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good wednesday morning and welcome to squawk alley. i'm live in rio. joining me back home in new york, john fort and kayla. and the co-founder of elevation partners. a lot of headlines but first back to kayla and john. >> thank you so much carl. disney is the biggest stock in the market right now. it's largely what is causing the dow to gain. of course news the company is investing 1 billion for a 33% stake in sports streaming service created by major league baseball and as part of the teal disney plans to embrace core cutters launching new digital service separate from the cable bundle. that will stream sports and here's what bob iger had to say about it. >> there's no disadvantage. if a customer decides to disconnect or to cancel their car service and migrate over in

directv's case to the over the top service which is primarily an internet provided service then there's no disadvantage to us. meaning it's press neutral to us. that's a very good thing. >> so first two roger with disney shares up about 2% right now. do you think all of those concerns about whether disney would move quickly enough to not get disrupted over the top, do you think that all of those concerns are alleviated now? >> i don't, kayla but i think this was a really smart move for disney. the situation is like the one with the iphone. it's often hard to come up with a second act that makes for a smooth transition and i think that the issue here, kayla, there's two things going on. for disney specifically, they had this amazing guilt on espn where 80 million people are paying for espn whether they

juan it or not and as we go to various cord cutting and unbundling situations they'll have to reset the business model and in reality over time there will be just as much money in it as there is now but i think the transition is likely to be murky and it's going to scare people but the second issue, this is the real irony. let's think about this. they're spending a billion dollars to buy a third of a piece of a technology business started by a professional sports team. for the last 50 years the television networks have been the ones they turn to to get them to customers and now the situation is completely reversed? i think that is an astonishing thing. and what they created here really is amazing. >> you're right but is it any less amazing than amazon which made it's selling books coming

up essentially with modern cloud computing or apple reinventing the smartphone? but here's my question for you, the difference here between the smartphone situation and the video situation it seems to me is con ten wise we're far from fully penetrated. there's plenty of global audience still to reach. people still have this hunger for content. even traditional on ten just done better than before.

tnch the exciting thing is the capability to reach everybody in the world is now there. when i talk about moving from adoption which is the purchase of new phones to adaptation which is the whole economy adjusting to the fact that everyone with money has a smartphone, this is exactly what we're talking about and to me what's great about it is there will be new product offerings and a lot of exciting things to be done but i think for the large scale market leaders like disney it's got to be scary because there's a lot of other people doing the same thing with less market share. >> let's move on to the markets. u.s. stocks trading in a tight range and not stopping the nasdaq from hitting fresh all time record closing and intraday

highs yesterday. oracle, citrix, hp enterprise and nvidia. what's so interesting about this year's rally compared to last years rally all driven by the high growth momentum internet stocks is what's old is new aga again. >> the s&p 500 margins have basically peaked because you have weakness outside of the u. s. and more than half the earnings of the american companies come from outside of the u. s. at the same time the market factored some of that in. particularly for the lower growth companies so you see situation where value is in the stocks and they have an upside

surprise. we see central banks sprinting money everywhere. there's a lot of cash flowing through the system and there's nowhere to go except financial instruments and that's driving the market up. i don't know how long that's going to last but i'm very happy about it right now. >> a lot of people have given yelp up for dead. it's up 14% this morning. is that what you're talking about when you refer to limited down side left? >> markets are about buyers and sellers so the battle between fear and grief had this year at least massive oscillations. we have started the year with tremendous fear and at the moment, those fears have not been realized and so you're seeing some stocks and apple was earlier an example and you're seeing it in yelp and many others and at some fundamental level that's a better market

than the one where there's six or seven stocks driving everything. we'll see how long it lasts but i was a venture investor there so i'm just really happy for them and i hope they keep going. >> very quickly, a lot of people are buying shares of cisco and hp and ibm for the dividend, less for the underlying company. is that safe now? >> when you're in an environment where in some countries around the world you have to pay, there's negative interest rates, seeing the yields we see on the established mature tech companies really is way above average and, as you know i have been advocating apple on that basis for awhile and there's half a dozen companies that fit into the same scenario. i think it won't be enough to protect if the market gets creamed but it will certainly give you relative performance. >> let's move on to china because shares of the chinese e-commerce giant popping after the company posted a surprise

