. >> that's what mcmillon has to do since he dropped the bomb and made a steady come back, he gave you some prompts. the man has over delivered. youthful fella. >> he's still youthful. i interviewed him years ago. we spent time together in china and he was young then. it seems like he's getting younger. >> it's online, you can do that. >> it's clearly not affecting him. he hasn't even gotten gray. >> i was clearly impressed with becky's interview and it was not idle. every single point is addressing the notion that we cannot let amazon -- including the idea of going for the customer, who amazon, as bruce nordstrom told me, is the most friendly company on earth. the twilio call gets a piece of

it. >> why do you keep mentioning twilio, a recent ipo that performed very well if you were an inventor? >> i'll tell you what. beautiful story. they talk about the ear ofra of investing, u bbicquity. they have nike and why do you get pushed? i push my olympic stuff, that's from twilio. they're embedded, they've got t-mobile, doing a lot of good stuff with them and they're on amazon and get a piece of every trade, whether it be facebook messenger, or air bnb. they are the future of cloud commuting. >> gotta. >> it's one of the great conference calls. it was a beautiful conference call. >> that's one area that walmart is not focused on is cloud commuting unlike of course amazon and web services which is growing enormously and gives them another engine. >> there's throwaway in the

facebook call mark zuckerburg talked about, bots that's twilio. they get money in every message sent, or every phone trafficker or authentication, they're doing it for sentiment. i think that guy's saying negative things. guy the way, did you get the go time from apple? >> apple just sent out, we get it, you can't play everything, but pokémon makes the impossible possible. this has been the big service revenue spike. apple has to go through 110 and 113 to turn the shorts but apple may be one of the few -- usa today with the peace talk about apple losing a lot of money in terms of market cap -- obviously not in real life -- but its go time app stores is a reminder the only way this pokémon go is for the service revenue apple

and it should have mentioned blue team because i play for the blue team, but you can't have everything. >> can't have everything. >> zuckerburg left it opaque. >> how about 50% who play pokémon are 55 or older. >> guess where there were some pokémon go players? in florence. the coliseum's chalked full. >> we're going to talk about some other stocks and earnings, including valiant, which is up shortly percentage-wise at least. look at wayfair though. >> i'm just getting started. >> we'll have the exclusive with the ceo of wayfair. why is it down? i bet you can guess, wider than exacted loss. and we'll give you another look at futures, back on the other side with some insight, we hope, on valiant.

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shares of valiant looking up this morning, a decent amount in terms of percentage-wise, after reported earnings a bit shy of what has been estimated but the

focus is on the 4.8 million to 4.9 milli 4.9 million the ebitda gave. a higher r and d spend, more last quarter than they previously ever have, and that was part of the strategy, so $108 million is a quarter r and d spend and talked about the potential sale of what they would claim as $8 billion in assets, units with roughly $2 billion in rev rate or revenues. they said they're exploring that and have gotten some in yes, sirries. gross margin down million dollars, 16% tax rate, but it's closer to 5% when you talk about cash money tax rate. of course that's one of the beauties of this company that was built around a really low tax rate, not doing any r and d and buying lots of companies,

all of that exploding into my smitherines, and after coming back not wanting to is to mylan from joseph papa, talk about reinvigorating the sales of any different parts of it and bringing that profitability up for new scripts as of the fifth of august they say, new scripts sold. >> there were a bunch of analysts every day, the wells fargo, in particular, and basically set up a bar that could be beaten. when you see expect free cash flow and nonrocore asset sales, that's a very aggressive tale. baush and loam, all i can say is periodically, what can happen, is the short's pushed too low, the company comes out with some

very positive statements no one can dispute at the very moment. the people who own it come out very hard. >> there were some stories about a negative cash flow quarter. >> right. >> so i'm sure there were people who were wondering because if you did print something like that then the concern would clearly be with valeant continue to support that 30 billion-plus dollars on the balance sheet. >> and the numbers he mentions is basically pay that next traunch of date that's worrisome. do i want to buy this stock? i did a whole piece on ""mad money" money". >> your sense is walgreens and dermatology -- you have companies like bristol meyers which admitted they overpromised and apologies i was one of 50,000 people who the go the word it worked for small sale. you get a stock down here, and

albeg allerg allergan, where they told a good story and everybody didn't blow up. let the people cover, and let's see if they can sell these assets. but joe papa, like he did at parago. david, that was 180 with a $200 bid. >> it was. it was. >> he can be a pied piper, but everybody loved that. and i love joe from sellersville, pennsylvania, not far from me and he did exactly what he did for parago and that bid was turned down and the stock is at half. >> but he feels like they have a decent enough portfolio of assets and will spend more money and on r and d. >> and that every script written now is going to be proitabfitab for them. >> i don't know. i saw the cbs formula and anything above average in terms of inflation is in question. now, look, i don't know.

dendroem, bausch and loam. we're a growing concern and maybe it's worth more than 24. i want to see the balance sheet fixed. >> to put it in perspective, over the last 12 months, the stock is down 90.94%. we'll be watching valeant. up about 7%. up next is jim's mad dash and let's give you another look at the futures. speaking of the opening bell we'll have at least a higher open. we've got a lot more "squawk on the street" right after this.

i'd liketon who are the board members standing in the way of management so i can find out myself how weak they are. i see some very accomplished people on that board. >> so do i and i'm not going to give you the sensationalism of telling you exactly who, but it's the longest-standing board members. >> and that gets us to our "mad dash," which is on that board intrigue at lululemon. >> i had the real money team look into this and found out maybe the qualifications weren't as strong. i think she had enough of chip. chip is a bit of a loose cannon and i found that company stock has been amazing. he's a complainer. he's a complain ber this, david. there are stocks where it's worth complaining about. i think she had enough of him, she's a reclusive board member.

