conspiracy to commit both securities and wire fraud. >> i didn't realize being banned from twitter must be painful for him. >> he's a bro. >> what do you mean? >> guy millennial guy. >> the way he talks, that bro-ish thing we do so well. >> here is squa"squawk on the street." good tuesday morning welcome to "squawk on the street." i'm carl quintanilla along with david faber and jim cramer on "squawk on the street. only about 100 points from dow 22k. oil has held around 50 auto sales and ism headed our way today. road map begins with the first trading day of the month

will august, a traditionally difficult month for stocks bring more record highs? we're on dow 22,000 watch. >> white house says new chief of staff has anthony scaramucci out. under armour, we'll look at the stock and the competition. all three indices saw a record like the dow and the nasdaq, s&p posted eighth positive month in the past nine. it's been quite a run. a lot of that, though in dow's case, has been boeing. >> boeing is the new thing it's really incredible y had some laughs this week where i read boeing, sell to

hold this was, to me, the biggest cap stock that had sales on it not netflix, not tesla, but boeing there was a moment where one of the analysts said is it as really as good as the cash flow real not only is it real but it's spectacular. i really do think there was kind of a misdirection play a lot of people felt boeing could be like, say, some of the -- like a ge and it wasn't. >> how do you miss boeing, though seems to me their business is one that you contract very well. >> they missed the dreamliner. they missed the share from airbus, they missed orders from all different parts of the world. those guys really have to rethink. a couple of guys had it but oh, my, that thing is up on the back of shorts. nrg, short squeeze they got it together scripps was a takeover

freeport and netflix, i don't know, combination of "house of cards," "stranger things," some of that foreign stuff. >> some wondered what earnings season would feel like if google reported before netflix or amazon >> i have been going over that google quarter and ruth barrett, who i have a financial crush on, they're doing, what is it, sand energy >> yes. >> they do -- they were not conforming to the recognition that it cost too much. if i had to do that conference call over, orchestrate that, i would have done -- i would not have said -- i would have talked data center, client take, just like amazon. i would have talked wainwright. >> that's your side business conference call corps ychoreogr

>> absolutely. jerome prince from the old days. i'm surprised these guys don't orchestrate it the way i do. i have a bernstein score i'm partial to bernstein scores. these guys are all learner and love they think it's camelot or something. there's a law passed who says they can't be disappointed. >> rogers and hammerstein were pretty good. >> hammerstein had a house near me. >> did he really >> yeah. >> huge influence. probably the reason that he's a composer now we've got greenspan, jim, with comments saying stagflation is about to emerge to a level not seen since the 1970s, exiting period of stagnant growth will mean not an acceleration of growth but higher prices. >> i'm let down by that. one thing we don't have is inflation.

that's been the fed's biggest problem. i do think amazon increased a level of deflation that's rather extraordinary, as has the sprint versus verizon versus att. >> versus t-mobile. >> i'm talking about major bills. natural gas -- incredible low, that's heating even though it's 108 degrees today in oregon. >> record-breaking temperatures in the pacific northwest. >> did you see had an? people are frying eggs on the sidewalk, not the burner toast. >> i don't think that's particularly healthy to eat your egg off the sidewalk. >> portland is so clean. >> you don't buy greenspan's caution on a bond bubble >> no. >> you don't buy howard marks saying it's time to increase our reduced risk in investments? >> look, it's never a great time people want to get ahead of

september, which is not a good month. i see things that i don't like there are cracks micron is going down >> 14% since early june. >> yeah. just the opposite, i think, of greenspan is our president, in there cheerleading for dow 22,000 you don't pay attention because you're mainstream. >> i don't pay attention to the dow either. >> no. and now the s&p is trying to assert itself. i think it's just not as bad a lot of boeings are out there waiting to happen. >> give us some names there. >> you want names? >> yeah, i want names. >> you want me to name names >> i want you to name a name. >> allison transition is a boeing waiting to happen. >> maybe that's too narrow for you. cummings that guide up was good people look at the short term. you want me to really just name

names? intel. >> intel >> people just -- that stock is incredibly cheap so intel i could have gone shopify. i'm not doing shopify. intel. the intel conference call read like a novel stern, those are really hard, those books. in the end it did say everybody is too conservative about us. >> that was a good quarter that was a good quarter. >> your point, really quick before we move on to under armour, seasonality in august, past four years, major indices down we know about september. >> august that second to last week and last week in august in 1987, which people don't realize. that was the first real crack. that's when the dow was -- sorry, the s&p

that's when you had the first crack and really had to look at yourself and say you know what this market, the mercks, coca colas have come too far. now they're what i like of stocks that have done nothing and may be poised. poised starbucks and the times. kind of bullish. >> what johnson already said to us last week, china may be a bigger market. will be a bigger market. >> yeah. >> so, you know, hey, hope springs eternal, mr. frapuccino. >> why not stick with what's worked, facebook, google, amazon these multiples are not that high. >> amazon? >> not amazon. facebook, google. >> 2019 is very low. google is inexpensive. >> cash flow machines. eating up the world. to your first point, they're generating so much cash they're going to be able to continue to invest in the growth industries of the future, conceivably,

unless they miss it, of course. >> they have enough cash to be able to buy sales force. >> they're going to create an ai machine that eats us all anyway. >> ai number three, trust the process. musk has some tweets that indicate it's time to see the doctor. >> the doctor? >> he has some existential tweets about how he's up and down and up. maybe it's mood stabilization time. >> speaking of down and up, let's talk some under armour this morning, full-year guidance below expectations, announcing a restructuring that will include job cuts and narrower than expected loss. it's been pointed out we've had job cuts at under armour, nike adidas is the one -- >> thing of beauty nike has made a comeback look at nike i'm dating myself. nike, vf, columbia sportswear, pvh, all suppliers and they're

all doing quite well under armour, i thought that the -- i know that the kohl's initiative is working for them i'm not against buying under armour here. it wasn't the kitchen sink a lot of people wanted. >> two-year on under armour. >> it's been -- >> house of pain. >> it has been a house of pain. >> under armour. >> you could have called it a house of cards. >> love this thing. >> ever since he issued that bottle, liquor, did the rye, his own line, just the opposite of what happened with clooney, melman that was a good buy. >> that was. >> revenue 9-11 versus 11-12. >> everyone was looking for a downgrade. made what, 980 million too much? consolation brands bought for $20 million. >> you're upset, as you should

be because, of course, you've been rung a restaurant that serves tequila and you were not smart enough to launch your own brand. >> that's true i want to do a monster -- let me tell you something, mr. negative if there was a movie made about kind of me, i bet you clooney would play me. i think he would play me i think that's who would play me. >> you got that one on me, without a doubt. and so many other things, too. >> we both wear brioni i don't know if he wears brioni. >> you can't take that away from you. clooney played you in a movie. >> he did? >> it wasn't that bad. didn't treat you that bad. >> my wife said don't see it you have enough -- >> you had some rough spots. >> did i >> you came out okay. >> how did i look, though? >> unbelievable. >> you know what, that's all that matters you can judge a book by its cover. >> that's right. >> not all of us can pull off a

suit like that. >> who would play faber? >> say again >> who would play faber? >> nobody. >> isn't that interesting? >> obnoxious short guy. >> the guy who played the brother-in-law of -- in breaking bad of -- >> that guy? >> that's who would play you. >> i like him. >> harvard trained more bad news for snap this morning. we'll fill you in on what it is. shakeup at the white house olympics coming back to the u.s. we'll talk about that. premarket, dow up five, four straight record closes brings it to a total of 30 for the year. >> do you think the president me noticed that >>or"squawk on the street" in a minute.

