enjoy. >> that was good. thanks i'll see you tomorrow. >> you did that on purpose but looked real. >> running late. no. final check on the markets, quickly, check out the futures, which are now down about 14 points not a lot happening premarket. who knows how we'll close the day. join us tomorrow, are you here tomorrow? >> i'm here tomorrow. >> all right. joins us tomorrow. and you'll be back. >> i am. >> yeah. >> join us tomorrow. "squawk on the street" is next. ♪ >> good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with sara eisen and scott wapner at the new york stock exchange. big names dominating the news flow as walmart and cisco post earnings, dudley speaks in an hour, futures shy of the flat line after yesterday's late day surge keeps that streak alive. 12 days of alternating gains and losses on the dow. europe steady, oil up six straight sessions as brent

passes the $50 mark. earnings, earnings, earnings. cisco shares down sitely despite beating -- despite beating the street. company plans to lay off 7% of the work force. we'll talk to chuck robbins. >> walmart shares up after beating the street's estimates and boosting its outlook. what's ahead for the company now that jet.com is going to be in the mix. >> and a strange story coming out of brazil as two olympic swimmers are pulled off a plane while drive trying to leave that country. live to rio for the latest on the lochte controversy. >> first up, walmart poised to open at a 52-week high after reporting second quarter operating profit of 1.7, nickel above, revenue above consensus. u.s. comps positive for a eighth straight quarter up 1.6 and raising their full year guidance. traffic was up and i believe it's best in eight quarters traffic, comps up 1.6. best in eight. some of these initiatives are starting to bear some fruit. >> i was going to add the e-commerce sales to that because

that was a bright stop, 11.8%, which was an improvement but still, not where it needs to be as doug mcmillon said. and as amazon continues to show 20% plus growth, already coming off such a bigger base on-line. walmart.com is going to be the focus for investors especially after $39.3 billion acquisition of jet.com. what is said on the conference call about integrating that. certainly we know that mcmillon was after the talent there. he's going to be running, mark laurie, running walmart.com. see if they can really jump start it. >> groceries were good and really after what target delivered the other day, you weren't sure what you were going to get out of this bag today. and it makes you focus, perhaps, more heavily on what target's not doing as much as what walmart is. >> i believe it was cramer himself who tweeted this morning, walmart proves that target's problems are target's problems. they did talk about growth in on-line grocery as people increasingly getting their groceries delivered.

entertainment soft, in line with q1. food deflation is going to remain a big issue for everyone in the space. they believe food deflation hurt the food comps 100 basis points as you pointed out earlier in the week. groceries that you buy at a grocery store are getting cheaper all the time. >> and food that you pay for at restaurants are getting more expensive. which is why people are opting to cook at home. this is going to be an issue, it was an issue last quarter. target mentioned it. kroger, all of the grocery stores are feeling it. it's going to make it tough for them, the deflationary food environment, at the point that mike santoli made yesterday, it is in the fed words transient or temporary in terms of the head wipdss. walmart is continuing to invest in trying to get fresh foods and go where the consumer is going. they made note of the improvements that they have continued to make on terms of employee morale, boosting workers' pay, a headwind on profits, but also has made the

store experience better. >> and makes you wonder, the retailers that have been unable to compete with amazon, sure, trends have changed and different things are going on, but if you execute correctly, be or at least execute better, maybe this proves walmart does that you can compete effectively at least on some level with the amazons of the world. >> how much of that is in the stock already? i mean it's been up 20% so far this year. investors took note of the improvement. the question is when can they get out of half a percent sales growth, 1% comps, better, better than where it was, and the expectations were, but still a big shift to turn around. >> people are looking at sales up 3, operating down net 6. one of the things you will want to investigate. courtney reagan spoke with the cfo and joins us this morning from headquarters with detail ps. >> good morning, carl. walmart shares getting a boost as you mentioned better than expected earnings. we'll see what happens when shares actually begin trading and i spoke to walmart cfo brett

bigs who attributes the store performance to retail fundamentals like clean stores, in stock inventory and improved employee morale. he actually doesn't see a market change in the consumer, but thinks there are things working in their favor like wages and gas prices and some aspects that are causing perhaps a little more caution than what the numbers show. and regarding the larger business decision, biggs says walmart is being thoughtful about its capital allocation leaning into investments like jet.com, $3.3 billion, less into others like selling 119 stores in mexico, its clothing chain called suburbia, decided to exit that. walmart posted the best comps since the third quarter of 2013, eight straight quarters of positive comps 7 straight quarters of positive traffic. the opposite of target which saw the lowest traffic in 1.5 years. the first negative comps in two years. i think grocery had a big part of that. walmart's on-line sales growth rate accelerated from last quarter, still below where it

once was. the jet.com acquisition, which will impact fourth quarter earnings by 5 cents we learned today in part from one-time costs, and on the prerecorded conference call, walmart ceo doug mcmillon talked a little bit about jet.com saying one of the things we like about the technology they've developed it rewards customers in real time with savings on a basket of goods and puts them more in charge of the price they pay. and then just moments ago, i wrapped up a media call and walmart's u.s. ceo greg foreign said the retailer is feeling good about going into the holidays, saying they're in better shape, cleaner, better prepared. and also unlike target's comments on electronics, foreign said walmart doesn't call out numbers from electronics and said, quote, we feel the performance across categories was steady. food or general merchandise. target said basically the exact opposite. that lower traffic hit across all categories. back to you guys. >> yeah. we made a big deal of that lower traffic at target. of course as you say, walmart's traffic up 1.2 ticket.

didn't cross into the negative. what explains the disparity between walmart and target over the past couple days? >> so, you know, it's funny because target sort of said look, if things were kind of crummy across the board. walmart said the opposite, things were steady, consistent across the board. if i were to look at it, i think grocery makes all the difference. 56% of walmart sales come from grocery. it's about 20% from target. and so you're going into the stores to buy your bananas or your milk and potentially likely to pick up general merchandise and if you're not doing that as much at target it has a more negative effect perhaps on your general merchandise. remember target is in the middle of switching its pharmacy so as they switch over to cvs, all of those k customers have to re-enroll and resign up for the pharmacy benefits and that's a little bit of a pain for some shoppers and perhaps it kept them from going to target, at least right now. target said they anticipated that problem but hopefully they can figure it out. >> we're singling out target

because of that negative comp story yesterday. >> sure. >> really a difference in the results. i wonder if walmart is taking share from target and other retailers that are struggling. for instance, i don't know if they overlap. do they take apparel customers from macy's or jc penney or the other stores that are seeing declining sales. >> i wouldn't say so much apparel. again i think it's grocery and it's that general merchandise. so we talked a lot about the competition between walmart and dollar stores for those fill in trips. i think target had hoped to take the place of the dollar store for a fill-in trip. i'm not sure it's happened yet. i don't know if this means that walmart has grabbed some of those fill-in shoppers. the dollar stores may or may not have lost. so i think it's very fair, sara, to think there probably is share gain. maybe it's from target, but maybe it's from the dollar stores. >> all right. >> indeed. we will watch that closely. you know, anybody who goes to

target and has their wife go into the dollar bins knows that's where the incremental sales come from. go in for one thing and watch out with a bunch of stuff. >> t mobile saying good-bye to data plans and announcing a new unlimited plan. we're going to talk to ceo john legere in the next hour. cisco cutting jobs, better than expected quarterly results. chuck robps will joins us live to talk about the growth strategy on cnbc in a minute. you're here to buy

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cisco's off about a percent in the premarket after cisco beats by three cents. the work force reductions we'll talk about that with chuck robbence in a few minutes. -- robbins in a few minutes. 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.

