all her websites, fueling speculation she may be getting ready to release an album. >> i thought the thing was broken when i was on twitter. >> you saw this? >> yeah. i follow her on twitter. i saw a periscope thing. >> how many people do you follow >> i follow a lot of people. you follow none. >> i follow 100 and try to pair that down when i get above t make sure you see us tomorrow. "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange david faber is off today coming off three straight losses benchmark yield back home 2.20

oil inventories tonight. the market, futures higher as stocks break their losing streak glimmers of a plan macy's adds a top executive and announces a further restructuring, how the new ceo is talking about those changes. forecast in decline in teen anl u usage. stocks are poised to open higher playing a big role politico, jim, says the big six as they call them, has a lot more than they had in july when it was just six paragraphs. >> i thought mcconnell saying there is going to be a debt ceiling not an issue was really important. and i think that can be an underpinning for a potential rally, given the fact that until he said that, i think that it was just well cast there may be organizational principles here. i'm not saying that i think anything can get done necessarily on taxes i'm also saying we're not going

to suffer from a debt downgrader. >> you believe mcconnell >> i do. i think mcconnell is trustworthy on this issue. i really do. i know i'm out there on that. >> politico at the same time as a piece saying on the debt ceiling, two sides are basically talking past one another there is no strategy to get that through in such a short amount of time. >> i think that mcconnell should -- he did not give any hedge. >> yeah. >> i thought that was very valued he didn't give a hedge for the supreme court justice. and he got that approved he's hedged when he has felt things aren't so good. i regard that as very positive. >> as for the tax package, politico spells it out this way. capping the deduction on mortgage interest. scrapping local and state tax deductions there's other things that they're quietly talking about, taxes 401ks up front. >> i don't think any of that is going to happen.

toll brothers reported on 800,000 homes sold in this country. used to be much higher mortgage reduction is sacred in this country tax 401k tax water. come on. >> tough sells. >> tough sells and state and local, there are enough states and locals that have republicans that are not in favor of that. now look, i do think that the corporate side is real if they're going to do that with corporate and personal it's going to fail like obama's did. >> on corporate the numbers they're throwing around are 22 to 25. but with some -- with a one-time repatriation deal. >> that's the kicker a lot of stocks i don't like right now but i would really like the ones you really love are faang. i guess we have to say c-faang because cisco is beneficiary silent c. >> speaker ryan was on last

night. >> how is he doing >> he hinted -- he basically said getting tax reform through might be easier than health care. >> this is something we have to make good on that's point number one. point number two, i believe it will be far easier for us to do tax reform than it was, say, for health care reform. >> because, in this case, they're not as beholden to senate rules. >> also, i don't know why the president doesn't just say -- tax reform is good for us. we all get more money. i do not understand the whole dialogue tax reform -- health care is the hardest thing in the world they picked the hardest thing in the world to start tax reform where it means tax cuts we all favor tax cuts, particularly when it comes to election time. now i got caught up with the speaker ryan last night because there was a hit on odell beckham that i watched -- i wastra

transfixed by the hit. like wow this is the kind of thing that takes your breath away tax reform, i always thought it was so easy. the president is off message tonight. he will be freelancing he is in a campaign rally. >> in phoenix, yes. >> campaign rally, campaigning for what okay that's all right that's all right he's campaigning but last night he was presidential someone used that earlier. they hesitated but he was. if he says we're going to lower the taxes for the middle class, i promise you that would be fabulous we would come in tomorrow and say hey, you know what something could happen there. >> we'll talk a lot about it going into september and october, for sure. macy's announcing management shakeup in the wake of slumping sales. hal lawton was tapped as incoming president here is what the ceo told our courtney reagan about the

incoming president earlier on squawk. >> a great choice for macy's, intersection of retail and technology and what he did, what he learned in terms of his retail experience, how he applied that to a technology company and coming back to a retailer, we think he will be able to scale change much faster. >> says the dividend is safe jim? >> great interview by courtney point blank, it was terrific i've been going over what ginnette said in the fourth quarter -- i'm sorry, in the conference call, a little disappointing. remember the stock just got crushed, versus what he's saying with courtney. i felt better. he said really there's not much going on with real estate in the comps call that was dreadful. he it say things are happening i really like that he talked about the fourth quarter being promotional. that is christmas. he did not say that this time. talked about loyalty i like the fact that they have a technologist they've lacked that.