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we deliver super-fast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. we do business where you do business. ♪ ♪ we're getting auto sales today. ford is first up phil lebeau is in chicago. >> reporting sales declining 7.5%, weaker than the estimate according to edmonds.com the theme from automakers, pull back in fleet sales. this is all an effort to do a

better job of bringing down overall inventory numbers which, by the way, will still remain elevated at the end of the month. one other number to keep in mind, fiat chrysler down 10.7%, weaker than expected the decline was expected to be down 7%. guys, we will get general motors in about 15 minutes. it will be interesting to see as these numbers come in, if they are weaker than expected, is the industry possibly going to get close to 17 million for the month of july as some have predicted? i'm not sure that's going to happen if we continue to see these weaker than expected numbers. back to you. >> thank you very much phil lebeau. here we go again, right? >> that's what those railroads were saying on those conference calls, saying this is going to be the problem for the second half of the year autos. >> what's going on what is going on >> a lot of people feel that everybody has an automobile that -- >> what you don't want to hear is layoffs. >> layoff production.

>> they take -- inventories are high i'm concerned because i was really hoping that union pacific was being too negative in norfolk southern but what phil just said is that there will be no recovery in transports of cars, such an important part. >> transports have come way down. >> oh, my. >> few weeks ago. >> we did get an upgrade of united that conference call was spirit where they talked about how everybody else is cutting prices that was very bad. a negative call. >> we'll get gm in a few minutes. meantime s&p will begin excluding companies that issue multiple share classes that takes effect today and does not impact existing members like alphabet and berkshire one company that will be affected is snap, class of stock with no voting rights, hit a record low in yesterday's trading. our friend josh brown said sometimes these interesting

classes have consequences. >> look, i think that andrew, sorkin was saying this morning, the most buying group imaginable cfos and ceos who say i wish i weren't in the s&p a lot of what i do is being shot down by s&p selling. so it's a mixed blessing it's true, you want that buying power. but if you really excel, you could be brought down so quickly by, say, flash cash that happened in august two years ago. which, by the way, i am concerned about. remember that friday >> yes, i do of course, people made fun of me because i was like i have to figure out what's going on verizon was down 12 points. >> friday/sunday. >> two years ago when bullard said he wasn't worried about china. >> all the stocks gapping down for no reason. >> there was a moment where david said listen, i have to figure out what's going on

priceless. >> yeah. >> priceless, right? some things are priceless. >> it was wrong. something went wrong. >> ge. >> verizon was down 20% at one point, something ridiculous. >> if you look at the charts -- >> i don't think that being in the s&p is -- that being excluded is not nearly as bad. look -- >> index funds, of course, control so many of the votes end up being the keys and proxy fights. >> look, their proxy is going to be worth an election, right? >> right. >> if they had a proxy fight -- >> speaking of proxy fights, by the way, p & g's proxy is out in their first what we call fight letter, their reason for saying do not give a board seat to nelson peltz still pretty tame. this will really get going in a month or so.

>> how much does it cost >> i detailed all the different advisers p & g has they're paying minimal fees to those advisers that will be something to try to make some point of they hired four investment banks, two law firms, two proxy advisory firms. >> meanwhile a plan to try to get stock higher, trion. they would have to pay nothing to get him on the board. >> sales growth by more than a percentage point in a market that decelerated more than a percentage point. >> that's true. >> equal to our original fiscal 2017 target, improvements, we continue to make strong progress on productivity initiatives. >> true. >> making meaningful head way on our next cost savings program. >> true. >> take that, trion. >> thank you because zbl-- >> yesterday you were attacking the activists. >> i was only saying -- there are some bringing credit they just don't really want

andrew livers involved. >> i think that's what the -- right. that's what the activists are saying they love breen. >> they do love breen. >> like you. >> i love breen. >> you made that clear yesterday. >> you know i was doing how much tyco is up it's like ten times the s&p. he's amazing a miracle man. that's all i was really talking about. >> when we come back, cramer's mad dash, count down to the opening bell and take another look at the premarket. nasdaq hasn't fallen for four straight days since october/november last year enhtvo tt tet e th op

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last week saying don't worry t rams, flash, there's still going to be restraint. equipment spending not up that much citi says you must recognize that it isn't over pricing can still go good. why is this important? seagate the other day reported a hideous number for disk drives western digital did not break out flash and disk drive people have been selling that

stock. this has been -- this has been going up and down. people are starting to say, wait a second old-time tech, don't give up on it and my take is that -- >> why has there been no response to what you say have been two consecutive strong quarters >> everybody feels we're only one d-ram chip away from being out of equilibrium people are not as worried about flash but d-ram pricing has spiked and it looks like the channel -- i don't know. it's a very controversial thing to say that the channel is full. this is citi saying don't give up the ship. >> stock is up, to be fair. >> one of the best performing stocks of s&p after being one of the worst performing the ultimate boom bust story. >> we've got the opening bell. sprint earnings from that company's ceo in terms of what's