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bibaud,. cisco out with results, cutting 5500 employees, 7% of the work force as it seeks to refocus on its software and services businesses. joining us is the ceo of cisco chuck robbins who joins us from san jose. good morning to you. >> hey, carl, great to be here. hope you're doing well. >> yes. it's nice to have you. i'm sure jim and david wish they were here. talk about the quarter. margin performance was, obviously, strong. you got deferred revenue growth. you got a lack of big warnings on macro. some investors wonder why the guidance wasn't even better? >> well, carl, you know we are proud of not only the quarter but the year we just completed. we had growth of 3% on the year in q4. we had 2% growth and we had 9% nongap e ps growth which was a record for us and finished the year at 2.36.

we had a -- we're very proud of what our teams have done and frankly very volatility environment throughout the year. as we looked at q1, you know, what we really saw was a weakening of demand in q 4 in our service provider segment around the world and emerging markets. those two countries were negative this past quarter, but the rest of our business, enterprise, commercial, public sector and developed countries was up 5%. so overall, good performance there. but really, it was combination of the weakening demand we saw in emerging and service provider as well as the, you know, we're just not sure we're going to see a shift in that in q1 and frankly, we're starting to see a little bit of impact from the transition in the business model which is something we're driving proactively, obviously. >> yeah. you mentioned the weakness among service providers. you pointed out em, but you also pointed out uk and i'm wondering, investors might be quick to try to draw a line between that and policy

decisions between that and brexit. is that what you think you saw? >> as it relates to brexit, carl, what we saw is probably exactly what most companies saw and what you would expect. we did have an extra month in our quarter versus other companies who reported at the end of june and what we saw was, you know, companies who our customers who had paused based on the uncertainty and decision, we had impact from the currency devaluation in the uk, but if you look at broader europe the large contributor to our business in europe, the negative business in europe this past quarter, was really the service provider piece. but if you look at the bright spots that we had, in our security business continues to move forward third quarter of double-digit growth up 16% with deferred revenue up 29. collaboration continues to perform well up 6% with deferred revenue up in the mid teens. you've got our data center switching portfolio that continues to perform well, our services business did well, and

you mentioned that deferred recurring revenue which is indicative of the transition to the software and subscription business up 33% again in this quarter. we're pleased with those areas. >> operating margin, forgive me if i have this wrong, highest since fiscal '06. i wonder, we keep hearing the narrative that large cap companies are running out of ideas to maintain margin. are you telling us there's more runway there? >> well, carl, we look at our financial model and we're committed to delivering on our commitments to our shareholders from a bottom line perspective and that requires us to manage a lot of levers including gross margins, expenses, our pricing, but i think it's reflective of the value that our customers see in our role as they move through this next wave of technology transition and the value that the network is going to play as we connect more and more devices across a broader geography, the

security that's required, the analytics that could come out of the network, the enablement of them to truly take advantage of this private and public cloud world with hybrid cloud those are the things that are important and customers see the value we can bring to them. >> on the layoffs, it sounds like you're going to take the savings and reinvest so two questions. how much thought did you give to sending that shareholders way and where do we think the 20% figure that was reported yesterday came from? >> well, first of all, carl, any time we make these decisions we do not make them lightly and we're dealing with people's lives. it's a very serious issue for us. we also work in an environment where, you know, the markets are changing faster than anything i've ever seen. the customer expectations are changing, technology is transitioning faster than ever. we've got the dynamic economy around the world, global

geopolitical dynamics, a lot of factors that come in and what our responsibility is, is to ensure that we're aligning our expenses against those areas that we believe will drive our growth in the future. i think that for the reports to get out ahead of our announcement, frankly, are a little irresponsible. we're talking about people's lives here. and i think that was even an insinuation that we may have leaked that which was insulting. we would never do that before we had an opportunity to speak to our own employees. we communicated with them and take care of them and do the right thing for them but we have to invest for the future. >> finally, chuck, coming on an election in this country, and winter, given what we talked about in other part of the world where there have been policy unserts if you think capex going into year end will suffer because we have no visibility on what policy may be?

>> carl, when we look at the service provider space, i think there's been well documented capex challenges through the first half of the year and we saw that exactly play out in our business as though reports had indicated. much weaker outside the united states than in the united states. i think as we get towards a presidential election i think the uncertainty is what sort of keeps people from moving and regardless of where we land, once we have decisions people can tend to move because they understand what the playing field is they're moving against. i think clearly after the elections, i think people will have more clarity about how to move forward. but i think that our country and the world today is actually better able to digest rapid changes and i think we will be okay. >> chuck, we really appreciate you coming and talking to us as you always do after the quarter. thanks so much. >> hey, carl, thank you. >> chuck robbins, of cisco,

joining us talking about election uncertainties, capex, layoffs. >> i think that's the biggest story. what stands out to me most, i guess in this report, is that the fact that revenues from telecom carriers and other service providers were negative after three consecutive quarters of growth. it's that capex story that is getting a lot more play, ever since the day that gdp came out and you see that business investment in this country is suffering. now you can blame it on election uncertainty, maybe some of it or a larger portion has to do with just overall economic uncertainty. this where are we in the cycle. and i think people have struggled to answer that question and thus are unwilling to make big capital investments as a result. >> especially on emerging markets with a company like cisco, saw it in the uk as well. been reading some of the analyst notes this morning, big takeaway seems to be cautious outlook. you mentioned the guidance, why it wasn't raised. analysts are saying this is a company cautious on demand trends to your point. on the workforce cuts we talked about how it was lower than some

of the reports indicated and some of the analysts are saying that is good because it suggests more at least for the stock and profits, it suggests margin upside which was a strength in this quarter but not too much the 20% reported that would call into question serious fundamentals of the business here. and as far as the martha was the execution story, that the company got high marks for this quarter. >> gross and operating margins standpoint. >> all right. that is the cisco story. when we come back on the show a live interview with t-mobile's ceo john legere the wireless carrier unveiling a new up limited data plan. he'll talk competition. taking a look at futures ahead of the opening bell. dow futures under a bit of pressure down 15, s&p futures down 1, nasdaq futures down a little more than 4 points. the opening bell moments away.

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minutes on this thursday where the news flow dominated by large cap earnings, walmart and cisco but not far from now dudley, we'll have to way weigh his hawkishness out of the minutes and williams tonight. the debate moves from the printed page to the spoken word. >> and yet the fed keeps telling us it's not about the spoken word but the data. i think the big message clearly from the minutes from the last meeting during july na we got yesterday afternoon, the fed is in a wait and see mode. they want to see the data and keep their options open on the table before they make another move to raise interest rates. they did not count out, though, a rate hike as early as september. and that is the next meeting, september 20th and 21st. possibly december. the market not pricing that in at this point but we did see a pretty vibrant discussion among the fed members some wanted to raise in july, some think it's time to raise now and some want to see more traction on the

inflation front. leaves it wide open in terms of what the market can expect in terms of what data would warrant an interest rate hike. >> i am going to say it is about the spoken word, just not about the words spoken by the people speaking them. it's about janet yellen next week at jackson hole. once again this proves her voice is the only one that matters. >> she's not building a consensus as we saw in the minutes yesterday. >> we don't know really what is going on. i mean there's a divided fed, dudley leads us to believe yesterday that things are going to have a little more of a hawkish tone. then the minutes come out. it sounds a little more dovish. the trade that was on at 159 reverses at 2:00 p.m. as a result. i'm waiting for the fed chair. that's all that matters. >> i agree. dudley is on the inner circle, his words should matter and they did earlier in the week and yet, the dollar still weak, treasure yields are still pretty low. a move up to 158, back into the 150s. we will he see this action as we get through today. >> look at telecoms and utilities. literally yesterday, at 1:59,

the sell-off on, the two best performing sectors of the year, and at 2:00 when the minutes come out it's like okay, they're back. >> i've been saying it's like -- you're on -- you're on the runway at laguardia, the pilot says you're number five for takeoff, but now there's a mechanical, we will go back to the gate, and sort of regroup and do this all again. it's frustrating for a lot of people. speaking of currencies, pound is at a two-week high. first it was uk unemployment in the 4s, now retail sales as we see this incredible post-brexit bounce. 1.4 on retail sales in the snoouk which is better than the retail sales are growing in this country. >> yeah. >> and a lot of people are looking for a pause after the brexit, potentially some of it, spending money because the pound dropped so dramatically, that it made [ inaudible ]. europeans and everyone else to buy over there.