at jet.com in that conference call, mark laurie was viewed as being part of the team this is very important for macy's and that dividend comment, i did a breakup analysis of macy's and you're getting the company for nothing. i did say that the cash flow is there. if it's a really promotional fourth quarter the cash flow is not there. >> for viewers who are wrestles with whether or not to liberal here, your level of conviction is -- >> it's' good trade into christmas. >> into christmas? >> yes it is a good trade that's not taking my life into hands. it's not footlocker. >> by the way our producer shannon stevens points out now officially the biggest s&p loser of the year. down 55. >> sometimes you're on conference call and you're saying, well, this can't get worse as the conference call

goes on and it keeps getting worse, keeps getting worse obviously nike yesterday kevin plank, please come on. footlocker and really kind of a -- there was a real undercurrent here that something is happening in this business. kohl's took nike and under armour that was a big decision by those sporting goods companies to go to kohl's. i was very much surprised after dick's, which was a horrendous conference call, that anyone thought that footlocker could be out there. but footlocker was terrible. i mean, when they said that double digit divide for basketball, did people just stop paying for big sneakers? >> as you said yesterday that's where the money is. >> i look at footlocker and l brands, which has thousands of stores and thousand -- bed, bath

and bodyworks, victoria's secret they're out of gas i like what gennette said this morning. i really do. >> your point on biggest s&p losers for the month, not the year, footlocker, then l brands, then mylan. >> horrendous number down today. chesapeake is natural gas places, apache, my travel trust owns it's a disaster. they have not explained this at all and they don't seem to be doing anything a quarter that should have been a complete home run and it wasn't you lose some, you lose some. >> moving on to facebook this morning apparently, according to a survey, we'll see a decline on teen users in the u.s. this year, according to e marketer. number of users between 12 and 17 years old will drop 3% to

13.5 million as they migrate to snap chat and instagram, first time e-marketer has predicted decline in teen usage for any group. what else is new my teen is no longer on facebook i'm on facebook. >> i'm with the viewers. i love a good survey i surveyed the nfl tom brady looks good patriots look good that's a breakout survey and falcons look good. what the hell. instagram is killing t sn iningt and snap, by the way, look at that stock you are what your record says you are, bill parcells i feel strongly this whole idea that face aboutbook is a loser -- z-man has basically given you this ring. i'm sure he's out there. he's the one that -- no way he

didn't see this coming they're annihilating snap. come on. we all have our own anecdotal versions i bet there were more instagram pictures of people watching the eclipse than there were all year for snap what good does it do the idea is that it goes away really quickly what am i supposed to be selling? captain morgan no, i'm not working. under 21. >> snap, our parent company owns a stake. cnn watching their own snap show. >> espn has a great snap show. all of these can work. instagram -- it wasn't supposed to happen. instagram was not supposed to just say we're going to crush snap by the way, nike wasn't supposed to say we're going to crush under armour this is the awakening of giants.

walmart, we're not going to take it anymore if you're going to be a supplier to us, we don't want to see you n amazon typically what comes down, by the way, i switched to azure microsoft. that was smart walmart, nike and instagram, these companies -- facebook. these are companies that are competitors like you wouldn't believe. people don't understand that the ceos are viciously competitive they do not just sit back and say, well, man, we were getting smoked it's not like that. >> what's taken them so long you say this has all been in the works? >> yes gross margins were unbelievable. people have written off -- yesterday facebook was down $2 at one point i was reading the web and it said why facebook is finished and then it finished up. why facebook is back sheryl sandberg, does she say i'm done here? and then the next day, i'm back?

a lot of people consider -- who changes that quickly >> we're in a world where absolutes sell, jim. >> amazon does seem to be in a down trend there are a lot of technicians right now. how many time s has it been it then your wife is pressing the tide button. then you learn you like it more. >> everything is existential. >> it is and those devices. >> when we come back, ceo of adp was with jim on "mad money" talking about his proxy fight. you'll hear what carlos rodriguez said last night on "mad." s&p and dow down the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages.

