>> i'm a big shareholder of at&t andverizon, i hold their share as well. they're great companies and zbrat futures ahead for them as well i have to give a shout out to costco, which i'm on the board of great company. doing great things. >> come back because i want to talk about walmart and amazon. >> exactly. >> squawk on the street is coming up right now. good tuesday morning welcome to "squawk on the street." i'm carl quint nanilla with dav faber. strong earnings, watching the senate as mccain returns for a health care vote the president tweeting and pressuring jeff sessions futures are up germany is strong, another record high.

ten-year works its way back to 2.3. and schiller up. caterpillar, mcdonald's among the big dow boosters premarket. >> alphabet shares sliding premarket, google's parent company reporting an earnings week but profits hit by a fine from the eu. >> jeff bezos, trump takes to twitter, blasting amazon yet again. 3m, dupont also reporting. also out, lily and gm. metals are getting a bid today copper trying to break out. >> that's exactly what i thought would play out caterpillar, this international would pay out. i'm surprised that the united states is so strong here construction equipment, that's exactly what you want to see for energy, for transport.

north america, incredibly strong latin america better than i thought. construction is just on fire you've got a tremendous, tremendous story here where the numbers are much higher than anybody was thinking this stock will not stop at 113. there will be some bears who will try to say china is not that strong. but in the end this raise is the most serious of the earnings season. >> of the earnings season? >> of the earnings season. it's all points bulletin good to read tlut commehrough te comments here. talk about favorable price realization for energy without oil above 50, how many people did these guys get rid of? this is an incredible streamlined cat. i am shocked they have this level of earnings power. leverage on sales here is extraordinary. caterpillar is back much harder than i thought

this is q1 of the good. >> second best stock of q2. >> yeah. >> raising sales expectations to 42 to 44 billion is not just ahead of estimates it will be the first annual increase in five years. >> remember the old days when we thought cat would get $10 in earnings power i do not think it has $10 in earnings power how quiet it was they give you the monthly numbers. they've got lean inventories, too. when i look at this, i say to myself, this company can make much more money than they could two years ago, before they started take iing the costs out. remarkable remarkable i just think they're on q1, great numbers. >> much higher forecast than

even in april. we talked yesterday but only to market perform. >> took a look at that upgrade that was incredible. i thought there was a chance that it would cost a 50 cents earnings month that was too low even the street high guy got caterpillar wrong. when you see the guy with the highest estimates be beaten that sadly, nobody has a clue of how to get -- they'll be upgrade, upgrade, upgrade, price bump, price bump, price bump and it's going to come as a big surprise. the call will just lend itself to this amazing story. >> cat, 3m this quarter's report were a little soft. >> technology is interesting that stock will not be up. i look at the quarter and go over with the company. there is some margin weakness there that people didn't count

on i am seeing very strong numbers in china. >> terrific margins on the service side hvac no one expected the heating ventilation to be double digit the margins are fine in that business otis wasn't up come on. the stock will be meander right here and two days later, why did we sell it continues to deliver a very streamlined company. >> they would have had more of a beat and raise >> otis would have had to have been up more i just think that aerospace is very good.

>> honeywell has had a bigger move i hate to say this this is why ge is at 25. they did not have organic growth i think it's going to end up being -- do i wish i had never heard of it? no and the free cash flow for ge is still -- >> it's anemic. >> thank you very much i have to get the roge out remember before google >> we'll get to google. >> ge should be at 23. if honeywell will be at -- >> simple multiples or -- >> in the end, what's so unnerving about ge, i'm sorry to

do that. >> the ge is interesting then you see how little they make and then you see this turbine. david you and i could go into turbines in terms of sales unnerving. power. the combination of power, locomotives and health care, what the hell? >> i know. turbine sales are important, too. they also generate a service fee over a long period of time unless you choose to pull in that service fee as a one-time payment. >> who would do that >> i don't know. >> that's something for investors to look at. >> that would be ill advised way to be able to break a quarter. honeywell, so far, it's

caterpillar, then honeywell. and then united technologies and then sadly 3m. just not great for 3m. >> they continue to have a review of that business. both engaged in that to decide or help the company figure out whether to separate out its aerospace business under some pressure from dan logue they've decided to do that. >> the ceo has got cart blanche from the previous ceo. i do suggest that -- here is what i say about it. >> about honeywell >> if that stocks go to 180 on that, he will do t it's literally how the chips may fall he is not wedded to that model a bit. i liked the conference call very much for honeywell

i liked it caterpillar is just a gem. he's so damn good i'm sick of it. >> let's talk some food. mcdonald's is going to surge to open in record territory this morning, thanks to a better than expected second quarter beat on the top of the bottom line, calling out a boost from upscale burgers, chicken sandwiches, discounts in beverages global comps, 6.6. >> what is he, a small cap do you know how big mcdonald's is people must be going there over michelin three star. >> 3.9, 3.2. we haven't seen numbers like this out of mcdonald's for a while. >> what are they giving away over there >> must be euros in the burgers. >> a lot of people doubt aid year, year and a half ago, that we would ever see that kind of growth, right?

the best you could hope for would be. >> quiet, quiet man. i wish he could come on the sho show. >> chinese numbers japan. this is a hamburger. wow! filet mignon i don't know. >> i saw lobster in maine, honestly some sort of -- one of the mcdonald's was advertising lobster. i don't know what they do with it but they're getting creative. >> franchisees will tell you that the big initiatives are still to come, mcdelivery, global ordering, free range beef are not reflected in this quarter anyway. >> no. this is a monster quarter. he told me it would be big the guy is like -- there you go,

david. signature crafted. >> they're starting to -- >> they're going to pull shake shack out of the stadium and put in mcdonald's. >> i hope they don't. >> just kidding. >> we have to be concern ed 5,000 franchise. remember that's a technology company that delivers pizza but.