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you're watching cnbc "squawk on the street. opening bell in just over a

minute's time. auto sales mostly a miss so far on the fiat and ford personal income was a goose egg. that was a miss. we'll open awfully close to 22k. >> yeah. there an under current of new money coming in. tuesday they will rally. i think they're making a stand here be careful a lot of the retailers have gone up here, but i actually think if you wanted to start buying some amazon, you probably start today. it's down, straight down i don't think it's so bad. at the big board, celebrating

its name change from desoro is andeavor and at the nasdaq, first financial northwest. >> banks held really well yesterday. watch those. >> overseas is strong. we're getting a lot of the foreign companies doing so well here i'm watching the banks and simon properties the worry about retail, again, shopping mall, simon expecting that brick and mortar to roll over it's not. >> simon has the highest end, many of them toutman and simon have the highest stores, get the highest

per square foot. >> right. >> even if you have those same stores move out of another mall that's b class they won't move out of their high malls. they have same occupancy. >> it's incredible when a sears leaves, they can fill it up with some higher rent then again, gm sales oh, my what value traps those seem to be extraordinary. >> we do have gm out. >> you're not joking about it not matching the sentiment on the street general motor sales down 14%, edmonds decline of 10.8% it is due in part of general motors pulling back on its fleet sales particularly to rental companies. but you look at the other side of the ledger, retail side of the business and it's not

pretty retail sales down 14.4% and the inventory, the day's supply, 104-day supply generally speaking they would like it to be around 65 to 70-day supply. 104-day supply that, is going to give a fair amount of attention. and to speak to the lack of demand on the retail side, gmc, trucks and suvs there, retail sales down 9.3% last month guys, back to you. >> phil, that number in terms of day supply, give me some of your thoughts does that typically result in big discounts toward the end of the year to unload inventory >> right. >> slow factories, lay people off? >> some of this is because they have built up their pickup truck inventory and they specifically tried to do that early in this year because they're going to be changing over to new pickup trucks and shutting down some of their plants a little bit later on this year that explains some of the buildup in inventory

overall, 104-day supply is much higher than they were expecting. general motors said we think we can get this down to a more reasonable level over the next several months having said that, we've already seen them extend some of the shutdowns at some of the plants. you know that they are reviewing what they're going to be doing specifically with car sales. such a huge drop in car sales. the next couple of months will really give us a better indication there some of that was by design because of building up inventory as they change over to the new pickup truck. >> still too high. fooil phil is really on this stuff. i don't like to hear those numbers. big part of this economy, autos. big. huge. >> you'll get deals in the next few months we know that, as they try to clear things out. >> and transmission for truck numbers -- obviously that's heavy trucks cummings, i'm looking through it 27 cent charge there

it's not that much of a -- my breath is taken away by the gm that's a bad number. ford motor under the new fellow -- >> hasn't gotten into full gear yet. >> no. >> what's the takeaway of auto sales? >> it's very important it just looks like that's -- everybody mo needs one may have bought one there's a glut right now phil has got a good asterisk to that i'm looking for 70 days is too much for me. that's what i've been taught suddenly we're over 100. there's not enough lot space. >> look at the price line number they're traveling, seeing

things, going on cruises they're not buying hard goods. they have their car which now lasts much longer and they are going on cruises. >> lyft, uber. >> disney theme parks, i think, will be a record everybody is focused on your world, cable i know you're focused on cable yourself. >> i am. >> ba-da-bum. >> sprint did report earnings this morning, generally well responded to by the market we'll get to what the ceo said to go through the numbers themselves, in line with what the street had been looking for. largely ahead of expectations. they added 88,000 handset

customers. down on the year but better than some thought not a bad quarter. service revenue overall, wireless service revenue $5.7 billion, down 6.2% sprint made a lot of the fact that they reported net income for the first time in three years. that is excluding the after tax of not recording items in the quarter. m & a, we spent a lot of time -- i did yesterday -- reporting on this, talking about it as well the focus being sprint, charter, ansoft bank, of course marcelo claure

charter hoped the statement itself would be taken in a broader context of we have no interest in pursuing a combination. that is what they were trying to do softbank is working on a deal to make a proposal to charter under which soft bank would contribute a significant amount of equity to a new company that would also go out and borrow, perhaps, as much as $60 billion from three if not four global banks it has financing commitments from and then would make an offer to acquire charter and the minority interest that it doesn't already own at a premium an offer that would also be more

than 50% made up of cash it would be controlled by softbank given the equity infusion it would make there's so much debt to go around not to mention could they get to a price that its shareholders led by liberty and newhouse family would be interested in? it's hard to see you have to say the likelihood is low you never want to underestimate the determination of one mr. masayoshi son. they are the ones dictating the strategy by which they're going to try to make a public offer to buy charter the next few weeks again as i reported they're not going to go hostile. they're not going to go hostile. simply going to try to put something out there. they'll see what the number, how much cash they can come up with.

150 billion dollar stake and then borrow enormous amounts we'll see if they actually have a shot. >> i believe they know everything we know it's not idle. wow! shows you what happens with low interest rates what you can pull off. >> sprint and t-mobile, still, is the deal that sprint would like to do want to get done day one of buying sprint. >> those egos. >> it's more about the worry on the anti-trust front, inflation coming down because of wireless price wars. >> and shopify. >> shopify is on fire. >> yes, it is. >> has been for a while.

10-year just below 2.3 and more data headed our way. let's get to rick santelli at the cme. hey, rick. >> darn right there is, carl after chicago was a little light yesterday, that will be at the top of the hour. we'll cover t look at interest rates, carl's got it under 230, 229 highly unchanged look at the one-week chart of tens 2.34, 2.35 you could argue is the upside pvt pop through there, test an area that was kind of the high water mark for the last stab at trying to get change on the year we stopped around 2.40. 2.44, by the way, is where we settled last year. open the chart up to mid december 2015 for bunds and you could really see we were hovering just below 60 bases points pay attention to that, though. not a lot of giveback, movement in the spread. ten versus bunds as everything is in europe, a very important indicator to pay

attention to on the interest rate complex now, let's switch gears a bit, shall we everything is about foreign exchange a lot of it is about the euro. one week chart to the dollar index -- i'm sorry let's go macro first open it up to the beginning of 2016 with. this is an interesting chart you see that 92.62 low that's all that's left for us to go after 92.62 close. now if we do a one-week chart now you can see the low per rate trade has been in the 90s to 80s. around 92.90 on the euro dollar, strong of it, january 2015 last time we were here. maybe these are the two clues for the next jump in this. watch the euro/yen, hovering around 130 that starts in the 2016. finally november 16 for the euro versus the pound should start to get above 90.5

all three of those spread also jump carl, jim, david, back to you. >> we'll talk to you in a bit. rick santelli, see you at the top of the hour. >> a lot to talk about with senior white house adviser reed cordish, including olympics coming back to the united states s&p is up five

on to politics now general john kelly facing the tough task after a series of shakeups, including the ousting of anthony scaramucci communications director after ten days on the job. reed cordish who heads up business and tech initiatives, including the news yesterday that l.a. will host the 2020 olympic and paralympic games reed, great to have you with us. >> good to be here thanks for having me. >> how heavy of a lift was it to get this to lncht a. >> to bring one of the most iconic events in the entire