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adp ceo carlos rodriguez speaking in depth about their proxima proxy fight. last night on "mad money" he told jim about a phone conversation he had with ackman. take a listen to this. >> i had a conversation with

bill right before, you know, we, i guess, agreed to disagree that he was going to launch a proxy contest. i asked him, bill, i know you have a vauks that's getting in the way and why you need an extension of this deadline but when you get back from vacation, why can't we meet then he said i'm afraid that's not going to work. that's not the way my business works. i have to have the leverage over the threat of launching a proxy contest in order to get you guys to agree to the things that i want to do with the company. >> all right so, on the one hand there's this fight about what to do with the company. >> right. >> then there's just the mechanics of how they're relating to each other, jim. >> yeah. i remember after i -- to be a little personal, after i got married my wife wanted to go on a honeymoon. i said are you kidding me? it's earning season. get serious. i felt the honeymoon was -- maybe his vacation is more involved in mine my wife said absolutely i'm sorry, i know it's the week that

more than one-third of the s&p reports but clearly this was a well-planned vacation. maybe he should have gotten airline insurance. it was galling it was galling one thing i said at one point this man's stock is up 2% twice in the s&p sorry you have to defend your life that said, ackman did make some points i felt there are two issues here one which i put under the personal affront, which is that this man, rodriguez, is a serious guy and you should approach him seriously on the other hand there were actual issues about how to raise the margins. ackman, if he had absolutely said -- this was my view if he had started out by saying, you know what, look, we have to sit down let me show you what i have. rodriguez said there were many mistakes, including things involving what ackman called concealing, which is a very hard charge i think it would have been

better had it been done, say the way nelson is doing with procter. obviously they have their own views. listen, we want you out. it was kind of from left field i totally understand why he would be disconcerted. the fact is that the board said no the presentation had some issues, though. >> what do you think happens to ackman's ideas, here on out? >> i think many of them are being done this on-premises issue, i thought, was the most serious. they have not adopted the cloud. i think they're making that move they seem a little -- they're heavy. ackman is calling it a tech company. they regard it as a service company. ultimate work service that is actually a tech company but ackman made points i think it's not going to be enough given the fact of how well the stock has done. >> what bearing does all of this

have >> saying that the company is crumby wow, that's not exactly what you want and he does say that there's so many problems at the company that you do start feeling like, wow, why do i own this, especially if ackman can't -- ackman, okay, let's see. the value didn't work that well. that was not a great thing herbalife was not -- he needs a vacation o he took one! >> another general growth or another vacation. >> i hope my wife's not watching she's probably thinking why did we wait six months for that honeymoon? but it was earnings season for heaven's sake. the day she wanted to go away. are you kidding me dow stock. caterpillar, 3m. can you imagine? speaking about how good the 3m quarter. it would have been -- >> why your whole life together. >> it would have been ill advised, yes

it would have been ill advised but ackman is right, the timing for his -- maybe it was the vacation to end all vacations. i don't know we went to prague. >> cramer's mad dash got some green arrows this morning. ronoh really?g's going on at schwab. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

opening bell in six minutes. first let's get to cramer's mad

dash. >> coti conference call. maybe people have stopped with perfume and makeup i don't know because you see, estee lauder had unbelievable numbers these guys are minus 5 they bought unique they should have bought clinique, doing much better. this is a tale of two cities estee lauder shows you how to be a juggernaut unbelievable term. i feel better about procter if they sold it to coty this is a terrible quarter just terrible. i don't understand the conference call. but as is often the case they think they had a great quarter. >> i was going to say, you called it a tale of two cities but the divergence between el and coty here -- >> it's extraordinary. fiscal they're calling it

transformational transformational to what this is a clinic about how they have to rethink. this company once -- there was an avon tie-up geez they're not so good estee lauder is running away from the pack. >> but hard to draw broad distinctions and consumer's appetite. >> it is hard. macy's, more discounting can in area ulta has been a tough sell china sales were off the charts for estee lauder. >> makeup is huge in china. >> instagram is that dead now, face book dead of the. >> opening bell in four minutes. whoooo.

