now there's -- >> washington state. >> there's a couple places you can do it now. >> yeah. >> a market there. quick final check on the markets before we go. looking at red arrows across the board. dow off 20 points. >> enjoy rio. >> thank you. >> steve. >> see you next from jackson hole. time for "squawk on the street." ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer live from the new york stock exchange. carl quintanilla, it's his last day, at least for us, live in the olympics at rio. he heads home soon. we're going to hear a lot more from him before that happens. taking a look at futures this morning, see we are set up for what appears to be a lower open after hitting highs on all three major averages yesterday. yes, shades of 1999. we'll get to that in a minute.

>> stop. >> how is spain doing your ask, italy doing? we don't have it today. >> oh, my gosh. my kids are there, the italian gdp is going to come out. >> come on, guys. >> we were lower in europe. back to the big three. the joke has been the last few days we've included spain and italy, not that they are -- >> inside joke. >> thank you. >> when the show starts. >> yeah. >> i'm sorry. >> we're in the show. >> okay. >> 10-year note yield hanging around 1.5, where it's been. we're a bit below that today and wti had been up -- there was a rally when for some reason people believed the saudis or their jawboning. >> to our road map this morning and it does start with the markets. the dow, s&p, nasdaq closing at record highs yesterday. where do we go from here in big retail stocks on the move this morning after some earnings. we also got overall retail sales. we will break down the busy week for the sector and go live to rio, of course. you saw carl, the u.s. racking

up a lot of medals. carl is talking to the athletes and will have a lot of good stories for us. it was a record day on wall street with the dow, s&p and nasdaq closing at record levels on the same day. this was the first time that had occurred since 1999. so far we're set to open a bit lower. retail sales coming in below at least what the street was expecting that being the overall, retail sales in july. auto and gasoline down 0.1%. there had been an expectations we would get a 0.3% increase. >> yeah. >> i'm not buying that. >> not buying it? >> no. i'm a bottom's up guy. i try to find a retailer that didn't have a good month. it's very hard. other than gap stores. >> good month versus expectations. >> no -- >> i really want to believe -- >> year over year sales declines are good. >> no. that's very true. it's relative, not absolute. but the fact is, is that the

back-to-school season was set up well. whatever numbers you have in the past may not be as important as the future. the inventories are leaner than i can recall at any time since the environment became promotional a couple years ago. denim is selling well, knits, very good time in men's and i'm wearing a tie that is a pvh tie. this is exactly the hottest selling stuff in a lot of these stores. >> right. >> traditional pvh apparel. it's calvin klein, they have 50% share in shirt and. >> i we will drill down on some of the reports out nordstrom out and jc penney. >> i like. >> talk about the broader market for a moment because one of the only benefits of getting older we were around in 1999. i was reporting. you were running a hedge fund. >> indeed running a hedge fund, talking 40, 50, 60 times earnings for cap stocks.

>> stock splits that moved stocks up 20, 30%. splits. which have no fundamental value. >> no. i mean splits were something, used to think which stocks are going to split next was an issue, largest cap stock was cisco sold at 60, 70 times earnings. >> i did. we saw cisco $600 billion, microsoft, ge over 40 times earnings but three months away from the top. >> okay. >> and the nasdaq then which we've finally reclaimed 15 years later. >> look at cisco as an analog and will help people. 13 times earnings 3.2% yield. one of the three highest companies in terms of the amount of cash on the balance sheet. this is not the cisco of 1999, but we were here because of the juxtaposition, too juicy not to talk about it, but i like the cisco now because the cisco now, which does report soon, i'm not saying buy it ahead of the quarter, but a lot more rationality. we will talk about a stock today that happened to have a

remarkable number, acia, this is one of these companies that basically it's a disruptive telco play. it's a profitable company. it's scorching, going to have a remarkable number, up more than -- the most of any stock. when on the conference call you understand why, a better mouse trap to make it so we have high speed video with the chinese company, not trying to get a big mouthful in, but there are reasonable valuations on companies that are profitable and then there are companies that are profitable that typically weren't 1999, that we are putting a multiple on that, while kind of outrageous, but you're looking at situations how do you value a company, some of these companies are growing 100% that are profitable. by the way, i'm talking about about ebitda, not adjusted. >> understood. not even adjusted. >> you're right. >> clearly nothing -- the similarities to 17 years ago are slight. but, of course, at that point the market was recognizing we were at the cusp of a revolution. >> david, we were wearing hats

and -- >> some of those we were. we were wearing a lot of hats. >> at the cusp of a revolution again but it's different. it's machine learning. it's artificial intelligence. >> a.i. >> it's -- there's hp, i hope we get to do this. don't know if it's a faber report. meg whitman bought silly graphic. that's machine learning. the quarter that n individual ya was machine learning, mark zuckerberg dropped in the facebook conference call if you can have the interactions in an automated way where you fire off a text and get a response to be asynchromoniously so it doesn't take up your attention, that is those words what machine learning is about. i can order on my cell phone while talking to you and playing a game and getting the scores of the -- even though a preseason game of the eagles beating tampa bay at once and sitting here and watching the olympics. >> understood. >> that's the world, david. you know how much bandwidth you need.

you need nvidia chips, acacia to do the back stuff, hpe to be able to deliver the -- basically this huge data center of property. data center machine learn understand what you want before you know it is what's moving. only a couple companies playing, but those are the stocks leading this morning. >> we will talk more about that i think in the weeks, months and even years ahead if i can go that far. >> this what is we're talking about. these guys are ahead of us right. >> grand master chess players -- >> are we pawns? >> yes. let's get to retail earnings while we ponder that. plenty to talk about. jc penney not up to where revenues were. same-store sales up 2.2%. still below estimates. nordstrom, though, set for big gains after reporting profit of 67 cents a share, well above expectations. the company raised its guidance for the rest of the year. start off with nordstrom, a nice

bit, saw macy's and kohl's yesterday up sharply even though they had same-store sales declines at macy's, people took the numbers and at kohl's as well, better than had been anticipated. the stock is you. >> kohl's and nordstrom nonpromotional on the conference calls saying things are better. our loyalty programs did better. we had the right merchandise. both are going to come in clean to a back-to-school season. there will not be promotional price cut which we like. nordstrom's anniversary sale unlike what the hedge funds were telling me turned out to be strong. that anniversary sale difficult. different time frame. rack was very strong. nordstrom was on the conference call i felt a little defensive saying listen, yeah, there are regular stores doing well but nordstrom rack is doing extremely well. you started thinking what happened in nordstrom the previous quarter. maybe that was an overreaction down. these guys are fighting their way back in terms of off --

doing more service again and having better apps, better execution and loyalty. >> the theme of the decline of the mall is still real. isn't it? >> i think that this was a quarter where what we're going do is kind of -- look at the individual companies grasping at straws of how it happened, about the credit card. i've been speaking to bankers in the last few weeks. a big increase in the number of -- in the number of charges on your credit card. the consumer feeling more confident because of jobs, because of hiring. we're caught in a political season. i don't mean to be political at all but the actual credit cards the amount of debt being taken on has since the great recession, come back. >> increased. >> that's what's best. when you get kohl's, nordstroms, jc penney was better, i am in the going to go with jc penney wasn't that good, it was very good. >> why do you hing it was very good? >> allison has a road map.

look at the comp store guidance. >> i am looking at it. >> comp going into the holiday season, he will be returning capital. >> billion dollar ebitda in 2016. >> he's doing aggressive in -- >> what i'm looking at the consumer spending using the charge card at nordstrom, jc penney, costco, the charge card is back. >> to carl in a second. it was interesting how much press macy's got for the closure of the 100 stores. we talked about it yesterday but sort of i guess because we're so close to it, but it's a bigger story than that. >> it is because -- >> out there in the rest of the country. >> remember our -- at comcast we talk where we work, our previous cfo used to talk about it's not growth, not profit, we want profitable growth. michael, who is now not with us -- >> mike runs a p/e firm. >> genius when it examines to explaining how companies make a

lot of money. macy's had not embraced profitable growth. they had embraced profit. they are putting their money behind -- those stores were not money losing but they will put their stores behind the growth part of macy's and that's why macy's can get a higher multiple. quite a good call. and blue america is doing well. they make most of their money iff, perfume. high-end perfume revenue is water. charging a lot of money for water. >> i will keep that in mind. i don't really buy any. >> au de toilette. >> i can't even say that. >> let's get out to carl in rio who joins us after an exciting night of events at the olympics. carl? >> hey, just unbelievable, david. the story of u.s. dominance in the pool, at the gym and the names we're starting to become familiar with. simone biles, simone manual, katie ledecky, nothing compares to phelps versus ryan lochte.