>> opening bell at the s&p at the bottom of your screen. at the big board, cpi aero structures, maker of aircraft assemblies for fixed wing aircraft and helicopters at the nasdaq, atomera a semiconductors materials intellectual property company. we'll watch of all the big names, and because it's the dow component we will watch walmart to start. looks like it's going to open at about a 15-month high. again, 1.07 beats 1.02. they raise to basically straddle the guidance. e-commerce up almost 12 and comps up 1.6. we talked about that at the front he end of the show. >> e-commerce 11.8%. another retailer to watch that reported after the bell yesterday would be l brands. which also came out a little bit better than anticipated. comps for bath and body works up 5%, it was the owner of that chain, victoria secret up 2%. improvement there. and l brands itself comps up 3%.

total comps up 3% is better than what we've been seeing out of the industry and l brands getting a 5% pop. boost guidance for the year but some of the current quarter guidance was less than expected. victoria secret going for changes. it's getting on the athleisure trend. it's making sports bras instead of padded bras. >> they're getting long on the trend, they're getting on the trend when people are saying athleisure has peaked. that whole thing is running its course. >> they may be saying that but the healthier lifestyle, the whole just getting into the gym more and being more aware, that's something that could have staying power and something that victoria secret is pivoting towards. >> who knows where retail is. cross currents between last week with macy's and gap some of the department stores, and then you have target, lay an egg, walmart comes back. it's been an interesting read. >> lot of research we haven't gotten to. twitter, i know you will talk about this on the half with ken,

taking it to a sell on essentially competitive concerns and the increasingly obvious idea that snapchat is finding ways to monetize really quickly. >> this was a stock that got off the mat, so to speak, in the last couple weeks ever since that rumor was out in the market about a possible take out with balmer. people started buying that thing like it was going out of style. this is a little smack down back to earth, not so fast, structural, maybe fundamental issues with the companies' outlook going forward. >> just a shade below 20, of course, which cracked for the first time since january. earlier in the week they also take priceline to a buy on advantages of scale. evercorp active in the research department today. >> twitter up 37% in the last three months. it has done better. the chatter that it was going to be talking to apple tv about

possibly adding a streaming -- just trying to keep pushing to the halftime report here. >> there we go. >> streaming channel for the nfl and it's going to have two thursday night nfl games on twitter. potentially something to ask him about. >> they will be debating that throughout the day. we will talk to sen na about it, obviously, at noon. >> oil, oil companies, the space is helping to lead the charge today. you got crude in the mid-47 range. it's up six straight sessions. brent as we said at the top, cracks 50 for the first time in about six weeks. so those opec headlines having an echo effect in the past five or six sessions. >> steady climb on the price of crude and has been reversing earlier losses in the day as we start the wall street session moving higher pulling brent up to 50 as you say. wanted to point out another retailer since we're going back and forth trying to figure out what's going on in the space. teen retailer american eagle posting results.

this is a stock that has been performing quite well on some turnaround efforts and plans. american eagle saying second quarter comps rose 3%. the company opened five stores, closed 7. the arie brand they have has been performing well. growth of 28% versus almost half of that expected. the stock is up almost a percent. as you can see it's having a good year bucking the retail trend up almost 20%. >> hormel another story today. 36 cents a share. beats by a penny. revenue ahead. remember this was a chart in the spring that looked like -- >> the best looking chart. >> it was hrl 24/7, it's come back a bit. a two-year gain or hormel looking in the high 50% range. we'll talk about what food deflation means for them. >> they're doing well. the analysts who cover the food space always say never bet against hormel because it always manages to surpass expectations.

it's been a defensive stock in this kind of environment which has propelled it as mike santoli always says a boring stock that people love. but clearly also putting out growth from this quarter too. >> what else i'm watching is something i know that is so near and dear to you and that is the dollar. >> oh, good. >> right. the dollar -- >> talk about that. >> you've been wondering why the dollar would have been moving lower over the last many days if there was this more hawkish tone by the fed. >> buy it. >> and expectation and right back down. i mean, what, the 10-year today is at 1.55. the dollar has been weaker. bespoke comes out and says the dollar is in a technically driven downward trend. people will be talking about that more in the weeks ahead if the dollar continues to go down. >> it's also another reason why during this earnings cycle the company guidance has not been as cautious because as you know the dollar, the strong dollar, has been a huge headwind and cut into overseas earnings. the better outlook helped in part by the weaker u.s. dollar. you're right, 1.13 on

euro/dollar shows a weaker dollar and the currency market is not betting on an interest rate hike this year. near a three-month low here. >> all of the markets have been more right on than the fed's outlook has been. >> true. >> we've seen it over and over again, whether the way the equity market has moved, the bond market has moved and the way currency markets have moved. what do you make of the paul singer comment, who is going to be at delivering alpha coming up in september, that we're witnessing the largest bubble in the bond market in history? he said that i think in an investor note yesterday. >> well, with central banks all in, buying bonds. by the way this is something if you read the minutes and parse the minutes yesterday and over the last few times the notes from the fed meeting, it's something the fed talks about. distortions in financial markets and some members worry, scott, that the super easy super low interest rates for prolonged period of time could create

under pricing of risks in certain financial markets and distortions in markets. they're looking at the possibility. people raising the concern about bonds. but as long as central banks like the uk just the latest and other central banks keep buying, keep seeing strength in the bond market. >> huge ramifications for a lot of companies on the dow at least, including a walmart which by the way is the best performer for the moment. to bob on the floor. >> we've got a mixed market, carl, but a lot of discussions about the fed minutes yesterday, and i know scott was talking about what janet yellen might say. this is starting to impact the way the market has been behaving. remember what the play has been. a yield play going on for while here. once again we're seeing sectors on the weak side, utilities and telecom and staple names, telecom and utilities up fractionally. the important thing there has been a play around belief that rates would be moved up this quarter. so if you take a look here, banks have generally done

better, particularly since their earnings came out in the beginning of july. they're up about 8%. we've seen utilities, telecom and consumer staples move to the downside. all of this is really dependent on the yield. particularly the two-year and also to a lesser extent on the 10-year yield. the 10-year from 1.3 to 1.55. a lot of people believing that would move up a little bit. that has stalled out. if they come to believe now that yellen will be extremely dovish, that's not going to go anywhere and move to the downside and all of these trades we've been seeing around the yield plays may well reverse problem for banks, good news for utilities. meantime take a look at a couple financial stocks. berkshire hathaway, biggest financial stock of all, broke to a 52-week high yesterday. other breakouts in the financial groups. i know the volumes have been anemic in the equities market, but look at the cme. chicago mercantile exchange. the futures market at the highest level since 2008. their volumes were up 10% in july. the futures contracts business has been doing very well.