second quarter profit despite revenue falling short of estimates. revenue was up 42%. it's the primary regional competition for alibaba that reports earnings tomorrow shares are down more than 25% this year. it's been a full year since market volatility. the resetting shook global markets. these companies are having a tough time and the third quarter could be worse. >> well, you know i'm troubled as an investor that looks at china and tries to understand what is going on. there's some kind of struggle going on between the central government and many of the leading market participants and this is more true of alibaba than jd where the conflict versus come into the open and i have no idea what to make of it and as a consequence i'm placing a greater discount, i'm less

interested in chinese stocks until i see clarification. there's those that have an edge and to them maybe all of this seems normal. sitting where i sit what's going on in china feels like we're in a reset and it's not done and there will be some piece of news, something that bottoms the stocks out. that will give us a better chance to buy them right now. >> what do you make of this continuing move toward partnerships? u.s. companies partnering with chinese companies as a way to penetrate the market. you saw uber china do that and jd is partnering with walmart in china when it comes to e-commerce. does that make you feel better about investing and companies partnering on those lines? better about the u.s. side or chinese side? >> this is the $64 question. i look at that deal and it

doesn't look like a partnership. it looks like uber throwing in the towel. walmart is in a much better position so we'll see what happens there. clearly they're having an influence under the terms in which american companies can come into china and they're less attractive than the ones two or three years ago when american companies could behave as they would around the world and i'm going to be more cautious. those paying more attention to china may be more confident about it than i am. >> a lot of players trying to figure out what the rules are. we appreciate you joining us. >> stay well. i can't wait to see carl do a samba when he gets back. >> we'll hold him to that. we'll hold him too that. be sure to tune into squawk on the street tomorrow morning at 9:00 a.m. eastern. alibaba before the bell and

alibaba executive vice chairman. >> now let's get back to carl that's still live in rio. a big night for team usa. an wins that goal in the 200 meter butterfly. just instagramed a couple of moments ago and said that's one, always remember i wanted that one so bad. last night also anchored the 4 by 200 men's freestyle relay with a two second victory. women's gymnastics. the final five win gold back to back in team competition for the first time ever. why are they called the final five? because the team size goes from five to four beginning in future olympics. amazing vault by simne biles and all alley raysman incredible.

the hotel infrastructure here cannot handle them all so they called in a favorite to help out. >> on the list of olympic sponsorships airbnb has a new title and a big deal in a city that had not enough hotels and with the recession not much appetite to build new ones. >> instead of building a place that's more concrete that you know you have a legacy in the city and sometimes -- >> after the games. >> instead you mobilize the community and then after the games, things will set up normally. >> four years ago rio was just a slither of the global market. most of it occurred in the past 24 months. >> the very first was hosting it

and i think the community really got engaged early on and to open up also their houses for the work up and they realize that was a very nice experience. i think that was natural for two years later. they continue to go. that's a lot of fresh spending for the city and the country in the middle of the recession. >> with consumers still under financial pressure the company added new payment options. for instance, brazilians love to pay for things in installments. >> we put together local payment methods to really have the flow of brazil that we're having as a place to stay. >> 66,000 guests during the olympics.

that's 25 million in income for airbnb hosts in this city and a lot more in residual spending. >> you don't have to build a lot of hotels anymore. you have platforms like this. >> bet you wish you may have had that in sochi. more from you in a bit. apple is gearing up for the next product launch but not just iphones taking the spotlight. book is defending it's move to block the ad blockers but the debate does not end there and one of the biggest advertisers announcing a major change in strategy on that platform. plus one year of alphabet released since we heard it was going to happen. is it better off today? we'll dig in more when squawk alley comes back.