>> reved up. >> exactly sbl whatever that means. what is it, a loner? what are you >> that's what we're talking abou about. >> i thought visa was great. visa don't leave home without a mcdonald's burger, man it's priceless. >> drop in second quarter profits due to anti-trust find due to anti-regulators here is the report out last night on the conference call. >> revenues were up 20% year on year and up 23%. advertising revenues benefited from strong performance, led in particular by tremendous results in mobile search with a strong

contribution from youtube. >> first to drop in operating margin in eight quarters monetizing mobile is tough, jim. >> drilling, drilling, drilling, relentless this guy, these sellers, all their thinking is this i remember when it went from -- are you kidding me after the big fine, after paying $2.7 billion, which for most companies would be a lot of money. for these guys is pocket change. $94.7 billion in cash. that is actually up can i say tax reform an hour of youtube a day, proves to me that, without a doubt, people don't have anything to do with their lives yes, the sellers are going to

bang it down yes, everybody reiterated buy. yes, they're using it as a source to fund other stocks. >> they are? >> yes. >> all right for a company this size. that said, subscriber opposition costs are higher dealing with a margin structure that is not the same that you've been accustomed to. >> they want you to focus on gross profit dollars that's great compressed to a certain extent as a result of that. and so, jim, would you rather own facebok or amazon or even ten cent than google >> have to see facebook. >> they're not having margin pressure. >> no. alphabet did not handle what i would have thought -- the call was sparse in information.

it was not a great call. it was not i think they have the facts to make a great call. this is a transition quarter they have to get web services up. >> they talked about the notion that cloud may one day be the biggest business. >> by 2020, she keeps saying major acquisition, it's hard to imagine how they can do that organically. >> with $92 billion why not buy a company that gets you there quickly? are you nodding? is that no >> have you capped datendidates >> there's one name. >> listen, sales force -- >> used to be my very good friend. >> he may have to join us so we get more mojo there. they're going to sell it

what can i say 950, 940 don't buy it here. buy it at the end of the day, maybe tomorrow morning same thing with 3m. >> when we come back, deja vu? the president takes aim at amazon and jeff bezos once again. the s&p will open at a record. dow is getting closer but not quite there. back in a minute she can't become a guitar legend just by playing air guitar.

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series of tweets he writes so many stories about me, they are as bad as ratings challenged cnn, lobbyist for taxes. fake news washington post being used as a lobbyist weapon against congress to keep politicians from looking into amazon no-tax monopoly has had the knives out for a few different target this is mornin morning. >> this is a publicly traded company that in the end owns a newspaper. >> bezos owns a newspaper. >> no, absolutely. >> went through the change in his couch one day, about 250 million and said okay, i'll buy it. >> what does matter, though, is that if there is some sort of

tax issue. however, third party sellers on amazon may not be charging the sales tax and so that is seen as a competitive advantage over your local retailer. >> absolutely. >> if they're using amazon platform but it's not amazon itself that's selling you the goods. with trump's continued tweeting and then this plan that the democrats unveiled yesterday where schumer was talking about monopoly power whether this starts to build into something even though there very well may not be a case to be made. >> what you would do, okay, is you would be a trust buster. you simply would say it's not

right. got broken up because it was too powerful. >> and market shares. >> the justice department doesn't have to be right to bring a case. >> from past experience. >> yes. >> cramer's mad dash veok at the free market once agn.ry strong opening in store r us we're back in a moment

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should have. nine west was trying to buythe for much less. second, david, this is the kind of thing where you're just buying anything, i think, to try to become more relevant. four-inch heels for $1200, what do you think they tell you >> i don't know. >> she'll love it because of the toe cleavage. >> got it. you said something interesting now. save coors does it need saving? >> i think it's fighting for relevance in a modern day era where people are just not shopping for this stuff. i don't know how much they can do it with jimmy choo. it has to be up in price i don't know too expensive, david.

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"squawk on the street. busy tuesday as we watch earnings john mccain returns to the senate today for a vote, motion to proceed on health care. got awfully close to an eight handle this morning, jim, we're basically flirting with all-time closing lows. >> yeah. look, i am so torn i keep thinking about that goldman sachs quarter, how little volatility there is you have to strain yourself to find something that's really wild here, that would be seagate, down terribly because of a class in prices. >> how can that be true when so much of the narrative today is ag, deputy ag, special prosecutor >> you know what what do they have to do with the mcdonald's burgers nothing. it's a big international company with a business in united states and you know what?

it's worth so many burgers. >> mid stream. recent ipo english premiere league soccer team tottenham hotspur, competed in the international champions cup. you should not miss the euro. >> i tell you, i have been a champion of the euro everyone keeps saying you have to short it. you have to short it go to europe do some business prices are -- it is too low. it is too low. rates are too low. germany is coming back, italy's coming back. only thing i didn't see strong in germany was hasbro. playdough does not determine a country. and the banks are not as strong as our banks in terms of the

price action we've got another rally off the bonds, maybe interest rate rally her here. >> strong day yesterday. market cap slightly above goldman's. took note of that. >> gorman will talk about his model. that's interesting the model. >> pretty amazing. we talked about, of course, morgan stanley that's a moment to pause because these companies take these things seriously do you remember when charl schwab exceeded the cap? maybe before 2000 but during the dot com? >> sure. >> merrill lynch took that -- that was a moment for them even when tesla exceeded -- these companies notice these things certainly goldman sachs and

morgan stanley, despite the fact that their strategies have diverged, no doubt, given the focus on morgan stanley that's a moment. >> that is important what kind of business is this? assets go out the door every morning. gorman is doing a fabulous job in leadership. i have to tell you, i don't think that -- you need volatility going back to the vicks question fixed income. >> at the beginning of this year, one stock was down morgan stanley is up 12%. >> changing as the guard. >> investors do tend to have longer memories sometimes. >> one of the big s&p earners

right now. >> that stock sells at tangible book value he has put -- now it's up 50 cents higher okay he is putting points on the board. that deluge of numbers. >> banks leading today, suntrust, citi, fifth third, are we once again -- ten-year just hit 2.3. >> jp morgan coming back to my price target. >> that makes me feel a lot

better what's so weird is when you go over united technologies, they need copper data copper is up you have commodities you have financials going up and you have google going down. >> that is -- listen, i'm happy when you succeed and get somebody. >> you are >> yes i don't feel -- >> it's good for everybody. >> when you take the people i've had as a frequent guest and somehow it's -- appropriate them for your own show. >> cooperate darwinism. >> i find that a bit upsetting. >> my wife was doing laundry yesterday. i asked what she was doing she says laundry i talked about euro vacation she sides with him. >> have no shot with corbett at

all. >> how are you doing with benihoff >> my wife is interested and my two dogs. >> jim, this is the kind of market you love. >> i do. >> financials, nvidia. >> a focused debt. you see those financials roaring, you can pin a whole new narrative. pnc's quarter. i know it's painful. you have to go over it line by lievenlt it's like a really bad book that when you get to the middle you say i have to finish it i have no choice. >> under armour to a sell. >> under armour sell is about how people are no longer buying

performance clothes. they're buying leisure wear. lulu gets downgraded, king of leisure wear i don't know where to go i know to avoid both and buy vf corp vf is back new leadership, by the way but they had a strong europe i'm surprised nike hasn't broken out yet. the hibbett collapse yesterday has created a pause in that group. david, the collapse was terrible. >> it was? >> pretty consistent growth, worst i've seen. >> people have pointed out why is it taking the actual commodity, why is it tougher sledding than some expected? we're up a buck today. >> in the anadarko conference, they said we're not going to

drill as much. cash flow is not that great from it this is what slumber j has said. the west -- the whole phenomena will slow down if you think 8% that is the united states controls the price of oil, then you're going to want to buy oil. if you psychologically think that a lot of people feel that the u.s. can -- now schlumberger has -- playing right into the fury that was announced in the call friday that the u.s. is going to cut back and that's going to drive oil prices higher. >> you think we can reclaim, say, 52? >> can't go through 50 at that point, everybody sells and sells and sells. >> that's a lower high. >> it can happen yeah oil can go higher just on what annadarko is saying, honestly.