if you look at her background, it's kind of changed, but basically she's gone because of some reporting, which basically said that chip did have issues and chip did bring her on initially and it's a shame that ship chip came on our show and really hounded, the kill people found out some questionable stuff. ever since admin took it over and came in with buying some -- a lot of chip's stake, look at this thing. some of the people in retail are questioning whether yoga is one trick. i would tell you it's one trick that i think nike wish it had. i think it was one trick under armour wishes it had. so i like the one trick for now and lulu will have a really good quarter and i have to tell you, rhoda pitcher, didn't really check out as kind of -- >> she departs the board, but it all started here on our show when he said -- when i asked for her name, he said longest

standing board member and subsequently, the recording indicated it was rhoda pitcher who was brought on as a life coach, one of those life coach things. >> i guess. >> i'm more of a life general manager. >> you're a gm? >> yeah, i'm a gm. >> quickly on retail, we mentioned coach. >> yes. >> we've got macy's. >> that was not a 2 for 1 split last year. people felt real estate was worth a lot. real estate in the retail world, yes, it accrues to frontier -- to federal realty -- not that simple. it's a cruised to federal realty, some what to simon properties but it is not a cruised to retailers. >> the actual retailers themselves. we've got earnings from charter and altice, that's up my alley. i'll tell you about both of those, the opening bell just a few minutes away.

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you're watching cnbc's "squawk on the street." we're live from the financial capitol opening bell, and my queue to turn to you and say what's the key to this market. yesterday, you chose bristol myers, which looked to be up, turned around and had another bad day. >> broke down. >> after that major, major news from friday. what would it be today? >> you know i'm going to have to -- i know -- i wouldn't say twilio, but it's too thing thly loaded. watch pioneer pxd, because there's another equity offering from the old st. mary's sm, about going to the personmien i oklahoma. these $2, $3, $4, so watch pioneer. this is in a bull market mode, watch eog, oil's in a bull

market. watch eog, pioneer, pxt. >> i want to come back to that after this opening bell. especially those equity offerings we were talking about. there it is, for this tuesday august nint9th, raising awarene for blood donations. over at the nasdaq, meridian communications, that's a mobile satellite communications company. >> i remember them. >> they came on -- iridum. >> they've been around all this time. >> remember global star? >> it's back. >> global star. >> all of those satellites still just looking for a home. >> you know, serious satellite is very strong. >> you don't know what the hello you're talking about. >> meanwhile, everyone's worried

about disney after the bell. >> let's talk about that. >> people are still worried espn is too big and espn science won't that be well and they're still trying to be able to put it into perspective of, wait a minute, shanghai. the hit movie was "the secret life of pets." >> that was a big one, although disney had a series of hits. of course we know the marvel studio. bob iger will join cnbc -- not us -- >> well, us, like not everyone can join us -- >> no, but mr. iger will be on later today after the quarters reported. now what about zika? what about concerns about the increase price at the parks? things are going to be just fine. >> norwegian cruise. all right? get this, they actually go on

the calls down .333 and talk about how the customer for europe is declining and didn't do enough discounting. and miami-based itineraries, which is continuing to out perform, are a little weaker. davey -- >> davey? i'll take davey. >> did you monkeys are touring? i follow him on twitter. they talked about miami-based -- and created miami-based itinerary is weaker, some believe that's code for zik zika. sometimes it's important to remember when you're having a conference, the guy who mentions zika may not be able to get the cruise lines to come to his place. that's something we should talk more about. the need to be able to keep pleasing management to get them to come to your conferences.

i'm not implicating anyone. everyone's fabulous, there's always rumors that it does. >> that happens all the time. >> stop trading. >> the whole conference business is very interesting. >> let's do something on it. >> also got editorial questions on it, too. >> we'll go out there, we'll kick it around. >> we'll uncover the conference business, what really goes on. wasn't that predator's ball? >> i love connie. i worked with her at american lawyer in '79 and '80. >> if it really holds up, i think andrew's book holds up. >> yes, yep. >> and of course lars poker, and let me add shoe dog. >> and did you hear him? did you hear -- did you hear buck knight? i had a stop t-shirt, and he was

my favorite. and i did run a 440 and used to use that at .49, and phil liked me when he heard that i ran. i was wearing tires at the time. >> were you? >> he was adidas, and nike after tiger back stabbed him. >> there is a little bit about nike. and we'll talk about charter and altice, up about 1.6% right now, of course everything is adjusted. ebo ebitda up 9% over year. this is one of the largest cable companies in the country. 25.6 million customers, and for the first time, we actually saw some of the bright house -- remember it's the combination of charter, time warner and brighthouse is all now charter.

on brighthouse, we saw some video sublosses. but brighthouse was a private company, and they got a lot of subs in florida. you know what happens there. people go down for the winter and turn on their cable and when they leave for the summer they turn off their cable and so you may want to consider that when you look at the charter numbers overall, jim. >> once again, david -- >> generally thought to be a pretty good quarter for this enormous company. >> where did that go? >> it was greatly overstated. >> cable turned out to be in the single best areas of the month. maybe the most consistent area i guess but in terms of cash flow. >> david, the cash flow is unbelievable. >> it is. during the second quarter of 16 net% ca net percent cash flows were 1.6 billion. they have a lot of debt, about

$60 million or so. these companies are some of the largest debt holders. comcast, our parent company has a good amount of debt but they've got more cash flow. >> it's worked. >> do you have wifi at home? >> of course i do. broadband is the key product. video isn't and we know it will only grow in importance as video delivered via cable declines. >> psc and g cut my hot water on sunday. i did not have any hot water. i didn't care. i had wifi. >> i would argue that wifi's more important than hot water. >> water still trumps wifi. >> yeah, bottled water. >> overall you need running water. >> now, wifi and then okay maybe so. >> running water, then wifi. >> that has to do with the out house. >> let's not go into that. >> i'll tell you i know a lot of kids who might disagree. >> how are you going to play pokémon go? you don't even play yet. i mentioned it twice only

because i can't be partners with someone who's not in it. >> i did want to mention altice. that stock had been down sharply, this is a company that has grown enormously, but is a big player with the acquisition of sudden link and cable vision. you can see up sharply. they're having some trouble in france in terms of the wireless business, but when it comes to suddenly, they're doing quite well and even at cable vision, closing down news day. remember news day? the long island newspaper? getting rid of that thing. it must have been losing a lot of money and wiping the balance and income statements must have help. >> there was altice. >> i got a newspaper job when i didn't want, but papers, david. >> news corp, by the way. let take a look. i don't know how they're doing. how is news corp doing this morning after reporting earnings