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it's been one year since google announced the creation of its parent company alphabet on a plan to separate it's highly profitable search and it's like cars and virtual reality. and shares of alphabet coming off fresh 52 week highs. so let's take a look at how they have done. from a core google perspective, absolutely they have done

fantastically well. investors have gotten a clearer look into the profitability of that business. but beyond that, what do you think? >> well, the conversation we were having a year ago was this sets them up perfectly to split out youtube and spin it off eventually. everyone was focused on what happens way down the road for alphabet. none of those things have come to roost but the one thing that has is the discipline that they have continued to talk about. it was never mentioned. it was never a buzz word on google's earnings call. and 4th quarter three times. recently only a couple of times but she announced a buy back and just did a bond deal last week to help the company mature it's capital structure and unless you think expenses have gone down dramatically they haven't. they're spending it differently. and it hasn't really slowed down that much either. if you take a look at the deals they have done in the last 12

months as alphabet they spent about $1.8 billion between the two entities in about 20 deals. their m&a deal making is pretty choppy but you would think if they were going to be tightening the purse strings they would pretty much put a hold on that and management style is out there. the cloud direction is unclear. and talk about amazon as the leader. google hinted at the fact that they're making progress but you have diane green running that. still a bit of an odd structure. on the alphabet board but also reporting an operational role there through the cloud. it's interesting these giants who are trying to get bigger taking various different roles. facebook, the semiautonomous acquisitions like what's app. apple, trying to build out eco

systems. amazon just growing into risky markets. microsoft, vertical integration and google you have this holding company structure. >> a lot of those companies held by insiders google despite the founders still having a massive, massive say in the company. 73% of the shares are held by institutions. this has been a winner for a lot of investors. phones, laptops and keyboards. apple gearing up for the next product launch event. which despite is coming up next.

probably less than a month away expected to feature the new iphone 7 but you can't buy excitement so walt has something you can buy today he is excited about a new keyboard for the ipad pro. >> the executive editor of the verge joins us now. >> good to see you, john.

>> about this keyboard, they make keyboards for awhile. you really like this one but for me the question is if you had to pick a single device to just get along with forever, pretty much, just exclusively. would it be the ipad pro with this keyboard or the laptop? a lot of people can't afford to have just a utility belt full of devices and they can pull out which ever one they want at the moment. >> well i think it's a tough call and it comes down to the software. there is as you know, there are are about a million apps in the apple app store that are tailored for the ipad. and a lot of them more and more and more of them actually are productivity apps and you can get along just fine.

if you're doing serious video editing you can do it on ipad but it's easier on a laptop. there's more storage and more opportunity to attach external storage so you probably are going to go with a laptop. but i think there's -- it's an 80-20 rule. i think for 80% of the people, even if you count what they do for work, it can be done pleasantly and without hassle on the software and with the hardware and now with this keyboard on an ipad. >> i tell you what got me, it was the educations. like trying to move audio files around and maybe every two weeks and to be stuck with technology it didn't work and made me put the ipad away and rely on them

more often. tow think apple is going to address that stuff or are they satisfied with the state of ios as it is? not entirely competing with the mac? >> you know, there are rumors they may even move ios to the mac and i stress those are rumors. i have no confirmation on th thatful it's a good example as they existed for years putting up a simple system in icloud. there's no reason why they couldn't be doing more of that in ios. it's not that there isn't a file system. it's that in is encapsulated in

that domain. pages and microsoft word has its own file system but it's not and if i want to put it into a photo or ipad and the file in any app i want that's still not easy on ios. >> no, it's not. so you should stick with a laptop or at least use your laptop part of the time. i mean, i have been using -- i said in the column, i am using my laptop less and less and less. i have been doing work things that we're talking about.

>> and thanks for joining us as always. >> still to come, bob iger's billion dollar bet on sports streaming and what it means for disney investors. squawk alley will be right back. this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. years about a cat allergic in to other cats.ow opening-slash-closing night it hit me: hats for cats. everyone said i was crazy.