remember, they have flash and d ran. people are taking a look at seagate saying the whole group is over. held this 30 level for a long time even though they've drawn out the quarters i don't want a rally led by micron i want good taste in tuna. i want jp morgan to lead the rally. a reference to a commercial you're probably too young. >> no, i do remember that well. >> and you're going to get a hawaiian punch. >> i remember that one, too. >> starkist tuna, manfred man. we're all showing our age. >> we are. >> nobody more than you. >> hey, maybe i'm the marlboro man. >> what does that even mean? >> i don't know. he was my hero for a while until i realized they kill you. >> thankfully you didn't -- >> remember they -- i didn't know until john hann came out, said it was bad for you. >> jim, people are pointing out the dollar if you take mcdonald's as an

example, it has not been the -- we didn't expect it to have a huge impact. it's been muted by historic standards. they're making back a weaker dollar gu to vienna you get a pretty cheap burger or italy, a cheap burger go to italy and get mcdonald's you're completely out of your mind burgers there are very cheap. >> are they? >> yeah. i just priced it i'm a super tuscan guy. >> in italy i wouldn't think that's the chosen cuisine. solely focused on the performance of companies in terms of their underlying -- china preparing for crisis along

the north korean border. >> trump going to youngstown the old capital of steel, other than pittsburgh. will he invoke 232 talking about a national treasure there's a huge number in that gerald ford aircraft carrier that was launched this weekend you could make a case without u.s. dominated steel that thing could -- you want to make an aircraft carrier with chinese steel? >> first six months of this year more automobiles made in mexico than last year, 16%, i think it was. >> making 500,000 automobiles in the town that i got a place in they weren't making any when i got to the place none pacific trade, you hear it blowing in the middle of the night. yes. you can hear it 500 mile. >> i don't think it's coincidence that you move in and they start making automobiles. >> reference to dillon passed right over your head. >> yes, it did springsteen does. >> manfred mann.

>> we can't play either one. springsteen owns the song. >> david, do you think cable is heating up >> what does that even mean? which part of it the distributors or programmers? >> the company we work for has become a genuine battleground and i have people who say you've got to go long comcast and you've got to short comcast. by the way, john ledger tweets me, jim, which is dumber, verizon or att am i the arbiter of who's dumb & dumber? he thinks i'm petey. >> a customer said i'm about to go crazy on twitter, regarding customer service he gave them his personal e-mail said e-mail me @john.ledger. >> saw that, too we were all included on that. >> maybe the only ceo who does that. >> facebook going down in sync with alphabet entirely i question that. >> concerns about margins, i

guess. not necessarily right but -- >> money flows out of tech betting that they would talk about -- other bets have been cut down betting they would have substance to their cloud business betting that they've been monetized, youtube at a higher margin. >> you sound disappointed now a little bit listen, stock is 23-plus percent including today's minor downgrade. >> if it were a broadway play it would be open for about eight weeks. >> no way investors make their money back. >> we've got a couple of hamiltons. we've got some hamiltons caterpillar is hamilton. >> dow up 114. 3m and utx keeping it check. let's get to bob pisani. hey, bob. >> record highs. happy tuesday, everyone. because of the earnings situation, despite a few misses

out there. right across the board strong open, 3-1, advancing to declining stocks great open take a look at the sectors all the ones you like having lead the market when the global economy is expanding, financials, materials. stocks moving a little because google is down 3% here and the banks are also leading europe, by the way, also doing well 2017 as the year of europe money flowing into european equities, up today german business confidence numbers came out in july fresh record highs this is the third straight month. talk about euphoric, head of the german business clements fuest said sentiment among german business is euphoric with prices this high you've got

to have a good beat and very positive commentary to really move the needle significantly. caterpillar, of course very positive company. there's a company moving stocks forward. utx was okay very, very small beat overall for them they did talk bay better overall outlook. stocks up better than 15%. that's not enough. just basic marginal, small little beat of a few pennies doesn't move the stock anymore you can see that 3m was about 12% lower than analyst expectations for their numbers. look at that that's not a typo there. down 4.5%. seagate, another good example. they were a very large miss. it's very unusual to have a big company miss by about 30% on the expectations you see what's happening there that stock is down by about 20%. so here is the trend so far. we got about 25% of the s&p 500 that's been reporting.

we're getting more companies beating on the top and bottom lines than usual almost north of 70% and they're beating by larger amounts than typical. there's the good news. here is the bad news prices are so high, you have to have a very strong beat or very, very strong guidance, really, to move the stock forward and small misses penalize you much more heavier than big beats will help -- than small beats will help you out and significant misses like seagate you get dropped significantly, down about 20% as to where we're at right now, 20% of companies, earnings up 8.8% they were stronger yesterday on friday because the analysts had not accounted for google's big fine and that dropped the numbers a little bit revenue is up 4.6% we may get to 10%. we'll see what happens with that elsewhere, if you take a look at the oil, halliburton is more

cautious even though production numbers are still high anadarko had similar comments. saying current market conditions require lower capital intensity -- that means we're going to spend less, folks as a result we're reducing to $300 for the year. anadarko is up the discipline they're showing is helping them a little bit 35% down for the year on anadarko among the home builders it's important to note generally they've been saying the same thing. pulte came out saying demand continues to benefit from positive market dynamics and generally limited supply of homes across the country pulte, take a look you can see is trading down

slightl slightly. >> a lot of these companies in the past have been doing 20% growth little bit of a slide there. highest of the day, dow up 122 points guys, back to you. >> i'll take it, bob bob pisani do want to way in now on battle for scripps networks, joined by viacom and discovery i haven't really weighed in with a report yet and wanted to do that this deal could get done in the not so distant future both sides are fully engaged trying to put together a structure and price that isamenable to, of course, the scripps family while divergent does control the vote at that company and is

intent on a potential deal following, of course, their ceo, decision to do that. where do you end up and what does it look like? sources indicate that scripps is looking for 50% cash in any deal not something that is beyond the wherewithal for discovery. take a look at ken lowe, of course, or viacom. you look at viacom and its current leverage of 3.75 you do start to wonder to what extent it would be willing to go in order to fund a large cash portion of any deal for scripps. they could do it but they would have to level the balance sheet quite a bit. you put them both together still you're talking leverages as high as 5.2 if you wanted to go 100% cash at 90 bucks you get the 5.5 times

controlling shareholders at national amusements, upstream from viacom would be willing to do not clear at this point. viacom making a decision here to pursue scripps and discovery fully engage as well in that pursuit. its leverage is lower. it may represent an ability to use more stock if it wants to, given what appears to be the desire or at least more attractive currency than viacom. stock prices actually moved up that helps it. so, we'll see. but this could be getting close.