the 200 individual medley, the throw down as nbc sports called it phelps wins for the fourth straight games, lochte in fifth. phelps the fourth athlete ever to win the same individual event four times in a row. question is, is this the showdown between phelps and lochte. we talked to lochte in the last hour and he basically said not so sure. >> he said he was retiring in 2012 and i said he was going to come back. and he did. so i'm definitely -- i'm saying he's going to come back for 2020. >> you think he will be in tokyo? >> i think he will be. >> if he is you will be too? >> if he is i will be there. >> medal count looks good. u.s. 38, china 30, japan 22. a little margin of error there between us and the number two spot. phelps does swim tonight in his final individual event. that's going to be the 100 meter fly. it's been a relatively tough category for him up against chad

le clos once again and the past few times he has won it's been a slim margin. the total margin of victory has been 0.28 of a second. i know you guys just got retail sales, guys, but we're going to do a spot in the next half hour about retail here at the olympics as we go shopping for both you guys -- both you, jim and you david. that's in the next few minutes. >> carl, i have to tell you, i'm getting a read about latin america in the last -- in the last few weeks. i know this sounds -- it sounds a little insane. but i'm getting a more positive read. argentina getting a positive read, colombia a positive read and hearing, yes, i'm going to say it, brazil is doing a little better. i know it's all anecdotal. when you're around there, i heard you about soap and whatever, but is it really possible that brazil could make a comeback? >> i think people are starting to talk about positive gdp once again. i think back to earlier in the week when we talked to carlos

ghosn of nissan who made his way around to dealers in rio who are arguing to him, consumers may not have availability of capital to buy a new car, for instance, but they're expressing the willingness to buy and from where this economy was two years ago, that's a huge step. >> that's big. >> it is. we will see you shortly. on the beach, kind of foggy. >> they're so exciting. >> it is. i mean the events last night were incredible. that 200 im the peak of swimming all four strokes, distance to a certain extent. >> i remember going to school and talking why did east germany beat us. there is no east germany. >> we know why they beat us. >> they were all on steroids. i mean the east germans -- women's east german swim team. >> they were kind of -- >> they were on -- i don't know. >> i'm glad there's no more east germany and so are they. >> is fox heading towards a

settlement over the roger ailes controversy? the latest there. another look at futures as we wrap up this week of trading. as you can see we are headed for a lower open. more "squawk on the street" live from post nine when we return.

>> there it is. italy and spain. thank you. >> oh, thank heavens. >> i feel better now, end my week calmly as you see. largely european markets are down this morning. back here on our shores, new developments for roger ailes and 21st century fox. reports say the company anticipating settlements with some accusers, though not clear how many people the company would settle with but the number of women who say they were victims reportedly reaches into the double digits. jim. >> oh, geez. >> this hasn't really affected the stock that much although it is down since we first learned about it. >> the group is not that strong. >> but there is an argument to be made that as this piles up, and as management, perhaps, senior management at fox is forced to potentially confront the idea of cleaning house that

you would have a change to the -- to some extent in terms of fox which is an engine for profitability, the fox network, at 21st century fox. >> this is a personality business an we know that they had tremendous earnings this quarter. the fox news. could you just make a case based on the fact that it was a juggernaut, it's hard to replace what is the most profitable form of journalism sp. >> it is. at this point james and lackland being theco-chair with his father are not taukts change in the conference call in the way fox news is programmed or they approach it. some say you're not going to gill the golden goose. again the mounting potential evidence, paul weiss, of course, the law firm continues its investigation. >> which, by the way, is a real investigation, despite what you read about in the papers. >> the question, does it mean

they will be forced to remove other managers at fox and, therefore, again, would you over time see a change or potentially important talent leave? we don't know. it's an interesting story to watch. especially also from a governance standpoint, and culture standpoint at the larger company itself. >> right. it's harder for me because i'm an earnings per share guy and i just had liked the fox very much. that fox news the gross profits were fabulous. they were absolutely fabulous. i just don't know whether you can -- if we were talking about a major retailer who stefan larsson leaves old navy and goes to ralph lauren, that's a change. why would we not think the major division of the major retailer if that guy left you don't think the product will be as good. it has to be as good under rogers ailes. i'm not talking politics. i'm talking performance. >> up next jim's mad dash as we

count you down to the opening bell. another look at futures. when we are about nine minutes away from the opening bell. more "squawk on the street" from the nyse straight ahead. ♪ [announcer] is it a force of nature? or a sales event? the summer of audi sales event is here. get up to a $5,000 bonus on select audi models.

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all right. it's time for a mad dash on this friday as we head to the market open. a market, of course, that hit highs on all three averages yesterday. >> that's why i wanted to pick nvidia to talk about, kind of what intel was in 1999. it's in all the sweet spots. brian cra zan itch trying to get it to be in the sweet spots. they're in deep learning, self-driving cars, they're in high-end gaming, they're in data

center and in virtual reality chips and every one of those lines, was well in advance of where people thought it would be and very big quarter to quarter. not year. quarter to quarter acceleration. >> off and to the right. >> every single business that they're in, you can't -- you need their graphics processors in order to be able to have the best cars, the best games. because you can't run at a speed that makes a grand theft auto look like it's more than real. when you look at a game like nba 2 k and looks like an actual game. >> it does. >> nvidia not that the software isn't fabulous for take two but it needs nvidia chips. this is an area that i urged intel to go into during the old days when i said listen, if you want to grow, go buy this company. but you know what, they just became a powerhouse on their own. they're in the highest -- if you buy a car, internet things for a

high-end german car is loaded with nvidia chips. there's a lot -- >> lot of -- >> lot of nxp semi, the number one market share. >> free scale with a lot of -- >> that's number one. >> free scale was always big. but david, this was the most impressive of the semiconductor conference calls. it was really, really good. it's not up with twilo which was the best of the calls that had to do with software. >> right. >> other than -- acacia, disruptive telco equipment play where i feel you got to be -- if you're in thinsar, siena, if you're in infineon you have to be careful and read the acacia call because you will sell those stocks today. >> you like that acacia. >> they're very, very smart and have a silicon based very inexpensive loved by the chinese going to be adopted for 100 g the standard. these companies are very, very good, david. and the analog to 1999.

so many are profitable, not i could mercle. these are run companies run by real business people and i didn't mention broadcom. >> you didn't. >> that's not the nick nicolas broadcom. . >> we're going to be watching a lot more stocks, of course, including the one behind us. that is quite a move there. >> quite a company. >> our market has been making a move as well. the market open right after this.