that were fine? >> new york times is still good, twilio. >> up 1%, there it is. >> they will make it through this. >> new york times will? >> yeah, their service saying target is going to miss the quarter. >> there are a lot of pure plays in publishing. time inc. is another one. >> we've already seen it when trunk was a tio 2 company, but that's what they named, the old tribu tribune's knurt. >> i work for trunk. >> they tell a good story. they do. but gwinnett has been a very good stock because they've made some cleaver acquisitions. and how about dish? embossed in all of this? >> how about dish? they reported earnings a while back. i read the call. it was always interesting to

listen to charlie. >> he's still playing cards. direct tv, what a great card that was. >> and by the way, on direct tv, don't forget about direct tv in terms of they've got to redo their deal with stars, merging with lgs, that will be important. don't know. just pointing that out. direct tv, of course owned by at&t. >> i want to tell you about a semiconductor. >> we've got to get to bob pisani. >> the stock is slowly, step-by-st step-by-step, inch by inch going higher. >> they've put on a bit of a warm defense that have worked, ibm and qualcomm. they're all the time with good news, and very positive with the twilio call. >> really? >> mr. watson does a great job. >> we're susceptible to charm all the time. >> total. >> my wife sent me a nice e-mail this morning. >> and that's it. you feel better about things

this morning. a little rough? it will pass. >> yes. >> sudden storms. >> stuff. >> bob pisani is on the floor with more on what's moving. >> reporter: good morning, guys. the important thing about today, i know markets have been flat for three weeks but there is some rotation that's going on. if you look at the early morning sectors we've got oil comfortably above $43, and although fractionally, industrials have been well and there's your other leadership group, technology stocks since july first, tech has been on a terror, and just in the last week or so, neck on a terror. you have a good rotation going on. since the bottom on tuesday, crude's up almost 10% in one week, that's it. energy stocks since then have responded, up about 4%. it's smaller than it used to be,

but that's helping keep the markets up. the tech sector, up about 10%. microsoft have done better than accepted and facebook, and that's holding up the market. there's your leadership groups tech and energy. gym mentioned eog, it's been a terror. it was $80 a few days ago. after its earnings report, it's $90, and it's a very simple story. they're have to keep the cash flow up. they can't have a negative numbers overall with the spending more than the cash flow. they've got to keep the cash flow up and finding ways to reduce spending even if oil stays $50 or below. that's the story for most of these stocks. on earnings, let's talk about norwegian and gap. the earnings was a beat here, but the guidance is a problem

and specifically mentioned weak demand for european trips. u.s. consumers taking cruises over to europe, as well as issues with the lower pound and brexit. >> if you look at the norwegian cruise lines it's reflected these issues already out, and the issue is down 6% than people had been anticipating here. for gap, we can't get any consistency in the comparable store sales, so comps down 4% for july. we were expecting to be down 1% and right across the board they were disappointing. old navy was expected to be up a little bit, gap was expected to be flat. banana republic, that's a real problem. some of the estimates were down 7%, it was 14% down. june was a pretty good month for comp store sales. may was bad, and now july's bad, and so nobody -- there's no real

consistency in the numbers overall. now remember they have 3,200 stores, they're making efforts. the guidance is better than expected. they're closing underperforming stores. there's all sorts of positive data points but unless you get some consistency in the comp store sales, look at that chart there, you're going from 30 to 15 and now you're at 23 or so, that's because nobody can figure out where the numbers are going to be and maybe the answer ultimately is close more underperforming stores. 3,200 stores is a lot of stores to deal with. right now the dow up 29 points back to you. >> thank you very much, bob pisani. 3,200. >> i'm telling you gap has got -- they're making some changes here. >> they've been making changes for a really long time now. when are they going to be done? you have to always keep iterating. >> i just think that it -- it can find a level. it can find a level. not recommending but you it can find a level.

these retailers are finding levels, is my point. >> 2399, that's a level. >> let's get to rick santelli. >> reporter: good morning, rick, we're leveling off. look at the 10 year chart, if not negative productivity level set to high yields. consider this, last week, we settled in the 150s ever day da and today it looks like a good chance. last time we settled at 160, think brexit a month earlier because it was june 23rd. let's look at july 1st start, it gives you some good clues, lots of important meetings and things coming on to central banking and brexit all happened in july. our ten year, you can clearly see 160's the mark all technicians are watching. when it comes to boone yields, 0.

0's the resistance most are paying closest attention to. queen sti we're still down on the year and the dollar is advertising what the feds may or may not do in the future is ground zero. pound versus $1, 129ish was in the close after the brexit. we are in a handle right now and the crb commodities, think energy, in things like lean hogs, huge down year, but as it levels off we said last year 176. the index is at 82. it is up on the year, but at one poi point, it was at 195. david, back to you. >> thank you very much, rick santelli. when we return we'll have more on the 2016 olympic games. we're going to head back to carl in rio. >> reporter: it's been 92 years since rugby was an olympic sport

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welcome back to "squawk on the street" live from the rio olympics. rugby returned after a 92 year absence. we visited practice and talked to madison hughes and coach mike friday and we asked what it's like trying to defend u.s. gold after nearly a century. >> as a story, it's a great story. rugby is in a different place so it's a different the olympics ae defending champions so we're going to be ready to try and defend our title. >> is it hard to assembly a team in america where kids didn't necessarily grow up playing? >> it's been tough. i think you know, what we've got

to realize is rugby, where it's positioned at the moment is kind of a minority sport and we need to move it to establish the c p complimentary sports and can sit nicely the nfl and allow those athletes striving to be the best they can be to also take up another team sport game and be very, very capable and successful at that, as well. >> madison, how did you come to it some. >> i grew up in england so that's where i picked up rugby, started playing at seven years old at school and been playing ever since. >> when you came to the states did you have trouble finding a home for that sport? >> i picked up at dartmouth and i found an immediate club there, the dartmouth rugby club. it was interesting, in the rugby team we had two guys who played before so deferral a different experience, but the guys picked it up went to learn it and found what an amazing and fun game it

is. >> i'm going to show you. this is your right-handed pass. you want to be standing -- if we're going this way down the field, you'll be standing like this, and to pass that way, open your feet and hold the ball like that. with your right hand to the back and your left hand to the front. >> yes. >> and if i'm to the left, you just want to -- kind of like that. so if you end with the long arms, that'll make it easy. >> you want a better spiral? >> that's the easy part, guys. obviously the contact management, getting tackled, not kill side part of the game. jim you'll love the team is known as the eagles and even though they're not necessarily favored because the fijians, the south africans are so dominant, they won the searchvens world ss in london and their competition gets underway today. >> a super bowl with any team name eagles and i'm happy.

