with an implied open right now of nearly 60. crude oil, yeah we're watching it because we always do and it has a tendency to sway the trade throughout the day. a look there. >> all right. gentlemen, thank you both for being here, scott and wilfred, great to have both of you here. tune in for scott later today. join us tomorrow. right now time for "squawk on the street." ♪ good morning. welcome to "squawk on the street." i'm david faber and jim cramer, we're live from the new york stock exchange. carl quintanilla is live at the olympics in rio and, of course, will join us momentarily. we got a couple big names this morning that we're watching. alibaba, and macy's. both moving, both up as you see sharply on earnings. we're going to have plenty on both including an interview with alibaba's vice chairman joe tsai a moment from now. another look at futures. you heard scott talking about the market overall and see it is

going to be up at the open. it would appear at least judging from the futures. european markets have had more or less reasonably decent day. good, love to see it again. thanks everybody. that's going to be a constant now. you see the one outlier is the ftse 100 in the uk. 10-year note yield and crude oil, crude was a story yesterday going down, 10-year note yield around 1.5 and now crude up a bit but did seem to take the market down a bit yesterday. as it weakened in the session. alibaba reporting its earnings this morning and they did top estimates. overall revenues were up 59% year over year. gross merchandise volume jumped 24%. joe tsai is the executive vice chairman of alibaba and he joins us now from hong kong. it's always nice to have you, joe. there's a long delay, i should let our viewers know. i will talk and then you talk. not sure we're going to be able to talk back and forth as much

as we might want to. let me start with this, joe. of course a very strong quarter. you did report gmv, but that's going away as something you're going to tell us about. you will be focusing people on that top line growth. which reaccelerated. to what do you attribute the re-acceleration in revenue growth? >> well, thanks, david for having me on the show. the acceleration of revenue growth is attributed to the fact that we are generating a lot of value proposition for our customers. the brands and merchants that are trading on our platform. and with the quarter that we just had, we generated $4.8 billion of revenue that's 59% growth. it's the highest growth rate we've ever had since our time of the ipo. and we're very, very pleased with that. and, obviously, a lot of work has gone into that.

we specifically a couple places, number one is the platform is now transforming from simply a distribution platform where we help sellers sell to a place where brand and merchants are coming to the platform to engage directly with our consumers. we have 434 million consumers that are buying things on our platform. and that value proposition is very, very attractive to the large companies and as well as small businesses doing business on the platform. and the second reason is we're just killing it on mobile. 75% of our gnv as well as 75% of the china retail marketplace revenues come from mobile. and this is -- we've come a long way since two years ago when people were concerned about that issue, but today, we have just reported that our monetization

of mobile users has exceeded the monetization of the users on pc. overall we had a really great quarter. we also have broken out the core commerce business where we are generating $2.5 billion in operating income and that itself is growing at 38%. >> yep. >> this is not counting the exciting stuff like cloud computing and digital media. so we're very pleased with this quarter. >> as you said. you hit all the highlights. i don't need to come back to them again. mobile monetization if i might as you pointed out there was some question, it's a more robust experience people say when doing it on a pc conceivably. to what do you attribute the ability to get mobile monetization rates higher on mobile or monetization rates higher on mobile than on the pc? sure. just think about a user on a pc, they will have to get on the

computer either at work or at home. but on a mobile device, they're engaged with the internet 24/7. they could be riding a bus talking to friends, sitting at a restaurant, any time they can whip out a mobile phone and engage with the app and you know, you know, i'm talking about our tabo app which has we've reported in the last quarter 427 million monthly active users and the average user is opening up the app, seven times a day. so that kind of high frequency engagement is helping us to monetize this user base. >> yeah. you know you say seven times a day which gets me to another subject that i want to get on now, even though we'll come back to the broader numbers, which is, you're developing yourself as well as a media company in part because of that kind of engagemee engageme

engagement. you guys are reporting segments so we can see how much you're investing and losing, why is that an area that you believe will become one that can be profitable for alibaba. >> well, we see digital media and entertainment as a natural continuum to our core e-commerce business. in the past, we have being able to satisfy consumer demand for material goods that are transacted on our platform. but today, when you look at the chinese consumer, beyond material goods they need to have spiritual nourishment if you will. and this is where entertainment comes in. and we feel that it's very, very important for us to continue to satisfy our customers, our users, and provide good entertainment offerings and good media offerings to them and that's why we have invested in uc web, which is a mobile

browser that's the number one mobile browser in china, and also has leadership in some parts of the emerging markets. we also acquired yoko to form the core part of the digital media and entertainment asset. >> we do media pretty well in this country to. a never ending stream of rumors that alibaba is interested, perhaps, in more of our media assets as well, as you grow that platform. is that something that is true? are you looking at or will you at some point look at u.s. media assets to make that a more robust offering? >> well, today, media is a global marketplace. what we're focused on right now is the chinese consumer and what they want to watch. so in terms of the shows, the movies they want to watch, not only domestically produced shows, but also shows that are produced in the united states, so, of course, we're interested

always in acquiring good content and licensing good content from people that make great movies, great tv shows. but that's not the only part of the strategy. really the focus that we want to put on is to invest in original ip, invest in professionally and user generated content on the you could platform. as i said media is a global marketplace. >> joe, cramer, you got 434 million active users, 17,000, you are about the best we're going to get on china. i have to come to you. we believe many of us here who are not bearish on china and believe in the government and what it's trying to do to make the individual more empowered to spend, this to me, this number looks like not only are you executing well but the chinese government is successful or succeeding in trying to get the consumer to spend more. can i read through that this may be the beginning of a turn where

the consumer really is accelerating in china? >> hey, jim. great question. i think you really need to take a step back and not think about the chinese economy in a cyclical quarter to quarter way. in any given quarter there could be ups and downs. what we're looking at is the long term trend, what is the long term trend. the chinese economy is shifting from a manufacturing economy to a consumption driven economy. and that is very, very good for alibaba as it plays to our strengths. so in that context, the chinese consumer the average household in china in aggregate there is 4.6 trillion u.s. dollars of net cash savings on the balance sheet. that means when you go to an average household they don't have a lot of mortgage debt. they have a lot of savings saved

up because of real wage increases if the past few years and they're ready to spend. that's what we've seen on our platform. >> joe, as you well know, we have a presidential election entering its last let's call it 90 days or so here in the united states. i'm sure it's a focus in china. you're one of the leaders in the business community there. i would like you to listen to a sound bite from donald trump, the republican nominee, who joined us earlier on cnbc this morning, talking specifically about china and then get your take if you're willing to offer it in terms of your thoughts about his comments, and what the overall tone is that you're hearing from the other business leaders in china? p. >> you know, if china goes down to 7% it's like a national catastrophe. we're going down now we're 1.2%, we're going to be lower than that it's looking like in the coming quarters. think of it, china goes down to 7% and then what they do is they devalue their currency and take more of our business and they start going up again. >> sure. >> but we're like the whipping

post the united states. people that don't understand the system, we have people that don't get it, and we are being ripped by many countries. china being the number one abuser. they do it better than anybody else. >> joe? >> okay. sure. >> number one abuser. >> please respond. give us -- >> sure. i've tons of respect for mr. trump but, you know, sitting here, i feel like china is the whipping post for the united states, and what's important to see is the overall context of u.s. china relations. what alibaba is doing is we're the gateway to china so right now if you're an american manufacturer, american brand, and you want to access the china market you should come and talk to alibaba. because we have a platform that

can bring over 400 million chinese consumers to american businesses and that's very, very impressive. that's very, very meaningful platform. and i just wanted to say that right now, we are working with many, many american brands, procter & gamble, apple, starbucks, they're all want to come to our platform to engage with chinese consumers because china is a very, very big market. so i think the overall sentiment here is we want to reach out to american businesses, we want to make sure that there's no animosity and there's a lot of synergies and the two countries are symbiotic and we really need to look to the positive aspects of the future. >> and joe, finally, of course, shares of yahoo! are going to be up today. people actually asking on twitter why is yahoo! up. clearly because they own 15% of alibaba, as you and we well

know. eventually, that 15% will be all of yahoo! or whatever they choose to call the company. it will be a 40 ad company comprised solely of potentially ta stake. many who believe that alibaba will eventually buy that stake back, those 384 million shares. is that something that alibaba will be focused on? >> sure. i think they call it remainco. so let's get this right. if yahoo! sells the stake in alibaba, they would have to attract a very large tax liability. it's a taxable sale. but here's the problem. if we go and try to acquire the shares of remainco we will not be able to cancel our shares. they still remain outstanding shares. we would inherit that big tax liability. so, i have to ask myself, why would anybody in the world want to do that.