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something that makes me happy my name is roger zapata and i'm a usaa member for life. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell ringing in 40 seconds or so. of course again, at the outset we talked about the references to 1999, the last time all three major averages were at their highs. the multiple then and now quite different but does not mean the multiple now is not aggressive especially after earnings season you can make your arguments it was strong but i can make my arguments it was mixed. >> i am not going to disagree at all. i think it's going to cause soul searching that we got there too fast again but it's a reluctant bull market. it's been very quiet. it's not anything that -- i was

hoping you would ask me the key to the market. >> what is the key to the market, jim. >> back the in the days we were speaking about there was a company called silly graphics, silicon graphics, highest, fastest computers in the land faster than sun micro. well you know what happened to silly graphics this morning? >> got bought out. >> meg whitman bought it. >> sgi. >> how the mighty have fallen but the company's product was never bad. that's once again hardware, software coming together, virtual reality, data mining, machine learning. it's the secret. >> you heard the opening bell here, of course. you see the s&p real time exchange back at hq. higher heros u.s. rang the bell celebrating the 11,000th veteran hired since the organization's 2007 inception and that cheering the at the nasdaq is for the ymca of greater new york.

you mentioned sgi. a tiny company but up 29% on the hp deal. hpe by the way. >> lot of people felt hpe was about to split itself up again and do something. this could be -- >> already splitting themselves off with the enterprise business. >> another brilliant move by meg whitman really capturing this -- understands where the high-end data center -- >> why would a 200, $300 million deal be anything anybody would care about? >> it's a signal of where -- i'm saying it's a signal of -- it tfl is so to speak from hitchcock, it's kind of what the story is not based on but shows you that she understands where the future is going and that -- and that hp is going to be part of the equation. they are back, they are in the room, they are doing data center, they are doing high-speed communications backbone work and i just want to -- my hat is off to her. this is not an easy turn. >> right. >> but it's a real turn and she

should be congratulated and she's done a great job. she's put them back in the mix, david. >> after a difficult year last year for the stock, this year has been a good one for hpe, of course, in part because of that huge deal to spend and merge. >> but the other -- and the other part, the hpq, the actual printer and pc business that's totally dependent on sara eisen's call since she does that 5:08 yen analysis every day that is quite compelling because ka mat su and the japanese printer companies can't compete against american companies if it were fair level. if it were fair. and they didn't keep that yen down, we'd kill them. we have superior products and superior state of mind not only like steven seagal in the movie "hard to kill". >> he was hard to kill, maybe not so much anymore. >> but that was some of his seminole work.

>> it was. >> great body of work. >> moved like a cat. >> i know. olivier, se gal. >> i agree. the two neck and neck. >> yeah. speaking of neck and neck, no, that's not a real transition, alibaba is up again. goldman sachs comes out, they really like it. >> that's conviction buy which means they didn't have conviction about the previous buy. >> they didn't feel it completely. they were there but really weren't invested the way they needed to be emotionally. now they're all-in at goldman sachs. >> your interview with joe tsai yesterday was a lot of soul searching how bad china could be if this is happening. about how china is leap frogging us. now i mentioned this acia and i'm probably emphasizing a company that's not that big too much but it's a fiber optic networks at a lower cost. their consumer, zte, 46% of the revenue, china. remember what he saw saying, joe tsai, when mobile adoption

clicked his sales went up. that's because of this china pull through of metro and interdata data center long haul metro networks are now leapfrogging us. in other words their telco is leapfrogging our telco. >> and we don't have any huawei here. >> we don't. >> you took that a place i didn't expect on alibaba. >> because i think acacia when you see a stock that is -- >> you won't stop talking about acacia. >> because i talked about it on "mad money" and said listen i am going to stick by -- my nephew and ben, cliff mason my head writer he said jim this is not 1999, this is a company making money that's really good that has a better disruptive product and i said the stock is up 40%. we can't push this thing. >> we're talking about acacia, not alibaba. >> and my nephew and ben stiller said, jim, acacia is the antidote, this what is you do on "mad money." we find acacia and we find twilo and thank you, you're welcome to all the nice people who said jim, thank you for acacia. because this is a real company.

>> okay. >> well -- >> great conference call. >> people watching alibaba up 2.7%. to finish up that conversation quickly, they are pushing they're getting rid of gmv, they're pushing analysts to look at some of the parts valuation at alibaba which i think is somewhat interesting. reporting the segments, cloud, media, and, of course, the core retail business and that's where goldman goes right away on sum of the parts target price of $120. which is interesting. >> yahoo! is up 1.5%. by the way, alibaba's earnings have done more for yahoo! stock than selling the core business even though we -- you know the media was so focused on that. >> i love accelerated revenue growth. always addicted to it. call me guilty on that one. but what i -- i thought was very interesting, david, you watch the retailers go up and whether they should continue to go up. we talk about the strong dollar and how it hurt them. >> yes. >> i've waited for someone to put to quantify it whether it be tiffany or disney or whatever. on the macy's call, they have a

very, very strong cfo she talked about how look our international credit card sales, this is really interesting, were down 12% in the quarter, which is better than being down 20% the previous quarter. suddenly i realize holy cow there's a -- that's an actual empirical data how hurt the strong dollar really hurt. that's going to start annualizing easier which will make you want to own the stocks again. there is real data out there that makes you feel -- i'm trying -- i'm not trying to reassure people at a level. i'm trying to say why we got here. >> understood. >> those are different. >> maybe tourists spending more money here as a result of a weaker dollar. >> consumer feeling more confident and the cross currents with people they say despite this election, always say that, and there is a sense that job growth is more permanent and i know there was a fabulous article in the journal about the chinese taking our jobs away and where they do. >> going back to the 1990s the changes that have taken place in the economy. it is an interesting story. >> i'm building a bottoms up from credit card companies, large retailers and real estate investment trust and retail was

very strong for the last three months. >> couple other names i want to hit. valeant always interesting. crazy week in the market with it up after earnings and down yesterday after reports of investigations, criminal investigations by the u.s. attorney. >> you think the smoking goop will matter there? it's never been the case. >> one other thing i would throw out is the -- usually we ignore these but the idea that you get these strikes, these civil suits from former shareholders. >> but you know what -- >> you know, some may be the large shareholders. sequoia was a large shareholder. do you see those come and potentially also be added into the mix of all this litigation that valeant is facing in addition to everything else. >> i thought i wanted to do a vulcan mind melt with you for a second. live long and prosper but i think it's the major hm, os that will sue. they were the ones that were

allegedly bilked. they would be the logical ones. they are not good enemies to have. >> they aren't. that's an interesting point. >> on a need to drug basis, they might want to switch. i am not -- have things going long or short in a stock going down, but joe pa pa will have to spend time with the u.s. attorney. this is not his business. but the u.s. attorney f they choose to go aggressive, you will hear about some of the characters that used to work there. they will spend some time. they may have to get counsel so to sneak finally because i'm not going to be here, on medivation, the situation we've been following some time, it's going to get sold. >> it is. >> it seems to be a fairly robust frup of bidders but the stock may reflect that medvation at 65, 66 at this point. but you do have i mentioned this the other day quickly but celgene, gilead, pfizer, merck,

and sanofi all showing expressions of interest. >> you know who is interesting not showing an expression of interesting -- >> it's not clear anything will get done prior to labor day but i'm going to be away like so many for a little bit, keep an eye on that one. >> i want to return to brent saunders and allergen. he's going the opposite. a lot of people thought he would be in there buying. >> very small stuff. >> $5 billion to buy back his stock at this level and then he will reload for another $5 billion if this stays and it's pipeline for him. developing a very good pipeline. he's the opposite of these other guys who might find pipeline chaegds. eli lilly should be in medvation their pipeline is getting challenged. >> maybe so. >> who should be looking. >> that's a lot of potential. >> some of these biotech stocks like biomer rin, using the strength to raise capital to do these very difficult drug trials, but yeah, medivation is on the block. notice who else is not buying and i salute them, whom i love so much in big pharma, alice

score ski, that war chest, everyone else was spending like a wild ban chi, ban chi, season four was the best of all. >> okay. >> but i do think that there was a remarkable by alex and j&j. he didn't blow his head off. let the other guys do it. >> let's get to bob pisani for a check on what is moving this morning. >> good morning, david. mixed on the markets here. remember, closing at historic highs yesterday. energy up as oil stabilizing around 43. banks are having a little tough time today, but not dramatically so. we have enough data points on the retail to make general conclusions already. the important thing is we've had five department stores reporting, including dillards and nor strom all had beat expectations. dillard operating income was included for everyone except for dillard's. as you see here the comp store sales were weak for them but overall good numbers. overall, here's couple of observations. the weather was better for the department stores. the inventories commentary

better lower. tighter expense control. i didn't hear it's a promotional environment very much. seemed to be more full priced selling. all this was good news, set up very well for lowe's and target and tjx will be next week. what happened nordstrom's, very specific issues helped them. store specific. tight ini venner to control but very more talk about narrowly distributed brands like brandy melville and top shop making them more specific in terms of the destination. they had a very successful rewards program. they revamped it. the shopper earns rewards points. lot of people on that. off price remains strong as well. anniversary sale that was really strong even though it was in the third quarter and didn't really count it was the highest sales volume in history. so nordstrom had a bunch of things working for them specifically, but don't kid yourself. just look at the numbers here. david made this point earlier about what's going on in the stores themselves. the full line for nordstrom, down 6.5%.