ii i'd root for anything eagles. i'm going to training camp monday, and i don't even care. >> they already have that spokesman that. dartmouth kid was good. >> i love your stuff. this game, rugby, i want to have it, because it reminds me -- this is so rough and tumble stuff. it's very exciting and i -- >> yeah -- >> and lacrosse and rugby are the two games i love on tv. >> and friday, the coach's point, is the leagues, nfl, nba, need to make room for things like rugby so athletes have options. for instance, nate ebbner, special teams with the pats, is on the team with the blessing of craft and belichick. it's not a game with some of these leagues. >> that's fascinating. the analogies are clear. it reminds me of jim brown

playing across syracuse for cleveland. i just think, carl, this sport is going to be put on the map by this event. this is the kind of thing that happens in the olympics. this is what phil said on ""mad mone money". this is going to be the sport. i want to own a rugby team. >> you'd be a great sponsor, jim. >> yep. >> he would be. >> and i don't even need coffee. >> all right. >> thanks, carl. see you in a little bit. >> see you. up next we'll have top stra stop trading next after this. you're here to buy a car

i we worked with pg&eof to save energy because wenie. wanted to help the school. they would put these signs on the door to let the teacher know you didn't cut off the light. the teachers, they would call us the energy patrol. so they would be like, here they come, turn off your lights! those three young ladies were teaching the whole school about energy efficiency. we actually saved $50,000. and that's just one school, two semesters, three girls. together, we're building a better california.

top trading with jim. what do we got? >> do you know what this is? >> i do. >> this is what? >> this is a $100 bill. last year, when i was madi meet with andres fibbic, it smelled just like $100 bill. they've obviously done it for a lot of companies because bingo. >> are you wearing it now? >> i wore it this weekend. >> how about people react to it? >> this is the sweet smell of

success. tony curtis. >> were people following you around? >> it was like the pied piper thing. >> i ff was on "squawk box." that's okay. i'm a kind man, i'm a good man. that's from apocalypse now. this is absolutely the smell of what my show smells like. >> got it. >> and on weekends, you wear your -- the ladies love it. even sara. sara eisen, she loves currencies, she didn't know that she loved the smell of currency. >> i ff. see you right back here tomorrow morning. coming up though goldman sachs, david costa, we want to hear his recommendations, keep it right here.

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good morning and welcome back to "squawk on the street," i'm sara eisen, along with david faber and will fred frost, live at post nine at the new york stock exchange. our very own carl quintanilla is

with us from the olympics in rio of the first let's check on the markets. we've got a mini rally underway, the dow is up about 39 points and the s&p 500 up fractionally, nasdaq up .2 of a%, and we have some breaking economic data to get to. rick santelli joins us now with wholesale trade, pirick and. >> reporter: and it's very interesting, sara, because this data point series doesn't garner any eyeball but today it's going to. inventories were up .3, we were looking for unchanged but here's where it gets interesting. sales is the key. we've had inventory puspurts th only end in disappointment, but the sales were up 1.9. this is big. the last time we were anywhere in this neighbor you have to go back to -- and i'm saying pretty far -- you have to go back to

september of 2012 to find a higher month-over-month change on the sales side, so some good news there. we'll watch the markets, although treasure yields continue to dip back into the mid-150s, sara back to you. >> thank you very much, rich and goldman sachs leading by 25 point stocks. in the green, oil prices rising. market volatility and volumes remaining a bit low. let's bring in david kostin, joining us exclusively at post nine. nice to see you. >> nice to see you. we have a rally this year. you predicted a flat market. we are up 7% above your target, maybe you weren't positive enough? >> well, the target remains at the end of the year, 2,001 left-hand a, we're slightly above that. the market has come a little bit higher, and tactically, we had

second quarter earnings, margins declining in the second quarter, that's a concern. we've been focused on that for a while, concerned about elections towards november and overall growth and how higher rates is a risk. those are some of the risks i would look at as head winds and the market is slightly above where the target is. >> so is it surprising investors are paying high multiples for what is declining margins now. >> the market trades at about 18 times earnings, which is at the 98th percentile, which is a very high-end of the range of the last 40 years so i think from some of the opportunities in the market, relate to risk of adjusted returns, focus on dividend growth, as opposed to yield some, secular growth opportunities. so there's some interesting opportunities in the market. one of the big focuses over the last several months has been minimum volatility strategies and i believe that is the wrong approach to selecting stocks and

you should be forward looking at risk and adjusted concerns. think about that ratio. if you think of a forecast, think about volatility, forward-looki forward-looking volatility, and the separation return. if you want to think about starbucks, visa, nike, sales force, level three, those of. some companies among the highest risk of adjusted return looking forward and that is the appropriate way to look at these stocks. risk to adjust return is critical. >> if you're talking about those factors how important is what the bond yield is doing to expect where risks should trade all the back of that? >> the bond yields roughly 1 1/2%. goldman sachs beinthinks this w climb and would generally be a headway for multiple expansion, and as a strategy, dividend

growth. most of the focus has been on dividend growth, but growth stocks have lagged. if you look at ange, n and korning, so dividend growth is the key area that has not been appreciated by a lot of investors right now. >> what would chal nlenge your thesis in let's call it margins and earnings, where we could see some sort of gap up? >> one issue would be better economic growth. if we saw more robust activity and that's sort of a key issue. basically the characterization the economy is in secular stagnation, that low rates have not induced managements to invest capital in a significant way, is basically a head wind and as a result, we're looking for companies as portfolio managers that have secular growth, more than 10% top line revenue growth. those are a rare environment, where the economy has been grovigrov