>> okay. that means i guess you don't want to do that, although i thought there was a way to do it in a tax-free manner, perhaps i'm incorrect in terms of buying the entire actual investment company itself. >> i think that's up to the yahoo! board to figure out, tax efficient manner for us to engage. and so you know, we can't -- we have a business to run and we can't sit here try to think about all the strange tax contraptions. >> joe. >> you are running the business well. look forward as well to speaking at our delivering alpha conference not long from now. joe tsai, executive vice chairman of alibaba joining us and there he is, keynote speaker on september 13th which will be very interesting. joining us from hong kong after jim, of course, those very strong numbers from the company. >> lot of times i have to do this, when you get the tremendous bookings -- a lot of

news broken just now. i want you to just -- the bullets, yahoo! given from what i thought, could happen here. >> if they can figure out a tax efficient structure they could engage but he said that's for them to figure out. >> right. but it's not -- i regard it as a situation -- >> i think the question for yahoo! which is going to be what will be the discount be that those shares trade to, to the overall value. >> i'm saying people are looking at yahoo! makes sense. a correct read through. could be more there. also i felt that i know that he didn't necessarily want to point blank say, that china is doing better. you don't want to read through. but chinese consumer ready to spend and the shift is happening. 400 million people. he has a better read than walmart. >> a lot of people. lot of people. >> speaking of retail, jim and i will get to macy's. you saw the stock is up rather sharply on better than expected even though the numbers themselves are not that great. but first we will get to carl from the olympics and, of course, another big night for team usa.

and let's give you another look at futures which we typically like to do right now. see there's macy's and alibaba. more "squawk on the street" right after this. ♪ mapping the oceans. where we explore. protecting biodiversity. everywhere we work. defeating malaria. improving energy efficiency. developing more clean burning natural gas. my job? my job at exxonmobil? turning algae into biofuels. reducing energy poverty in the developing world. making cars go further with less. fueling the global economy. and you thought we just made the gas. ♪ energy lives here. ♪ guyhey nicole, happening here? 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.

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usa swimming continues to dominate in rio.

carl joins us live with the latest results. carl? >> david, we try to answer your craving for swimming news. katie ledecky, last night, anchors the 4 by 200 freestyle relay. u.s. wins gold for the fifth time in the past six olympic games and ledecky now has more total medals than anyone else here competing in rio. she goes into preliminaries for the 800 meter freestyle later today. the showdown, lochte/phelps against each other for the final time. this is kind of like when agassi and sampras faced each other for the final time. phelps, of course, holds the world record in this event, gotten it eight times. lochte two times. and lochte talked about what tonight means given all their history. >> you know, going up there and just racing him, it's amazing. so definitely got to be a lot faster for tomorrow. i don't know about the bromance

part, but you know, me and him, we've been racing since 2004, so we definitely created a good friendship and everything from that. so tomorrow it's going to be fun. >> finally, guys, tonight judo kayla harrison won gold in london, the first u.s. olympian ever to win gold in judo. she looks to defend that today. but she could face her main rival mira agular of brazil. later this hour we will talk about the business of michael phelps as we said yesterday, so dominant here in rio, and yet so close to retirement essentially. what does that mean for endorsers like under armor, like omega, when they're thinking about how much to pay phelps. that's coming up in 20 minutes. >> all right. thank you, carl. lochte has a new turn, on his back from the push off from the wall. really cool. >> no conference calls to speak of. i'm going to watch. >> you watch that. >> up next, ready for your mad dash because that's what's coming up.

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agar. we are ready here on thursday, of course, to get the opening bell under way in about seven minutes. first the mad dash. talk macy's. >> okay. this is really important, david. there have been a series of what i regard as guide down, guide down, guide down, until you get the guide down too far. that's what happened to macy's. they guided down and guided down. finally beat. in other words, i'm not saying things have gotten dramatically better but doing self-help. closing 100 stores. 15%. >> 100 stores. 728 stores out. >> what's interesting, these stores are making money. so what they're saying is we're going for profitability. and we're going for profitability in a world where

we know that amazon is gunning for us, walmart is gunning, doesn't matter. they're getting their act together a little better with 2.0 of omni channel which is good. terry lundgren trying to leave on the highest note possible, taking out a lot of costs. i have to tell you the progression, we always want to hear how the progression of sales are within the quarter, they're like this, okay. >> right. >> and the magic duck came down. apparel is better. it so looks like even though ralph lauren said that america wasn't that good in apparel, even though we know that kors said america not that good in apparel, coach said not that good, the fact is the apparel stocks will fly. should they fly? all we know is that the inventory is cleaner than i expected. you will see a read. >> acceleration. even though it is -- we're talking 2% same-store sales declines but that was better than anticipated. >> guide down, guide down. you're not getting this. but what you're hearing is cleaner inventories and good back-to-school season. back to school season, you should read pbh, vf corp not doing as well as pbh but those

are the ones that people will go to. all i can tell you, david, this stock was twice of what its valued at coming in this morning last year. these stocks great piece, jpmorgan, calling this a great trade long into the holidays this week when the stock was right here. nice call. i would like to point out good analysts. but this is -- the group is going to travel because it looks like the consumer is a little stronger than we thought. the weather went better. >> more porous or not as bad. >> dollar year over year not a strong dollar story. you can't use that. i'm think doing i us a pen to paper and look at tiffany again. almost like that. you can almost look and say that whole strong dollar story is evaporating because look at the dollar in year over year. it's not that important. and by the way, latin american tourists not as bad as we thought. read the read through from disney when bob iger talked about that. oversold bounce day one. >> got it. more to look at including

macy's, of course, and alibaba. we got a lot more "squawk on the street" right after this. you're here to buy a car.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. opening bell going to ring a minute from now on this thursday. got some news today, jim. this is a typically quiet time of the year. of course the alibaba earnings, macy's earnings, at the tail end here. but what in your mind is a key that we should be watching as well? >> i'm still going to focus on oil because i feel that what's happened we had the same kind of fakeout again earlier in this week, we heard that venezuela and some of the other opec countries wanted to call. it doesn't matter. it's nonsense. all that matters is that the saudis will pump as much as they can because if they cut back someone else will take their share, thank you rusty brazzon going over this from rbn. if oil turns down again, other than a couple retailers that had genuine good news today will give back. yesterday turned, it will turn

again. if oil goes down. >> so we're back to oil -- >> totally trapped. look, these retailers were oversold and they're going to catch a bid, particularly because there's a big rta. it's an etf. they all go. but be aware if oil -- if the saudis are in charge they're not done. they're not going to stop. they can pump maybe even 11 million barrels a day. >> here at the big board, veritiv, corporation, a business to business distributor. at the nasdaq, the challenge athletes foundation, non-profit supporting people with physical challenges. you see it, the real-time exchange back at hq. a lot more green than red on the board right now. of course be as we are looking for a higher open this morning. jim, you mentioned oil, of course, perhaps being a key. >> a couple apple notes that are positive but it's really all luke warm positive, ubs saying, rbc saying there's going to be more units sold. that stock stalled and led to the beginning of the decline in the nasdaq which was kind of