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good morning. i'm sue herrera. here's your cnbc news update at

this hour the battle against zika continues in south florida. the mosquito control director says the population is dropping in the winwood district that's linked to 21 zika infections. his department is finding just one mosquito a day down from about two dozen mosquitos and traps sets two weeks ago. the defense department releasing video of u.s. air strikes on isis positions in syria last month. the u. s. is flying air missions in support of u.s. backed ground forces trying to push isis militants out of the city. and german police carrying out raids against suspected islamic extremists in several towns in western germany. they targeted preacher who is are suspected of trying to recruit young men to fight in syria and iraq. the mineral fire continues to burn in central california. it's now burned more than 800 acres and it's only 10% contained. more than 800 firefighters are

battling that blaze that started late monday that's the news update this hour. >> thanks so much. we are counting down to the close in the u.k. and across europe. just happened a couple of minutes ago and seema has that. >> a mixed day of trade for european equities. investors taking a breather but it's important to note we have seen a notable rebound in the european equities. the big picture here. take a look at the german dax. it's back in bull market territory up 20% from its february low as the brexit worries subside. plus german auto stocks continue to rally. bmw with a lunch in car sales worldwide helped by electric car models elsewhere they're trading higher after they raised production target for gold. this is a stock up 16%.

up 60% since the brexit vote. currently the best performing stock on the ftse 250 this year. some of the other gold minors around the world moving higher. outside of equities the bond market stealing the spotlight and the rally has not given up as the bank of england relaunching the bond buying program but failed to buy as many bonds as it was hoping to or in other words it could not find enough sellers of u.k. government bonds. in response, the short end of the curve has gone negative and the 10 year yield a record low and the 30 year yield has really caught the attention of investors breaking below 1.3% for the first time ever there's a discussion and this is motte a problem that mark carny is facing but mario draghi as well. >> meanwhile disney shares

turned around this morning after initially selling off what were better than expected results and the company also announcing a billion dollar streaming and julia sat down with bob iger and joins us with more now from the conversation. >> that's right. talked to iger about disney investing a billion dollars in the streaming video company to create digital streaming apps for brands across the country including a new streaming sports service that will include sports like hockey and baseball and will not stream exiting espn channels but iger opened the door to bringing traditional espn direct to consumers outside the bundle. >> if the business model starts in a significant way we have the ability to pivot quickly and put out a direct to consumer model and that's really important. we're not suggesting that it's

going to happen. it's our hope that that doesn't happen but this puts us in a great position and shouldn't happen. >> there's potential to launch apps based on disney's content or even marvel star wars. it will be top 7 channels could erode disney's revenue and here's what he said. >> there's no disadvantage to us. meaning it's price neutral to us and that's a very good thing but what is also very important is that we know that the ott platform is likely to grow and it's vital for us to be not just with espn but all the primary services to be part of those over the top, over the top products that have being brought

out. now disney owns a piece of hulu. it's another example of how it's taking more ownership over it's content distribution. >> thank you for bringing us that. let's also bring in the senior media and entertainment analyst at drexel hamilton. he joins us on the cnbc newsline. why baseball and how do you grade the consumer side of the product that disney is buying into? >> this goes back a little bit to the earnings can which exemplified what disney does best which is disty beauty brand to the consumers. and the it's launching it's own version of an hbo.

>> perhaps the disney investment puts that to rest but what's the pros and cons of developing this technology outside of core espn. >> so i think when it comes to streaming direct consumer. we can going to separate into two buckets. sports and non-sports content. i don't think that sports content can go over the top and direct to consumer. some sports can but the leagues make more money by fragmenting so if you look at thursday night football it's split among three different tv networks that you have to go and get to watch all the games. they make more money that way and it's just not economical to think that all the best sports content is going to be available on one digital platform. you can two direct. the reality is its your

traditional cable or satellite bundle. however the nonsports content is the disney channel content and all the great brands disney is constantly introducing in it's studio. that can be made available direct to consumers. something that looks like an hbo and can include parental control tools and novelties that only disney can bring. >> so what does this mean for silicon valley companies like facebook, google, twitter, apple that are looking to sports and certainly to other type of content to drive engagement on their platforms? they're making investments in the kinds of infrastructure that they are. do they need those companies less? and does it perhaps serve as a warning sign to investors who are expecting them to dominate video distribution? >> what you're seeing is they're fragmented once again. not only do we have rights by certain days. we had rights by end zone but now you're having them by