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russell. but there are some, jim, who says volume has been light hard to draw fat lines this week >> yeah. like all the companies that are reporting, people are shocked that they're good, dsw toll brothers reports, i think, a very good quarter and people sell the stock down. there's a lot of trading that is awry here. i think people ought to just cool it. there's not that much happening. stop trading on things where there's nothing to trade on. medtronic, i didn't think was nearly as bad as the stock is indicating toll, i didn't think was nearly as bad coty, i thought, was worse everybody seems to want to trade on nothing and it's so thin there's just not a lot of players. please remember that big accounts can move stocks a large fund could easily move

along almost stock. >> volume has been very light. way below the averages some expected to be quiet. yelen speaks friday. >> that does matter. i look what's going on in the medical device and drugs they're all drifting lower i think there's some value there, especially because the dollar has really given up the ghost. everyone keeps pronouncing the dollar is about to make a major comeback have you noticed that's been wrong over and over and over again? >> there's the opening bell. big board pga champion billy horschel, celebrating the northern trust over at the nasdaq, stainless steel company outokumpu. >> stainless steel in aerospace. think about allegheny technol y technologies these stocks have been drifting down

interesting. >> northrope winning this. >> that was big. >> icbm. >> any of us that live next door to those nike missile silo, you're always fearful this is what we're going back to these are big contracts and people should understand that the defense is making another move here. really is. >> year to date change now 52%, boeing. >> people hated it going in, thought that the dreamliner wasn't making money. it's making very good money. perhaps because of price wars in domestic airlines maybe the numbers wouldn't come through. they completely forgot the obama deal with iran, you may not have thought was good but boeing, it's fabulous for them. >> looking at the leading dow components, apple is up this

morning. shortening time delivery on ear pods. >> i remember when they first came out people said wow, i really want the cord what, so you can be on a treadmill and have it strangle you? wow, i really want the cord. yeah, that's a great feature such a natural those who have tried them it's like where have they been all our lives? there's some chatter about chrome i'm sorry, android versus apple, people going back and forth and trying to make something of those. that's another example you're trading on nothing. you're trading on nothing. nothing is happening don't make it so there is. sales force is something sales force matters and sales force could help cloud stocks. adobe is coming back i guess that vm, a big upgrade today.

a concern that amazon web services were take -- deutsche bank said this worry is no longer a real concern. bravo is on fire such a strong business the data center is on fire another data center company, cyrus one yesterday. you can't find space in a data center it's that hot of a business. anyone in the data center -- intel is in the data center. whatever intel does isnever enough to the stock market intel's new chip was good, big battle between amd i am saying that data center cloud, there are things that are happening. you can trade off of those. >> a lot of it is sentiment.

>> yes. >> it reminds me of what was written yesterday. i'm not encouraged i'm concerned about conflict both external and internal leading to impaired government efficiency. >> we've had impaired government efficiency since obama one and it has been fabulous for the market every hedge fund no hedge fund manager i know comes out and says i'm pounding the table. it's a great opportunity that's what he should have said. i'm looking for delivery in alpha who deliver ace positive message. there have been positive things. bill miller with amazon. remember he came out and said i like amazon? i someone just said he liked your stock hello, did someone say positive things

>> waldorf is still in business. >> juim, freeport. >> vhp and freeport. congratulations on getting vhp to shed those oil stock. freeport being hot is positive for so many other stocks make a case for caterpillar, cummins, for honeywell you could make a case for united technologies. >> a lot of these names are up. >> they should be. freeport was supposed to be dead it was supposed to be dead. >> he three-year highs >> freeport is smoking brought the hand back to life. do you think oil could ever go up in our lifetime >> people are wondering the relationship between oil and, say, gold, for instance.

>> you're right. >> what happens if oil continues to trend lower >> a deal we don't talk about enough enterprise energy transfer partners, etp. they did a really, really big 50 million unit thing it has crushed the whole sector. that is key because those companies need that money in order to be able to expand so watch that. it's not just oil. it's the pipelines the president hasn't talked pipeline lately. >> maybe tonight. >> yeah. >> tesla the journal has a story about the bonds they sold the other day down 2%. journal characterizes it as ambivalence toward the company. >> i saw that and thought guys they're not treasuries. >> yielding 5.3. way above. >> right

ilan musk. there you go ilan musk, a titan full faith in that man. >> ge is down five straight. now 9 of 11. >> that indicates i'm an idiot there you go no, i'm early. sorry i'm early mr. flannery he has his work cut out for him. >> you exited wells a couple of weeks ago. >> yes, i did. turned out to be a good price. ge, i'm stuck. yeah you know, i don't know if you saw the movie "passive glory." >> one of the great films of all time. >> trapped like rats i feel like i'm trapped like a rat in general electric but mr. flannery could issue, could come out with a plan that's better than uber. presuming jeff gets the job. >> as ricoh says they're close. >> still going with that, huh? >> we'll see