that's the department stores. that's the trend we're seeing. nordstrom rack, the discount, better, 5.3% in on-line, even better. nordstrom a microcosm of what's going on now. the same-store sales everywhere else, see the same story. general decline here. see dillard's had 5% decline here and that's been the trend so far, getting around those stores themselves has been the big issue. we've been talking for the last few days with traders down here, about these old chestnuts that we all like to talk about, sell and go away and as goes january goes the year and a lot said they're not working well. january barometer up 7%. the august summer swoon, august is week up overall. i talked to my friend jeff at the stock traders almanac and he made an interesting point he said the presidential election cycle really has a big influence on the stock market. the last seven months of election years, are strong historically. there's only been two losing years of 16 elections since 19

52. and august, by the way, all this is strong in an election year. as for sell in may and go away, he said no, that doesn't work. should not sell in may and go away in an election year. so the bottom line some of these old chestnuts don't work because the presidential cycle is exerting a pull on that. more on trader talk.cnbc.com. back to you. >> thank you very much, bob pisani. >> a check on oil with jackie deangelis at the nymex. jackie? >> good morning to you, david. oil prices crossing the $44 mark in the session high this morning. so we're getting a nice lift here today. now the opec freeze talk possibly supported by the saudis is certainly a piece of the story. two schools of thought on this. the negative side to this would be the saudis won't agree to a freeze because they don't want to give up share to iran, but on the other hand, remember, that deputy cp is very committed to doing an ipo in 2017, maybe 2018, to raise money for the $2 trillion sovereign wealth fund. supportive would be higher oil prices might be time to set the

stage now. some people saying this is a $2 trillion incentive for saudi arabia to come to the table and actually do something here. in terms of production, remember in the united states, we're down over a million barrels since june of 2015. opec production has not fallen substantially and that could be the key to this market. something to watch here over the next few weeks. back to you. >> key to this market. she's picking up on -- thank you, jackie. >> key to the market. >> the key to the market. >> have it. >> jackie has her keys, you have your keys. >> freight up today. i like to see that. i think the alibaba interview was the most important thing that happened this week. >> that's hyperbole, come on. >> it changed the tone of a lot of -- really? >> yeah. >> why? that's a monster big company. >> it was interesting and fascinating -- >> people, just in terms of the gauge, of a data, versus the consumer versus wholesale, retail numbers. no. alibaba was -- >> okay.

>> acceleration of the consumer in china. >> all right. all right. up next, plenty more from rio where we find our carl quintanilla. carl? >> hey, david on a day where we did get the retail sales numbers, you know a big piece of olympic revenue is in merchandise. we're going to show you what it's like to go shopping at one of the biggest sporting events in the world when "squawk on the street" continues.

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or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card one thing at the olympics you have to get used to are long lines, lines to get in, lines for security but then lines for shopping. this is the olympic mega store here. the big retail presence where people will wait upwards of 30, 40 minutes to come in and spend their own money. every olympics has a mascot. this is rio's his name is said to represent all of the brazilian animals rolled into one and hence, has all the powers of those animals. kind of cute, kind of

terrifying. of course if there's a national sport in brazil it's soccer. brazilians are obsessed with soccer, ignoring the other events not going to as many and that's why some of the stands are empty. buy something for jim and david. jim, this coffee mug, and david, for the swimming workout, rio towel. >> say hi, jim. >> hi, jim. >> hi, david. >> hi david. >> one of the benefits of being a global sponsor, visa is the only card you can use here. they don't take mastercard and they don't take american express. >> thank you. >> guys, i don't know if you're in next week but the next time we are all together, at the table, you'll get those gifts. shopping a big part of the experience here. back to you. >> thank you. >> thank you for the towel. and more importantly, carl, thank you for great coverage this week. >> fabulous. >> great pieces.

and, obviously, you know, the minute by minute reporting as well. it really has been exciting to watch. >> yeah. proud you're my partner. >> thanks, guys. really proud. >> thanks, guys. >> really good. >> see you soon. >> all right. safe travels back. one of these days the three of us will be back together. >> i know. how about the way that charlie, who is a very competitive man, boxed out everyone, ceo of visa. >> what are you talking about that when you say at the olympics? >> he does these events, a very good brander, i think a sh rauds man, doesn't like the press that much. >> no. >> but has been branding visa in a way very powerful. people want to go to the games. apparently he's the man to see. me, i'm going to tokyo by the way. i've already decided. >> going to tokyo in '20. >> couple of buddies of mine. >> carl kept talking about us going to south korea in '18. >> i am not going to miss the olympics. this is too exciting. so we booked it. my buddy and some other guys, 2020. >> tokyo sounds good to me too.

i need to go. all right. we're all there. it's only four years. it goes by so fast. as do our shows because we're up to stop trading with jim right after this. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state

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it is time for stop trading. >> important retail sales number today in one of the line items, food and drink. not that strong. an what's difficult for me is that brinker reported a quarter that again, like nordstrom and macy's is like guys, we're kind of doing okay. good read through to the darden too. this is casual dining. chili's. but david, what is selling well is beer. i want to turn to constellation because they have ballast point which is selling well, moulson, the consumer is spending on liquor. and the consumer -- even though you may get the read through that says they're not the companies involved in the industry are having as good a time as the retailers that you see fly. so let's not cup fuse the broader commerce department numbers with the reality. brinker was a strong quarter. >> a lot of people are trying to make sense of it all because, of course, the consumer is everything in our economy or 70% to be fair. >> using their charm.

>> you have a strong jobs number but retail sales number from commerce that doesn't look as strong. you got delinquencies starting to rise on certain areas of credit. >> you have to look at the overall credit numbers, the st. louis fed puts out good numbers. the overall credit numbers are rising, credit card. why i like that, is that's consumer confidence. and that tends to be lasting. and that's what lacked since the great recession. we haven't had that. that's a good sign for the country. that the consumer is willing to borrow a little again. we got a little too much like our parents. >> we did. >> we're still in that having that problem, jim, when it comes to a mortgage and housing it does appear -- >> you taubz about this a lot, 74, 74. >> we don't want to revisit like the lax standards that took hold in '03, '04, '05. >> kohl's, nordstrom macy's and if we were to look at their

credit card receipts they would accommodation loyalty credit card. quite impressed something is going on and real. because there's too many department stores for good numbers, oh, they figured out their mom strategy at macy's or omni channel. no. the consumer is taking the credit card and spending and it's good and it's one of the reasons why these moves may not be over so quickly. >> have a great weekend. >> yeah, you too, partner. >> thank you. >> just to our -- to carl, i don't know, i like d never allowed to tell people how much you like doing the show. >> maybe they cut your pay. don't want that to happen. keep buying houses. >> have a great -- >> remember my father said, says you're over extended. >> looking down, he's good. >> coming up, donald trump could pay nothing in taxes, at least that's according to the "new york times" jim stewart and he will tell us why. speaking of donald trump moody's economist zandi says he is the biggest threat to the recovery.