devices and by technology. in other words you get the linear tv and buy those rights and if you want to get the streaming rights that's going to be a separate set of rights. the challenge now is to see how do the tradition mall guys step into wanting to acquire the rights. they're going to be expensive. they have a lot of money to spend but also i think they have learned some of the lessons here that once you're caught in the sports you're caught into a vicious ecosystem. we have to pay a lot more. the nba deal is going up by 190% relatively soon for time warner and disney. something that we cautioned about. >> disney has the option down the road to buyout the rest. we'll see how the deal plays out for tonight. we appreciate your time. >> when we come back, facebook taking a stand against ad blockers. before that discussion, carl is live in rio with a look at what's coming up. >> kayla, so far this week we asked olympians their favorite

social platform, what they would do with a million dollars. we get another edition of ask the athletes in a moment. here i a builng a jet engine. we've been hearingo much abo how you're a digital company, here i a so you can see our confusion. ge is an industrial company world-changing machine machines that can also communicate digitally. like robots. did you build that robot? that's not a robot, that's my coworker earl. he builds jet engines with his human hands. what abouthat robot? that is a vending machine, john, give him a dollar.

>> they don't exactly agree and kevin is going to take your questions live during the hour and tweet us with the #ask kevin and we'll try to get your questions to him of course yelp needs no help today. that stock getting a big upgrade. shares surging and new at noon is china preparing for another round of dramatic currency moves? seema is following the money with a new report. carl out to you in rio. >> sounds good scott. thank you so much. the road to rio is not an easy one, even for athletes that take home the gold. we asked about the biggest challenge they have had to overcome to make it here in today's edition of ask the athletes. >> seems to 2030 so it was a little difficult to train like this but i was going to keep

going. >> three weeks ago i was like okay we start from the beginning and that's the most challenging point. >> biggest challenge i would say most definitely is all mental. i feel like if you put your mind to it, you can do it. you have to really be set and like know your capabilities. >> injuries, financial pressures, just amazing sacrifices and commitment to get to these olympic games. let's get to chicago, rick santelli and the santelli exchange. >> great job in rio but not the bank of england. the 3% nonsolution. let's put the landscape here very quickly. roughly the equivalent of a buy back to the tune of 2.2 billion u. s. results in about 65 million not being spoken for. only about 3% but that 3% speaks

volumes. now consider, plflt carney when he moved rates lower and announced corporate buy backs for what reasons i can still not find one person to explain. but he is no fan of negative rates. he didn't say we're not going to have negative rates. it's very difficult for me to think that the secondary market has enough horsepower to take rates negative that don't start out negative. or doesn't result from the central bank having a benchmark negative. why? the answer is easy. who are they going to sell it too? we saw 2 and 3 year paper get very close in the secondary markets. single digits yields and this is not a good thing. on one hand you read one story about the bank of england and this wonderful idea that this is going to mix what ails them and

they're not sure what ails them yet because of the issue of how post brexit world will stack up is yet unknown but even more to the point when you look across the seas, why is there a surprise here? a you can't find the paper and maybe the bigger answer is deutsche bank. look at these banks, italian or german. historic times. negative rates aren't fixing their balance sheets and what investors are going to want to pepper more money into an institution whose prognosis and diagnosis for making money is defined by can't make money in the usury business. isn't that the foundation of capitalism? i don't know i think somebody needs to raise the flag it's going to come from janet yelen and today's 3% nonsolution shows investors are some what awake. back to you.

>> you're certainly awake. and we are glad. >> when we come back the debate over the blocking of ad blockers. more squawk alley is next.

procter & gamble,al biggest ad spend egg in ter in the worl. moving away from targeting ads too much, it says. focusing on a more wide-ranging way of getting to its customers.

this on the heels of the social giant taking a stance against ad blockers, by blocking them on its desktop site. facebook revenuing soaring on its growth and for more on the debate joined by ceo of interactive advertisers bureau, representing companies like facebook and google. also with us is ceo and co-founder of ad block plus used on more than 100 million devices. thanks for being with us. this overblocking story -- sorry -- overtargeting story. get to blocking later, kind of surprised me. the example given in the "wall street journal" of wanting to self-abreeze and targeting pet owners, finding that didn't work as well as targeting everybody over 18. does that signal something negative for the likes of facebook and google which have all of this data on people and perhaps a ray of hope for those who hope to reach the masses but don't have that kind of data? >> clearly not.