world back to the united states is a real lift no question that we were deserving. this was an incredible bid that we put together. the city of los angeles put together and the u.s. olympic committee. but the president and the whole entire administration leaned in on this to help make it happen. >> there's been some debate as the olympics have come to cities around the world about the level of investment required, the use you get out of the infrastructure after the fact. rio is paying a bit of a price for that now will it be different this time here >> that's what makes the city of los angeles and the united states such a perfect partner and host for the olympic games our infrastructure is 100% in place. our stadiums, our arenas, our facilities, our college campuses that can act as olympic villages we are ready to go of course, we have time to make even further improvements. but we have the infrastructure, the improvements and the facilities to host world class games right now. >> all right

jim cramer, mr. cordish. i like the liolympics coming bak i am questioning about whether that republican dominated congress is interested at all on spending on infrastructure away. they wee know they couldn't repeal and replace how will they get together to do something that would be good for our bridges and tunnels in this country? >> that's -- you're asking the right question we have incredible confidence we are going to be able to move forward with the president's agenda, including tax reform and, as you're saying, one of the most expansive infrastructures in our country, working every day with congressional leadership and these two vital initiatives for the country. >> mr. cordish, what gives you that confidence? so far people who look at the legislative accomplishments of this administration might not feel similarly. >> you have to understand there's been as many bills passed under president trump as just about any president at this

time and the other thing that gives me confidence is i have met personally with congressional leadership, both in the house and senate they recognize the importance of the tax reform bill. they understand the need for this country of a great infrastructure package we're working diligently to put together packages that meet the goals and needs of congress and of the american people i feel very good that we can get this done and in a bipartisan way. >> earlier this summer, i believe, sort of in june, you had been predicting, i think, you could get infrastructure legislation passed in the house and senate this year do you still think that's the case >> i do. i think we'll move forward with the tax reform bill, infrastructure package congress is able to take on many important goals at one time. these are folks so important for the country. so important to keep the strong economic growth we've had under president trump. we need to deliver on these vital packages and congress is

ready to do it. >> this morning, reed, the president tweets that corporations, and we're quoting here, have never made as much money as they're making now. how does that feed the urgency for cutting their corporate tax? >> well, part of what is spurring the incredible confidence in this country is the belief that we will get done the cornerstone legislative pieces related to american business of president trump. clearly, tax reform and infrastructure have been things that the president has talked about since day one, that american business has counted on since day one and that international business, investing in the united states, has counted on since day one so i think it's very important that we deliver on these legislative agendas in order to keep this momentum going. >> orrin hatch has said getting to 15 on corporate is unlikely, finance committee chair. and even '25 will be a challenge. is the white house resolute

about 15 >> so i'll leave that to gary cohen and secretary mnuchin and the president. i can tell you we are dedicated to moving forward on tax reform in a substantial and meaningful way and we're dedicated to moving forward on one of the most expansive infrastructure bills in the history of our country. >> when are we going to see that infrastructure bill, mr. cordish? will it be linked in some way to tax reform >> it's literally being worked on, on a daily basis we're meeting with all constituent groups, cabinet secretaries, house and senate leadership the package is coming together in a very meaningful and substantial way. we will be ready per the president's original schedule, to submit that package to the hill this fall. >> i know it's not necessarily what anyone wants to talk about

down there but we all knew anthony scaramucci was a voice for business, a voice, to some degree, optimism, capitalism had some other sensitive issues. can you tell us you have kind of a hole in the organization will it be filled correctly? because i know that he was a little controversial but he also understood the way business is done. >> i think that this administration has shown itself to be one of the most pro business and american worker administrations in u.s. history. the president is 100% focused and dedicated to strengthening american business and, in doing so, strengthening job opportunities for the american worker one person, even a talented person like anthony scaramucci does not make it an administration the reason that manufacturing has all-time confidence levels is because the administration

has taken a comprehensive approach to strengthening american business, putting in place policies and initiatives that support american growth and that's what we're going to stay committed to. >> finally, reed, hasn't quite been 24 hours since general kelly took his oath but does it feel different in the oval today? and where will we begin to see the impact of his presence as chief of staff >> so, look, since day one there's been an incredible amount of talent in the white house, working every single day on behalf of the president and on behalf of the american public and accomplishing a tremendous amount of things on a daily basis. a lot of which i have to say doesn't go reported like it should that being said, there's no question in my mind and in our minds here that general kelly is the right man and the right leader to make sure that we operate perfectly as a team, to best serve the president and

best serve the country. >> reed, we appreciate your time covered a lot of ground. congrats on the olympics again please come back. >> my pleasure we're very excited to bring the olympics back to the united states. >> reed cordish at the white house today. >> i wanted the olympics in new york tremendous amount of building. the fact is that l.a. won't need to do that. >> nice point by him although the traffic. >> we've got enough building. >> come on. >> hudson yard has been built anyway what are you complaining about >> i like jobs in new york that would have made it so we had 2% unemployment. we will get stock trading with jim in a moment oughnut. oughnut. right away, it was a success. i mean, it really took off. what people don't know is that it all started with points from my chase ink card. i bought the ingredients, utensils, even custom donut cutters.

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amazon is going to kill everybody story is not -- is still alive but it's not crushing the rets anymore. >> what's coming up tonight? sulentic tells it like it is i want to talk about brexit. all these banks are leaving. it's incredible. >> estimates on job loss in london. >> incredible. and jonathan corr, elliemae, coming on when the number is bad, shows a degree of faith that i really like. >> thanks, jim. >> absolutely. mark mobius on where he's w.nding opportunities right no dow is off the early highs, up 59

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♪ good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. oil trying to hold in the 49

range. >> our run map for the hour does begin with rain across the board for the month of august. where you should be putting your money straight ahead. and anthony scaramucci ousted after just ten days. under armour cutting its guidance, restructuring plan that includes job cuts details and analysis straight ahead. first, economic data crossing the tape. let's get to rick santelli with those numbers. rick, good morning. >> good morning, sara. let's start out with the older number, june spending, closed up .5%, down 1.3 another disappointing construction number. last month's goose egg does rise to .3. at least a minor positive. july number, headline looking for 56.5, close 56.3, weakest

level only since may when it was 54.9 there is no revision of 57.8, the last read. what about prices paid it leap frogged right into the 60s, moved from 55.0 to 62.0 and 60.4 versus 63.5 on new orders new orders moving lower. price pay moving higher. and since we have ism tomorrow and the big numbers, jobs report on friday, let's look at employment 55.2 that's the weakest level since may as well. in may we were looking at that number on employment at 53.5 the numbers could have been a little stronger. really since november, a lot of these feel-good indices jumped up into a new domain even though the numbers are a little light, they're not that light, based on where they were just prior to the end of 2016. sara, back to you. >> yeah.