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good morning and welcome back to "squawk on the street." happy friday. i'm sara eisen with david faber and wilfred frost this morning live from post nine at the new york stock exchange. our carl quintanilla is with us from the olympics at rio. the markets pulling back from the record close for all three of the major indices. the dow off by about 24 points. still looking at a higher week. the s&p 500 off just fractionally same with the nasdaq. wti crude continues to gain. it is up a percent marching toward $44 a barrel. hillary clinton making a key speech in michigan yesterday criticizing components of donald trump's agenda on the economy. have a listen. >> i don't think mr. trump understands any of it. he hasn't offered any credible solutions for the very real economic challenges we face. >> so joining us now from washington is gop strategist and

former rubio manager terry sullivan and democratic strategist morris reed. morris, we'll start with you on hillary clinton and donald trump really. we spoke earlier with the chief global economist at citigroup on worldwide exchange and he said he's worried about the united states because if donald trump gets elected he sees the risk rising of a trade war, and if hillary clinton gets elected he sees the risk of a trade war as well. >> a lot of anxiety by the nature and tone of what both candidates are saying about trade. however it's one thing to run as a candidate and another to be to run a government. i don't think we'll be as bombastic and anti-trade when either one gets into the office. i do, however, think that hillary clinton has a better track record and plan of expanding markets so i'm not as -- i don't see it as a glass half empty. i think that both want to get in

the oval office understand the way to expand jobs is to open markets. that's what i believe fundamentally. >> the opposite of what they're saying on the campaign trail. i realize it's an appeal to populism but hillary clinton doubled down on that stance yesterday, saying no way on tpp. don't you think it would be difficult for her to reverse course if she gets in elected. >> once you get in office and start to deal and negotiate with the congress, we have different branches of government. trade has traditionally been a good thing. it hasn't always worked out for every sector, but i believe that there will be compelling arguments that tpp, frankly, would be a good thing for the american economy. so she may say this now, but when you get a paul ryan or a leaders in the senate may have a different story altogether. >> terry, both candidates seem committed to huge infrastructure spend around a quarter of a trillion dollars according to clinton.

more than double that for trump. do you think either will actually deliver those sorts of numbers and can they, in fact, afford to? >> you know, isn't it sad listening to morris talk about how our hope is that they -- these candidate don't mean what they say from an economic standpoint, that we're hoping that it's -- that they're just talking to try to win over voters and that these aren't really going to be their policies. it's really put our country in a bad space from a competitive standpoint. you know, there's no telling, i think that hillary clinton is more likely to be believed than donald trump and that might be scary. you know, at least trump says crazy things, there's no expectation that he's going to do them. hillary clinton has a record of doing, you know, things that aren't friendly towards the economy. and, you know, she was the original one that wanted to take over health care and that's a problem and a concern and especially from an economic standpoint. >> terry let me be clear about this to you, politicians say

things, you know, you run campaigns, so have i, on the stump but the reality when you get in office and have to work with different branches of government it is not a total torre system here. if congress makes a compelling argument and a case to go forward i believe there is a compelling case that the tpp would be good for the american economy. what candidates say now and ultimately what they do one, two years down the line, if the evidence proved good they should move forward. >> right. and i guess i totally understand what you're saying and agree what i'm saying, isn't it awful we have two candidates right now we really don't believe are going to do what they say they're doing. that's a terrible place. i run campaigns for 20 years. i know what you're saying and that candidates sometimes fudge a little bit but now we have two candidates we fundamentally believe are lying to us and that's awful and we hope they're lying to us. >> let's move this conversation forward. beyond the infrastructure spending what is the pro-growth message from hillary clinton? >> it's interesting because i

get sort of [ inaudible ] looking at the reviews people gave her pretty fair reviews and "the new york times" as well. i think she needs to double down on something democrats don't do. the corporate tax system. our corporate tax system is abysmal. we're terrible. we're the worst in the world. if we can find a way to create -- to redefine our tax code, create a gate system people can bring income back to america that could spur the economy along. i think that this is something that hillary clinton could see allies across the aisle, the paul ryan, will work with her on these types of things. i'm hopeful this is something she can focus in on and double down. >> we're hearing that from donald trump. do you think that hillary clinton does have a message or more of an opportunity to reach out to republicans across the aisle with a pore pro-growth -- more pro-growth economic message going into corporate taxes and not bashing the tpp even though she's come out against it. >> i think she has a huge

opportunity. a lot of republicans, especially fiscal conservatives, who are scared to death of donald trump. and they're also scared to death of hillary clinton. and so, you know, if she has an opening to seem less unstable and win over some key republican votes she's going to need that in college educated white voters in suburban areas, upper income, that aren't going to be trump voters she needs to encourage them not to stay home but come out and vote for her. i don't know if she can do it because her policies have been consistently left leaning. >> yeah. >> what's interesting hillary has a track record of working with republicans. remember when she was in the senate republicans worked well with her. i think this is an opening for her to start to reach across the aisle and get consensus now, that tax code is something she can do it on. infrastructure is something she can do it on and she should really drill down on this health care issue, child care issue. with donald trump being 30 points behind her with white

educated women this is something that can make a difference. it is a compelling argument to women. >> we'll leave it there. thank you very much. good discussion, terry sullivan and morris reid. >> big day of -- excuse me, big day tore retail earnings. courtney reagan has the latest for us. >> good morning to you. jc penney results aren't as positively surprising as maybe some other department stores, but certainly show forward progress. jc penney lost an adjusted 5 cents per share, better than the expected 15 cent loss. revenues slightly shy at 2.92 billion and that key comparable sales metric improving 2.2% over last year. 0.2 shy of consensus. cojuan and company notes a likely limited upside for shares since the department store only reiterated its full year guidance. ceo marvin ellison is hosting his first analyst meeting where jc penney will reveal its three-year forecast when we might get more on the conference

call. the strength of the sephora shops, calling out rollouts in rural areas. the home department also strong. ellison calls the new appliance test shops excellent. reiterating the strategy to focus on less weather sensitive categories. we heard that from him last quarter. nordstrom catching a break beating on earnings and comp sales, slightly light revenues. the department store raising its full year earnings guidance slightly as well saying its anniversary sale which shifted later this year was even better than recent sales trends. nordstrom rack again the stronger performing segment, though nordstrom's website comps grew 9%, notable because 20% of nordstrom sales come online. now dill dards's top and bottom line better than expected but comps were light. the ceo classified the results as poor. noting continuing impacts from negative apparel trends. that's a little different than what we heard from macy's. on wednesday i'll be in texas at the jc penney analyst day and

sit down with marvin ellison and hopefully hear more about the quarter and plan forward. >> thank you very much, courtney regan. >> another record-breaking night at the olympics. carl is in rio with all the highlights. carl? >> hey, david, we talked about gymnastics and swimming this morning but congratulations kayla harrison the first olympian to win gold in judo from america in london, back in 2012, sought to defend that this time around in the half heavyweight category and did win. now the first woman to win multiple golds in that category. she's talked about retirement being a possibility, so we asked her a few moments ago what comes next? >> mma is definitely something i'm going to think about. it could be, perhaps, very lucrative for me. something i think i would be good at and excel in pretty fast. but at the same time is it going to fit with me and my persona. it's completely different from

the olympic stage. you know, in judo, after every match you bow to show respect to your opponent and you shake their hand and i was hugging the girls after i was fighting and it's all about mutual benefit and welfare, judo, and in mma i feel like it's a lot about trash talking and entertainment and you get fights not necessarily baited on your merit as a fighter but based on things that don't really matter. >> she's going to be an athlete to watch. finally from that kind of gold to this kind of gold, these are olympic pins and they're made by all kinds of sponsors, athletic teams, even media organizations. here's a cnbc pin. trading these at the olympics has its own entire culture. take a look. >> this one is really nice. inside olympic park a tradition nearly as old as the games themselves. pin trading. >> what if i give you this one for this one. >> oh, no. >> come on. >> this is very special. >> sponsors, committees and

media outlets come to the games with an arsenal of pins to distribute and recipients trade them like a form of currency. >> this pin right here, is one of the most coveted pins. >> learning to trade is a sport in itself. >> i'm doing the one on one here. you can't swoop in. that's big bad. that's bad. very, very bad. >> where you don't even have to qualify. >> when you see these guys walking around with like 200 pins and they got pins -- >> they're professional traders. >> professional traders. >> you don't trade with them. >> hey, man, that pin is worthless. they're all worthless. what are you talking about. >> it's an amazing way to meet new people at the olympics. this is my security lanyard. i got sky sports, visa, i got brazil, i got nightly news, today show, cnbc. i'll bring this back. you can have a look but cannot have the pins themselves, i'm sorry. >> you didn't bring us any pins, carl? what? >> he got me a towel. >> he did?