happening at the same time as you got oil rollover. so you are going to see that. david i have to tell you -- >> apple had a rally since the earnings. >> when on "mad money" in '93 saying it's not the end of the world. everyone was telling him it was. he kept his head up. the alibaba interview is the most important thing that's happened. so many people david, so negative on china, and i totally get that. it's a communist country. we don't have a good read at all on it. jd reported good numbers, bob reported good numbers. starbucks, howard schultz has said china is strong. ed young, said china is really strong. we know by the way, that hong kong has been very good of late. take a look at what disney said about hong kong disney. and yet everyone is so cynical. i look at the people who are genuinely like to slam me, kind of amp up their slamming when i say something good about china, not talking politics but maybe it's better. >> listen, of course he -- joe tsai executive vice chairman

discussed the transition to a consumer led economy which will take some time to accomplish but it's a focus of policy makers there. it is amazing to me, people using a mobile device, check tabo seven times a day. seven times a day. >> but remember what he said -- >> they have overall in terms of annual active buyers, 434 million up 18% year over year and mobile, of course, is -- >> but david this is like, for instance, say we were with my wife, okay, while i'm talking to you, i would have gone to one kings lane and gone to ru whatever and restoration, hardware, all of that i would have ordered while talking to you and outfitted my whole bedroom. >> she can do that. does she make eye contact while doing it? capable of doing it without even looking. >> that's what they do. seven times a day all done within the context of the talking to the boxes, listening to their wives an having a conversation with you. i just -- just now i just ordered a bedroom -- i just ordered night tables. that's what they do. who explained this to me is

strauss zelnick. i said how can there be so many hours of grand theft auto. they're like working at dinner, watching a game. and david, it has to do with multitasking and you and i are singularly focused and still have these things. these are nonexistent. these are like -- that's a dinosaur and a stegasaurus like when dinosaurs ruled the world. >> no more. >> jurassic cramer. >> cramer/faber right here. our own jurassic park. >> joe -- how many do you -- during this that i've given you, there have been like 100 millen orders placed for i don't know -- >> of course. >> pokemon go. >> not just alibaba. we talked about the successful transition facebook managed to do in its business over the last couple years making mobile the key. amazon, of course, has managed to do that. >> yelp yesterday with a good number. point of intent. you're looking and you -- i mean

yeah. it's obvious, though, isn't it. by the way, i use this occasionally. sometimes i pull it out of my pocket. >> see -- >> you can make a phone call with it, by the way. >> i don't know how to do that anymore. what's interesting, intel made an app artificial intelligence. what that's about, them knowing what you're about to order before you order it. that's another thing that's happening. so you're orderering quickly because they know what you're ordering. >> i'm glad you brought up a.i. it's so important and facebook and google and amazon. they are so focused on a.i. >> so focused on it on facebook. >> what it's going to mean and it depends when the machines will get smarter than us or not. they still say it's like 2029. >> it's catching up to us. what they do know is like they have -- it's called intent. point of intent is google. alphabet. the notion of intent zishg burg is focused on the idea he can figure out while you're formulating the idea where you want to go and, of course, we all see it in alphabet.

i was looking at the number of units of a shake shack versus panera. it finishes your sentence for you. artificial intelligence is something brian cra zan itch is focused on and the acquisition shows me he's thinking of the future, not the past. >> back to macy's because it's up 15%. did it in the mad dash. i love this quote. sometimes i like these press releases where they come up with quotes. we've been saying a setback is a setback for a comeback. and we now believe we are set up well to proceed to a comeback. >> well look, i see you and raise you with a deutsche bank buy recommendation of perrigo. ideal setup from here. why? because it's so bad. i mean, who are you kidding. can't make up this stuff. ideal setup. being down by four touchdowns going into the half and say we've got them where we want them. >> they are -- that's right. overly confident, now going to be able to comeback. you're making a phone call or receiving one. >> that's my doctor. i'll call her back. >> call back. >> perrigo after a bad day

yesterday is up slightly. shake shack talking about earlier. i don't like to spend too much on it, it is a $900 million company but we like their food, down 4%. >> it needed to be a $900 million because david, you had the comparison here, doing $100,000 a week. so we try to find out comparison of a public company like that. panera does 48,000. that's the most i could find. use a panera comparison the average shake shack should be worth $5 million but going into yesterday, into the number it was worth $14 million. >> right. >> david, on the conference call, there was actual questioning about the way that the company is kind of calculating how labor will not cost them as much as people think. they also use a very small comp group. using very few stores in their comp, 23. i guess what i'm saying the skepticism here is increasing. just when i think that the company as it goes down, rationale to buy it.

>> right. >> because it is getting cheaper and very popular, but i have to tell you, the skepticism here is very, very big because in the end, there's just no way you can value a unit at 14 million. you can't get there. air ritholtz matically you can't get there in terms of labor saves. that was mentioned in the call sdmm i think a very -- -- in i think a moment where you had the question do the analysts not like this. >> don't cut back too much because they have to keep those clean. >> they have to do remodeling, more expensive than we thought. the story did not -- the story had a lot of [ inaudible ] on it. >> move to kohl's because the etf that tracks retail is up about 3%. or one of them that tracks retail. kohl's you've followed for some time and positive on. i think you've been positive on. >> i felt that both macy's and kohl's had gotten oversold. look they cut the forecast but here, they give you this line, encouraged by the performance of juniors and young men.

now juniors and young men's i am going to tell you again, a pvh read through. but the pbh read through. nordstrom's trading up in advance of what they will say tonight and jc penney in advance of tomorrow. it got so bad it was hard to do -- >> right. what is it, down so low that -- >> look up to me. >> down so low it looked up to me. >> these are not stooge companies. they are companies -- i mean nordstrom happens to be one of the great service oriented companies but they were hurt by amazon. everyone has been hurt by amazon. the consumer got better, the weather got a little better. and you're going to see a read through that's a little more positive. but, you know, i'll tell you one that i'm looking at. >> please. >> kind of bizarre. >> yes. >> i'm looking at furniture. >> furniture. >> restoration and hardware. >> okay. >> lot of insider buying. stock is down from 100. $25 seemed to have held.

furniture seems to be doing better. the acquisition by -- of mattress firm. earlier by stein hoff. how wayfair has come down. people are cooling, cooling on on-line buying of furniture. next thing you know you have a squeeze. >> finally, speaking of insider buying, this guy hogue at netflix, really wants to own a lot more of this thing. he bought another 300,000 shares between august 8th and 9th. bought 600 shares towards the end of july. this man wants to own this stock. >> tell you something about jay hogue. >> that's a lot. 900,000 squares. >> tough businessman. i have worked with jay. he's brilliant. he's tough. don't take the other side of his trade. >> that's well said. to mr. pisani who knows a thing or two about trades. >> the important thing about today slightly mixed opening but tech is the leadership group, has been for the last three weeks. and what a surprise, retailers are doing well today.

now the important thing and i hope you watched terry lundgren, so wonderful to watch him every day address the retail position and how overstored we are. my favorite metric of the day, terry brought this up, how overstored are we, this will tell you everything. 7.3 square feet of retail per person in the united states. what does that mean? in france it's 1.7 square feet and in the uk 1.3 and japan 1.7. terry said this is ridiculous. five times the retail space in the united states compared to the rest of the world. and that has to change. he's taking leadership. that's why the stock is up. they're starting to address the overstored nature of the u.s. economy. macy's announcing at some point going to close 100 of the 728 stores that they have. gap already had earlier announced that they were going to be closing under performing stores as well. 3200. we've seen smaller closings from pier 1, kohl's, office depot. macy's is taking a leadership role here. you will see more announcements from other companies about

accelerated store closinings an the reason because of the same-store sales. look at the numbers for the second quarter and what's been going on here. macy's down 2%, kohl's down 1.8%. kors down 7.6%. fossil down 3%. these are continuing down numbers from quarter over quarter. year over year. and the first quarter was even worse over all here. so here's your retail earnings numbers. macy's beat, reaffirmed their guidance. kohl's beat. cut their full-year forecast their numbers are above street consensus and that's why kohl's is to the upside. a little glow here from everybody else. the apparel makers on the upside. they'll be reporting later. finally want to mention, shares of peak energy, talking about getting all the cash flow under control, they're exiting a big position in the barnett shale. those wells, they're going to transfer the ownership elsewhere. they had significant negative cash flow. they're going to be paying williams essentially to get out of a contract for that, so

paying to get better cash flow. that's what it's all about right now. chesapeake fragds trading up about 3%. back to you. >> yeah. 52-week low on that stock, 1.50. >> i remember when they told me about the barnett, he found the barnett, and how rich the barnett was. but the decline rate was rather extraordinary. so it's not a bad move. the decline rate in eagle ford is stronger than i thought too. another area. >> stronger being -- >> more -- >> more of a decline faster. i think look, aubrie mcclen nonnever speak ill, but i had managed -- my show is not about friends but money. i had a long relationship with aubrie and he built that company being early on every shale, marcellus, utica, barnett but the shales run out and people have to remember that. that's one of the reasons why people believe ult hayley oil has -- ultimately oil has to bottom. shals run out and a fast level of demotion versus offshore.