growing roughly 2%. >> and investors are willing to pay ultimate pmultiples, as wel >> that would be a concern. the market is creating around 2 1/2 time enterprise value to sales, which is high, but think about google, amazon, paypal, fortuneet, there are companies trading at model levels valuation, that is a rarity, we call those secular growth stocks. >> do you think the market is underpricing the fed rate high school, what you and your team is predicting this year? >> we've assigned about a 75% probability of a fed high school, tschool fed hike by the end of the year, and that would be a potential head wind. >> you mentioned months ago if we got higher economic growth that would be a surprise. could trump's economic plan deliver that higher economic growth? >> the political concerns really

relate to economy, and basically, foreign trade and protectionism, where both on the hillary clinton camp has not been supportive of the transpacific partnership, which is a strongly endorsed by the business community and donald trump, with concerns about tariffs on schchina imparts, th would be economically speaking. you can read some of the comments by industrial amendments in the second quarter conference calls, highlighting the whole tpp as a reason they were focused on foreign trade and why that was important for their top line growth. >> it's a conversation i'm sure we'll continue to have into the election. as always, david, thank you. david kostin, u.s. chief equities officer. and let's head over not olympics in rio. carl consist unit quintanilla i some highlights. >> reporter: we've talked about

some of the upsets in tennis. jo djokovic out, the williams sisters out. seeded seventh, survives a tough match with france, and wins the third set tie break and talked about that victory after the match. >> that was definitely one of the more nerve wracking matches that i've played, and you know, i'm just really happy i was able to fight no matter what was going on. my brazilians i guess to stay in the match and keep competes ing what i'm proud of myself for upon. >> and from tennis to swimming, ryan held hais emotional response, when he won in that relay, mens took the gold medal there. held grew up idolizing his teammate, michael pehelps, and talked about what it's like idolizing someone you do as a

kid. >> when i was seven, i said i wanted to go to the olympics, win a gold and be like michael and i got to swim on the same relay as michael pehelps, that was amazing. when you're on a relay with michael and you have the world's most decorated olympian at all time t kind it makes you stand little bit taller with a little more confidence because you have the rest of the world swimming in to you. >> what a treat for him. congratulations to held. finally, guys, a lot of buzz today with the rowdy crowds here in rio, and by that we mean the rowdy brazilian crowds. the times has a piece about how the brazilian crowds have so much energy and so much volume, even in events where silence is customary, it's thrown some of the athletes in table tennis, some of the swimming officials had to ask for quiet. beach volleyball, there was some

hecknin he heckling. in a few minutes we'll talk to the ceo of rio's organizing committee. we'll get a report card on fay four how the games are going, what the concerns were going in, and what the hopes are of course for the next week and a half, guys is this. >> recall ca, thank you very mu much. it's the same on the new york stock dpang exchange. when we return, as carl just said, he'll sit down with the co of the olympics, sidney levy, plus, lululemon's longest standing board member is out, we'll break down the controversy of her departure. you're watching "squawk on the street."

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welcome back to "squawk on the street" live from rio and a member of ypo and exclusive cnbc partner with 24,000 executives worldwide, joining us here in rio, is sidney levy, the ceo of the rio organizing committee. he joins us here at our set in olympic park, great to have you, congratulations on day four now? >> day four, yes. >> what were your worries going in, candidly, now that you can talk about it and how have they been answered? >> the first priority has to be the atlas, the transportation, the food, the competition places, and this was the main thing we were worried about. too many athletes at the same time, and i'm very glad to

report we're doing very fine on that one. >> security lines, all of tha o efficiency, are you where you want to be? >> we were there, with the chief of states, fracois hollande, so we were pretty worried about it, our specialist team worked very well, so this went well. first day we had a glitch in security, and the machines were too strict so the lines were too long, so we had to adjust that. but i think we had 96% of the people here saying they feel secure inside the park. pretty good number. so i think we got that. >> we've talked a lot about on air, the budget rio had to work with challenges? how did you do it on what london and sochi spent? >> this would be gains forev ev

and ever. we had to diminish sizes, stance, number of people, and services. so we did that. the question everybody had at that time, can you do that and deliver great games, so i think we're answering everybody saying yes, it's possible, it's tough, it's hard, but it is possible. >> so do you think that opens the door for the committees to give the games to developing countries to take a chance on ev africa? >> i hope so. the games cannot be restrict to some countries. it's a very hard job, you've got to be tough. we're lucky to have constituents that understood that. most players understood that so they helped with the system. >> let's talk about doping. we mentioned lilly king, criticizing her russian

competitor. to what degrees doesdoping color the games, meaning spectators i have no way that player is clean and how does the doping agency respond to that? >> there's zero tolerance. if there's hint of suspicion, it can't work. people have to go there and be very sure there's no dope involved so it has to be strict, there's no tolerance. if you go into that, that's the only way. >> does that mean every russian athlete b athlete would be banned? >> i don't want to comment to that, please. >> it's a tough one they're going to struggle with. >> yes. >> brazil's economy. how do you feel and would you put a target on when gdp goes positive? >> we really think the games can bring this curve, the inflection of the curve and that people

feel more confident, seeing the numbers to begin with. we went through a very, very hard time. there's still some things going on and we need the president finally on the job to put reforms and we're pretty confident they will. that's the scenario we're seeing right now. >> and when critics say this money could be spent on hospitals, police salaries and schools, what's the answer to that? >> they're wrong. >> because? >> because everything, the organizing committee, it was private money. all the government money went to infrastructure, new subway lines, new transportation lines. this is going to stay. this is going to help the economy moving forward. so it's not one or the other.