>> we like to do that. what are you guys willing to do? it is discovery in viacom, jim aggressively at least, engaged, in trying to figure out a way to get something done here. if you're discovery, probably not far behind. >> that's the jimmy choo deal with michael kors. they have to do something. n entertainment in retail. they do not have the wind at their back. >> some people wonder why the scripps family wouldn't want all stock. >> tax consideration. >> but somebody pointed out to me when you're looking to sell a well-run company to a company just like yours -- >> see you later. >> take the cash and go home. >> we'll have more, hopefully,

as this week moves along rick santelli is at the cme group in chicago rick >> good morning, david fun in the fixed income area, especially sovereigns. you know, outside of cnbc, you know, there aren't many who are rushing -- or russian, i should say, to report record prices in equity. >> twos are up one fives are up three tens are up three. 30s are up four basis points, bunds up four basis points in that 227 area, 230, 260 frequented in the early part of the year real issue is that we held to

213. didn't even get that close i can't stress how significant the upper 50s are in the one-week chart if you move the chart to the very end, that's basically the zone bund deals are trading at euro versus dollar, one week keep an eye on the euro. it is the year of the euro carl, jim, back to you. >> rick santelli we'll get stock trading with jim in a moment. dow up 100 between utx and 3m, shaving about 80 points off the index.

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no one expected this it's not in the playbook that stock has room to run it's not going down. that was a really good quarter wow! just the whole change. nvidia is in the doghouse. >> good name for a dog answers to nvidia, going to

confuse the heck out of them genius, believe me you talk about gm, i want to see what's going on there. wow, david, right in your wheelhouse, mccormick and the fren french's deal. >> you know my basic question. what are you paying? >> that did come up in -- i think one of the reason he's anxious to come on the call -- the show is what is he paying? i went in my pantry, took a picture. sure enough we had some french's in there. >> well, there's got to be a plan they'll talk all about it, multiple being a lot lower and syner synergy. i love how people love to wrap their synergy into their base number. >> i use it on the laundry

no, i don't. >> but your wife does. >> the other day i claimed i did the laundry. my wife said i heard you said you did the laundry. i said i did it once. >> "mad money" 6:00 pm eastern time another busy day when we come back, more on the earnings bonanza, mcdonald's big beat dow is up 96 don't go anywhere.

good tuesday morning i'm carl quintanilla with david faber. sara eisen has the morning off strength in mcdonald's and caterpillar. weakness in 3m and utx we'll watch that, along with oil, up 2%. >> our road map begins with that earning blitz, caterpillar, gm and dupont, among the earnings this morning we'll dive deep into their quarters and show you what to expect in the second half of the year. >> we'll talk to former mcdonald's ceo ramsay about what's happening in fast food. >> and musk versus zuckerberg on artificial intelligence. we'll tell you about that. first let's get to rick santelli rick >> exuding with consumer confidence here.

121 handle 121.1. why is this so exciting to me? the read in march was the best since christmas 2000 i can't find anything in between. so this is the second best number basically since 2000. we did see a bit of a downgrade. last look, the june number of 118.9, now 117.3 but that's some pretty big horsepower richmond fed doubled expectations, looking for seven, ended up with 14 unlike consumer confidence, richmond fed has had higher numbers this year at 20 in april, 22 in march no matter how you slice it, it's a pretty decent number carl, back to you. >> mcdonald's, though, is another story. recording beat, huge jump in

comps, almost double the consensus estimate as the fed is set to kick off day one in a two-day meeting in washington. interesting bar bell here, strength in caterpillar, weakness in 3m. >> 3m and utx. caterpillar and mcdonald's benefiting from their beats shows you the magnitude of how emphatic you have to be, just because of how well things have done it's a net bias to the upside, i think. the market still wants to lean that way beyond the earnings, banks up 1.5% that's been the seesaw for a while now. >> 3m below 200. you have to go back to may to see a number like that. >> big weight on the dow in terms of price at the peak of activist energy, you would have made a run at 3m. these businesses on paper, why

are they together? to me it shows you that you were expected to get this global lift, weak dollar helping almost anybody with a global footprint and even if it didn't help enough. >> you know, google, of course, i guess the largest loser, so to speak, in technology still down a little less than 3% to some extent, going into the financials, i guess. concerns there about margins. >> and i think it takes you back it's not as if this is really kind of an abandonment of the story. it's been unusual. meaning bond prices are down, tech stocks are down that's the way they've portrayed it for a while right now. >> meanwhile, you and i have been swroeki injoking about thes

almost got to an eight handle at 9:04, which flies in the face to everything you hear out of washington. >> the market doesn't, as a swren course of business, price in craziness going on in d.c you have so much offsetting action within the market the index is kind of trapped that's what the vicks is playing off of. >> move on to caterpillar, machinery analyst at jp morgan and at jeffries. good morning, guys good to see you both. >> morning. >> anne, we've seen the sequential improvement in retail numbers out of cat what accounts for this guidance that is even stronger than we had in april >> that's a good question. revenues today, we did see retail sales improving the last couple of months however, as is classic caterpillar you get one quarter like this every cycle where revenues come in in line but they delivered 65% incremental profits on the gross margin.