see so much money offshore because they last forever. >> all right. over to the bond pits, rick santelli is at the cme group in chicago. rick? >> well, david, if you look just at where yields are, versus where they closed yesterday, not a lot of difference. but when you look at a one-week chart of 30-year bonds and i don't normally put a lot of technical credence in intraday. i like closes. the most efficient price of the day. but you do garner the 234 on the intraday definitely is the top and we've shaved 10 basis points and very moderate type trade. it's noteworthy, longest maturity, the final auction this week, 15 billion, we'll be talking about it at 1:00 eastern. one month charts all the way through here, we will look at the main character at least this week in my opinion, let's look at the 10-year guild. it has adrift. lost so many basis points for what many consider obvious reasons. if you look at the rest of the curve, its come back from single

digit yields like the two-year and the three-year. we know yesterday's failed reverse auction is something fresh in investors' minds. look at our 10s not as aggressive, more ranges, but with the volatility post-brexit we're going nowhere fast to the upside even though volatility has moderated a bit in tight ranges as of late. bunds, bunds are more similar to what we're seeing in guiiltss a the tops of 30-year zero jumps out of you. that's the dividing line. final chart the dollar index. can go nowhere quickly with rates moving the way they have. david, back to you. >> thank you very much, rick santelli. coming up after the break, we're going to have a lot more from carl quintanilla in rio. >> carl? >> david, one of the final showdowns tonight for michael phelps. when we come back a look at the legacy of the most decorated olympian of all time and what it

means for his business as an endorsee when "squawk on the street" continues live from rio. what is freedom? yes, it's riding a horse across fields and stuff. 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. so go, family. watch. freedom. ha! seize the data! get our best unlimited plan ever so you can stream and surf all you want...with unlimited data from at&t

welcome back from rio. he is the most decorated olympian of all time, 25 medals and counting, multimillion-dollar brand. how big can michael phelps brand get with his olympic career is over. as michael phelps continues his quest for more gold in rio, his teammates look on in awe. >> i kind of look at him like you have 20 gold medals and i have one and, you know, it's just he's awesome. >> reporter: a career nothing short of legendary. with more gold medals than some countries like india and mexico, have ever collected. >> he's so knowledgeable about swimming and he's not afraid to share that knowledge with anyone that asks. and so it's always good to talk to him about stuff. in and out of the pool. >> reporter: cashing in on his success may have limits. not only because he's in his final games but due to personal setbacks. >> don't you have anything to

say, like the dui which resulted in a six month suspension of swimming in 2014. >> you had the 2001 bong photo incident which lost a few clients including kellogg's famously but i think the 2014 drunk driving is so fresh, you know, at the time he was 29 years old, he's not a young boy anymore, so these are real serious mistakes to make, no matter how many gold medals he wins in rio. >> reporter: phelps' primary endorsement deals with under armor and omegaomega. dr. rice of st. louis university, say his marketability may be limited if not because of his past ironically because he is an olympici openen. >> the reason michael phelps is not getting rory mcelroy jordan spieth money, they're in the lime light every year. if we believe this is michael

phelps' last olympics, if he has swum his last olympics he will not be in the limelight going forward. >> we will see if that ends up being true. phelps back in the pool for one of his final olympic races, facing off against ryan lochte in the 200 meter individual medley. a lot said about his maturation as a man, 2 month old son boomer at the games. we will see if he can leverage this amazing success from the past dozen or more years into financial success down the road. >> it will be heck of a race tonight and, of course, that's the interesting story on phelps overall an hit potential maturation as you say, carl, thank you. we will be seeing you again in the next hour. up next, though, we have stop trading with jim. ♪

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another day, another valeant story. "the wall street journal" reporting the u.s. attorney is looking into the possibility of insurance fraud involving fila dor which was not technically a unit of valeant but gets ply cated. >> it could be an issue. the last big fraud we had in

u.s. attorney investigation was in july of 2002, a situation for bristol-myers. stock had fallen from 50, when they realize told you there was channel stuff not unlike valeant saying in the hundreds to 21 bristol-myers. that's where you found out about the federal investigation. the stock went to 30. in other words, when you find out about the federal investigation, it tends to be at the end, not at the beginning. if you want to sell val nts, sell valeant off the balance sheet and the possibility that the expectations are too high set by jo papa. i would not sell it off of this investigation which i'm surprised hasn't happened already. it was somewhat unbelievable that you could have all that, all the stuff that citron pointed out and to have no investigation before, the man who ultimately what happened to bristol-myers they went after the cfo and indicted him, no conviction and the company itself never ended up -- shareholders never got hurt because chris christie decided

that bristol-myers should be spared. >> he was the -- >> he happened to be the u.s. attorney. >> criminal investigations or indictments if they come for financial institutions spell doom but that seemed to change -- that was before arthur anderson certainly. in this case it wouldn't seem to be -- >> sell it because the expectations too high the balance sheet is not good. but don't sell it because you think it's going to be put out of business. >> all right. what else -- >> show. >> just looking, i'm studying for tomorrow already. we didn't get to half of the things i wanted to cover. brinker a better than expected quarter. you know, hamburger churn, right. >> hamburger churn. >> brinker was chili's did better than i thought, shack a little worse. shack is to be continued. there's a lot more there. many more secondary offerings, cliffs natural, giant secondary offering. we know they want to clean up that balance sheet. everybody is using this equity market to clean up the balance sheet and sell. >> agreed.

>> buffalo, buffalo, my pet company. >> yeah. >> blue buff, better than expected quarter. should be up more. >> see you back here tomorrow morning. no friday off for you. >> no. i'm just getting started. >> speak of fast food because he does love it, donald trump's bold comments on cnbc this morning. we will break it down with our expert panel and macy's on the move after earnings. we will hear what ceo terry lundgren has planned. more "squawk on the street" straight ahead.

♪ ♪ you can call me ♪ >> good morning. welcome back to "squawk on the street." i'm sara eisen with david faber and kayla tausche live at post nine from the new york stock exchange. carl quintanilla with us from rio this morning. he will be joining us in a moment. show you what's happening with the markets. we've got a rally going on, on wall street. it is building throughout this morning. the dow is currently up 74 points. s&p 500 up 0.3%. the nasdaq up 0.4%. strength in retailers like macy's and kohl's, those earnings well received. wti crude is jumping a bit here up above $42 a barrel. our road map starts with donald trump speaking this morning on