we don't have any single white elephant. the statements are small. we had already an olympic stadium, a big football stadium, so we're very confident there's no white elephants in the system, and the organization of the games is private money as it should be. >> so no legacy issues like ala athens, or other games with bigger infrastructure? >> we were pretty sure that won't happen in brazil. >> congratulations on a good start. sidney levy, the ceo of the organizing committee. and we look forward to you in a bit. just want to point out the markets. mentioned a mini rally and the s&p is up a quarter of a%, that a new intra day record high territories up 5 points. healthcare and consumer staples are also higher. let's show you the nasdaq, which is also higher and we're seeing

the dow rally about 45 points, a new high, as well. so we're keeping an on on teye the levels and speaking of technology, on facebook, let's get over to julia boaorstin wit that. >> it says they'll at the same time address while many people download ad blockers by giving people tools to control what types of ads they say. users will be able to click to see why they're seeing it. people are targeted by their age, or where they went to school and they can edit preferences, about hiking and cooking and can opt out. andrew bossworth added some pages saying we've designed our

formats to address the underlining reasons people turned to ad-blocking software. the idea is if they get ideas valuable to them, advertisers will pay more, which means more profitin profits from facebook. we'll see if fans of ad blocks software is announced it doesn't work anymore. >> interesting idea and the stock sun about half a%. thank you. as we head to break, check out shares of valiant jumping up nicely, 13.5%, confirming the company is sticking to its 12 year guidance. we'll dig through the numbers, the dow is up 41, the s&p at a new intra day record, up five points. but what's it cost to modernize a school district? what's critical thinking worth? a basketball costs about fourteen dollars.

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walmart buying jet.com for more than $3 billion. becky quick sat down with doug mcmillon and the cofounder of jet.com, mark lori, who joins us now with some highlights. becky. >> thank you very much. this is a story of two cultures colliding. you've got the traditional

retail giant, walmart, with its simple culture of delivering low history cost goods meeting up with hipster, e-commerce jet.com. it played out in front of our cameras with walmart's ceo, doug mcmillon on the right-hand side there, shedding his walmart uniform when he came to headquarters and he dressed down in jeans. mark min the unofficial uniform of blue shirt and slacks. walmart needs some help besting its online sales growth and jet.com, which built a big customer base since it launched needs help cutting costs to make a profit. the two of them talked about some synergies, and lori said jet.com needs walmart's scale to help it finally turned a profit, but we didn't hear how this will impact walmart's guidance for the year because the company is in a quiet period ahead of

earnings release and we talked about mcmillon how the economy is doing and there's some good news there and some bad news. >> we've got currently pressure, food is deflating, so we'll never get all of those things lined up in our favor at the same time. but low fuel prices do help, and hopefully we'll see those stay down for a while because that's what our customers need. >> we also talked politics and both major candidates are talking about trade. you've got trump threatening to slap tariffs on goods coming in from china and something like that could have a big impact on walmart, which sources from around the world. >> in the case of tpp, the one area that walmart would benefit is selling beef and pork into japan and because of the changes that have been negotiated, our farmers would not have the same tariffs attached so pricer would

be lower in japan and more demand for u.s. protection, so when we talk about a trade deal let's talk about the specifics. when you hearing some like that growing up in america and caring like i do, that would be great for the country. so these big sweeping statements is something we need to be careful of. >> and david wall street's going to be hearing more from the company next week when, it releases its earnings report august 18th. david back over to you. >> thank you very much, becky. great interview this morning. >> thank you. let's talk about valiant, the embattled pharmaceutical down. down about 87% last year, but having a very good day after reporting earnings that were a bit low of what had been anticipated but the ebitda, the company talking about the potential sale or the

examination of a sale as much as $8 billion worth of assets -- the exploration, i should say, it's not something that'll happen. r and d is going up at valiant, a company that had been known for not spending much anything on r and d. it's tax rated and still remains extra ordinarily low. it did spend -- or have a 15% tax rate, but only 5% cash and it is talking about an acceleration of the salex business, an important business it bought a little over a year or so ago that has hit some difficult times. so overall, joe papa, the company's new ceo trying to set a positive tone for what he believes will be a strong second half 2016. some came into the quarter wondering if there were negative catch flow. clearly that won't be the case. some of those low of the stock may be helping send it up even

more. i want to hit charter communications, the conference call ongoing right now, but that stock having a good morning overall. they did add 18,000 residential video customers which in this market is kind of interesting, given the expectation of course that people will be slowly but surely disconnecting thevideo prescriptions. the broadband from the likes of the course of charter or comcast, our parent company, any number of companies offering that, this was the first quarter we saw all of the names under the charter banner, time warner cable and brighthouse. brighthouse was a private company, so it's the first look we got into those numbers and they have subs in florida where people tend to unhook from video as they head north before they head back south. and finally, guys, disney's going to be reporting after the bell you'll probably be talking about tomorrow morning. >> i'll be talking about it on closing bell actually.

>> marathon day. >> you're doing the foul, wow. >> but julia will be talking to this man. >> bogb iger will join julia. >> more on the olympic games in rio with carl. >> reporter: if you go to the beach in brazil there's good chance you're going to buy a globo cookie. i'm buying one from antonio here. they cost about $1 or so made of cocoanut, milk, and sugar, and is considered a treat for those locals at the beach. and you can see why. more "squawk on the street" after this. fields and stuff.oss but it's mostly getting to watch your directv with unlimited data from at&t. we're setting families free. so they can stream away - and not squabble over who's using how much.