>> very nice. >> really nice. i know. >> hey, carl, you're finishing a great week of coverage, of course. i'm curious, hard to have one highlight or a couple but anything in particular that you'ring going to remember more than other things you've experienced during this week? >> you walk out of this game, this one in particular, it's my fourth games, really rooting for brazil. their economy is trying to catch a second gear here. there's so much hard work to do in reforming. there's so much inequality and poverty, put this game has given them a little bit of a head start. i will be thinking of them. the stock market by the way, a new one-year high today, i'll be thinking them over the next year. >> carl, thank you. carl quintanilla. >> time to come home. you're having too much fun, dancing, shopping. we miss you. >> thanks, guys. >> thank you. when we return, after closing at record highs, stocks are, well you can see, down a bit.

there it is. donald trump speaking out against the moody's report saying his economic plan would hurt the economy. we're going to have moody's chief economist join us to respond pap lot more ahead, stay with us. dentist if an electric toothbrush was going to clean better than a manual. he said sure...but don't get just any one. get one inspired by dentists, with a round brush head. go pro with oral-b. oral-b's rounded brush head cups your teeth to break up plaque and rotates to sweep it away. and oral-b delivers a clinically proven superior clean versus sonicare diamondclean. my mouth feels super clean! oral-b. know you're getting a superior clean. i'm never going back to a manual brush.

markets are partying like it's 1999 all three indices soaring and hitting record closing highs. yesterday. is this the beginning? joined by tony, market strategist at pimco and bill

smooeds, ceo and cio of snead capital. tony, start with you, we've seen record highs and oil prices stabilizing and a reasonable earnings seasoned got record low bond yields. what's the factor driving the equity market higher? >> it's been a simple thesis. interest rates are low, the spectrum into higher risk assets credit instruments and equities. the glue that keeps it together is continuous economic growth globally and it does exist. economies dploeblly are growing at a risky situation but still growing, providing cash flow to pay out dividends to pay bond investors back the interest and princip principal. the economies look great but not okay. the backdrop is a low interest rate climate without question. >> bill, to what extent are people buying stocks because they're the pick of an otherwise pretty unattractive bunch right

now? >> well, there is that. you know, there's an enormous amount of money out there and people have pretty much despised this bull market the whole way. but we think there's a risk in there right now that you don't have to deal with by getting out of the market. that is that the most expensive stocks in the s&p, the 100 most expensive, trade for about 52 times earnings. and the 100 cheapest trade for about 10.2 times earnings. so, rather than worrying about whether to be in the market or out of the market, we think this is a really good time to think about okay, let's own merry tortious companies that don't have favor right now and leave the very well favored revenue growth stories to somebody else. >> one of your top picks is the banks, is that right? >> yeah. it's interesting, you know, a year ago, year and a half ago, everybody just admired the daylights out of wells fargo. now the ceo is adding 10 or $11

million at his holdings at the lower prices and no one wants them. we think that it's very possible that whoever gets elected president of the united states is going to be as fortunate as ronald reagan was in one respect, and that is, the demographics of household formation in the next ten years are spectacular and the banks should be a big beneficiary of higher velocity of money, mortgage loans to the largest population group. >> tony, despite bill's views of being able to make some picks or continue to go higher, recent trade flow data showed a lot of money out of active funds into etfs. given this interest rate environment at the moment, buying stocks it's like active stock picking now less relevant than it used to be? >> so what you're saying is beta is more important than alpha. we believe in a risky situation where asset prices have been inflated by central bank activity one has to be more mindful of beta risk to say to simply buy the market. one has to be very selective about what he puts in his or her portfolio.

so we're looking for securities that will bend but not break if the many stressful scenarios many people envisioned do come about. picture china, for example. the risk associated with it that many point to or the brexit related issues or the u.s. and europe and japan central banks are having less impact on economies and that creates a certain risk that should make you somewhat leery about beta risk and buying the market so to speak. >> yeah i would agree -- >> go ahead. >> sara, i would agree with that. think about this way, right now, the s&p is getting disproportionately overweighted in tech and not to pick on you folks but you spend an amount of time each day talking about tim kaine and exciting new futuristic things and that is the risk to the indexer today. the indexer is always at risk when the group that's done really well the last couple years gets to be an outsized part of the index. so i would argue just the

opposite, that again, not across the board, but this is a pretty good time to lean on value and to be a little bit nervous about just straight old s&p indexing. >> it's a good point, bill. i wanted to get your take on the retail sales numbers that we got today. headline number disappointing. i just wonder, though, if this kind of equity market that keeps hitting new record highs needs to see those kind of not all perfect economic reports so that the federal reserve stays on hold? >> it seems the markets have amnesias because the last piece of data, major data we had on a consumer showed it was the best quarter, the second quarter, second best quarter in ten years. in fact, also digging into -- >> 4.2% gain. >> third time in ten years we had a full handle on consumer spending and within the retail sales report, very importantly the last few months, were very pro bust. so-called -- robust. so-called control group which gets brought into gdp, 3% annualized gain.

ex-automobiles and gas, 8% gain as well. we shouldn't make too much of a volatile report plus it's a clearance month, july, people are shopping for sales. it's not a big month in terms of what happens. >> tony, thank you very much. >> thank you. >> thank you. >> thank you both and have a lovely weekend. we will have to leave it there. >> when we return, on the show, pulitzer-prize winning columnist jim stee wart is here. why trump could pay nothing in taxes. stay with us. you're watching "squawk on the street." ing 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.

hillary clinton and donald trump unveiling tax plans to stimulate the economy with mrs. clinton planning to release her tax returns to the public today. but our next guest says donald trump could be paying zero in federal income tax. joining us at post nine jim stewart "new york times" columnist, cnbc contributor, glad you wrote the story. i often say that to you when you show up. it's funny, i know you did a lot more reporting but real estate guys when you talk to them, they say, he may not pay anything in taxes. >> exactly. when i first started looking into this a few weeks ago i said

come on. you've got to be kidding. he has to be paying something. he's -- he claims to have hundreds of millions in income. no, probably little or nothing. the more i delved into the tax code it became clear he could be paying nothing. >> why? what is it about the tax code and real estate? >> the main advantage he gets as a so-called active real estate developer is the ability to take paper losses, mostly from depreciation, of all these various, you know, llcs he owns and offset it against ordinary income. now that used to be possible for average people who invested in real estate partnerships and that was deemed such an outrageous loophole it was wiped out in the 1986 tax reform. this being, you know, the real estate lobby, they carved out this exception for active real estate developers such as trump. he can take massive paper losses, because we all know real estate doesn't really depreciate even though you get the schedule an write it down, and then he can offset his income.