"squawk box" as expected he made some bold statements. we'll break them down. that blowout quarter for macy's, kohl's reporting a beat, both stocks are surging. >> team usa continues its winning streak. we will go live to rio for the highlights. >> start with politics as we mentioned, republican presidential nominee donald trump speaking out this morning on "squawk box" with our own becky quick and becky joins us from headquarters with the highlights. >> good morning, sara, good morning everybody. as sara was talking about this has been a big week for both campaigns when it comes to focusing on the economy. trump started out the week on monday in detroit, michigan, unveiling additional plans of things he wants to be talking about, issues he would like to focus on and hillary clinton is going to be speaking later today in warren michigan, coming up at 1:15 eastern time. we will be taking that live here on cnbc. trump this morning laid out some additional plans for us. we talked about trade, we talked about taxes, we talked about china, we also got to interest

rates and trump points out that interest rates are low right now which makes it the right time to borrow. >> normally you would say you want to reduce your debt and i like to reduce debt too as much as anybody. the problem is you a military problem, you have an infrastructure problem, tremendous infrastructure problem and other problems. and also, the asset is your rates are so low. what's going to happen when the rate eventually will go up, and you can't borrow, you absolutely can't borrow because it's too expensive. it will destroy our balance sheet, totally destroy the balance sheet. this is the time to borrow. >> so much coverage not the but everything but. at times donald trump went off message from the economic issues, times he made missteps, these have been missteps critics have pounced over and what you're seeing in the headlines every day. this morning donald trump didn't back down from any of those

controversial statements. you could say he doubled down. >> on the second amendment, everybody came to my defense because there was nothing said wrong. i'm talking about the power of the voter. and nothing was said wrong. only the haters tried to grab on to that one and it was very unsuccessful. we're talking about it has tremendous support and trems does power at the voting booth and that was all. as far as mr. khan, it's been said by everybody, i think that's been very well talked about. and that's been put to bed a long time ago. >> of course it's not just the haters and the critics, it's many of the people who support donald trump the most strongly, who have also begged him practically to stay on message with the economy, to not get dragged into other issues. in the last week we've heard from carl icahn, steve forbes and larry kudlow all who not only plan to vote for donald trump and advise him, but icahn

told wapner he would like to raise millions for him. they said the other issues, these controversial statements have been missteps for him and his campaign. but trump says he is not changing his ways. >> all i do is tell the truth. i'm a truth teller. all i do is tell the truth. and if at the end of 90 days, i fall in short because i'm somewhat politically correct, even though i'm supposed to be the smart one and even though i'm supposed to have a lot of good ideas, it's okay. i go back to a very good way of life. it's not what i'm looking to do. i think we're going to have a victory, but we'll see. >> of course big question comes in the polls, there have been a lot of polls recently that have shown donald trump losing ground. there was one in particular from "the new york times" that showed republican women at this point key demographic only about 7 % plan to vote -- 72% plan to vote for him. mitt romney won 92%p donald trump says the pollsters are missing people who are showing

up at his rally. a lot of things have happened. we saw that happen with brexit too but that's a key takeaway from what we were talking about this morning. >> what did he say, he will take a long vacation if it doesn't work out? >> i'll take a long vacation. i want this to work out. i think it's going to work out. i think we will see a victory. but he said i can do a vacation, i have a nice life and i can go back to that too. >> great interview. we enjoyed watching it this morning. becky quick thank you for summarizing it. we will be monitoring donald trump's speech this morning. he's talking before the national association of home builders at 10:30 a.m. we will bring you news as it develops and taking live hillary clinton speech in detroit this afternoon on the economy. let's talk about all of this. right now from washington, veteran democratic strategist and former clinton white house aides david goodfriend who is also a surrogate we should say for the clinton campaign and with us at post nine, politico chief economics correspondent and cnbc contributor ben white. on the big theme this morning, about trump's spending on infrastructure, he's got grand

ambitions an when he says that our airports are in need of an upgrade, i think a lot of americans can agree with him but hasn't president obama spent the last six years trying to persuade republicans of just that point? >> well, he has. and republicans like to criticize obama's systtimulus a waste and boondoggle and something that didn't help the economy. trump sound likes a democrat who wants to take advantage of low interest rates to spend money on infrastructure. perfectly good idea. republicans typically don't like it and don't want more debt. $19 trillion. don't want more spending. that's something that trump can say would be appealing to voters but as becky pointed out it gets lost for trump in some of the nonsense he says and the fact that he wants us to believe he wasn't talking about second amendment people taking into their own hands the situation of hillary clinton wins, ridiculous. nobody really buys it. he gets losts in that stuff and so many things that his economic message gets blown away and we're not talking about it that much. >> we should be. this is cnbc so we can really

dive in deep. >> sure. >> on the economy on these issues. the borrow and invest, that's like paul krugman. >> this is populism, donald trump's populism which worries some democrats. this is why they think that, you know, maybe he has some appeal to blue collar swing voters in rust belt states and democrats who really do believe that we haven't spent enough and invested enough in this country. he does risk losing some republicans but that part of donald trump's message is probably going to resonate. what you will hear hillary clinton talk about today in michigan, he's for that, but also for giant tax cuts for the wealthy. that's not such a great idea. >> so david, i mean the question here to you is, she supports massive infrastructure spending as well. she also, though, wants to raise taxes on the wealthy to help pay for it. so is she the more fiscally conservative candidate? >> well certainly from a budget standpoint, moody's analytics said the clinton plan would not add to the deficit or debt and that is significant. so yes, in that sense, if you're both pro-jobs, pro-working

class, pro-infrastructure spending but care about deficits, hillary clinton measures up better than donald trump who has said in other context, i love debt. i love debt. says donald trump. so -- that would be a wedge issue for some independents and some republicans who do care about the deficit and want it see more infrastructure spending. to my colleague's point from politico, the congress has shown, the republicans in the congress, have shown a reluctance to do that kind of tax and spend so i think what we might see happening under a clinton presidency and a first 100 days, is a deal. let's say paul ryan wants to do tax reform. hillary clinton as president might say i will meet you at tax reform, let's do that, but i want to include some infrastructure spending on my first 100 days. i think. this is me a talking. not the campaign. i believe that's a possibility under a clinton presidency and i think republicans in the house want under paul ryan's leadership would want to do deals with a president clinton. by contrast, you see an awful

lot of fracturing between republicans and donald trump on these very issues. there are republicans who are refusing to endorse donald trump bartley because of his outlandish statements but because he is not sticking to republican party orthodoxy on a lot of these economic messages. >> david, how hard is it to predict the feasibility of either of these plans without knowing what the makeup of congress will be come november? >> there's a two-fold answer to your question. one is, somebody running for president is appealing to the electorate at large. here's what i want to do. with a big enough margin, that person will have a mandate that congress, they just want to get re-elected after all, they have to listen to. i think you're seeing previews of that right now in the number of republicans in the house starting to endorse hillary clinton which is very unusual. so i do think that there's a possibility that hillary clinton comes in with a mandate. after all, donald trump is saying we need to improve infrastructure too. there's very little distance

between the candidates there. i believe that there's progress to be made in congress in a clinton presidency on that front. now, you also have republicans in congress who will never ever, ever agree to pay for infrastructure spending with taxes. that's -- those votes are always going to be out of reach to hillary clinton. the real question is whether or not moderate republicans and frankly i believe the democratic majority in the senate would be enough to get these plans through and i believe they would be. because i believe she's going to come in with a mandate. >> turn to ben for the final word. i mean, to that question is there -- given what trump is talking about and the fact that it has not been anything focus of republicans over time, in terms of deficit spending, can he change the debate at all or get them to conceivably consider something that has been -- >> they've been quiet and he can to a degree. if hillary clinton does win and particularly if democrats take the senate and republicans sustain losses in the house, i think they would be more inclined to listen to the

voters, support for infrastructure spending and back off some of this stuff saying we can't spend any more money on our country. i think there's a lot of that message that's gotten through. i think the other guest is right, that there's an opportunity and a clinton white house for a deal on a big infrastructure spending plan, plus a corporate tax reform plan. the problem is, the left doesn't like corporate tax reform if it means less revenue so they would have to figure out a way to spin it to the left this is not an overall lowering taxes on corporations. if they can do that there's actually unbelievably a possibility that washington could produce some economically significant legislation in the beginning of 2017 wouldn't that be a thrilling situation. >> yeah. >> amen. >> that's what we like. a good old debate on economic issues. thank you very much. david goodfriend and ben white. make sure to keep it here on cnbc because we will have live coverage of hillary clinton's speech that is today at 1:15 p.m. eastern time. well, we had another very exciting night in rio. let's get out to carl for a

countdown on all those medals team usa is racking up. he joins us from rio. carl? >> hey, david. not every morning get to start with fencing but that's what we'll do as daryl homer, 26 years old, takes silver in the individual saber. it's the first silver in 112 years and the first time that u.s. has medaled in this event since 1984 when we got bronze. he fell in love with fencing when he saw a picture of fencers in a children's book. women's gymnastics, the all-around, simone biles, is it hers to lose. aly raisman appears to be the only real threat here. she hasn't lost this event since 2013. finally guys, right now playing is golf. the u.s., the only delegation to send more than two golf eers wi four, bubba watson, rickie fowler and a couple others. 72 hole individual stroke play. there is no cut.