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[ hip♪ olympics 2016, let ]n me get you on my level. ♪ ♪ so you never miss a moment, ♪ ♪ miss a minute, miss a medal. ♪ why settle when you can have it all? ♪ ♪ soccer to wrestling. track and field to basketball. ♪ ♪ fencing to cycling. diving to balance beam. ♪ ♪ all you have to say is, ♪ "show me," and boom it's on the screen. ♪ ♪ from the bottom of the mat, ♪ ♪ to the couch where you at? ♪ ♪ "show me the latest medal count?" ♪ ♪ xfinity's where it's at. ♪ welcome to it all. comcast nbcuniversal is proud to bring you coverage of the rio olympic games. good morning i'm sue herera. here's your cnbc update.

it could be another rough day for travelers on delta. the carrier canceled another 250 flights as it continues to recover from monday's worldwide computer outage. it canceled about 1,000 flights yesterday. a saudi-led coalition carrying out strikes in yemen's capital for months, following peace talks over the weekend and hit a privately owned food company, a presidential compound and a military base. russian president vladimir putin welcoming turkish president erdowan to russia, the two looking to repair ties, surrounding the downing of a syrian plane last year. and espn is reporting tim tebow is actively pursuing a career in professional baseball and plans to hold a work out for major league teams and their scouts this month. he hasn't played since he was in high school in 2005. that's the new update this

hour, i'll send it back downtown, sara, back to you. >> and he was an nfl quarterback, right? >> yes, he was. >> he definitely was. >> sue, thank you. meanwhile, donald trump attempting to put his campaign on a different track with a big speech about his plan. john, we're getting all sorts of reaction to it this morning. >> reporter: we are, and donald trump has placed himself in a very deep hole in this campaign. he tried to get out of it with that economic speech, tweaked his tax plan a bit. the benefits are still tilted towards upper-income americans and the clinton cal pampaign ca it the friends and family discount, and increases the deficit but not as much as before because donald trump adjusted upward to match those of other republicans who have been moving away from him. >> we will work with house republicans on this plan using the same brackets they have

proposed. 12%, 25%, and 33%. these reforms will offer the biggest tax revolution since the reagan tax reform, which unleashed years of continued economic growth and job creation. >> here's how deep that hole is for donald trump. our new nbc survey monkey pole shows him down 10 points 51-41 to hillary clinton and he suffered two fresh blows yesterday. first of all, republican senator susan collins of maine said she could not support donald trump, that he lacks common decea dece and those serving past president, would be the most reckless president. here's general barry mccaffrey this morning. >> mr. trump has gone over the line too many times, loose talk

about nuclear proliferation urging, you know, japan and south korea to go nuclear, praising saddam hussein, a mass murderer, praising putin, leading russia into a criminal alga alagarky. he's not fit for president of the united states. >> and the danger for donald trump is that becomes so deep by labor day, no candidate can dig out of it. >> john, thank you very much for that. we'll discuss it a bit more in detail. joining us, gop strategist michael bonds dcba law and policy managing attorney and president of the american commitment. good morning to you both. michael, let's just start with you. >> good morning. >> john just outlined some of the issues mr. trump is facing, another couple high profile gop members coming out to criticize him, but following that economic plan yesterday, will a lot of traditional gop voters be

applauding him particularly from the business world given what he was saying about corporate tax rates? >> absolutely not because that's not enough. simplifications overdue, sure, but one would think as the outsider candidate, the businessman that donald trump would have come out and said, great, we've got a big plan, we'll do big things and say for example we're going to balance the budget by 2020, we're going to tedeal with the fact housing and healthcare, and middle class and workers, 18% of the population is unemployed or under employed. combine with his promises to revoke trade disputes with countries like clint a ohina, o bigge biggest creditor. as the national security experts stated yesterday, this is a big deal. >> phil, there was some aspects where he seemed to be moving closer to gop members in particular, the personal income

tax bands. is that showing there is some progress in terms of what he's considering to get closer to the party, or is it very minor relative to the rest of it all? >> well, i don't think they were that far apart to start with. there was a difference in the top rate, which does matter for growth. most of the growth from the business side is that 15% business tax, where he has a regulatory freeze and has a very pro protection energy plan and i think the message he was trying to send yesterday is the for those who doubt that i really mean this -- and there are those mothi who think he's sincere. paul ryan has been working on tax reform, he's going to take the lead on this. if i am am elected and have republican congress we're going to get this done and i think that's why he moved closer to the position of the house that said we can work off the house's draft and that was a very important move for that to people to see as credible he can

get this accomplished. >> and i'm and i'm asking you because you two of the here is the trump sporter, don't you think when it comes to deregulating this economy, getting rid of what trump calls massive real lag massive regulations he has tormoto be more specific? >> he's talking about a total regulatory compliance about $15,000 per household, approach $2 trillion. we've had 200 new rules in compliance cost over president obama's seven and a half years. he's is iisaying let's figure o from a structure reform act, which puts congress back in the decision loop. it's a big deal to have a presidential candidate who is will be to diminish presidential power in order to fix the regulatory process and so i think he's really on the right track in regulation even without getting into all the specifics,

which i mean there's so many when you're talking about hundreds and hundreds of rules. it's not practical to drill down to all of them in the campaign context. >> do you agree in terms of he's the right man to bring down regulation? >> absolutely not. he's going to use the authority to the extreme even worse than president obama. you have to understand if you understand federal law you've got to go through the federal rule-making pros rule-ma rule-process. you have to change federal regulations to allow people to get greater access to treatment. if you put an end to that, which is currently undergoing the form regulatory process that means people's lives are at stake. you have to under government. trump's proposal -- >> that just means go to congress and do it the right way. >> we'll have to leave it there. thank you very much. michael burns, phil kerpen.

>> carl to rio, let's get a look at what he's munching on in terms of brazilian treat. >> reporter: we're all done with treats for a moment, but rio's a very congested city. there are some fierce wars going on in the ride sharing business. we'll talk about the competitor uber has on its hand when is we come back in a moment. energy is a complex challenge. people want power. and power plants account for more than a third of energy-related carbon emissions. the challenge is to capture the emissions before they're released into the atmosphere. exxonmobil is a leader in carbon capture. our team is working to make this technology better, more affordable so it can reduce emissions around the world. that's what we're working on right now. ♪ energy lives here.