people complaining about the vix, 11 a week ago, now 12 and change. you will see it moving up slowly but surely in the next couple weeks because september usually is a little more volatility month. look at the vix futures for september, october and november they're not 11 or 12, they're 15, 16, 17, the market is anticipating more volatility. you said a lot about walmart. want to point out an important thing about walmart. a huge $20 billion share of buyback announcement back in october. they will do it over two years and already done ain't 7 or $8 billion. $12 billion remaining. this is a huge number. remember the company has about a $220 billion market cap. they will take about 10% of the company back over the next two years and that will be a positive impact, obviously, on earnings. the dow down 3 points. back to you. >> bob, thank you. let's head over to the bond pits and a check with rick santelli, at the cme group in chicago. good morning, rick. >> good morning. it's really interesting to watch all the discussion about the

fed. the market had no discussion, though. if you look at a two day of 2s, you can see the aftermath but i think a better chart is let's start. you have to start everything on brexit day. because never has there been an issue that so many have thought the outcome was so easy to predict. doom, gloom and disaster. to me, predicting brexit probably in many ways is less complicated by far than monetary policy. and that wasn't right. so you can take it from there. the markets are just not only doing post-brexit surprises, the fact that the pre post-brexit was so wrong gives it two afterburnsers so to speak. like physics. the energy wasted in the wrong positions not only had to reverse but had to deal with the energy coming in to deal with it on the fly for new positions. now if you look at a two-day of 10s the 23rd of 10s what i'm

getting at if you just looked at the brexit charts i'm showing you could never bic out it was a fed day. it didn't move the dial down here at all. no surprise to the traders. if you look at bunds since 6/23, in the same range, low yield range. look at the pound dollar, here's where it gets interesting. boy i will tell you that certainly looks like a double bottom. and a double bottom after that volatility, that's like a commodity double bottom. traders used to live for those. so what you want to watch is the gilde to see where the back pressure on the interest rate differential is and looking like rates are turning up but that last chart doesn't look as aggressive as the pound. wait and see how it develops. judge, back to you. >> thanks so much. rick santelli in chicago. now for a closer look at oil prices, jackie deangelis, is at the nymex with a big day in your market, jackie. >> good morning to you, scott. that's right. crude prices well above $47 a barrel. breaking through the 50 day moving average. technically speaking that is significant. the fed minutes yesterday, weaker dollar today, stronger

crude, always supportive. things i want to draw your attention, the flooding in louisiana, maybe we will see refinery closures, people are worried about that watching it. lot of opec buzz out there and traders tell me even if this is the case of buy the rumor sell the fact that's what the market is going to do. we've seen this time and time again. short covering could be responsible for some of this. a week or two ago how crowded this trade was to the downside and how quickly we've moved higher from here. so certainly people may be changing their view on oil prices at this point. >> thank you very much, jackie deangelis. when we come back former fed governor fred mishkin, does he think there should be a rate hike in september. obviously some muted action. dow down 16, walmart the best performer on the index, cisco the worst. back in a minute. was just a bottle.

that no one would ever notice me. but i knew i could be more. that one day, i would make people smile. [woman speaking indistinctly]

stocks relatively flat as investors digest earnings reports and a divided fed on when the next rate hike should occur. for more on how to play the markets bring in phil, asset allocation strategist and mike,

chief investment strategist at ubs. i'm curious as an asset allocator strategist here, how do you deal with the calls that both the stock market and the bond market are over valued, lots of people saying it, both near record prices, how do you determine how much those were? >> a lot of people are talking about complacency in the market too. we think there's too much complacency in holding cash, cash almost 70% of the u.s. gdp right now with $12 trillion. average is 50%. >> where did that money be? >> that is going into still anything that can pay a little more than zero which is credit or high yield. high yield a different trade than earlier in the year, earlier in the year the trade was the cheapest it ever was in a nonrecessionary period. now you're getting about a 6.5% yield on the index but relatively speaking to where the u.s. 10-year treasury is at 1.50 we think there's runway but less than we saw earlier this year.

>> given that valuation setup how much would you be telling clients to put their money in the stock market at record highs above average historical valuations, but also as phil says, better value than bonds? >> well first of all i agree with phil's observation that when you look at the alternatives there's not a lot of places to go and one of the places we want to focus on where we think there's attractive opportunities in terms of opportunities that generate income but opportunities that generate growth. when you talked about equity markets being all-time highs we have to be careful not to confuse all-time highs with market peaks. markets repeatedly make highs year after year. the issue is whether or not this is a market peak. the market is likely to continue to grind higher over the course of this year into next year for a couple reasons. first of all we do see the earnings cycle beginning to improve now. we think first quarter was probably the trough earnings that will reaccelerate. secondly which phil would agree with, we will continue to have a pretty pragmatic fed which means interest rates will stay low for

a long period of time. that dynamic should be pretty supportive of the u.s. equities especially if you're looking to capture incremental income for the dividend growth stocks. >> phil, i'll ask you, that cash may be unattractive from a return standpoint but if you think we're at or near a market stop, why would you put -- market top, why would you put cash to work if you have it? >> cash every day inflation is positive you're losing money on it. negative real return. ways to play defense in the market without having a negative real rate of return that could be government bonds, high quality credit, not even high yield. the fed tore a second, don't fear the fed is what i tell clients all the time. you want them to be going this year. if they're not going, international development is weak, that's a bad environment for the stock market. pace of the fed tightening we think is way slower. good for the dollar as mike mentioned good for things like em as well. >> what would you have to see in equities to put that on top of the alternative list as opposed

to bonds? how much of a sell-off would get you interested here? >> if the fed is back involved in september or december we will see an air pocket in the equity market that could be 4 to 5% back. you know, we're already invested in u.s. equity market. we would put more to work in that environment. >> mike, i'm sorry. >> i was going to say on the don't fear the fed point, i'll turn it to you, phil said don't fear the fed because if they raise rates that's a sign the economy is health yearer, the fear from wall street and the feds we talk to, they might not move at the appropriate time. they might raise interest rates while things are still weak, especially over seas. >> i think those risks are low. i think the fed has demonstrated they will be pragmatic and prudent with regard to raising interest rates. look, what we're talking about here is the normalization of policy. the normalization of policy is not something that has to happen immediately. what is more likely the fed will likely to continue to deliberate, pass on any rate action in september and we think the next most likely opportunity for them to raise rate is

december. remember this, it's still conditional. it will be conditional what's happening here in the u.s., that is, we continue to see improvements in terms of the macro data, but also they're going to keep in their peripheral divisions some of the developments happening overseas. in the past one of the things that has stayed the fed's hand in terms of raising rates aggressively has been developments outside the united states. >> the issue of complacency, vix is at 12. okay. it's maybe it's unlikely the fed will go in september. but the market and market participants will be caught so off sides, i mean they're going to be sacking the quarterback before the quarterback even does -- starts the snap count. >> right. yesterday for the first time since june 23rd when everybody thought the uk was going to stay in the eurozone you had a meeting this year that was over 50% priced through. so it wouldn't be shocking for them to move in december, certainly september, because that's only about 25% priced in, but economic prosperity has never been driven by zero interest rate policy. you want rates higher. ask japan.

>> we will leave that here. phil from jpmorgan and mike ryan from ubs. >> when we come back, we'll go live to rio, andrew ross sorkin with the latest on the u.s. swimmer story being detained in brazil over their tail ofle of robbery. the dow down 16.

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team usa continues to rack up medals but questions and controversy continue to surround members of the u.s. swim team who say they were robbed at gunpoint by men posing as police. our andrew ross sorkin is live in rio with the latest. >> hey, carl. that's right it is a full day of competition in rio but may be the controversy you mentioned over what happened to four u.s. swimmers that's taking the front page this morning. the developing saga over whether ryan lochte and his teammates told the truth about being held at gunpoint last weekend, taking a new turn last evening when brazilian authorities removed two of the swimmers from their flight home right there at the rio airport in dramatic fashion. conger and gunner bentz were questioned and released with the understanding they would continue their discussions about the doesn't if asked as matt lauer spoke to lochte by phone.

lochte back in the united states insisting that story is true. new reports surfacing about members of team great britain held at gunpoint and robbed themselves. and then there's another controversy today making the rounds the latest coverp "sports illustrated" which features katie ledecky, simone biles and michael phelps but look phelps an under armor spokesman is wearing nike. see the swoosh there. they are the outfitter of team usa. under armor not commenting or immediately able to respond to our request for comment this morning. a lot going on here in rio. not just on the athletic side but clearly on the business side sponsor side and everything else, guys. >> andrew, we're entering an area where the swimming controversy is sort of overshadowing what we would normally be talking about, the u.s. sweeping in women's 100 meter, men's basketball advancing to the semis and more. >> yes. big win last night. big win for basketball last night. some great ping-pong -- i should

say table tennis. everyone knows my interest in table tennis. amazing athletics going on. and a number of big matches coming up also we should say last night, on volleyball, we had -- excuse me, the u.s. beat brazil, getting the bronze. a lot of great stuff happening here but the big story and if you look in the papers in the u.s. in new york cover t"the ne york post" watergate, not clouding the olympics necessarily but an issue nonetheless and we will bring you the developing story as we get more. >> i think you mentioned this yesterday, andrew, so important to get to the bottom and truth of this because going into the olympics, there was some questions raised about rio's security and they invested so much. i'm just curious from you, some color there on what that has been like, the security and what you're hearing from the athletes on it as well? >> so there's a couple things going on.

most of the athletes stay in the athletes village for the most part. the big issue is the local people who are furious in some cases if, in fact, lochte lied and, of course, we don't know that yet but that is the issue and the people feeling this is their opportunity to showcase and given now these allegations about crime here, this is what they were trying to avoid the whole time. so that's what makes this such a big story here in rio. >> guys back to you. >> andrew, we can't wait for more coverage including your tae kwon do event tomorrow. when we come back, andrew, thanks. t-mobile's ceo john legere will take on the competition with an unlimited data plan. dow down 3. don't go away. this car is traveling over 200 miles per hour.