the board votes in the next couple of weeks. >> overall, though, jim, in terms of leaders, financials and semis, you would probably take that. >> financials have been horrendous they're trading on actually there's no news in the financials europe being stronger kind of always helps the case. interest rates are -- every single little second, 64th of interest rate is setting off the algos. i now have cascaded myself on three straight that's okay. i think humility is positive. >> 1-on jpm. >> wrong. >> what were the other two >> look, i think general electric with the yield is good. i said that at three and three and a half and they didn't raise the yield dividend stock went lower let's see what mr. flannery says

i think it's going to be a whole new ge and have big costs taken out. those who have met flannery always say the same thing. incredibly funny, nice he will cut out everything that needs to be cut out. i think maybe even the celtics tickets, if they really belong to ge. >> they are in boston, correct >> yeah. maybe moves back boeing moved to chicago. that turned out to be a good thing. who knows. >> mcdonald's. >> yes chicago seems to be a good place to have your company headquartered. dow is up 103. let's get to bob pisani on the floor. >> good morning, carl. happy tuesday, everybody very strong open 5-1, advancing to declining stocks seem to have an appetite for risk on again. forget about utilities, telecom. forget about the defensive stuff here retail is back a little bit. we had news on dsw that's strong.

macy's, management changes that's helping all the retailers are up semi conductors, leaderships group for most of the year that's strong. banks have not been. there have been attempts of that generally not. it is today. and materials are doing really well right now here. we've been talking about this for a while. copper yesterday we talked about it near a three-year high. it's very important. global economic expansion is being reflected in the earnings reports. v bhp announced their profit was higher and still shy of the estimates overall. copper miner based in london, antofagasta. they had earnings that were also very strong. spilling over into europe to all the miners rio tinto. we've been making a lot about

selling their sha lchell operats oil is half what it was when they bought it so no idea what they're going to sell it for. it's already been quite a bit of a problem here the chairman there has already said it was a mistake in hindsight, spending that $20 billion. some of the etfs what people have seen here is a sudden increase in the last few months in volume you can buy copper and aluminum as an etf. it is the etf. it owns metals it does not own the stocks but futures contracts in metals. increase in the volume in the last couple of months as the global economic has gathered steam. global gdp in the 3.5% range

now. that's what's powered the etfs forward. there are different ways to play them if you want to own the stocks pick those global stocks have done really well. there's the etf. more u.s. based, the xme, the orange one on the bottom, have not done as well because, well, steel stocks haven't done as well in the united states in general. you have to be careful just because it has the word mining in it, don't necessarily pick that one be very careful. comment on toll brothers beat on the bottom line but not on the top line they're trading down a little bit. what's going on here, i think, lot of debate about peak housing right now. bob toll and doug yearly were quite chatty on the conference note and took aim right at whether or not we're at peak housing. bob toll said the industry has

room to run. they're going at this we're not at peak housing, guys. single family housing well below the 50-year industry average they are 20, 25% ownership is below historic norms. indeed, it is. a lot of people arguing we're not going to go back to history he can norms that's an intellectual question and rates in unemployment are low. he argues that the upscale market is strong, that's in the wheelhouse of toll brothers. this argument about peak housing, i don't think, will go away any time soon carl, doug yearly and bob toll were quite chatty on the conference notes, arguing about housing. still a lot of room to run back to you. >> bob pisani, thank you very much these guys know housing better than stock market and it bugs the heck out of me when people doubt them. green arrows in the energy

complex as well. let's get to jackie deangelis. >> bouncing around in this range of 47 to $48 a barrel as we await the api in inventory data later tonight. according to plats, it's for a drop of less than 1 million for crude and a little more for gasoline reports have been coming in all over the place this summer traders are anticipating the possibility of a surprise. the trend has been that crude draws and gasoline where the surprise comes meantime, crude rolling after the close, october becoming the front month that could cause volatility. yesterday it certainly did in the session as well. if we go lower from here the expectation, as we stay over 45, at least until labor day, then the market would re-evaluate and readjust there were reports last night that opec compliance is still

fairly decent. supportive factor as well. >> jackie, former office depot ceo steve odland ten-year hovering around 2.20. back in a minute