. what does marc faber think about the trading nation? more "squawk on the street" coming up.

welcome back to "squawk on the street." let's send it to carl from rio at the olympics. >> reporter: hey, sara. rio is one of the most congested cities in the world so it's no surprise ride-sharing apps are at war. uber having surrendered to dd in

china faces another local powerhouse here and latin america publish jorge doesn't know travis, but his app, easy text goes up against uber every day. a slightly business model tapping not private drivers but existing networks of cabs, armed with knowledge of local customs a andet k ettiquite they're too bo notice. >> you see china, taxis in southeast asia and latin america, that's down from uber down, mexico, argentina, chill l chile and we're giving them a run for their money. >> do you think the deal was a sign they've bitten off more than they can chew? >> absolutely. it shows uber didn't have the capacity to under a market better than the local player. >> with 25 million rides, easy

taxi is beating uber in brazil, but the fight is just beginning. during the olympics, uber has gone for more market share offering uber english to hail english-speaking drivers. those tactics will be more difficult in latin america with low smart phone penetration, where easy taxi is getting creative. >> we have a pilot people can ask a taxi using an sms, and we also have a solution where we put in shopping malls or hospitals, a stand where you can click a button and we'll dispatch a taxi to that location, but in the end, carl, what you want to do is which is it's the connection of one individual with a car. >> you have ever met travis? >> i haven't met him personally. >> what do you think -- what do you think of him and because ho he's basically doing what you're trying to do. >> he's an incredible entrepreneur. he's built one of the best-funded start ups in the history of the world. it's incredible.

there have been some discussions about how aggressive he is in the market. i think actions speak for themselves. we're trying to differentiate ourselves treating drivers better. >> reporter: coming up in the next hour on "squawk" alley, we'll get a rebuttal from the chief of uber brazil and talk about some of the challenges of grabbing market share at least in this country, guys. >> carl, it makes me wonder and i know you were speaking with the ceo of the olympics about how much spending went into the infrastructure to prepare, the roads, trains, can people get around? did they do a good job with this? >> i mean, it's still early. people argue the subway is limited. it's not a full line of subway like you may think of new york city, so still people rely heavily on the automobile to get around. that's clearly what easy taxi's going to bank on and what uber will bank on. you don't need the economy to grow that much to get these businesses to grow but clearly anything that brazilians do

overall to get the infrastructure going is going to make a difference. >> absolutely. carl, see you in a bit. thank you very much. let's get to chicago, rick san anton s santelli. i'd like to welcome tim, thanks for taking the time this morning. >> rick, it's good to see you. you look good. i look the boots. >> thank you. listen, it's easy today. productivity, negative number, down .5. to me, the economy can't him along if we don't get a couple things fixed overburden, of course regulation, we also understand productivity is right up there and maybe the last thing is tax reform. what were your thoughts when you saw that negative productivity number flash on the screen today? >> you know, it's tough to see 100 basis point decline because

that's what we've had, and i like, as you know, to draw a connection to fed policy, because it tends to get overlooked and it's the root of all things, if you look at what the role of the fed has been, it's this, 1975, congress put the fed in charge of employment and prices. people and money, which are the two biggest inputs to productivity. if you look at the trend line for productivity since the '70s, it imexploded. productivity is nothing more than what's left over after you put people to business, that's labor,s and capital. if the fed is depressioniat dep value of money that puts the focus on labor. people will need to hire, at some point you have to pay people to work. over the long run it leads to offshoring, it leads to wage stagnation, and ultimately, the fed is undermining productivity.

>> you know, tim, one of the discussions on the channel this morning, after that number, resolved around something michael bloomberg said recently and that is the problem with the globalization is technology and it was brought up that technology is having strange effects on the productivity numbers. your thoughts? >> well, you know, humans are resi ree resilient. we find inventive ways to do more with less. i'll go back to the basic idea, which is if you're diminishing the value of capital, you'll erode the value of technology to add to productivity, and you might think, why? why would the fed undermine productivity? you can -- is it -- are they a collection of abov bafoon is? not at all. it leads to debt inflation. it's paying down debt. if people focus on paying down

debt, they tend to sell things at distressed prices, businesses stop hiring and investing in the future, and we slip into recessi recession. what's the fed do in response? they believe and all central an bankers believe this is orthodoxy, it's the credit cycle that creates growth. we have zero interest rates. we have in effect a permanent teaser rate on credit cards so people will borrow and spend and the fed and central banks buy debt. if you have a mortgage that's $200,000 and your house devalues, you panic. if the value of your house soars to $500,000, you resume spending and borrowing. the problem with that it twofold. what follow as credit cycle? debt deflation and who backs the fed? we never ask that question. who stands behind all of the fed's dollars and spending to

buy our debt? we do, the taxpayers. in effect the fed is undermining product activity. >> i tell you what, tim, you don't paint a very optimistic picture. i truel don't see central banker -- and even more so i don't see them getting off a train that seem to be going nowhere. thanks again and back to wilfred frost back at headquarters. >> thanks very much, rick, down here on the nyse floor. the nasdaq has ahead a intraday high, the s&p also once again at a record intraday high, and europe is rallying high. much more on the markets ahead on "squawk on the street." stay with us.

in news out of the lululemon, as the company's longest standing board member rhoda pitcher is resigning. she played a key role in hiring the company's current ceo. there has been some controversy swirling about ms. pitcher's

experience level, the street.com appeared jim cramer have raised questions in the last few weeks and months about her lack of experience, and at one point whether she was even a real person. just 2 1/2 weeks ago i sat down with the ceo about rhoda pitcher. >> i've known her for about three years, she's been the chair of our meetings and governsance committee. she hayes a deep understanding of our culture and has been a great support of build the management team i was able to build the past few years. the intuition, combined with her deep understanding of the culture was an asset, and i'm grateful. >> so she stays despite the mystery and the controversy surrounding her identity and her experience? >> absolutely. absolutely. >> it tissues ourns out she's n saying. the company announcing saying --

it's not due to any disagreements with us. the board telling me in a statement, quote, we have the right to lead us into the future and the best management team to execute on our ten-year vision. we wish rhoda all the best in her future endeavors, so framing this as her decision to leave the company. it clearly has not affected the symptom pres, has been a source of controversy. >> that's why i bring up once again we have europe seshlging into the close. the difference between the two there, if you have bond yields teching up here, which is a little more encouraging, that a bit more cause for concern.

let's send it over to jon fortt with a look at what's next on "squawk alley." >> we'll be talking about making money online. and a cofounder of netflix talking about the next generation. and lots of deals happening in tech. we're going to difficult into that, all that and more coming up on "squawk alley." this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every

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