so on the outside we never want to put those big numbers into our models but the buy side was pretty close on. and the whisper number was about $5 for this year the question going forwardis, is this sustainable? >> what's the answer to that >> well, history would say that caterpillar delivers great incrementals for a couple of quarters when they get volume back we shouldn't forget that they spent $3.5 billion on restructuring and 16% fewer workforce today versus at the peak of the cycle. they could probably deliver another couple of quarters like they normally do the key question is, is this a different caterpillar or is this the same old caterpillar that eventually delivers lower incrementals and expectations get too high >> stephen, obviously, if you've been in this name you've had to have been very patient to get the leverage to work

the stock could double in a couple of years. what did you make of the quarter and that longer term outlook >> sure, yeah. obviously, i agree with ann. we're in the sweet spot right now, getting all the revenue bouncing off the bottom and none of the costs coming back that's always nice to see. the flip side of that at the peak, obviously. this is the good news part of the cycle. that's nice to see i agree with ann, though, that at some point costs start to come back in in terms of the stock kind of doubling from here, i guess it's worth remembering we're at an all-time high right now. at least within very close distance of that and there's a fair amount built in. >> what's going to determine whether, in fact, there is more life to this cycle, what parts of the world, what division? is it still a bit of a china proxy in terms of what can get you longer term demand over the next couple of years

>> china is what it is and infrastructure spending continues to expand there. i think the one incremental up side is probably europe, coming in much stronger than we had expected waiting for it to happen, waiting for it to happen it might actually be a key catalyst for caterpillar and demand for their products. >> jump in if you think that is the next level. >> sure. >> that means oil needs to blake out of the range it's been in.

things like iron ore and cole. if you look historically, cat is very highly coordinated. i don't think the scotts go a lot higher. >> did try to hammer away at a five-month high, i should say. what are critical levels for commodities if stephen is right? >> they consume a lot more copper than diesel or gasoline vehicles. a bold case on the copper side we would say demand should accelerate here not just on the back of higher global gdp but trends on electric vehicles pick up i think there is a bold case to be made on commodities like copper, coal and coal is very important to caterpillar.

>> thank you very much let's move on to alphabet, second quarter earnings beat let bring in rob sanderson and victor anthony post nine analyst with egis capital. thanks to you both victor, the big picture seems to be pretty favorable. mobile search is working what are investors kribling with, margins or noisiness >> nothing has changed last night materially tax spike in the second quarter dropping acquisition cost so

that's risen that was an issue two years ago and percolated again today the long term secular story for google hasn't changed at all. >> are those cost items something that's going to carry through in the current and future quarters? >> i think it will i think longer term you'll see tha that. >> margins, victor seems to be saying that it will be with us for a while. do you agree >> i think it's likely they're investing in a lot of areas. huge opportunity there behind the market leaders who want to push aggressively. investing heavily in devices content spending in youtube and subscriber acquisition lot of areas of spending as victor pointed out, traffic acquisition cost spike that, is

structural it's a consequences of the move to mobile and probably sticks with them for a while. >> so, do you pay a lower multiple then even though you have incredible -- that's my words -- top line growth at this massive company? >> the stock has been sensitive in the past. they're a little better in transparency now than they were in previous cycles there is a little bit more evidence of spending conservatism in certain areas and willingness to say no when things aren't working. perhaps that's mitigated really it's more of a function of what technology does and whether the market keeps going if tech is getting a little heavy, then the multiple may come back a bit. if it keeps going, google will participate in that. >> wild card question, victor, what's youtube worth in the $670

billion monster that is alpha t alphabet, $1.5 billion, it's not that far behind the metrics in something you see like facebook. is there any way to characterize what that is worth in the company? >> at least $75 billion. >> i remember estimates years ago that it would be 20. one day it might be worth $20 billion. >> right monthly active users have grown from the data i've been tracking in similar ways that facebook has been part of our vernacular, daily usage. last quarter they pointed to several different options in terms of the modernization path they could pursue. it's somewhat early. public transportation, ride sharing are options they could pursue in the future that's one unit investors should

really focus on longer term. that could be material to alphabet's valuation in the next couple of years. >> another area people seem to think will be material is cloud. they seem to talk about 2020 being the largest. is that a possibility in your mind what will they need to get there? >> to be the largest by 2020, they'll have to make up a lot of ground in a pretty short amount of time. they'll think it's a question of scale. goog sl massive on an infrastructure level scale base and sophistication of the advanced services level. they do a good job in basic storage and compute, media applications, you've seen migration of apple business, snap chat business, of course, and spotify. things in the media sector they're competitive. the more sophisticated workloads that they're quite far behind

the market leaders. >> victor, obviously, this company is right at the center of whatever push there is now, globally, toward artificial intelligence, way of solutions and computing down the road. is all of that going to be kind of incremental for alphabet or on some level is it kind of defensive? what i mean by that is tech base search is probably not the future something mover an ai type solution s is google positioned fo r that transition >> definitely. voice search will dominate longer term. you're talking 10, 20 years from now. it's not eminent they're investing aggressively, hiring i think they'll be at the forefront of the ship at ai. machine learning will dominate the discourse on the tech side over the next probably two generations. >> lot of fun and charge showing nontech ceos, ai and conference calls. >> musk/zuckerberg feud.

>> we may have to define what we're talking about. >> i have an answer to that. we are all going to die. >> let move on to gm thank you, guys. gm reporting earnings this morning. phil leb aechlt au has that in chicago with more on the q2 results. phil >> strong numbers that general motors reported. the conference call just begun we'll hop on that and see what kind of commentary they have in terms of second quarter, they beat the street by a wide margin revenue coming in a little lighter than expected. numbers within the numbers in the second quarter, we knew they would have slower north american sales. no surprise that the revenue took a bit of a hit there. profit margin up 10% was better than some expected return on invested capital greater than 30%, much better than what they have already said they would deliver every quarter of at least 25%. this morning on ""squawk box"" we had a chance to talk with cfo chuck stevens because of slowing

car sales is considering ending production of certain sedans here in the u.s. >> we are always going to be very, very focused on aligning supply and demand. as we've seen the shift from passenger cars to crossovers, you know, we've taken very proactive action to reduce our production of passenger cars. >> read between the lines, guys. it's all about where you allocate that capital. right now with car sales down more than 18% in the first half of this year for general motors, don't be surprised if we see them move very quickly to curtail that production. again we'll hop on the call and see what comments they have which no doubt will be coming to analysts in a couple of minutes. back to you. >> there were questions about the revenue number, whether or not europe was apples to apples with the street. do we have a clear answer? >> we don't have a clear answer yet. as close as we can figure out, most of the estimates, when you strip out europe so that you have an actual comparison, was

37 billion, which is what the revenue was for the second quarter. most were estimating around 38 billion. a little light on the estimates but certainly not what had been previously put out there as the estimate of like 40 billion. >> phil, thank you very much we'll come back to you for more headlines. phil lebeau watching gm. former mcdonald's chief ed rensi will join us first, we'll bring you the results of cnbc's fed survey after the break where wall street sees stocks headed later w is year and next donow up 78. we're back in a moment when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time