♪ some developments regarding the electric car market. ford has signed a memorandum of understanding with china to build electric vehicles in that country. here in the u.s. volvo is rolling out crossovers and suvs,

transitioning to an all-electric lineup by 2020 when they made that announcement we asked if it was a seminole moment in the car market. >> phil lebeau had a great analysis today what happened with volvo when the chinese bought it versus when ford sold it just remarkable and a comment about the chinese government they want more sales overseas. imagine like truch smp saying, telling any of these companies, the communist party is not a democracy. they basically tell you here is what's going on. we are a democracy people lose sight of the fact that the chinese, who in my regard are the least fair traders in the world when you hear that comment you think about what dan damico talks about, former ceo of newport. you're playing with people who do not play they just dominate

they don't play fair. >> you are sympathetic to the view that we're reaching a point where either you change how you deal with china or they become the dominant player? >> yes in health care if that chinese communist government decides to cure something, they have these hospitals with 500,000 people per hospital, national epidemic of respiratory diseases. if they decide to go to drug and health care we could be hurting in a leadership area i like the chinese i'm not saying anything about the chinese people chinese government is so powerful they do not play fair mr. bannon has moved on but he was spot on. >> i don't think we've heard the last of him. >> no. i didn't look at breitbart today. i look at espn a lot because of

that hit. >> definitely worth the watch. >> do you look at it every morning? >> at least once. >> shoot okay i'll change my whole -- the way i do business. >> we will get stock trading with jim in a minute we're back in a minute thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

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time for cramer and stock trading. >> micron, mu. they could not break out, micron being flash. on the cisco call, d-ram prices going up hp doing so well they're worried about d-ram prices l lamb makes the products for it you watch those two. if they break out the 52-week highs those are the two that will trigger giant rallies in

tech including short squeezes that's what you want to watch. >> you're seeing tight inventory, rising prices being ratified >> absolutely. and at the wrong time. august is supposed to be a bad month for these guys historically, europe is weaker these are two to watch if they break out and join cloud players like adobe and sales force, you're going to have cloud up and you're going to have hardware up that makes for a technology rally that's a lot bigger than -- >> micron. >> so important. people don't know how symbolic micron can be. and lam is such a great company. they sell -- micron is seven times earnings, lam is 11 times earnings look out. >> on "mad money" tonight. >> benioff hasn't been heard of

from a long time meaning he has been quiet. i think it will be a good court. george barrett, haven't seen him on tv, cardinal health they disappointed twice. it is so inexpensive, it is begging, at least, to be looked at. >> got a lot to watch. >> i'm going to cancel my vacation. >> are you >> i don't want -- >> everybody is doing it. >> i want everyone to like me more i'm sorry about that honeymoon but, you know, it was okay we waited seven months. >> it worked out. >> one of those periods there were no earnings whatsoever. i thought that was the right thing to do. the wife didn't know the difference but it was important to me. >> we'll see you tonight "mad money" 6:00 pm eastern time. dow is up 110. ed conard when we come back, get his take on the push for tax reform and whether or not there is consensus building around a package. ♪

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good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen. david faber is off today dow is up 108. s&p up almost more than 13 oil trying to play along here. ten-year around 220. >> our road map starts with market the second best day for stocks in august, following a turbulent two weeks. tech breaking out, helping to lead this rally. what's pushing stocks higher. >> common ground lawmakers have made strides shaping its tax plan we have details. shakeup at macy's continues, hiring an executive from ebay as part of its management revamp. we'll hear from macy's ceo straight ahead. first up this morning, markets are in the green, following yesterday's mixed session. nasdaq looking to break past a three-day losing streak with all the major averages looking to have a better day since october