you can keep these llcs going forever or another massive loophole for real estate developers if you sell one property, and buy another, you don't pay any tax on the gain. now that used to be true for regular people too for their homes and they wiped that out. but again, real estate developers got carved out. don't get me going on this. it's outrageous. he's not necessarily doing anything illegal. it's not illegal. he's taking advantage of the provisions there. b, how many times do i have to say this, we need tax reform thp pes is an outrageous example. when running for president step up there, let's just see the returns. if you're doing it legal you're not ashamed of it put them out there and let us see. >> i was going to ask that. wondering if this you think politically is the mystery of why we have not seen the tax returns and if so, why. he's not doing anything illegal as you said. >> well i think it would be a political firestorm it turns out

he pays so little. the percentages and the issue, because you use these devices and get your adjusted gross income down to maybe zero or some years as we've seen he actually did report losses. so, you know, it's -- the rate suspect the issue. it's the absolute amount he's paying in taxes probably extremely minimal. i think he would come under fierce assault if it turns out that that's the reason. it seems to me this is the obvious reason. there's a principle in the law if you don't produce evidence you can draw a negative inference out of it i would apply that here. until he produces, i think we are entitled to conclude he's paying little if anything in taxes. >> these tactics would they show up in his personal or company tax returns? >> the personal tax returns. amazingly he lists 564 business entities in which he holds a position. there are apparently others he doesn't hold a position. that's a lot. each one of those files a return, a k1. that is passed through to him, personally, it gets his tax returns must run to a massive,

you know, bigger than the manhattan phone book and all shows up in his personal returns. >> he is an active developer therefore benefiting still from this particular deduction. >> yes, he is. i mean, it's -- what is or isn't an active developer is subject to legal interpretation and could be argued about but one question i had in my mind is, how do you actively manage 564 or more entities while running for president. is that active management? how active can you be? >> jim -- >> a lot of people that work for him. >> do you think he's going to release his tax returns? he says it's because of an audit. what are your thoughts? >> everybody says he's not going to do it. he could have done if it he was going to do it he should have done it before now. >> mitt romney was paying 14% because of a number of things including his investment in private ekt and things like that. >> i was among those who criticized him. i look back now, he's a tax hero

compared to real estate developers the private equity people cannot be held accountable to real estate. >> expecting to see hillary clinton's 2015 tax returns. >> yes. >> some time soon, possibly today. any things to look out for in that. >> i would be surprised. i looked at hillary's tax returns, i'm bipartisan. they're not that interesting. she makes a lot of money from speeches and other activities. she pays a high rate in the high 30s. i mean, you can criticize them, but not for not paying their fair share of tax tas. >> we will have to leave it there. >> again, just seeing it today, because it had been coming up and that's -- and you hear it from people, jim, and then you said that can't be, like no, i know real estate it's going to be zero, that's the reason. >> yeah. >> great stuff. >> a lot think it's because he's not worth as much as he says. >> people wonder about the net worth. >> that's a splats iseparate issue but looking at the tax rate which is significant it would be a scandal. >> a bigger scoop. >> we're still paying 52% as new

york city residents. >> don't ask. it's too embarrassing. so high. >> david faber, release your tax returns. public wants to know. >> yeah. i'll tell you right now, it's 52%. i think that's what it was. >> thank you very much. >> journalists get no breaks. >> none. >> thanks, jim. >> when we come back speaking of donald trump, he called out moody's for saying his economic plan would put his economic plan would put the u.s. in recession. listen. >> it's a ridiculous statement that they come out. i assume they're democrats because it's a ridiculous statement. >> we will see. moody's chief economist mark zandi joins us next.

good morning, everyone. i'm sue herera, your cnbc news update. the defense department releasing video of recent air strikes on isis targets in syria conducted july 26th in northern syria. the strikes came as u.s. backed forces were trying to oust

militants from the city. a wave of coordinated explosions rocked multiple cities in thailand overnight and this morning killing several people and wounding dozens mor . thai police say they were local sabotage not linked to terrorist groups. vladimir putin replacing chief of staff sergei ivanov in the high-profile reshuffle in the kremlin in years despite the clear appearance that ivanov was forced out putin insists he was making the move at ivanov's request. the deep fried twinkie jumping from the state fair to the home freezer market. hosest launching the product, its first foreray into frozen foods with a box of 7 for $4.76 for the first three months they will only be available at walmart. i don't know. that's the news update. sara, your neck of the woods because you follow these companies. i'm not sure about a deep fried

twinkie. >> consumer companies were moving towards healthier foods. not sure it goes with the trend. >> that would -- >> who doesn't love a deep fried twinkie. >> a counter trend. who knows. >> get wilfred to have one. been in the states a few months. >> hasn't done that american tradition yet. >> next on the list. >> we will go to the ohio state fair. >> thank you. >> you got it, guys. donald trump and hillary clinton's economic plans are under the microscope. hillary clinton often cites moody's research. yesterday on "squawk box," we asked donald trump about moody's criticism of his plan. listen. >> how do you reconcile saying your economic plan was well received and expected to create the jobs that you've just told us, it will when moody's says your plan will cause a recession, create far fewer jobs than hillary clinton, and increase the deficit. >> it's a ridiculous statement that they come out. i assume they're democrats because it's a ridiculous

statement. my plan cuts taxes. she will be raising $1.3 trillion in taxes. my plan cuts taxes. my plan will lead to growth. he we're going to have the jobs, not her. i think they might have been looking at an old plan or something. it couldn't be this plan. everybody says this will create tremendous growth. >> let's bring in mark zandi, chief economist at moody's analytics to respond. good morning, good to see you. >> good morning. >> so clear this up for us. are you a democrat? >> yeah, i'm a registered democrat. >> and you contribute to the clinton campaign, correct? >> yeah. i contributed during the primary to the campaign. and in full disclosure i've contributed to both. i did work on one previous campaign, the john mccain campaign. >> how do you respond to critics out there that say, your politics is coloring your economic research?

>> i guess a few things. one, read the research. the methodology, the assumptions, the results are transparent, laid out. you make your own judgment. second thing i would say, it was a team. i led a team and we had both on the team. but take a look at yourself and make your own mind. >> just to be clear have you looked at the new trump plan? because i know your analysis is often cited it would cost 3.5 million jobs, unemployment would rise to 7%, 11 trillion in terms of what it would add to the national debt. are those your current numbers based on mr. trump's latest speech in detroit? >> no. it's not. that was done -- that analysis was done four or five weeks ago. it does not reflect any changes he's made and will make in what he tried to articulate and did articulate back on tuesday. at this point, we don't have enough information.

there's not enough granularity to what he said to be able to quantify it. we're waiting to see if they post more information on the website and provide more information in regard to what he has in mind and i will update the analysis. >> so some of your themes stand. you did say in the report that trump's proposals would lead the u.s. to a more isolated economy, cross border trade and immigration would be significantly diminished, foreign investment would be reduced on some of his trade plans. the only counter here, mark, it's not like hillary clinton is opening herself up to trade. she's come out very vociferously now about tpp. wouldn't it be the same isolationist attitude? >> well, that's a good point. just -- what i would say is that the biggest difference between the trump perspective and clinton perspective with regard to future economic growth, jobs and x dp, is their policies with regard to immigration. that is the key.

mr. trump is no fan of immigration. he would require the 11 million undocumented plus people to leave the country. whereas, secretary clinton has endorsed the immigration reform bill ta was passed in the senate back in 2013, the so-called gang of 8 legislation, that would increase legal immigration by a million people per an them, more educated skilled workers and provide a path to legalization, citizenship for 11 million undocumented. that's a very striking difference in a very big difference in what it means for economic growth. >> can i ask you about infrastructure spend. it's a theme both candidates have been talking about with some huge numbers involved as well. can the u.s. afford those sorts of numbers in terms of increasing its debt load and if the ultimate goal is to boost gdp growth, is infrastructure spend the right path? does it have the multiplier effects if we look through history to deliver gdp growth?