and a tie is settled with a three-hole playoff. being played on a nature preser preserve. that's going to be happening later on today. tonight rowing, judo and the marquee event will be swimming. a very busy day six here in rio. >> carl, how about kristin armstrong, what a story, are people talking about her? >> amazing. i mean cycling doesn't get enough attention. but to win gold in three -- in the same individual event, three straight times, is basically hardly ever been done. only eight times in the history of the olympics. so she's getting a lot of attention and deservedly so. >> before her 43rd birthday. >> amen, baby. >> amen to your 40s. >> well, i mean i'm past those but still, it's good for old people. >> thanks, carl. see you soon. >> all right. >> when we return macy's and kohl's surging on big earnings beats. we'll dig through the numbers straight ahead and an inside look at the health of banking and the u.s. consumer chase

consumer banking ceo barry somers will join us. more ahead on "squawk on the street." at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking.

but i only had a salad. it was a buffalo chicken salad. salad.

alibaba reporting earnings ahead of wall street expectations. the giant e-commerce company reporting 434 million annual active users, up 18% from a year ago. overall revenue 59% higher than one year ago. and that is an acceleration, a significant one quarter over quarter.

we did speak to alibaba's executive vice chairman joe tsai on the program and asked him as well about that key issue on the campaign trail between china and the u.s. what are his thoughts on candidate donald trump. >> i have tons of respect for mr. trump but, you know, sitting here, i feel like china is the whipping post for the united states. and what's important to see is the overall context of u.s./china relations. >> of course mr. trump earlier on cnbc making comments about china and its use of currency devaluations to continue to prop up its economy. you may have noticed this morning that shares of yahoo! are higher. in fact higher than the day they announced the plans for the sale of the core business because really the most important asset at yahoo! is its 15% ownership of alibaba, 384 million shares. which under the current plan will be placed in what will be an investment company once core

business is sold to verizon, potentially the yahoo! japan stake is disposed of in some manner. what will happen then? some speculate that alibaba would want to buy that investment company in order to take control of its own shares. here's what mr. tsai said when i asked him about that possibility. >> if yahoo! sells the stake in alibaba they would have to attract a very large tax liability. it's a taxable sale. but here's the problem. if we go and try to acquire the shares of remainco, we will not be able to cancel our shares. they still remain outstanding shares. and we would inherit that big tax liability. so i have to ask myself, why would anybody in the world want to do that. i think that's up to the yahoo! board to figure out a tax efficient manner for us to engage. and so, you know, we have a

business to run and we can't sit here trying to think about all the strange tax contraptions. >> i should point out that a couple of large yahoo! shareholders tell me they believe that if, in fact, alibaba were to do that very transaction, the shares would still be treated as retired, if you will. because they would own the shares themselves. so they would not perhaps be counted by many of their shareholders. we'll see. speaking of joe tsai, he will join us live later this year. actually about a month from now, delivering alpha along with big names such as treasury secretary jack lew, ray dalio, carl icahn, steven schwartzman, look at that lineup, ladies. isn't that something. >> they will be here, tsai in town? >> yes. he will be with me on stage. >> a little later this year. usually in the summer. >> it is. ike we changed it so we -- i think we changed it to get bigger names if it was even possible to do so. >> all right. it is also a big day for retail

earnings, kohl's and macy's reporting earnings that beat the street. courtney reagan joins us with reports lifting the whole sector. >> definitely. the second quarter is looking a lot better for department stores than what we saw in the first quarter of the year. macy's reports the sixth straight comparable sales drop but it wasn't as bad as feared and the retailer says sales improved each month of the quarter successively. the department store beat earnings expectations by 9 cents, revenue above consensus and reiterating its full year guidance for both earnings and sales. macy's is also making some moves to close more stores. it will close 100 of its 728 stores. most of which are currently cash flow positive. but macy's ceo terry lundgren says his company isn't one to sit still. aggressive stances the right ones to make when the industry is going through major changes and right now there's too many stores. >> in the united states, there's 7.3 square feet per human being of retail space. okay. that's ridiculous when you

consider that in the uk it's 1.3 and in france it's 1.7 and japan 1.7. we have 5.5 times the number of retail physical locations in america per capita than any other country in the world. there has to be a rationalization and we're not waiting longer. we're taking the stance, we're going to have -- still have as courtney said, we will have over 530 stores in all the key markets. >> macy's is considering alternative for four large flagship stores and san francisco men's store for possibility redevelopment. macy's will increase its vendor shops within the stores it keeps and continue to infuse technology both in store and on-line. now investors like it. shares are on pace for macy's for the biggest daily percentage gain since 2009. up almost 12.5% right now. pulling down even a little bit from what we had seen this morning. a long trading day to go. kohl's are better than feared.

they beat by a wide margin, 1.22 versus 1.03. comp sales but matched estimates, kohl's cut its full year forecast but the street anticipated that move. kohl's shares are up 12%. inventory hitting better levels than the retailer planned and that is improving fwros margins for the first time in five quarters. kohl's seeing strength in juniors and young men's, good news for back to school, first couple minutes of the call for macy's, the cfo said the same thing, strength in apparel nearly across the board. maybe those warm temperatures for the summer seasonably warm, finally started to help retail. sara? >> yeah. certainly double digit moves for both of those stocks higher. they have a long way to go to make up some of the losses. courtney reagan, thank you. >> thank you. >> when we return a look at the health of the banking sector with the ceo of chase consumer banking, barry sommers joining us next, more ahead on "squawk on the street" with the dow up 55 points. stay with us.

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you may have a mobile bankping app and use it all the time and saying, gee, why are there still so many branches.

we have our next guest joining us, barry sommers, ceo of consumer banking at chase. nice to have you here with us. >> thanks for having me. >> when you walk around this city you see a lot of bank branches and people ask the basic question, i'm doing my banking mobilely why is there so many physical locations. >> great question. while a tremendous amount of innovation around banking and the mobile phone that allows customers to bank where they want, when they want, and how they want, the reality is, the branch really remains the center of that relationship we have with our customer. now what happens in that branch has dramatically changed over the last few years but it remains incrediblebly important part of our value proposition. >> why is that? why are there still tellers or not as many. what is going on in a branch which makes ate value proposition for chase and something that is worth the return on equity that goes into it. >> sure. like you said, a lot of transactions are moving to the mobile phones and machines and that's a good thing because that's what customers want. at the same time our branches have evolved into advice

centers. over 3,000 financial advisors helping customers with the most important things in their life, whether it's the funding of their children's college education, whether it's their retirement. we have relationship managers, two-thirds of all jobs created in the united states are with small businesses. we have business banking relationship managers who loaned over $17 billion to small businesses fueling this economy. that doesn't happen on-line. that only happens inside a branch. >> some people walk into a branch to get a mortgage, i guess, also. >> we're really -- from our perspective the most important purchase for most people is the purchase of their home. last year in the branches we did over $27 billion of origination. you know, inside those four walls there's a customer sitting down with a banker who cares and really helping them do important things that happen in their lives. >> when we talk about mortgages, of course, "the wall street journal" today writing about rental being as a percentage higher than it's been and housing ownership lower in part people are having a tough time getting mortgages.