no. i mean, i can't speak to procter & gamble's analysis or strategy, they seem to be clearly saying, hey, this is a very big mass media and it working effectively for us. loets let's go in that direction. telling they said exclusively they're not reducing the a of spend. just doing it in a different way. >> i wonder, if not reducing amount of spend but in a different way does that open up the possibility that competitors who don't have the same kind of targeting ability could at least compete for some of that mass market dollar? >> you know, i think that the history of advertising supported media has been a history of lots and lots of competition. some from very familiar places, some from unfamiliar places. look, in the 1960s, when three television networks basically controlled 95% of all spending, you still had the opportunity of

a thriving magazine industry, thriving radio industry. it's kind of no different today. there's some advertisers that will benefit from lots of targeting. there's some advertisers that will benefit from lots of mass exposure and some advertisers that will benefit from both. same with the media. >> on both targeting and blocking, is the onus on the advertiser or on facebook to create better ads that are more effective and that are less of a nuisance so that the end user doesn't want to block them? >> yeah, absolutely. on both of them. i think this move of procter & gamble shows you can overdo targeting. at some point consumers feel ads are becoming increasingly creepy, they would say. so i think brands are becoming more and more smarter now, that they are now looking more closely into what ad campaigns

they're running and if in the b interests of the consumer. >> and a company helps users block ads on desktop sites. what is facebook's response? is it going to end up being a game of "whack a mole"? ad blocking software, and they have to come back and adapt theirs to get around it? >> yeah. it's basically an attack against their own users, what facebook is currently doing. be clear, none of that is new. spammers have always tried to work around the spam filter, and the spam filter will adopt. this will really be something where the internet community will rally up and make sure that they will adapt their filters again so that users really do have a choice so that they can protect themselves against intrusive advertising and also

security and privacy invasions. >> randall and till, thank you. if you want to use facebook, you pretty much have to play by their rules. thank you for the lovely and lively discussion. when we come back, carl's live in rio with a look ahead at what's on deck. "squawk alley" will be right back. welcome back to rio an

summer olympic games. plenty of action going on today and tonight including key medal events. gymnastics, the men's individual all-around, men's and women's judo, men's and women's fencing and, of course, the marquee event tonight, guy, swimming. both the men's 200 meter breast stroke, women's 200 meter butterfly and the relay. the 4x200 freestyle relay featuring katie ledecky and missy franklin. a lot to get to tonight. an exciting evening of olympic sports. >> don't work so hard, carl. i want you to see some more events. women's gymnastics a good start, but get out there and have some fun. >> yeah. that's usually not what this is about, but we know that going in. it was great seeing gymnastics

last night. maybe we'll get to some basketball tonight. did you see leslie jones is actually coming to rio? >> it's amazing, that she is. for someone who quit twitter just a couple weeks ago, to now be back in full force, and using it -- to her advantage. it's fun to see. >> yeah. after tweeting, of course, about it over the weekend, she was invited by ep jim bell and last night, going back and forth with kerri walsh on twitter. we'll be there. you think you're pumped now. wait til you see me in person! pure energy. will hurt eyes. we won't stop. yeahz, so proud. doing a lot from beach volleyball and covering all sorts of events when we get to track and field. >> she's already on nbc's pay this is a perfect nbc synergy as we like to call it.

>> trolls don't get invited to rio. you got to bring something pap lesson. >> sweetest revenge we can think of for leslie jones and think we're enthusiastic about the games now. wait until she gets here in the coming days and next week. have fun watching tonight. see you tomorrow. back to the judge and "the half." all right. cue, thanks. welcome to the "halftime report." i'm scott wapner. top trade this hour is it finally time for the financials after lagging the market for months. the sector's on a run lately leading some to say the banks are back. are the gains short lived or something more? ask our panel. with us the hour today steve weiss, josh brown, jon najarian and kevin o'leary. o shares investment, and kevin, xlf up, jpmorgan,