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♪ good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and scott wapner at the new york stock exchange. index not doing a lot with the dow down five but a lot of news underneath that including oil, walmart, cisco and dudley set to speak any moment now. see crude helping out up almost 2%. >> we had breaking economic data crossing the tape as we speak.

rick santelli joins us now with that. rick? >> yes, sara, our july read on leading economic indicators is up a little more than expected, up 0.4. this is the second best read of the year. april is up 0.5. response in the market, not too much. but, of course, many traders are continuing to handicap how will dudley move the market, considering he had very little really influence on the market in front of the minutes which would mean markets should have been more skittish. probably the next time, today, maybe less of an impact but, of course, jackson hole looms and the markets always pay attention. back to you, judge. >> thanks so much. our top story today, dow component walmart beating estimates on the top and bottom line raising full year guidance as well, shares of walmart right now trading near 14 month highs, best performer out of the dow. stock up better than 1.5%. let's bring in dana telsey and joining us here at post nine, is thompson reuters director of consumer research jer rone mar

tis. good to have you here. da dana, nice to have you as well. >> thank you. >> jer rone, you first, score walmart you like what you saw? >> i definitely enjoyed the numbers. walmart executed very well. we're seeing that stores are cleaner, the inventories are leaner, and on top of that employee morale is also up. they recently got a raise from their paychecks and that's encouraging consumers to shop at walmart. the low-end consumer who is also receiving a boost from lower gas prices which is encouraging to do more store visits. we're seeing that the labor market is improving consumer sentiment. so those are all good components that are helping walmart's bottom line. >> dana, what is walmart doing that target is not? >> i mean, overall they got traffic. if you look at the traffic that walmart got it was very impressive. you had consecutive quarters of traffic increases. the outlook is good. and frankly, they had very good category performance in terms of the bred of category

performance. target has work to do. >> how are they driving the traffic? if traffic is gotted a walmart and not so good at target what is walmart doing? >> i think one of the things walmart is doing is the grocery business. it's the home business. it's the toys business. i think it's some of the basics they're executing well on. i think the stores have gotten cleaned up. they're competitive on the prices. some of the markets and merchandising initiatives they put in place are beginning to work and that's encouraging because guess what, the outlook was positive also for the third quarter. so that suggests that the momentum is continuing. >> and we certainly see investors embracing all of that in the stock price at a 52-week high. stock up 20% this year. so how much of this is already priced in and what does walmart need to deliver going forward to keep it sghg? >> i think walmart is well positioned to move forward. already for the third quarter we're seeing the estimates look very positive. in fact we're entering the

back-to-school season and walmart is one of the favorites for the back-to-school season. students will be going for back to school supplies and parents will be stocking up on more items and groceries for the houses while buying things for back to school. >> aren't parents going to be buying back-to-school on-line, amazon. walmart has one bad quarter and everyone says amazon is eating their lunch and killing -- >> the middle class consumer that target used to own those are gravitating towards amazon. remember, walmart's core consumer is the low-end consumer. who's not yet so much amazon savvy and if they prefer to go on-line they might choose to go over the shipping option that walmart gives them which is $49, also two day shipping, much less, half of the costs of what other consumers are paying for prime. the low-end consumer will prefer to go to walmart rather than amazon. >> dandana, if they're getting traction on e-commerce why was jet necessary and necessary at that price? >> one of the things is when you

think about that price and think about the market cap of walmart, certainly walmart's market cap makes that $3 billion price not so -- not as significant. i think overall the ability to learn what we've seen companies who are buying e-commerce companies like nordstrom buying some of them also, they want the talent and they want to be able to see how to execute these type of operations. because it's going to be combined, the stores and on-line, are one going to be one single unit over time like the virtual view of inventory. >> dana, for your view on the valuation, 17 times, is walmart getting too expensive? is it fully valued? >> it's certainly getting up there, but when you have the momentum of the sales continuing, it's very hard to go against when you're going to be able to continue to have better sales and earnings. that momentum, there's certain value investors and big long-term growth investors that need market cap names like

walmart. >> if you put all of the retail that was last week in a basket with the names and the numbers that have come out this week, dana, through the prism that you view retail through, where are we? how would you describe the retail environment today? >> i think we're better positioned for the back half of the year, coming out of the second quarter earnings season, than everyone felt going into the second quarter earnings season. inventory levels are leaner. fashion trends are starting to appear. we're seeing the low-end consumer like what walmart just reported having strength in sales, and it should make for what has been names that were under owned, it should make this an interesting space for the back half of the year. i've got department stores doing better. i've specialty stores overall. even the growth specialty names, at least meeting the raised expectations for them so that's encouraging for retail in the second half of 2016. >> real quick. >> i would also keep a good eye on the value of retailers, keep a good eye on t.j. maxx, the

dollar stores, walmart because that's where the consumer is gravitating and looking for value right now. >> thanks so much. joining us here today. >> thank you. >> cisco posted better than expected earnings in revenue last night. the dow component reported adjusted quarterly profit of 63 cents, 3 cents ahead. revenue above forecasts as well. cisco announced it would cut up to 5500 jobs, 7% of the global work force and that comes as it switches focus from hardware to higher margin software. we talked to ceo chuck robbins about the layoffs and asked where the earlier reports came from. >> what our responsibility is, is to ensure that we're aligning our expenses against those areas that we believe will drive our growth in the future. you know, i think that for the reports to get out ahead of our announcement frankly i think are a little irresponsible. we're talking about people's lives here. and i think there was even an insinuation that we may have

leaked that which is insulting. we would never do that before we had an opportunity to speak to our own employees. we've communicated with them and we will take care of them and do the right thing for them. but we have to invest for the future. >> yeah. the insinuation that cisco did that themselves. we talked a bit about their decision to reinvest some of the savings from the layoffs, the work force reduction, rather than buy more stock. certainly they've had a long history of doing as well. >> j and p security says they can continue their aquistive theme making acquisitions because they will have the cash do that. cisco shares are under pressure, down a percent and yesterday they performed pretty poorly leading up to the report on that speculation that the cuts would be deeper. 9,000 to 14,000 which would have been 20% of the workforce. so fearing the worst potentially on that one. >> let's not forget the stock has had a nice run, 52-week high in the last, you know, couple days. nice yield play as well.