are you seeing that, are your standards more stringent than they've been and there is any chance things will loosen up a little bit? >> in general we're just very are focused. to us nothing more important than helping customers purchase a form. we have the right platform in place and our mortgage bankers working with a banker, sitting with our customers and offering a product. >> is that a product more will avail themselves of? >> if it's the right thing do we hope so. >> you know, you guys are still taking costs out of the business. gordon smith was on, your boss, when you were doing the bus trip. >> yeah. >> joined us on cnbc talking about billion overall coming out of the business. does that include closing branches? how are those going to be realized? >> gordon has talked about our business will become more efficient, but i remind people it's not about closing branches. most people focus on the four walls. it's actually really important you manage the business what happens inside those four walls. so the reality is, david, there are less people in branches because some transactions have moved out. less tellers.

but you will see more client facing bankers in those branches. one other thing i'm pleased about is these tellers, as their jobs change, we owe it to them to make sure we have the right training programs in place they can reinvent themselves and do other jobs inside the branch. >> mobile banking still growing but it's not growing quite the rate it had been. it's the growth is slowing. >> yeah. >> said another way. do you expect that to continue and what do you attribute that to? >> i think that the mobile phone is becoming like the center part of people's lives and including in banking. one of the things we're excited about launched, we have quick pay, our p to p payment announced an arrangement with other banks to get real-time safe payments to customers, not only just chase but other banks and something like the phone is going to become more important. we will be one of the first banks to roll out a phone to be able to authenticate yourself at an atm machine. forget your card, you have your phone authenticate yourself and get cash. the phone will become more important as the years go on. >> and, of course, security is very important.

you guys spend billions on it. can you tell people confidently they should feel they are secure when they do not just on-line banking but mobile banking. >> nothing more important to us than our customers since the security of our customers information. we take that incredibly seriously. jamie talked about the investment inside of that and we feel comfortable. >> finally back to the idea of the branch. a number of your competitors are significantly reducing their footprint when it comes to branches. you guys, i mean you've gone down a bit in 2014 you had 5600 branches, now you're somewhere around 5300 or so. but why are they moving more aggressively than you are? >> yeah. i will tell you this, over the last five years, our branch count is flat but inside those numbers, we've built over 400 branches over the last couple years. we'll continue to build branches and we build branches for one reason and one reason only because our customers like them. and -- >> who are these people who still need to go to a bank. >> we're excited about the growth of our business. if you look at the significant growth that we've had almost two

times the national average, it's because of that investment over the last few years building over 300 branches in important markets like california, florida, the tri-state. these branches were a significant investment we made and are working. >> well we're going to be watching, of course, and analyzing the performance there. thanks for the update. >> thanks for having me. >> barry sommers. all right. david we're keeping an eye on the markets. stocks drifting higher here. the dow up nearly 70 points. energy is the sector that is in the lead. too late to get into stocks? as they're near record high. we will be joined by fidelity's yuri timer straight ahead. ♪ [announcer] is it a force of nature? or a sales event? the summer of audi sales event is here.

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good morning. i'm sue herera, your cnbc news update at this hour. a canadian man previously banned from associating with isis was killed as canada's national police force thwarted what they believe was a suicide bomb plot.

the suspect allegedly planned to carry out the attack in a public area. russian president vladimir putin holding a national security meeting following reports of foiled attacks in crimea. the bleegts meeting to discuss recent security in the region. russia annexed that territory in march of 2014. 30 residents and 3 firefighters injured in a three-alarm fire at an apartment complex in silver spring maryland overnight. at least seven people are missing. the fire was caused by an apparent natural gas explosion. 160 firefighters battled that blaze. disney pulling the plug on its main street electrical parade. the company will end its run at walt disney world in october. it made the debut at the park in 1977. the parade will be shipped to disney land for a limited run. that's the cnbc news update this hour. over to jackie deangelis for the eia inventory report. >> good morning, sue. thank you. look at the natural gas numbers.

we got a build for last week of 29 billion cubic feet higher than expectations, being interpreted as bearish by the market, a penny higher in terms of natural gas before the report came out, now in negative territory. think back to last week we when we got an injection of 6 billion cubic feet small and sent us higher. about 10% off in terms of pricing since that number has come out. now total stock still over 3 tritsen cubic feet. in good shape as far as the supply goes across the country. what analysts are looking at is demand. on the east coast it's been very hot but the demand is measured across the country and demand has been weaker than expected. if we continue to see that trend throughout the rest of august, going into the fall, of course, you can see these prices stay well under $3. of course sara eisen, that is good news when it comes to consumers. back to you. >> absolutely. jackie, thank you. meantime stocks are ticking higher. the dow up 75 points. oil prices up about 2, 2.5%, and

reports from u.s. retailers beating expectations helping to fuel the rally. for more on the markets joining us is yuri, director of global macro at fidelity investments. good to see you again. >> good morning. >> the retail reports in macy's and kohl's at the top of the s&p 500. how far do they go towards easing some of the concerns about a beaten down sector of the economy and of industry and consumer spending in general? >> i think the u.s. economy continues to be in good shape. growth has slowed. but it has been a domestic consumption led economy and it's been going on for five, six, seven years now. and it's really remains pretty stable. it's really been the global economy that's been the extra factor over the last couple of years, softening while the u.s. economy has remained pretty robust. so i don't really see that this really changes anything. we're continuing what we've seen. >> in general, though, now that we're sort of coming to the near

end of earnings season, feels like better but not stellar. is it enough to provide a backdrop of rising stocks into the second half of the year in terms of the quarterly number? >> i think so. i mean this was a pivotal season. because it's the first quarter in i think in five quarters where we are seeing actually a smaller decline in earnings, earnings are still declining, but the rate of change or the second derivative is starting to improve. so q1 was 7% below the previous year. q2 looks like it's going to be about 3% below. so as we all know, when you look at inflection points you have to look for the second derivative and that has improved from the first quarter. build that's the beginning of a -- whether that's the beginning of a sustained trend remains to be seen, of course. there's a green chute here on the earnings front and that's important because over the past couple years, the moves in the stock market have been all based on liquidity but in the absence of earnings. if we now have a friendly liquidity environment through

central bank easing plus we have a few green chutes on the earnings front i think that will stabilize the markets and maybe give it some upside here. >> central bank easing aside the two shocks to the market in the last year of course came from china. bank of america reminds us that it is the one-year what they're calling the yuan anniversary of the initial devaluation of the yuan last year, down 1.9% in a day, down 6.5% against the dollar in the last year. but do you think that the fact that central banks have made themselves so present in the global macro economy, means that we won't be subjected to those jolts shocking as they were, again? >> i think so. as you said, a year ago was the very surprised devaluation in the yuan and then about six months ago, we had another one not an outright devaluation but more of a stealth evaluation and both declines in the stock market of about 14% or so over the past year were, you know,

involved with that chinese devaluation. and a piece of good news is that during brexit, when everyone was sort of looking towards the uk for what was happening next, the chinese were actually able to devalue to actually bring the yuan to a new low without causing any kind of disruptions in financial conditions. so the chinese have i think i are closer to where they need to be and were able to do it while nobody was paying attention. so that's a good sign. >> yeah. but it also could suggest that investors are too complacent about the economic and financial risk out of china? >> i think right now china has stabilized. they did a trillion dollars of fiscal stimulus in the first quarter through bank lending and, you know, yes, it's going into sort of the same obsolete sectors of the economy that really need to be reformed, so it doesn't really fix anything over the long term and there's still potentially a banking problem out there. but china is a command economy and they control a lot of the

levers, not all of the levers but a lot of the levers and right now they've managed to calm things down and in the absence of another shock, i think the market is going to be okay from that perspective. there could be other things elsewhere but from china doesn't seem to be likely in the near term. >> we're looking at energy on top of the s&p with consumer discretionary, financials are coming back. i mean these have been the groups that are tied to the economy, that have lagged behind the utilities and staples and telecoms this year. is it time for a rotation in? are you roger mcnamecommending clients. >> it's interesting that post-brexit breakout in the s&p to new highs, new all-time highs, was led by the sort of the low val, high dividend players which are sort of the most boring part of the market and they tend to protect on the downside not lead on the upside. the leadership to the upside was really quite surprising and i think it was on the back of a plunge of the 10-year yield down to 1.3 and now yields have

stabilized around 1.5 or so, it doesn't surprise me to see some rotation out of those defensive sectors into cyclical sectors. tech has been on the forefront of that as well. so going forward, it really just depends on what happens to interest rates because if they continue to fall, we may see that the sort of low val space still do better than most people have expected. >> as we have seen so many times before in this last few years. >> exactly. >> thank you. good to see you as always. from fidelly. with the do you up triple digits 100 points. >> to carl quintanilla in rio for a look at what's coming up from the olympics. carl? >> hey, kayla, we're going to talk about the beauty of rio. not the beaches, but the business of making people beautiful. when "squawk on the street" continues.