>> i don't think we can afford not to invest in infrastructure. it's key to the productivity of our businesses, their competitiveness. it will save enormously in the long run and it can be done in a very intelligent, smart way. both candidates have talked about an infrastructure bank and i think that's, you know, a very attractive way of doing it. secretary clinton has been more bold in her proposal. she would have 250 billion over five years in additional direct spending on infrastructure but you have to pay for it and she lays out some ways for doing that through higher tax revenue, raising tax rates on very high income households. so not doing it would be a huge error. and particularly in the political context, i mean we have bipartisan support for more infrastructure spending both mr. trump and secretary clinton have supported it, the obama administration supports it, many in congress on both the rs and ds, so not to do it would be a very serious mistake. >> mark, quickly, what do you

say to those who see hillary clinton as a continuation of president obama who did preside over recovery but it was one of the shallowe esest economic recs in the history of the u.s. and in the last seven years we haven't seen growth above 3%? >> i would say there's a -- a lot of her proposals are a continuation of mr. -- president obama's policies. a lot of new things. but i would say that the u.s. economy has made a lot of progress since the great recession. we've created over 15 million jobs and unemployment is 4.9%. there's still a lot of economic pain and suffering but that's because we dug ourselves a very deep hole, that's taking us a very long time to get out of it, but i think the policies have been generally quite good, and i think going forward, continuation of many of them, not all of them, many of them would be the right thing to do. >> mark zandi, thank you so much for joining us to respond to donald trump and talk through some of the economics of both

plans. mark zandi from moody's analysts. >> let's get out to carl who's, of course, live in rio with a look at what's coming up. carl? >> hey, wilfred. it's the question we ask during every olympic games. does it pay for a city to host a. a study has some answers. we'll talk about that when "squawk on the street" continues live from rio. new alert system for whenever anything happens in the market. but thinkorswim already lets you create custom alerts for all the things that are important to you. i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. but the best place to start is in the forest. kubo: i spy something beginning with..."s" beetle: snow. kubo: no. beetle: snow covered trees. monkey: nothing to do with snow.

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after the fireworks and the athletes are gone, the cost of hosting remains. and according to an oxford university study, it's not money well spent. researchers say the games have a crowding out effect where nonolympic tourists, even residents, avoid the host city because of congestion and high prices. the uk actually saw a drop in international visitors during the london games. some critics argue athletes and their families stay wrapped in the olympic bubble and don't spend like typical tourists. another downside, infrastructure investments don't always pay off. the tab for athens in 2004, $15 billion, is widely blamed for helping to bankrupt the country and sochi, home of the most expensive olympics ever, is home to an under used stadium and public transportation system. which costs russia $1.2 billion a year to maintain. the question is whether rio's

$12 million investment will pay off. organizers say the city keeps 60% of any profits. rio's organizers say their bid modernized the city as the recession kept private investment away. now, of course, this decision has real consequences for future games, guys, because the ioc continues to debate whether or not to take a chance on developing economies like brazil, like maybe africa in the years ahead, or whether to play it safe and keep these games in the likes of an l.a., or beijing. >> carl, i can't believe that there was a drop in visitors to london during the 2012 olympics. it was rammed. you couldn't get around at all. that aside, in terms of the ranking of how successful recent ones have been, did the study go really into that and who tops the list, who's bottom of the list? >> i mean, the worst case is montreal, back in '72 or '76,

essentially left the city with $30 billion -- 30 years worth of debt. it took them decades to come back interest that. that's sort of the posterchild for why you would not do this. obviously the rio organizers are hoping to provide the counter view to that and say look, we didn't have a subway before, now we do, and it wouldn't have happened otherwise. >> to your question, carl, about the ioc deciding on developing economies for future olympic games, i mean brazil did have a lot of criticism in the lead up, it wasn't going to be ready, dealing with a political and economic crisis, it didn't have the infrastructure. for the most part it seems to have gone smoothly would you say is. >> yeah. i mean there's still a lot of protests particularly again michel temer. you can protest now in olympic park which is sort of been a judicial debate here. but there's still a very large portion of the local electorate who argues that money you spent on the games, could have gone to making sure our schools don't leak from the roof and that debate will continue.

>> good point. >> overall, it feels like the sentiment is much better than two years ago after the world cup which is one of the sparks that led to the unrest and the impeachment of dilma rousseff? >> yeah. it's going to be interesting. i mean, if, in fact, brazil comes out of negative gdp in the next couple years, will people say, it's because the olympics were there. we're not going to know the answer to that for a few more years. >> thanks very much. great coverage and safe trip back from rio. switching focus, big banks are asking the federal reserve for an extension to comply with the volcker rule. goldman sachs, morgan stanley and jpmorgan are among the banks asking for an additional five-year grace period. if the fed agrees the extension would give them more time to exit fund investments and run through 2022. just for a bit of context on this one, guys, there's been three one-year extensions to the volcker rule on the generic

terms. this is a five-year extension ask on the particularly liquid assets. it's an interesting headline and story but flagged already, filed in some of morgan stanley's 10 qs. goldman has mentioned it on the recent investor call. it's not unexpected but it does highlight some of the assets that banks still cans get rid of quite a long time since these rules were initially brought in. an issue they have to deal with but not unexpected and why the stocks aren't reacting. >> right. right. liquid securities i guess of various types. but the overall emphasis of the volcker rule has been felt in terms of capital and risk taking. >> absolutely right. more of a niche area, particularly some private equity investments they haven't gotten rid of yet. how have you not, but it's a small part and not unexpected. >> all right. when we come back, on the show, the popular whopper from burger king now getting a tex mex

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burger king attempting to fend off the kpez tigs with his it's new fast food trend, the chopp whopperita. going after that do bole here, jane. >> absolutely. taco bell nipping at it's heel. out city hoping to bring the olympics here, eric says he fears a trump presidency will hurt our chances with the ioc. burger king busey trying to tear the wall down. has the king gone loco? well burger king has been trying to get in the mexican food game, at least tex-mex, and as we said, taco bell gaining on it. the chain's been testing. we unboxed it. it's basically a whopper in a or it till la, you don't hold the pickles or the lettuce, off cheesy, mexicanish sauce.

would you have had a whopper in a tortilla. >> it might sound good. can i try it? >> reporter: would you try it? >> oh yeah. >> reporter: why? >> seems less fattening. >> i didn't buy it. >> yeah. >> reporter: yeah, you like it? it's the first time i've ever had taco sauce on a pickle. all right. on power lunch, i will give me review, the anchors will play along eating their versions of the whopperito. one of the challenges for fast food is that the financial gap between eating at home and eating out is wide. it's cheaper to eat at home. also on fast tap, i will be at the coliseum because tomorrow, the los angeles rams, the los angeles rams return for their first game in decades. and we talked to coach fisher about whether or not he's feeling much pressure to do

something better than the '79 record here in l.a. back to you. >> yes, that's an nfl franchise moving back to l.a., sarah. jane, i'm explaining to sarah making sure she's up on it, okay. >> i am up on the whopperito. >> which is healthier? whopperito or whopper. which is less healthy? that should be the question. >> i'll tell you this, the comparison i made was more between like a taco bell burrito or a chipotle, this is right in the middle of both. this is probably healthier than a taco bell one and fewer calories than a chipotle. only 570 calories. $3.99. >> i think it looks good. we're not allowed to have your review yet, jane? >> she's tried everything. >> you have to tune -- no -- am i usually like everything, but i do have some things. i'll tell you what i miss, this is only a temporary item. they had mac and cheese which

was the most deadly wonderful food, fried mac and cheese. they took it out. this is going to be around for a while, but maybe not permanently. >> it's been around 24 hours. >> didn't she once have like a bacon-flavored milk shake? >> yes, i did. and it did not make me ill. so whatever doesn't kill you makes you stronger. that was a jack in the box thing. >> i guess i don't have vegetarian whopperito. >> you can hold the meat. what's the point? >> yeah. jane, thank you. we look forward to your review. that is coming later on cnbc. >> also seem to get to bite into one of those. >> got to start early. >> i am hungry. >> i know. i'm also looking forward to the l.a. rams kicking off. owned by the same owner as that. >> arsenal. >> right. >> there we go. >> let's go to john with a look

at what's coming up next on "squawk alley." >> good morning, my nickname is elementary school. no, it wasn't. we're going to have "squawk alley" early investor to ask what really is the next multibillion dollar idea in tech. also microsoft making an investment in interactive demon. we're going to have an exferret in both microsoft and coming home before he does, all that and more coming up on "squawk alley". energy is a complex challenge. people want power. and power plants account for more than a third of energy-related carbon emissions. the challenge is to capture the emissions before they're released into the atmosphere. exxonmobil is a leader in carbon capture.

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good morning, it is noon in rio. it's 11:00 a.m. on wall street and "squawk alley" is live. good friday morning, i'm live on the beach in o.