so, staying at a higher domain is a good thing. rick, thank you. first trading day in august, as we mentioned stocks starting in the green, coming off another month of record-breaking gains, amid a backdrop under armour, bp, sony and more. guys, i've been watching under armour because the share price reaction has been pretty severe and pretty negative. the bulls on under armour say this is still a company that's growing 9% revenues. that is strong in the world of retail right now it's not what the market has come to expect from under armour the bears say the valuation is too rich, the company is losing money and restructuring, announcing some layoffs, about 280 jobs, 2% of the global workforce, not unusual in the world of retail right now either but clearly again under armour took the market by surprise. it's off the lows but still down, guys, 7.5%. >> wow you've been preaching the story of adidas and retro chic and the

interest it's had. nike is about there as well. >> under armour and nike are restructuring, trying to figure it out as the athleisure, i'll say, rolls over. it's not as trendy as it once was. nike did preannounce raise and that stock has been on a tear. they'll have to deal with the stronger euro, though. that certainly has helped them over the last year that's something to watch. nike shares are flat interesting not falling in sympathy this is seen as an under armour move, in particular. the other things i would point out, footwear sales actually did decline in the quarter a lot is riding on steph curry and curry released shoes, went up against nike. having stumbles in growth. apparel did better accessories did better all the growth in this company right now is coming from

international. >> still sports a very high multiple. >> exactly. >> still considered a growth company. nothing like the growth company was a couple of years back. >> very proud of that double-digit revenue growth on and on and on. they were able to deliver that the problem is that they've gotten bigger and now they're trying to communicate that they're in a more mature phase and sort of grow into themselves so far it's not exactly getting through or the market just needs to reset those pe values what is it, in the 40s >> seems like 40s, yeah. >> lot more of them in the 20s for nike. >> for more in the markets this morning, we're joined by mark mobius executive chairman mark, good to have you back. good morning to you. >> thank you. >> you're joining us on a day when auto sales and income have been a little light. greenpan is talking about stagflation, heading into a seasonally weak time a lot to be nervous about?

>> well, for emerging markets we're really on a tear as you know, since the beginning of last year, emerging markets are outperforming. it looks like we're going to continue to outperform going forward for a number of reasons. first thing, the currencies are getting stronger against u.s. dollar that's helping a lot and then also if you look at china and india, the biggest emerging market countries, they're growing at 6, 7, 8%, incredible, considering the size of those countries and then, of course, brazil is coming back. i think they're going to have terrific growth going forward. so we're in a pretty sweet spot this stage of the game. >> do you think that comes at the expense of u.s. or not

>> not necessarily i mean, we were hoping that trump policies would result in higher growth in the u.s., which would help everybody but as it turns out, i think money is probably now retreating the u.s., taking some of the profits out of the u.s u.s. market is still doing as well as you pointed out. generally speaking, i think people are taking some profits and putting it into the overseas markets, including emerging markets. >> not so much russia these days, mark wanted to ask you about that the latest is vladimir putin ordering 755 members of u.s. diplomatic staff to leave moscow on reports that president trump will go forward with the new congressional sanctions on russia what do you do with russian stocks right now >> we're really sorry about that development because russia has a number of terrific companies that we would like to invest in. we're still investing in some companies that are not sanctioned but it's going to be

very difficult going forward if these sanctions continue rising like this. >> you did mention the u.s. dollar it's fallen 9% that's been a big part of the strong emerging market story this year. do you think this is a relative political bet that the politics in certain emerging markets are stabilizing? i guess i would exclude brazil and venezuela from that group, while the u.s. is looking more uncertain or is it about something else >> i think that's part of it but i think the emerging market currencies went down too far and given the growth rate i mentioned, it was just too much. and now they're rebounding from that low point also i think the u.s. dollar strength is something that trump does not want. and i think he's working, and his administration is working to weaken the u.s. dollar any way they can so i think the combination of these factors are really working to help emerging market currencies by the way, not all emerging

market occurrencurrencies are gg stronger there are some that are getting weaker generally speaking, the big ones are getting stronger. >> mark, a recent b of a survey said the biggest risk right now is a crash in the bond markets. not far behind was a tightening of credit in china how likely is that >> of course that is happening in china the government is getting quite alarmed with all of the extra kind of financial instruments that have risen as a result of their policies they want to liberalize the financial market but then it went too far now they're cracking down on some of these trusts and other so-called black money that's gone into the market also they're concerned about money going outside of china for projects which, you know, really didn't make much sense in money terms. as you know, waldorf astoria is all boarded up and the financier who bought that is not around. nobody can find where he is.

i think they're beginning to crack down on these kinds of efforts. >> and, finally, do you see north korea concerns being reflected in emerging market stocks if not, why not? and when might that begin to happen, if at all? >> you know, that's the amazing thing. i mean, i'm very frightened about the situation in north korea, but it doesn't seem to have affected the korean market very much, south korean market and i think the reason for that is under the new administration that we're seeing, mr. moon, there are a lot of reforms taking place, particularly in corporate governance the companies are getting their house in order in terms of the way they treat shareholders. that's helped the market it's a very puzzling situation this nuclear situation is very dangerous. >> mark mobius of templeton, always good to take your temperature on emerging markets and u.s. thanks for the time. >> thank you. >> president trump removing anthony scaramucci from role of

white house communications director only ten days into the job. for more on what impact that may have on the administration's agenda we're joined now by mark penn as well as enterprise institute fellow and cnbc contribu contributor. mark, do you think he will have a long-term impact on the white house? >> he has to while the dow is reaching record highs the presidency at the same time was reaching record lows. and i think i've never seen a disconnect between economic performance and the administration performance and the number one reason people cited was they didn't like the way the government was being administered they didn't like the tone. so i think it was essential that he shook up the white house staff, brought in some new people, stabilized it. he has to stop the leaks he has to really, i think, almost rebuild his administration from the ground up. >> jim, any sense that he will

be successful at trying to do that >> well, i mean, obviously it's never easy to fire people, obviously. that's sort of the easy part how will we know if this is working? well, i think you'll start seeing more people join this administration there's still a lot of empty jobs those need to be filled. if kelly is doing a good job they'll be filled with quality people i think you'll see less tweeting that would be a sign i think that would actually be a really big sign. we saw a lot more control on the part of the president, that kelly is sort of getting through to him those would be two very big signs and, of course, if republicans are able to make progress on tax reform it seems as if the president is a plus in that process, then that would be a huge success for john kelly. >> mark, what about this idea that everybody needs to report fo general kelly the chain of command sarah sanders in her news conference yesterday suggested that the entire white house