many emerging markets stocks have surnlds over the last couple months. is this about the commodity bounce or something deeper going on here. we discuss at trading nation at cnbc.com.

let's get back to carl quintanilla from the olympics in rio. carl? >> hey, kayla. good morning. aside from the olympic crowds in rio, another huge population of rio tourists and they're here to do a lot more than see the sights. brazil is known for its beautiful beaches and beautiful people with good reason. brazil is second only to the united states in the number of cosmetic surgeries. and despite the country's recession, the brazilians society for plastic surgery says the number of surgeries has increased 10% each year since 2010. the industry gets a boost from medical tourists who go to brazil specifically to get cosmetic procedures at discount

rates. >> in brazil you will find prices around 30%, 50% less than in the u.s. with the same quality of services. >> reporter: cosmetic vacations caters to medical tourists in rio, work with 100 patients a year mostly from the u.s. company reps make doctor appointments, arrange travel and recommend restaurants. it's part medical consultant, part concierge service. >> before the surgery they come and stay some days to do tourism, of course. they want to see brazil. >> reporter: dr. geraldo a surgeon with 40 years experience gets 10% of his referrals from cosmetic vacations. his specialty, performing multiple surgeries at once. >> together it's liposuction -- >> one-stop shop. >> reporter: that's part of the appeal for patients who travel across the globe. >> one thing that the doctors in the united states, they're kind of skeptical about doing all of

those surgeries at one time. >> reporter: medical tourism to brazil is expected to grow 45% over the next five years. an attractive figure to the industry and its patrons. >> i plan on going back to have some other things done. >> one other reason people come to brazil to have those procedures done, privacy. cosmetic vacations tells us clients come under the guys of a real vacation and go home again with a new look. guys, with a currency here up 20% on the year, that bargain is getting smaller and smaller over time. >> best performing currency of 2016, so glad you mentioned it. david is getting some ideas. >> well i'm keeping an eye on quintanilla. he looked good going down, but let's see what he's looking like when he sits back down. >> carl, your eyes look a little different. >> yeah. >> i wonder how many people bring in a picture of gisele and say i want to look like that. you go to your hair stylist and bring a picture of jennifer

aniston and that happens in the states but brazil has a lot of exports that are gorgeous. >> i'm going to come back, you guys will say quintanilla has got back. >> very good. >> they can do that too. >> you said it, not us. >> that's right. >> carl, good story. thank you. we'll see you in a bit. >> send it over to rick santelli in chicago at the cme group. good morning. >> good morning. boy that's a hard act to follow. i would like to welcome my guest today, peter. thanks for taking the time. >> thanks, rick. >> all right. three topics. first topic, last time you were on we talked about bond proxies. that was about a month ago. markets haven't changed much but the risks are still present, maybe even larger. explain? >> yeah. i think what we're hitting now you still see the utilities, dividend stocks and low volatility stocks they've lagged the market for the last little while and i think they're set to underperform in upside scenario and a downside. the upside if we really are

having growth we should see rates rise, we should see the growth stocks gain momentum. that will take money out of those bond proxies. so i think they underperform to the upside. if we hit a downside, valuations are very stretched. p/es are very stretched. i don't think they can continue catching the inflows. i would be continuing to reduce risk out of all those low val and dividend stocks right now. >> all right. everybody knows that whether you look at any short-term rate it's nothing like it was in '07 in '07in '07/ ' 8 but as we get closer to 100 basis points not the 500 or 5% during the crisis, this is about the lead into mid october's money market reforms. however, i'm sure you have comments as to how the process is going. your thoughts? >> yeah. i think there's two things going on. one, libor is recalculating how they do their calculations, right. they're trying to revamp that so they don't get into the trouble they had in the past. it's going to a market based mentality. that's already pushing libor higher. on the back of it these money market reforms which further

push libor above other rates. two things that are important takeaways. one from the investment side i think people should be looking at more floating rate asset also leverage loans, etfs out there that people can participate or closed end funds and then i think on the personal side when you're borrowing money against your home, i think you want to be locking in fixed. if this libor differential is going to be permanent floating rates will be less attractive than in the past. you're supposed to try to take advantage before it becomes mainstream and look at buying on the investment side floating rate and locking in fixed rate on the home side. >> couldn't agree more on the rate locking. and finally, qe, corporate style. i haven't talked to one person, source, analyst, economist, who finds any logic in the notion of quantitative easing, buying corporates. there is already no shortage of investors in corporate securities. your final comments on that condition? will it continue and is this another quasi proxy we should

worry about as a bubble? >> yeah. this is a really tough one because for my job we have to recommend people take advantage of the situation. it is putting pressure on corporates to go tighter, making it easier. long term i don't like the fact that now long-term i don't like the fact that the governments and central banks are picking and choosing losers and funding rates. they should have stayed out of the corporate side but now that they have gone down the path they don't seem to be able to extra kate themselves. it's going to be continuing until we see problems. going way back when they were trying to defend them they went to 60 cents on the dollar. it slowed down the whole fixing of grease. i could see that happen down the road through this particularly in europe. >> peter, always a pleasure to hear your thoughts. thank you again. >> back to you. >> rick santelli, thank you very much. 114 getting higher by nike and chevron. we're gearing up for the 6th annual delivering alpha

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>> this morning, a different story and the story is in the wall street journal and the southern district of manhattan or new york is investigating valiant for criminal charges related to what they would say is defrauding insurers. this having come about as a result of its undisclosed, the argument is, relationship with that mail order pharmacy which has since gone out of business but the fact that the two were so closely linked and insurers didn't realize they were acting

on behalf of valeant. all of this enough to send the stock down over 9% again with that criminal investigation at least apparently according to the wall street journal and still well above the lows here and down about 90% in the last 12 months. they were up 20% on earnings when you're down that far. and even a 20% move off a low base is not that much. >> there's still a lot of questions about the overall business model given it used to be low tax rate acquire companies, file drugs, raise their prices significantly but the new ceo was talking about the fact that every prescription sent out is a profitable one for the company in the current environment. >> i wanted to take the opportunity to look at the broader market here because we're seeing gains and energy is leading the charge but consumer d

discretionary is up there. you have macy's and kohl's both out with earnings and both seeing declining sales. it's not like everything has been solved but expectations were low and this were glimmers of hope, especially in macy's and also in kohl's that things might be turning around and the companies were making necessary moves like the announcement that they'll be closing 100 stores. >> they made the expectations low last quarter in mid may when they warned on this quarter slowing. nordstrom shares fell 16% when they reported earnings and they report today after the bell. >> let's send it to swrjohn wit look at what's coming up. >> alibab did well. signal positive things about e-commerce in china. that's certainly something to

pay attention to. also donald trump here to dig into his comments. what they might mean for the future and then a key executive at google. especially when it comes to google's investing activities is leaving but does it really matter? all that and more coming up on squawk alley. can an established bank move like a start-up? it's a question we get from some of our largest banking clients. the face of their business was tellers. then atm's. today it's their mobile app running on the ibm cloud. across every transaction, the hybrid cloud helps their data move quickly and securely. our clients are building out features and pushing updates faster, on five continents. with the ibm cloud, they can move at the speed of any start-up.

good morning. it is noon in rio. it's 11:00 a.m. on wall street and squawk alley is live. ♪ ♪ joining me back for the hour in new york and business insider ceo. a lot of headlines today for the olympics and their guys with green arrows in the