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the fed is kicking off it's two-day meeting today. steve leisman, fed survey and expectations for the stock market back at hq hey, steve. >> good morning, michael 7 % of our 44 respondents say the third rate hike is coming in december nobody expects a rate hike tomorrow most expect the balance sheet reduction in september expecting less, less fiscal policy, less monetary policy and not expecting a lot from stocks. forecast after yesterday's close. just a percentage for the rest of the year and 5.4% by the end of 2018. not a lot of optimism for stocks in fact, there's some concern

that the market is over valued and you can see that we are expecting a little bit more growth from 2016 where growth was 1.6% there it is. 2017 2.5%, 2018 year over year look at how it's come down after post election. you can see in the next screen here in november 2017 it was 2.2. then you get the election and all this optimism and that's kind of come down as fiscal policy has been kind of priced out of this market and what you see is that most of our respondents think the market is too optimistic about fiscal policy when it comes to the outlook, 50% say the market is too optimistic about fiscal policy from the trump agenda 36% say they're realistic. and some people are really concerned, including mark zandy of moody's nanalytics saying asset markets are very highly

priced not everybody feels that way thom melcher says despite the list of potential worries and the elevated valuation we believe it will continue to g w grind higher as interest rates drift higher. >> steve, you know, that idea that markets are a little bit way ahead of themselves potentially, financial conditions being so easy that's one of the reasons the fed is going to get aggressive if they see one more hike in december. >> i think that's all they see right now. some are saying after december they may stop for a while. in addition to doing the balance sheet. by the way, we're not expecting the balance sheet tomorrow to be announced. but that is, i would say, a potential risk 39% see that balance sheet

reduction coming in september and a bunch see it afterwards. i think the fed will be concerned about that fiscal policy and monetary policy work together if you're looking for less fiscal policy you're going to get less fed policy. the concern was that you would have all this stimulus coming from the trump agenda and more and more you can see, mike -- and i think you see it in the trade. that's being dialed out. >> yeah. that story has changed the last six months steve, thank you very much for more on the markets and the fed, let's bring in jack abbott. jack, good morning. >> good morning, mike. >> how are you thinking about the fed right now in terms of both balance sheet and potential future rate hikes with regard to, you know, how the economy is now tracking also just the way the markets are situated what are you expecting to hear tomorrow >> yeah. i think we'll hear some tough talk maybe little action. like most observers, i don't expect any rate action tomorrow. i think they are going to talk

tough. they are optimistic that inflation will pick up in the latter half of the year, that growth will -- growth trajectory higher toward the back half of the year and that justifies their strategy to raise rates and reduce their balance sheet over time. >> you think they're striking the right balance here feds should go a lot faster. it seems as if there's a way to decide to frame this lots of different ways to have inflation tracking but you have full employment and markets being extremely happy right now. >> yeah. i think you've got, really, the three constituencies of course, the fed is focused on jobs and the economy you've got that third constituency and that's stock market the fed, if they just purely focus on jobs and the economy, they can move forward with their rate plans and the balance sheet

reduction. my concern is -- and i think i heard jamie dimon flapping his arms about this last week. if you start to pull back that balance sheet too quickly, especially if it's a coordinated effort with the ecb and boj, which they're certainly not on board yet, that could pull the rug out from this equity rally we've enjoyed over the last few years. >> do you think there's a legitimate risk that the fed is going to go fast enough and really push the balance sheet to a point where the markets will be caught by surprise? >> no. i think because of the temper tantrumbull, turned 180 degrees on their heels in 2013 when emerging markets and other markets got upset. so i think that, you know, the good news here is of all the crisis we would have to encounter this is a contrived potential crisis and one that could be reversed pretty quickly. i'm not worried that -- you

know, i worry that they could upset the apple cart here. but i also understand that they're very sensitive to it, too, and will likely reverse course if they go too quickly. >> jack, we talked for months about the spread between the soft and the hard data this consumer confidence number is another reminder of that. it's just a barn burner of a confidence number. yet, as some are pointing out, why isn't real consumer spending tracking it more closely >> yeah, carl, great point call at the paradox of thrift. the fact is that the financial crisis really focused households on preparing their balance sheet. they're doing exactly what they're expected to be doing but the problem is that we're not seeing growth as a result. student loans and other auto loans are up but most consumer borrowing is now actually pretty prudent and so are lenders lenders aren't necessarily extending home equity lines for people to take vacations

anymore. i think while it's more responsible borrowing and more responsible lending, we're seeing it in what i'll call the slow and steady recovery it's certainly a lot slower than we've been accustomed to, but also on a much more solid foundation long term i think that's great short term, it's a little frustrating. >> just to quickly bottom line it from an investment perspective, does that mean you play more defense right now? >> i'm finding better value overseas look at the -- the caterpillar number was fueled, in my view, by emerging markets, particularly emerging asia i think they're cheaper. there's more room to run and even developed markets, too. we're under in the u.s. and emerging in a big way. >> jack abbott, good to see you. >> you, too. take a look at shares of mcdonald's that company beat expectations on earnings and revenue. it seen its sales zooming.

former ceo edward rensi will join us with what is working in fast food. excuse me, are you aware of what's happening right now? we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that.

good morning, everybody. i'm sue herrera. jerusalem metal detectors will be replaced by cameras that can detect hidden objects. senior palestinian officials and local residents criticize the use of cameras saying they also should be gone. speed boat capsized off ind nearbya killing at least ten people several others are considbeliev be missing about 2,800 i-rover hoverboards have been recalled for overheated batteries and as profiled on "closing bell" three market square in wisconsin has announced it will begin to offer its employees a work issued microchip that can

be implanted, all access to their office building, implanted between the thumb and forefinger underneath the skin. that's the news update this hour david, back to you they say it doesn't have gps tracking ability but i don't know if i would have a microchip implanted. who knows? >> i'm not sure. we stuck one on our dog but i guess he had no say in the matter. >> that is very true. >> yeah. thanks, sue. >> you got it, david. >> the president sending off a flurry of tweet this is morning, including his displeasure with attorney general jeff sessions kayla tau kayla tausche is in washington with the latest. >> very levels of intensity from the innocuous, touting a rally in ohio this evening to time sensitive, calling for republicans to repeal or repeal