staff will do so jared, ivanka, steve bannon. if that does turn out to be true, how much does that improve, do you think, the productivity and the process of this white house in getting stuff done like tax reform >> i work very closely during the clinton years, even while we had impeachment, with the entire white house staff. and, look, that chain of command is absolutely essential. the white house is the most chaotic, most difficult, most aggressive place you can possibly imagine working in. it blows the socks off of any kind of corporate environment you've ever seen if you don't have a chief of staff who is strong, who can keep everybody in line, who can be the gatekeeper but is seen as fair, making sure that all perspectives get represented and heard, then you don't have an administration you have people planning their

leaks, sunday shows, tv appearances and that just wasn't working. it may have worked in the campaign but it doesn't work for governing. >> and is that possible with jared kushner and ivanka trump there? do they need to go back to manhattan? do we need to normalize this presidency so it sort of looks like a cookie cutter republican presidency where you don't have, you know, relatives hanging around, working on policy, their own routes of access that obviously has been poisonous. i think that would also be a very huge next step that would show that this thing is getting under control. >> you really think, jim, he's going to dismiss his daughter and son-in-law >> no. >> the two seem to be amongst the most single important people in the administration. >> probably not. which means this effort is going to be very difficult for this to be a true success, given the sort of general framework that the president has set up john kelly could help. but if the president is,

himself, fully on board in normalizing this presidency, seven months in, then it's not going to work. >> the president has been tweeting a lot more about the stock market people are charting his mentions of stocks and coming more frequently for a time the market was doing okay where is the line between drawing attention to a rising class of assets and then trying not to jinx yourself or have to pay the price down the line when things come down >> yeah. generally as a policy, we would not refer to the stock market. we would refer to jobs, employment, wages, inflation because, you know, the stock market, one day it's up. the next day it's down you put a lot of your capital in something that also is followed so closely by elites and not as much by the general voters look, we just came out of the field with the harvard harris poll, 60% see the economy as going in the right -- as

growing, a plurality, 41% see the economy on the right track that message is out there. the president should be capitalizing on it but, boy, i really worry when somebody points to the stock market you know you have a black monday and there goes everything you've been talking about for the last six months. >> markets will fluctuate, right? >> by the way, in case you thought he was going to control the presidential twitter account, general kelly, that is, president trump is out on twitter saying only the fake news media and trump enemies want me to stop using social media. 110 million people only way for me to get the truth out that will not be under general kelly's control for the moment. >> he sees that as his main communications tool, mark, doesn't he there's no real expectation he's going to stop tweeting, is there? >> i don't think he's going to stop tweeting. we asked people in the poll what would improve your image view of

the administration they said first, jobs, tax reform, infrastructure and then it was stop tweeting have more dinners with republican and democratic congressional officials and fifth shake up your white house staff. so i think the american people understand a pretty good formula. i don't think he will ever stop tweeting the question is whether he will ever get in line message wise so he can have a communications -- they lost the health care messaging. democrats clearly won that from day one. and that's because there isn't a unified message machine, as democrats have had. >> we'll see how many tweets between now and november are about fake news and russia versus taxes that ratio might be pretty telling. >> yeah. it may, indeed gentlemen, thanks to you both. >> thank you. sticking with the scaramucci story line, what happens to his hedge fund skybridge capital,

which was sold to chinese congl conglomerate hma leslie picker joins us now. >> at the time scaramucci stepped away from the firm the biggest wrinkle that sky bridge was sold to the chinese-backed hma, creating a delay here in the u.s. as regulators take a closer look and potentially in beijing both sides, however, say they are committed to the deal regardless of who scaramucci's employer is. the day after his infamous comments were revealed, recent developments with anthony scaramucci and his role within the administration have no impact on our business and/or the transaction with hna hna reiterated that today saying, quote, the news about anthony scaramucci leaving his

role as communications director has no impact on hna's commitment to closing the skybridge transaction as soon as possible skybridge is essentially a middleman taking money from wealthy individuals and plunking it into hedge funds. the industry has been under performing hedge funds and the market as a whole. worst case scenario for skybridge would be if the deal gets pulled, according to experts i spoke with if hna pulls out, employees could defect and investors will have no choice but to redeem without capital, fund-to-funds business is essentially nothing. guys >> we'll watch for that i guess. >> leslie, one of the key questions has been the valuation. substantial multiple to assets that typically has been higher than what we would see for a business like that didn't they? >> exactly and that's caused a lot of questions as to exactly why hna would pay that much.

were they trying to get access to this administration, to create more favorable terms with the chinese in order to, you know, do their business and push back on some of the president's criticisms of china? those are big questions. and with scaramucci no longer in that communications role, it's a big question as to whether hna is still interested in paying that price and for the acquisition all together. >> yeah. they wanted it just to curry favor with the u.s. government when we come back, shares of under armour are getting smmlaed after the company announced new job cuts and shrink its outlook for the year analysis on what to do with the stock, straight ahead. plus more on the dysfunction in washington and the road ahead for the trump agenda representative marsha blackburn is with us ...saving time when it matters most.

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we do business where you do business. ♪ ♪ did cut its full-year guidance what to do with that stock jim duffy as well as fbr capital market senior research analyst

siphon anderson. susan, was today a game changer in terms of the outlook for under armour and the resetting of expectations? >> yes i would say pretty low quality beat on sg & a also they pulled forward some revenue from third quarter into second quarter which made the second quarter top line growth look worse and to top it off they cut the 2017 guidance and issued a huge restructures charge for 2017 about 50% of their earnings growth on edge will come from adding nonrecurring items back to it. >> do you agree? are you taking it as negatively as susan is? >> the question is about the margin structure of the business and what it can be on a forward basis. taking a step back, looking to a 7.5 revenue runrate. it now looks like that will be

closer to 6 billion. planned for that 7.5 billion run rate, making adjustments to try to realign that. margins here in the mid single digits versus in the double digits a couple of years ago my question is, can they get that cost structure realigned with the reset revenue biz >> yeah. susan, there are some questions about margin and profitability if you look at the sales numbers, 9% revenue growth isn't too shabby right now and 9 to 11% is still better than the rest of the industry. isn't it >> yeah. i'm skeptical, though. flat revenue and third quarter and up to low to mid 20% growth in fourth quarter. with really no new products coming out in the third or fourth quarter i'm skeptical they'll be able to hit those numbers. >> jim, what went wrong here is this a management issue, an

execution issue? did they just get too big? what happened that lost the momentum for under armour? >> sure. a combination of factors no one is disputing this is a terrific brand, a brand that has tremendous potential and a lot of growth ahead of it. in the north american marketplace a year ago you had the bankruptcy sports authority, industry was growing at such a rate that people overshot from an inventory standpoint. effectively, the industry has oversupplied the market and we're digesting that right now this is a difficult period of execution that under armour is going through. a real test of the management team as to whether they can navigate this without compromising the equity in the brand going forward. >> susan, what is it of adidas,

beating the market right now while nike and under armour are going through restructuring? how much is it the competitive pressure from adidas >> correct they're obviously outperforming now. previously they had been underperforming several years. it allowed nike to continue to do well and also under armour to grow dramatically while they had weaker competitors that's just not the case now going forward, i think you have a much different athletic environment or athleisure environment where we've seen growth slow, product become commoditized i think it will be difficult to get back to that mid 20% revenue growth target they've had for several years. >> jim, what's the appropriate valuation? under armor currently trades around 46 times earnings, adidas at 34, nike in the mid 20s.