so those old technology names that have done well carried the nasdaq and nasdaq 100, maybe no price it's giving a little back. they've been the better performers. >> 3% dividend yield. not too bad. >> quick news alert, the federal reserve is launching its own facebook page. the central bank says it hopes to increase accessibility to fed news and educational content. the fed uses twitter, youtube, flickr and linkedin. a number of fed branchs have their own facebook pages. the st. louis fed and new york fed and the san francisco fed. guys, we love this kind of stuff. it makes our world more accessible to the general public to a younger audience. >> what's next, like start instagraming pictures of snapchating from inside the meetings? >> that would be awesome, wouldn't it? >> that would be good. >> posts will include press releases, speeches, testimony, frequently asked questions, photos, videos, so they are now on twitter, youtube, flickr,

linkedin and now facebook. >> look -- >> i think it's great. especially as the public gets more aware of the fed, you're hearing it on the campaign trail. donald trump has talked about it. and clearly this is a tough economy with a lot of people feeling it and a lot of people point their finger at the fed saying they're not doing enough or creating bubbles or doing this and that. they can defend themselves and become more relatable. >> i want nice selfies from inside the room. janet yellen spin around, throws the thing up during the next meeting. >> dudley in the back photo bombing. people are asking whether facebook live would be a possibility for a -- certainly -- >> that would be a different strategy. yeah. on communication. >> the ultimate transparency. >> i'm going to friend the fed. sticking with the fed as we head to break, you're looking at a live shot here of the federal reserve bank of new york. which is just down the street from us here. there is bill dudley the head of it providing an update on the regional economic conditions.

he is going to be speaking. we'll of course monitor and bring any headlines and take q&a as they cross, bill dudley making news earlier in the week suggesting markets were being complace the about the -- complacent about the prospect of a fed hike. we will talk about that with fred mishkin getting his take on the waiting game. say so long data plans. unlimited all-in on unlimited. what the company's spicy ceo john legere, the dow down 4.5 points. 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.

over to seema moody for a market flash. >> the u.s. is reportedly suing harley-davidson over a mission control device. that according to bloomberg. we only have the headlines at this point. but the suit is apparently set to target the screaming eagle power tuner of harley-davidson. we're looking at shares down now by as much as 6% on the day but, of course, a developing story and one we'll keep an eye on. sara, back to you. >> seema, thank you. policy makers as we've been discussing divided over whether to raise rates in the near term. new york fed president bill dudley is currently speaking at a briefing here in new york. he's talking mostly about the regional economy. we'll bring you any headlines from him. there are other economists discussing this and he's at the event and if there are market moving headlines of course we'll tell you about them. our next guest says to raise

interest rates the fed needs to be confident inflation is returning to the 2% target level and this is far from clear. joining us now is frederick mishkin, columbia university economics professor and former federal reserve board governor. thanks, good to see you again, fred. >> good to see you. >> so you don't think it's time to raise interest rates on the discussion we got from the minutes, do you agree that this sort of wait and see mode is appropriate? >> well i think the answer is yes. my view actually is, that the fed should actually be very, very reluctant to raise rates until we actually have a strong indication that inflation is going to get back to 2%. in fact, one of the problems for central banks is that they frequently talk about a 2% as if it's a ceiling. you know, if you're shooting at a target you want to hit both above it and below it if you're aiming for the center of the target. so given that the inflation numbers have been so weak lately, my view personal view, it's not time for the fed to

raise rates yet. there's not enough there to actually indicate that this is the right thing for them to do. >> the dollar and the market seems to agree with you. the dollar at a seven-week low. why do you think we're in the dial nam mick where the markets -- dynamic where the markets don't believe the fed, where dudley says the markets are too complacent about the prospect of rate hikes and september and december are on the table. you're not seeing that priced in. >> so i think two things. one issue here is that the federal reserve officials want to keep their options open. the right way to think about what's happening right now is that we're in a situation where whatever is going to happen in terms of rates should depend on how the data evolves. so given that the data could actually -- we had a weak may job report and then very strong reports afterwards, that given the data, if it's sufficiently strong then, in fact, the fed should think about raising rates. my view is that the data became

weak they should not raise rates and potentially if bad things happen they should lower rates back down again. they want to keep their options open. i'm not a fan of the way they talk about it in terms of talking about specific date for when they might raise rates but that's when it is. >> understand your point of view. it's scott wapner, how are you this morning? >> very good. >> are you really saying, though, that the stock market at a record high level, the economy at 2%, yes, it's not great, can't withstand a quarter point hike at this point? >> oh, i think it can withstand a quarter point hike but the problem is that the fed is supposed to try to achieve a 2% inflation target. that's something that they have committed to since 2012. it was the right thing for them to do. and the inflation numbers tend to be very weak. so you're seeing a situation where, in fact, inflation is low, inflation expectations are low. in fact, the way i describe the current situation, the center problem for central banks

throughout the world is it's difficult to get inflation high enough. that's the problem. it's not a great situation to be in, but that's what they have to deal with and that should be something that should give them a lot of pause on raising rates. >> that's where i was going to go. if you look at comments about food deflation, and things like that, maybe the fed can never hit its target for inflation. >> well, i wouldn't say that. i mean you do wild and crazy things and always raise inflation. the question is whether you can do it prudently and i think that we're in an environment where central banks i think have been too cautious in terms of pursuing easy enough monetary policy, that, in fact, that they are worried more about the risks of inflation being too high than the fact that the reality inflation is too low and it's hard to get it up. in fact, i actually think that in that context, more aggressive actions particularly could be true in europe, i think the ecb has been way behind the curve, continually so, and, in fact,

you're seeing cases where they raid rates did it in -- raised rates in 2011 and it was a huge mistake. different environment, sort of the new normal it's difficult to get inflation up. we never would have expected that to be the case or concerns always has been a monetary economist active economist for over 40 years, and, in fact, i never would have imagined our big problem is not that inflation is too high and it's tough to get it down but that inflation is too low and tough to get it up. >> yeah. fred, if we're having this -- if there's no urgency on just tactical rate moves, where are we in terms of thinking about a new framework, a new level of nominal interest rates? how long do we have to wait for that discussion? >> well i think the discussion is going on right now. i think that clearly one of the big issues is what is the normal rate of -- the normal real interest rate which would actually tell us how high the actual -- the normal policy rate should be. that's a huge discussion. we clearly have sensed, in fact, that number may be lower than we thought previously.

one big problem for not just the u.s. economy throughout the world is how weak investment is. this is a huge problem. and, in fact, not just a problem in terms of the economy doing well, in the short run, but also in terms of long-term economic growth. so this is a big issue. >> so are you in line with bullard and williams have put on the table? >> well, i think if the issue is we have to revise down our views of what the so-called natural rate of interest is, and that's something that we have to think hard about, i'm not saying necessarily that the numbers are the right ones, but it's certainly something that is surprised us and indicates we may have to do rethinking. we would love to see investment get stronger and that would help long-term economic growth and actually help raise the long-term natural rate of interest, but we haven't seen that happen yet. it's very disturbing. >> and finally, as we endlessly debate the policy path and when the next hike comes in, you've been inside the rooms, fred, so

when the federal reserve tells us that the election is not a factor, when it comes to making monetary policy and won't impact their decision on raising interest rates, is that really true or don't they have to consider the economic impact and uncertainty around an election and what that will do? >> well, up with sense in which election is completely irrelevant to what the fed does. the fed is absolutely adamant about not being political. they do not want to be involved in making decisions about what their policies are, depending on what the -- what the -- what's going on in terms of the political environment. however, if, in fact, the political environment is actually creating some economic instability, that's a whole different issue. but, in fact, i think that the fed basically is -- looks through this, realizes typically elections don't have a huge impact in the short run on the economy, and so they do not spend a lot of time thinking about that.

but absolutely they are not concerned about not raising rates because there's an election occurring or doing something different because an election is occurring not the way the fed operates. >> always a delicate dance when it comes to talking about that one. thank you. >> absolutely. >> frederick mishkin, former federal reserve board governor and columbia university professor. >> all right. coming up, two olympic swimmers get pulled off a plane while trying to leave rio. we will go there live for the latest on the lochte controversy. much more ahead on "squawk on the street" stay with us. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment,