and replace during today's health care vote to the tongue in cheek, where he suggested his 11-year-old son, barron, is going to get questioned over rusha. but it's his tweets using the mega phone to some 32 million followers to tabling repeated swipes at his attorney general that are raising eyebrows. to chastise him for not investigating hillary clinton. incoming white house communications director anthony scaramucci on satellite radio this morning said it's probably right that the president wants to replace sessions. >> when you think about the relationship john fnc. kennedy a with his brother as attorney general or that the president had with eric holder, president obama, they probably don't have that sort of relationship. and i think the president, when he thinks about the architecture of his cabinet, i think he needs that sort of a relationship there. >> firing sessions would raise more questions than it answers who would replace him that's

more loyal to the president? if that person were a former campaign official, would they, too, have to recuse themselves and how would this focus on loyalty affect the long-term reputation of the doj? washington strategist greg valier says the number one question he's getting from clients, why won't trump stop tweeting at least a third of the president's tweets are self inflicted wounds that distract from the agenda and for congress' part, lawmakers are standing by their former colleague, senator jeff sessions and say they believe the president is inappropriate in these tweets speaker paul ryan says it's up to the president to decide how he wants to proceed. guys >> yeah, kayla, i saw lindsey graham coming back, defending jeff sessions. that clearly is the most important part of this morning's tweets from the president, as you rightly focus on them. if he were, as it does appear --

you don't want to jump to conclusions. we simply can read what's being said and we heard scaramucci he seems to want him out what would happen, to your point, if there's a new person appointed? will congress, you know -- what about the nominating process or the confirmation process in the senate you know, what chance would they have to actually get through >> a couple of different options, david if they go the traditional route and choose to nominate someone that would go through the full confirmation process, there are questions over who a candidate would be that would sale through that easily. there's not one that comes to the top of mind or that rises to the top of the chart in that way. the second option is potentially to do a recess appointment that person would serve through the end of this senate into january 2019 but that, of course, would attract new criticism at the white house over this issue, which is going to inspire criticism no matter how president trump does it if, in fact, he does choose to do this he is seeking advice on this

that is what all of the reporting at this minute tells us but it's unclear exactly how he will choose to move forward if, in fact, he does continue to be frustrated and let's this frustration over general sessions continue to boil up. >> kayla, thank you for that we'll be watching d.c. closely, obviously, today and all week long kayla tausche. meanwhile, mcdonald's forecast, second quarter profit up $1.70 revenue beat expectations on global comps, up 6.6, nearly double the consensus estimate. it's been a while since we've seen a number like that. u.s. comps 3.9. >> hard to poke a lot of holes in it. what's been amazing to me is how mcdonald's as a stock has just separated itself from the consumer staples group and actually on a year-to-date basis with today's gain it's now up more than dominos which, of course, has been the poster child that has kind of cracked

the code for traffic and volume through technology so i don't know how much more you can expect out of mcdonald's but it's really got sort of the trend. >> year to date almost 30% as far as the dow stocks go, beat only by apple and boeing. not much farther to go to take the number one spot. >> nothing defensive about the way it's acting at all. >> for more on mcdonald's, let's bring in former ceo ed rensi good to talk to you again. >> gk good morning, everybody. glad to be here. >> some of the right throughs this morning on the quarter credit the performance to, in their words, cheap soda and upscale burgers. is it that simple? >> no, absolutely not. in fact, leadership, leaders and strategy counts and steve easterbrook is a quiet, strong, studious, intelligent man who laid out a strategy. he has been working his plan ever since he came back to the u.s. he has got the total unabridged support of the mcdonald's

franchisees and they are the rock on which mcdonald's is built. it's a much more complex matter than free sodas. >> all right how did he get that confidence of the franchisees famously corporate tells franchisees we want to do this it may mean you have to buy additional equipment and there's always been friction around that how did that go away, if it has? >> there's always that dynamic tension. the thing you have to remember, franchisees invested a lot of money and work hard at that business and it's the only restaurant business they're allowed to be involved in so they don't have divided loyalties. there's a constant give and take, a push/pull. that helps grow the system as fred turner and ray crock used to say, if you can't get the franchisees convinced to do something, you probably shouldn't do it. >> if it's not just about in the latest few months, cheap soda and a new burger introduction, it does seem as if there's some

ext strategic focus on rolling out these promotions and getting those franchisees on board do you actually think that they have sort of a clear runway to continue to introduce these things have they just been on a hot streak with them how dependent is future growth on getting lucky with some of these? >> yes, no, and maybe to all of that the reality of it is that mcdonald's is belly to belly with 45 million consumers around the world. franchisees are at the front of that mcdonald's does an enormous amount of research with existing customers and emerging customers and they're going to give the customers what they want we did the mcrib, lobster rolls in boston, johnson brats in wisconsin. you have to give consumers what they want, in the way they want it, do it in an economical way they've been incredible at gradual incremental evolution,

evolving since 1955 and will continue to evolve in the future they've got great strategies with new techniques, new strategies that will carry the day. >> do you see a lot of risk, execution or otherwise, in mobile ordering or delivery via uber, anything like that >> i think this whole uber eats idea is one that needs a lot of exploration. i think it has a lot of potential. but food is fragile. i don't care where you get it or how you produce it and if the uber drivers aren't prompt in getting that food to the customer in a good fashion with heat and freshness, then it could be a problem and some people are going to do it really well some won't do it so well convenience is very, very important to the american consumer today you have to find new ways for convenience. if you don't think that's true, take a look at what amazon is doing to all the big box stores. convenience is everything today.

>> can you achieve that convenience if you're mcdonald's without sacrificing a little bit of margin? what's the average ticket for mcdonald's that you actually will introduce a delivery piece to that somehow? >> well, you know, who would have thought that taxi cabs would be replaced by uber or limousines would be? i take uber to the airport, costs me $17 used to cost me $70. mcdonald's -- i'm confident mcdonald's will figure it out if it can be figured out. take a look what their g & a trends have been like. that ervery good at controlling cost they're in the penny business, scrape the last ounce of ketchup out of a can to make a profit. >> on that point, ed, they are doing all of this with not more storers restaurants but fewer. we know they've had some strategic pivots internationally regarding ownership in the franchisee model

does all that make sense to you? >>. >> absolutely. i've said this for years and years and years. mcdonald's should never have more company-owned restaurants than what they absolutely need to staff the organization and do experimentation. company stores ought to try this stuff first so if it fails it doesn't hurt the franchisees minimum number of company stores is essential the efficiency is better g & a is better. and you get better travel knowledge. company and store employees are great people they work really hard. when they go home at night they don't worry about that restaurant the way an owner does. >> finally, you know this company well you've been in it and watching it for decades it's been through a few golden ages, i would argue. how would you characterize this one? is this, in fact, a new golden age for the company? >> if ray crock were alive today he would say keep shoving that

hose down your competitor's throat as they're drowning steve easterbrook is intelligent, surrounded himself with intelligent people. the board knows what he's capable of, has international perspective, shrinking the globe for mcdonald's, very attune to up and coming customers. if there were such a thing as the golden age, this has got to be the platinum age. >> ed rensi on mcdonald's. always good to get your take appreciate the time. >> thanks for having me. good to see you. >> as we head to a break, take a look at shares of eli lily, the company beating estimates while upping its outlook, the stock down 3%. drug rollout delay and former economic adviser to president trump, judy shelton, will join rick santelli for a special santelli exchange. more "squawk on the street."