>> sure. i think to own under armour stock here you have to believe there's large improvement in the future enterprise value of the sales. under armour currently is at 1.7 times versus nike at closer to three times and adidas north of two times. what it comes down to is can under armour realign the cost structure to start driving more profitability in future periods? there's a leap of faith here that rational minds prevail and they make the adjustments to the cost structure to drive more earnings. >> susan, you take down your price target as well >> well, my price target is $14, which i think, you know, it's much lower than where the stocks are trading now. more down to come, 35 times next year's numbers still a very high valuation for a company that had negative earnings growth last year now minus mid teens earnings growth this year top line revenue profile has been more than cut in half.

>> well, we'll leave it there with the stock down almost 7%. thanks for joining the conversation jim duffy and susan anderson. >> thank you. >> thanks. uer>>nd armour weakest performer on s&p take a look at shares of bp today. oil giant reverses a year ago loss, continues to be affected by costs related to that gulf of mexico oil spill in 2010

let's head over to sue herera with a news update. >> good morning, everyone. vice president mike pence is in t bichlt tbilisi, georgia, where he met with the georgian prime minister. >> president of the yunited states of america, president donald trump sent me here with a simple message for you and for the people of georgia. we are with you. we stand with you. we are proud of our friendship. >> pakistan's lower house of parliament voting in a new prime minister, ruling party candidate

will replace deposed prime minister sharif who resigned friday after supreme court ruled he faced corruption charges. venezuelan opposition leader was removed from his home this morning, currently under house arrest by order of the venezuelan government. allies of the opposition leader says he was taken from his home as well while under house arrest lots happening in the world today. that's the news update this hour i'll send it back downtown to you guys sa sara >> sue, thank you. when we come back, pushing forward tax reform with health care on hold, can it be done we'll talk about the trump agenda with representative marsha blackburn what you're trying to say is from way downtown? i am still learning. i can see that.

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welcome back to "squawk on the street." coming off another month of gains. best month for stocks. july, that was, since back in february let's get back to bob pisani.

>> not 22,000 but still nice gains. when you have the two biggest sectors leading you're going to get a move up no matter what's going on banks are doing better and tech, which is the leader, doing well we're seeing a little bit of flatness on the part of materials. transports, again, are not doing much at all. this sort of lagging again this is one of the things i've noticed in the last couple of days couple of strange divergences going on here. dow industrials up 3%. transports down 4% rs that's a little strange couple of things going on here first, the etf for this, we had a huge move up in the iyts in the november elections after the trump play on infrastructure that's been moderating a little bit recently second, there are opportunities elsewhere in the industrial space. most of the transports set for the airlines, they're basically u.s. plays look at the big global industrial players caterpillar and boeing, for

example, they've been knocking the cover off the ball because they're overseas where there's opportunities and better growth in those particular areas. finally, individual sector issues with transports so, for example, airlines, that capacity, margin issues. margins at cyclical highs. weaker pricing poor retail sales haven't helped them that much you see what's going on with the railroads between autos being poor and energy being poor, that's been a major problem. look today at what the railroads are doing as ford, gm, chrysler all reported sales below expectations all down 5, 6, 7% in the last three, four weeks. another strange divergence i've noticed. have you looked at the markets the dow is up 245 points the s&p down four points how is that possible it happens because of the way the indices are weighted when you get a few dow opponents

that blow up on you. i'm talking about, for example, boeing, the market gets a little weird. s&p 500 over the dow industrials. boeing is up about $10 in four days or something like that. that's almost 70 points in the dow. a quarter of the dow's 240 or 50-point gain is due to one particular stock i could throw in some others there but i think you get the point, when you're dealing with a very small sample size like 30 stocks dow not quite 22,000. >> setting up to be a busy period for congress when they come back from august recess joining us here at post nine to talk about that, marsha blackburn from tennessee is here at post nine thanks for coming. >> good to be here thank you. >> people are trying to get an idea in their head of what this is going to look like when you go back to work. what will be the lead, do you think? >> we want the senate to show

some spine and come up with something on health care they need to do their job. they've made a commitment. they need to get into conference with the house on a bill and the house is going to keep working on our agenda. we've already passed over 400 bills. we are going at it aggressively. i think it's time for the senate to kind of pick up that pace president trump is very committed to health care, to tax reform, to getting the economy going again. and, as you can see from the markets and everything that is out there, we're moving in the right direction with the economy. so, government needs to get its act together and move forward also skinny up government. >> are you sensing a big showdown with regard to the debt ceiling in september and if that gets messy, what does that do to a timeline for tax reform >> i fully believe you'll see tax reform before the end of the year the debt ceiling, i think that

you will see the white house and the administration work with the house and the senate to find a way to meet the obligations that are there. get a budget passed. finish with health care and do tax reform if we do that this year, i think that things are going to be in pretty good shape. >> infighting inside the administration and controversy scaramucci, priebus, all in the span of one week does that hold back the agenda >> what it does is crowd out the amount of time that people are talking -- and what they're talking about. it's the drama and what we have from our constituents, they tell us they want to see action get things done. and, quite frankly, they're not paying that much attention to the drama. they're not paying that much attention to russia. they're paying attention to who has a job and what their paycheck is. and they want that done. they're looking at the cost of health care. they're looking at the fact that

they have lost access to health insurance. and those are the things that they come to meetings and come into our office and talk about. >> congresswoman i'm surprised to hear you, though, say you want the senate to continue to focus on health care what the president has also been saying in tweets the senate majority leader indicated last week when he got the thumbs down from john mccain that they were moving on and so this continued focus solve the agenda >> the senate ought to be able to walk and chew gum at the same time. >> they can do that. they took a lot of shots at it. >> they like to work in gangs of seven, gangs of eight. let's be a gang of 51 and get something done for the good of the american people. last week on the telephone town hall i did, 70% of the people felt we should pass a budget and support the president's aswrenda 80% wanted the senate to make a