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two american swimmers pulled off a plane by brazilian authorities as questions and controversy continues to surround the u.s. swim team who say they were robbed at gunpoint by men posing as police. andrew ross sorkin is in rio and has the details for us. andrew? >> thanks. it is a story that is dominating the news here an as you said last night brazilian authorities removing two u.s. swimmers from the flight home dramatically shortly before their scheduled departure at the rio airport. the latest turn in what is turning out to be a bizarre story that began last weekend

when ryan lochte and his teammates reported being held at gunpoint. and now doubts are swirling about the voracity of that story. lochte appeared to change some details of the story even last night when he spoke to nbc's matt lauer still maintaining an armed robbery did occur. we want to put this in context for a moment. just for viewers. because this isn't just a matter of who is telling the truth anymore. these are athletes who have now signed sworn statements, if they are found to have lied, they could face as long as three years in jail which could turn this episode into an international incident. the u.s. olympic team the ioc, u.s. consulate and, of course, the sponsors of all the teams, and some of these players are monitoring the situation carefully. a statement just coming out literally minutes ago, guys, this coming from the u.s. oc, the three u.s. swimmers, these are the ones still here in brazil, gunner bets, james feigen and job conger, are going

to provide further statements to the brazilian statements all are represented by counsel and appropriately supported by the u.s. oc and consulate in rio. this is a business story, guys, because i should tell you ralph lauren, gillette, gatorade, sponsors of lochte himself. he is not here. so the legal implications for him personally are difficult to ascertain and we should withhold judgment, there is a lot of speculation on the internet on twitter and elsewhere and we yet to confirm all of it. pieces starting to ripple out. >> clearly at the very least two things, one, it's a nightmare for the olympic committee, certainly for team usa, but increasingly a story people will have to start to dig down as you pointed out, the penalties under brazilian laws for lying to authorities. >> right. and, of course, look, we still don't know whether there was lying and i should says the

judge has said repeatedly what she saw were inconsistencies and all she wants to do in terms of keeping them here is to try to get more information. that's all that has been said thus far. as new reports have continued to emerge, questions have arisen, we talked to one of ryan's friends today on the air this morning, who seemed to suggest he was getting more and more worried whether the truth had come out and all of those sponsors and the money behind it and then the people of rio, who have had lots of questions about this particular report, and what it has meant for the showcase that is supposed to be for this city. >> andrew, we'll wait for word from you when we get answers. andrew ross sorkin in rio for us. >> t-mobile unavailable t-mobile 1 with unlimited everything. but will the new plan attract customers from the competition? we will be sitting down with the company's ceo john legere next. much more ahead on "squawk on the street" with the dow

completely flat.

good morning. i'm sue herera. your cnbc news update at this hour. three american olympic swimmers plan to meet with branden authorities to discuss the reported robbery. swimmers jack conger and gun nar bent have been released after being pulled from a plane departing rio yesterday. police said they found little evidence to support the swimmers' reports of an armed robbery. firefighters have only been able to contain about 4% of the wildfire raging in southern california. more than 25,000 acres have been burned and more than 82,000 people have been forced from their homes. the red cross has set up

shelters and warm temperatures and strong winds are said to be fueling the flames. the coast guard was called in to rescue four fishermen off the coast of maine. the boat they were in began taking on water forcing them into a life raft. all four were air lifted to safety with minor injuries. get ready for sticker shock at the pharmacy. the price of epi pens is going up. mylan pharmaceuticals is raising the price of the portable device that could stop allergic reactions. one pen costs $500. they were $100 in 2008. the device comes with just a one-year expiration date. all three of my kids have allergies, just bought three for the start of the school year and believe me it is sticker shock. that's the news update this hour. let's get over to jackie deangelis with the eia inventory report. good morning, jackie. >> good morning to you, sue. looking at natural gas inventories this morning, the department of energy reporting an injection of 22 billion cubic feet, less than the expectation

of a build of 28 this week. it's a bullish number. let me explain to you why that is. it's less than we saw last week. less than expectations. but also this is the 15th straight week that we're seeing these injections less than the historical average. that's why prices are supported here. you can see after the number came out we had initial jump up, we're coming back down to about 265 where we started before that number was released but holding on to the gains for the session. i will say in terms of total stocks still over 3 trillion cubic feet. no need to ring the alarm bells but see with the injections slightly less than in the past, that we are starting to work through some of the inventory. that's something to think about when you're trading natural gas, keeping track of those numbers, especially as we head into fall and winter. the season will soon be upon us. back to you. >> all right. jackie, thank you very much. nat gas the story today, but people continue to shake their head at what oil has done over the past six sessions, up six

straight in the face of production levels that remain close to records, if not at records, right? >> same with inventories too. >> we keep asking the question what's driving pricing, can it really be all about nervous shorts being run out of the market. it sounds like a stretch. >> this upcoming meeting for opec with increeing noise from -- increasing noise from producers like saudi arabia and russia and nonowe peck members, are they going to agree to freeze in production to stabilize prices. >> it happened in april and didn't agree. >> right. >> brent oh, by the way, back above 50. you mentioned it. it quickly went over for the first time in six weeks. back over there as we speak. wti up 2%. >> yeah. 47.69. long journey. we continue to watch some of the telecom ceo trash talk continue over twitter. we hoped to speak to john legere in just a couple minutes. hey gary, what are you doing? oh hey john, i'm connecting our brains

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something a bit strange appears to be happening in the gold market. the opposing relationship between gold and stocks, more extreme than ever. we'll talk about what it means for you and your money tradingnation.cnbc.com. more "squawk on the street" coming up.

t-mobile announcing going all-in on unlimited data this morning with unlimited talk, text and internet on t-mobile's high speed 4g lte network. $40 a line for a family of four. joining us first on cnbc is t-mobile ceo john legere. good morning. >> great to see you. welcome back from rio? thank you. you definitely know how to light up a room. everybody talking about this plan, trying to understand what it includes, what it does not include. be as transparent as you can. what do you got get? >> yeah. listen, carl, this is on carrier

12, as you know from being with me, an uncarrier move is a pinnacle change to the wireless industry, starting with solving a pain point and over 1 million customers have told me the biggest pain point they hate data plans, buckets, and today i officially ended the era of data buckets and went all-in on unlimited. as you said family of four, a monthly subscription to the internet, ununlimited calling, unlimited text, unlimited 4g lte and video screaming at standard def and you know this is all-in on unlimited no data plans. by the way, we are the only network that can do this not only the only ones that will, so it's a new era, very simplified. called t-mobile 1 and we're replacing all of our rate plans with this. it's very, very exciting and it's a big change and i challenge the whole rest of the industry to figure out how to do it. >> what about now, people have a

lot of questions about hd streaming fees, about tethering. >> yep. >> how easy is it to replicate the opportunities you have now under this new unlimited plan? >> again, very clear and transparent. remember, one off our recent uncarrier moves gave us tremendous amounts of learning about how people stream video on mobile devices and with this, what we're doing, is we're providing unlimited video streaming, no data buckets, at standard definition, for those for some reason and there aren't that many who want ultrahd, you can add for $25 a line and have full ultra hd. another piece that's important, tettering is included. there are upgraded tettering packages as well. but one of the things that's big, big, big, big, is you can add tablets with unlimited streaming. for $20 a tablet you can add that to this. it's everything everybody wants

to see is there. you can live an unlimited life and as you know it's a big deal. >> you say you're the only one doing it, john, but your friend marcelo, the ceo of sprint, tweeted t-mobile and john legere nice of you to follow us after our successful unlimited marketing trials and announced an unlimited plan today and they say they've been out doing test trials in the market for weeks. >> isn't that sad, actually. that he tweeted out, is that the same guy whose owner woke up -- >> aren't you the king of twitter. >> i'm getting better by the minute. didn't he wake up and panted he loves t-mobile. i think the sprint might have switched to t-mobile. listen, sprint's got problems of their own. they're not investing in their network, huge balance sheet issues, they have new plans they need to be done. this is not about them. it's about us going directly