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call 811. keep yourself safe. let's get over to the cme and the rick santelli exchange good morning, rick. >> good morning, carl. a little delay, folks. the fed is going to, of course, potentially begin its two-day meeting without any major changes, so say many but there's one topic besides balance sheet reduction i'm interested in and i want to know more information on. that's interest on reserves. >> is this something we want to continue to pay? should they be talked about? >> i think it's a very bad idea. the fed is really giving banks every incentive not to make

loans to the private sector. just collect interest on excess reserves that is being kept to no purpose. it's just sterile. that should be the money used as financial capital for the private skter. that should be made valuable to small business and to people who want to borrow, to create something, to do something productive and, instead, it just sit there is at the fed, collecting interest i think it gives banks the incentive to not hire the next loan analyst and, instead, be more concerned about protectin themselves from regulatory overkill from the fed. >> dr. shelton, it's interesting to say that. recently talked in d.c. and wrote a paper "our unhinged fed"

and believes that not only are reserves a bad thing, he thinks it's one of the main reasons for no productivity in this recovery he said, you know, the fed policies are supposed to minimize their effect on private sector credit creation and this, obviously, isn't finish up, if you were janet, how would you deal with interest on reserves in the here and now? >> well, you know, the thing that's really sad about all of this is from the fed's point of view, from chair yellen's point of view. they don't really care i mean, they pay the banks not to make the loans. but they make so much money that what they pay on reserves is a small portion of that. the rest of their earnings, they turn around and remit back to treasury that's what's crazy about the whole arrangement. the fed ends up buying so much

treasury debt, takes the earnings, interest from that debt, pays a little on reserves and turns around and gives it back to treasury the problem is that it's just an unholy alliance between the treasury and federal reserve i think we need to take a deep breath and ask whether our central bank is doing more harm than good. >> dr. shelton, thank you so much for your insight into this issue. i hope to read more on ior interest on reserves in upcoming statements i'm not sure i'm going to hold my breath. thanks again, david faber, back to you. >> thank you, mr. santelli let's send it over to john fort. john >> earning seasons roll on alphabet sales up 23% you might notice the stock is down 3% this morning on an issue with traffic acquisition costs how much of an issueill at wth be moving forward? we'll dig in, coming up on

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eli lilly reporting earnings before the bell this morning meg sat down with the ceo early and joins us now with more meg, take it away. >> they posted a beat and raise the second quarter that wasn't enough to bouie the shares the stock is under pressures after the company set the experimental rheumatoid arthritis drug will be delayed this year. shares down 3.7% now some analysts expect lily and the partner under pressure today will need to run an additional clinical trial to get further clarity on the drug's risk of blood clots. that means a delay of 18 months. despite the revenue beating the quarter, an analyst called the report an net negative pointing out much of the beat is driven

by price increases for older drugs. lily's ceo talked with ""squawk box"" this morning i wasn't there he was asked about the democrats plan on prescription drug prices. they pay an average rebate of 50% back to government programs and insurers in the united states suggesting the problem in the system is elsewhere. >> if you look at patient out of pocket cost that, is by fate biggest driver is insurance design they also highlight the bad actors, the tourings and valiants of the world which you report on. and that's a problem too but we think scott gottlieb has the right and that is to increase competition in the arbitrage opportunities in the generic market that have gotten a lot of headlines >> finally, another biopharma earnings news, check out biogen. that stock had been -- now fwz flat it had better than expected results for the new drug for spinal muscular atrophy. there was a lot of talk on that conference call about potential m & a, david let the biotech target speculation begin.

carl, back over you to >> meg, thank you very much. meg watching the drug companies. leading the s&p 500, we talked about freeport with jim this morning what a day for freeport and for copper as the metals hit a bid 3m continues to weigh on the dow. and it's pretty big percentage move for a name that big >> it is i still think that there's a little bit of a -- when it comes to the actual earnings reporters, the sell on the news is bias. just because of where we're at i think 3m is one of the stories that, you know, it's not something that people have a firm grasp of exactly what the drivers are in a quarterly basis. i think that's a little bit of a head wind. and utx, the reaction there has not necessarily been great at all. >> look at those leaders right now. all related to mining. taking things out of the ground. freeport not that long ago, people were looking at the liability side of the balance sheet than what it had in equity given concerns about its ability to repay debt no longer. >> and weak dollar and you have

this instinct in the markets to dredge up what hasn't worked yet and bring it back. so the rotation sometimes does kind of shine on these areas that, you know, haven't necessarily been leaders >> yeah, we'll see if that dynamic lasts. meantime, tech continues to weigh, whether it's google or seagate, micron, a lot of the names leading the s&p 500 lower. >> going right into the banks up 1.8% really on no news, bank earnings, it's just about yields going up a little bit and money coming out of tech. >> we'll get more texas instruments among some others. the former ceo of twitter dick costolo is back. we'll digest the results out of alphabet forget man versus robot. it's tech ceo versus tech ceo on the subject of ai. we'll get one last check of the markets.

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costolo. strong earnings are propelling the subpoena stop a new record high with energy, materials, and some of the other cyclical sectors leading the way higher energy is being helped by a 2% jump in the price of crude oil extending yesterday's gains after saudi arabia said they would limit oil exports in august that's putting some at least energy on pace for the best days since july 3rd here. today's leaders include philip exploration, transocean, chesapeake energy all up in the 4% to 5% range a sector to keep an eye on as well and certainly the oil

prices will put bigger rig counts in focus come that friday move that does it for this hour of "squawk on the street. let's send it back down to the new york stock exchange for the start of "squawk alley." back over to you guys. >> dom, thank you very much. good morning, it is 8:00 a.m. at alphabet headquarters in mountain view, california. "squawk alley" is live ♪ good tuesday morning welcome to "squawk alley." jon fortt at the new york stock exchange dow is up 103. s&p 500 hits another record high the dow was up more than 150