decision on health care. whether they were for the affordable care act or not they said get the job done they made a promise and said they were going to do this and they want them to deliver. and they want certainty. they want to put some certainty around what is going to happen in the health care arena are we really going to move back to patient centers are we really going to let individuals make those decisions for themselves or are we going to continue this flopping back and forth between government health care and government decisions and the talk and the rhetoric? they're tired of it. >> you'll have to get some democrats, then, on board or the field with more moderate republicans to get anything done. >> we continue to ask the democrats to work with us. we had a 27-hour hearing and markup in our committee on the health care bill before we sent it out of the house to the

senate and we repeatedly asked the democrats to work with us on this agenda. >> you've done a lot of work in technology. >> yes. >> we talk a lot about amazon. their scale, their size, their power. do you see them coming under anti-trust in the years ahead? >> we're beginning to hear a lot from individuals in the marketplace and innovators about what they term the tech monopolies, you know, google and amazon and netflix i'm looking forward to the super hearing we're going to have on september 7th. chairman walden and i bringing in the heads of your big edge providers and isps and talking about the issue of net neutrality, how we keep a free and open internet and how consumers have the ability to protect, as i call it, their virtual use, presence and privacy online it's a discussion we need to be

having and make certain that people understand what that interface is. >> but when a company -- does it matter how large a company gets or how large their exposure is to a consumer if what they end up providing is sort of disinflationary? lower prices >> these are all things we need to have as part of our discussion on the 7th. we need to look at what the net nultity rules that the fcc -- when the fcc went in and stole jurisdiction from the ftc and then said we're going to handle privacy. we need to look at that. we need to look at that title to reclassification and then talk about the free and open internet principles no blocking, no throttling talk about latency and buffering. and get to these issues that really make a difference to consumers. if we're going to talk about net neutrality do we need to talk about search neutrality?

so that when someone enters something and searches it that it is, indeed, based on the algorithm of who is searching. >> sounds like we're going to talk in september. >> we are talking september 7th and looking forward to it. >> please come back then. >> absolutely. will do. >> thank you so much, congresswoman blackburn. >> when we come back, apple reporting after the bell, as you probably know. focus for investormay t s nobe on this quarter's results. what to look for and why the dow back up 71 your insurance company won't replace the full value of your totaled new car.

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apple earning are out. is fed looking toward the next product. apple headquarters in cupertino with more of what we should be watching morning, josh. >> morning, sara apple expected to report 1.57.

boeing a big short shocker in this report. investors paying much closer attention to that 2.4 guide. looking for eps of 1.81 on revenue of 49.2 billion. iphone shipments that disappoints, though investors are going to want to know what that guide possibly says about potential delays am that new flagship iphone expected in the fall of course, we've already seen a number of analysts come to the conclusion that, yes, that new iphone will be delayed right now, investors don't seem too worried about that in fact, many of those same analysts aren't too concerned either, saying a shift in production for a month or two wouldn't be too big of a deal. apple stock already up 30% so far this year. bernstein says he he isn't too concerned about a delay either but does say there is a caveat here it would be a problem if iphone

8 availability is pushed out past early november. switches away from the iphone potentially put those fiscal 2018 numbers at risk you would expect apple ceo tim cook to get a lot of to get a lot of questions about that on the conference call after the bell. >> thank you, very much. now let's send it over to jon fortt and get a look at what is coming up on "squawk alley." >> taking the baton from josh and dig even further into what to expect from apple earnings. how much are component costs and inventories go to play into what plas tors are looking for from ape hey start to look ahead to the iphone launch for the holiday season that's coming up on "squawk alley. shopping. because sure, we want to use this to call the people we love- - like our directors. but mostly, to get the entertainment we love. maaaaark ! ! ! switch to at&t for the only unlimited plan that gives you 60

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for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance. let's get to the cme group in chicago with rick santelli. hi again, rick. >> hi, sarah good morning good morning to my guest andy brenner. thank you for taking the time, andy >> rick, always a pleasure good to see you, buddy >> you know, let's go back in the way back machine december, 1989 38,915, then the loss decades began, the 90s, part of the

teams. where is the stock market? under 20,000 points less than it was back then. do we want to talk bubbles, equity markets, central banks? how is all of the lessons to japan to be put forth considering the entire globe now has had a decade of growth sinc the markets? >> the fed and ecb, boe and as well as the boj continue to pump money in left and right. of course, the fed stopped pumping money in they're going to start to reverse it they're going to reverse it at such a slow rate that we really wonder what is going to happen you know what? central banks can not manipulate things forever they've been doing it since 2010, 2012, you know, we reversed from a low in equities of march of '09. we wonder how is the market going to react and we just don't think it's

going to react well. you have the draggy speech comi draggy speech coming up. you have the fed announcement on september 20th about there, you know, reducing the balance sheet. then you have the german election in september 24th >> and market is looking pretty good market is looking pretty good. it never ceases to amaze me. let's look at the journal today. they have an article, ecb takes hard line on reform proposal article goes on to say that ecb technically could find any of the southern economy that's don't get their economies in order up to .1% of their gdp i personally don't see that happening. i think brexit taught us that the edicts from brussels don't fall on receptive ears how do you think this plays out in the southern economies and mario draghi's proposed exit >> you know, the ecb or the eu should recognize they're in a

period of calm right now if they start this up, they're going to have a lot of turmoil there is no way that portugal, spain, italy, and certainly not greece which owes -- which the ecb or the eu has all their debt up you know, there's no way they're going to find these countries. these are just idle threats. not going to happen. >> now if you were an investor and we're almost out of time, if you were an investor watching the european markets rocking and rolling, the currency rocking and rolling, would you challenge it you know, to america it reminds me of 2011 in our stock market many people didn't like the foundation of the equity run but still remiss to say to sell. your final thought >> rick, it's just amazing to me that the germans can issue a two year today and minus 69 basis points and have two times over subscribe. the european economies right now are crazy. and the ecb with negative rates just doesn't make sense. and it's going to hurt them. so you know what i

don't know where we're going but i don't like where -- what it looks like to me right now. >> there's a big lump under the rug that everybody is ignoring i don't know how it will turn out. for now, it's party time in europe thank you, andy brenner. sarah, back to you. >> europe surging again today, rick thank you. when we come back, the bull case for apple e mpge ready to report results today. the stock is a bit higher. much more ahead. don't go away. they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.

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welcome back to "squawk on the street." banks poeflting the biggest gains and pushing the financial sector higher. so keep an eye on those shares in a does it for this hour of squawk on the street let's send it back down ton to "squawk alley. >> it is 8:00 a.m. in san francisco. it's 11:00 a.m. on wall street "squawk alley" is live ♪