after verizon. and at&t whose networks cannot handle this. and us responding to our customers. an important note, since we did the first uncarrier move, post paid phone customers to t-mobile have been 11.2 million. the rest of the other three, minus 250,000. so trust me, we respond to no one. we listen to our customers. we're changing the industry. data buckets are dead. fully unlimited data. bring it on. i hope they all try it. take your best shot. >> john, it's scott wapner, he is bringing it on and also tweeted, come on, john legere, all this drama for this. sprint new plans are better without the drama queen show. he goes on to say, you are a truly great -- you truly are a con artist. no doubt good luck. >> yeah. scott, if hu woke up and andrew ross sorkin or carl totally scooped you and did something that you've been dragging your feet trying to figure out how to

do and you had to jump back out what would you do? remember, all i know this is what my customers want. i'm adding customers from everybody else in the industry. marcelo needs to wake up and realize that the mother of all customer loads is sitting in verizon and at&t. 77% of my customer adds come from those two. he should focus on fixing his company and, you know, just copy paste everything i do and you'll be fine. >> i told quintanilla and sorkin i would never call them con artists if they tried that on me. >> i keep reading softbank which owns 80% of sprint wants to still do a deal with you. you and claure could end up at the thanksgiving table one day no matter what you say back and forth. >> if we ended up at a thanksgiving table i will throw potatoes in his face. all we -- all we learned yesterday, let me tell you what

we learned yesterday, we learned yesterday that the owner of sprint woke up thinking about t-mobile and it's funny i did too. it's fascinating. it must really suck to be sprint and have your owner thinking about t-mobile. >> you know -- >> i think he likes magenta. >> john -- >> i think you're going hear from him. >> we will talk to claure in the next hour. wapner told you what he said. honest question here, do you guys, is part of this for show or do you honestly dislike each other? >> oh, i don't -- listen, everything i do, leading the uncarrier is for my customers and employees. it's just small noise from an amateur twitter guy that should stay in the shallow end of the pool. shouldn't play with the big boys. i take nothing personally and i move from no fights. so bring it on. >> we're going to -- man, i mean, we've seen competitive pressures in this industry but you guys take it to a new level. we appreciate you coming on. we look forward to digging into the details of this new plan.

john legere, of course, t-mobile joining us this morning. thanks, john. when we come back, 11:00 a.m. eastern as we say the ceo of sprint marcelo claure will join us. in the meantime dow up 11 points. and i believe we're going to get to santelli after the break. >> to chicago to rick santelli, see what he is watching at this hour. rick? >> that sounds great. what we're watching, we're watching how the gears get greased. yes. my guest this morning, jim, jim, welcome. before everybody's eyes glaze over we will be talking about repo agreements and the repo structure. it's not complicated, it's pretty easy. anybody who has had a bicycle that doesn't seem to move right, you put a little grease, moves much better. jim, basically what you do in the repo market is the grease for short-term funding for securities, is that about it? >> it is, rick. it's really simple. i mean if you want to buy a house, you get a mortgage loan. want to buy a car you get an

auto loan. u.s. government security in many cases, market participants get a repo loan. it's basically the same thing. collateralized lending. >> if i cover an auction by the federal reserve and the treasury, and there's a fail, that's really a bad thing. and even though fails in your market aren't a good thing, there was a period of time where they were happening quite regularly. why don't you explain why people have borrowed securities failed to replace them. ? >> well, i mean, you have customer flows on both the asset and liability side of the balance sheet. and in some cases those customer flows don't always add up. you know, a common situation is you've sold 50 million dollars of treasury securities and waiting for 25 to be delivered to you to make good delivery and what happens, the incoming security fails to come to you so you can't make your delivery on

the other side. it's really simple. i think a big change in the marketplace just recently, it was, you know, the clearing banks have becoming more restrictive in the intraday lenzing of securities. -- lending of securities. it makes it more difficult to complete your package deliveries if you've got fails on the other side. >> all right. now let's make this real easy too. the reason it's difficult in many respects has to do with a piece of legislation that nobody likes, i'm not talking aca, i'm talking dodd/frank. can you quickly explain why regs have made the behavior of those who need the security different, behavior of those who hold it different, and the behavior of your operation trying to fence into them difficult some. >>? >> sure, dodd/frank has been rolled out probably about two-thirds, 70% down now is basically -- >> only been about six years. you can't expect them to have it done that fast, can you? >> well the rollout, you know,

frankly we're happy it's methodical and well thought through. whenever you have regulation change the rules of the game you have disruptions in the marketplace and we're clearly all managing through disruptions. so, you know, all the banks have shrunk their balance sheets for safety and soundness purposes, the regulators want higher capital ratios, and in doing that, shrinking tbalance sheet people participating in the security markets like ours and doing repo for sure, there are few of them around and that is just making things much more constriktsds and much easier and harder to execute in the marketplace. >> i thank you for your objectivity and finally, because we're running out of time, to me, the money ball issue here is, when i asked you when we were speaking yesterday about what we were going to talk about, what would be the easiest way to improve this because we're all worried about liquidity when we hit future

moguls in the fixed income markets and your answer had to do with the quarantine securities held by many central banks like ours, and what did you tell me? >> well i think what i said, you said what would you like to improve the marketplace, i would like a yield curve like any borrowing or lending institution, we would like a yield curve, we would like the capital markets to be free. i have to caveat that a little bit, rick, by saying, that, you know, the fed and bernanke and paulson jumped into the market and saved everybody. they created a huge position and the unwinding of that position -- >> we didn't talk about that yesterday, jim. i don't think they saved anybody but the big banks. my question is specific. if the fed started selling some of the securities like mark olsen from the fed i have on every month advocates it would make your market easier to work, would it not? >> i think it would, yes. >> there we go. that's the question. i like being perry mason once in a while. thanks for being a good sport and making a complicated topic

much more easley understood. sara, back to you. >> yep. we always like that. rick santelli, thank you. we've got breaking news now on that harley-davidson story. sue herera following that for us. >> sara, thank you very much. harley-davidson has reached a harley davidson has reached a seattlement with the environmental protection agency over the story we told you about earlier. basically the epa alleged that by selling it's pro super tuner through dealer networks that the company enabled dealers and customers to tamper with the motorcycle used on public roads. they reached a settlement and here's the statement. quote this settlement is not an admission of liability but instead represents a good faith compromise on areas of law that we interpret differently. particularly the epa's assertion that it is illegal for anyone to modify a certified vehicle even if it will be used solely for off road closed course

competition. as you noted earlier and much less than it was. so harley davidson reached a settlement with the epa on this particular issue. stocks down 2.5%. back to you guys. >> sue, thank you so much. coming up 11:00 a.m. eastern time on squawk alley, the print ceo will join us. much more ahead in a sparring match this morning with t-mobile's john ledger. approaching medicare eligibility? don't put off checking out your medicare options until 65. now is a good time to get the ball rolling. medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in.

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>> they're all fighting for a market that isn't growing as fast anymore. it's getting so competitive that they have to continue to put out these new offerings to get people to switch over and those

that haven't signed up yet to do so. unlimited is the new thing. john ledger going for that and sprint announcing it as well and you brought up the fact that these two could ultimately end up again together if you believe reports that they still want to do a deal. >> yeah, we talked about not just the numbers back and forth but the relationship that ledger and he have which is so evident on twitter. do we have time for it? i don't know if we have time or not. this is what john ledger told us a few moments ago. >> everything i do is for my customers and for employees. it's just small noise from an amateur twitter guy that should stay in the shallow end of the pool. you shouldn't play with the big boys. but i take nothing personally and i move from no fight. so bring it on. >> neither one takes it personally. they're very quick to fire back when one puts it in social

media. >> it's amazing. it's a reflection of how much time we spent on our phone. how important this is to consumers. what you're paying and what you're getting. but it's so complicated maybe airli airline fares are the only other thing you can think of with this level of complexity. >> if it's corporate battles but they're both up against the big guys, at&t and verizon but both of them are showing fast growth. adding 180,000 new subscribers. >> these stories i sent to john are still out there as recently as this morning. about this possible soft bank interest and that maybe they're just waiting for a new fcc in a new administration to try to do

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