2016 morning, gentlemen good to see you. >> good morning. >> david, does today mark a turn in sentiment or can we draw many conclusions given the light volume this week >> i think it's a good point it is a period of low participation. not that much volume but i do think the bigger picture is still intact. we've got a pretty healthy environment for stocks earnings that are fwroeing nicely well supported by banks that are continuing to ease lending standards. earnings revisions have been the best in 60 years you've got a fed that gradually is raising interest rates but not aggressively and stocks still look attractive relative to bonds i think this is an environment where stocks continue to grind higher. >> jeff, do you agree? how do you answer those who say look, we're in a seasonally weak period, geopolitics have treated us roughly the past few months we don't know how policy will shape up in the final quarter of

the year or q1 of next year. is there a reason to remain cautious >> i think you asked if this is a shift in sentiment i think it's a continuation of sentiment, if anything low volatility, grind higher kind of year this hasn't even been the biggest draw-down episode of this year and it isn't even 3% i think this is a continuation of drawing fundamentals we see at the margin there's certainly been some erosion, i think, in the confidence of the economic policies coming forward. i think that also maybe balances the capability for what we do experience to be a surprise. some room, i think, for positive surprises. >> david, when you rattled off all your reasons for optimism and buying the market, i did not hear you mention tax reform. interestingly today, we come into a politico piece saying that there is more agreement on some of the principles behind tax reform from republicans and

trump after house gop speaker paul ryan last night told cnn this is going to be easier to do than health care do you think dow not think that's part of the trade here? >> i think that would be an upside surprise. in our view, there's a slootly better than 50% chance we do get tax reform, including corporate tax reform that could be a nice positive. our numbers, corporate tax reform could boost earnings by 10% over a couple year period. if we got that, i think you could see stocks get a nice boost from that. importantly, sara, i don't think the market is pricing in much right now in the way of success on tax reform. high caps companies as well as small caps, they've not outperformed since the election. if we do get tax reform that's an upsided case. not a game changer but makes stocks take another leg higher. >> this idea that we've priced

in anything leaves us with what's next that will excite or energize the markets you have, this period that you guys have been mentioning of unusually synchronous growth yes, slanted but stuck for six months around these levels what do you think is going to get that upward grind continuing >> well, one thing i think is if people check their portfolios and how stocks around the world are doing, they would see that emerging market stocks are up 25% this year, that develop market stocks are up more than u.s. stocks, at least when you factor in the currency that's an important point. a weak dollar tends to be supportive of risk assets. so it may be when people come back to work in earnest in the fall they realize that the expansiveness of the strong returns this year is the thing that's most interesting. >> ray dalia from animal spirits after the election, david, to

now cutting back on risk because of the way conflicts in washington are being handled do you think investors should heed some caution from that? >> i think we're going to have to live with this sort of very fractious and political environment we've been living with since really the financial crisis i think, though, politics doesn't necessarily get in the driver's seat unless we have some trouble in the economy and then end when investors start looking to washington for solutions. so as long as the economy has the momentum it needs, corporations are investing, hiring, consumers are spending and buying housing and things like that, i think politics plays sort of a second fiddle to the economy. but i agree. if we're looking for washington to make things change and implement changes that are necessary and what markets think are necessary, then that becomes

a little bit more problematic. >> jeff, i guess you'll go along with that. we talked for years about the relationship between stocks and government it's one thing to say that markets like gridlock. but do they like gridlock when you've got fires burning on various social issues around the country? >> i think they like that kind of gridlock maybe a little less because it undermines the confidence in the policy effectiveness. and i think in the context of this market where we squeezed so much return out, if we look at valuation, sentiment, if we look at volatility, it may create a bit of a symmetry in the way forward. the positivity that we've been talking about but maybe the more significant in terms of magnitude case would be the risk case if something were to disrupt the confidence of investors. >> jeff, david, thank you.

appreciate the confidence on a day where the dow is now down 13 appreciate it. the president laying out his plan in afghanistan last night we've got the details and what means for defense contractors. plus more shakeups at macy's what the ceo had to say about coer ampany's new president, e-mmcend much more "squawk on the street" will be right back

welcome back president trump addressing the nation yesterday what does his plan mean for the defense industry morgan brennan is back with that. >> remotely piloted drones, mor military vehicles and munitions. keep in mind we're still very, very light on details. the first to benefit from a troop increase likely to be the service contracts, caci and leidos this could also help make the case for a light attack aircraft program. now as i saw firsthand earlier this month, the air force is test i testing as it explores this option the super tacano is being produced for the afghanis. we're paying for that as well. that said, analysts are

skeptical about how quickly the program would translate into planes as we wait more from the pentagon on all of that, another piece of news is fueling the defense sector today minute man 3 ballistic missiles one of which was test fired earlier this month it means lockheed martin is no longer in the running for this contract valued at $25 billion telling me, quote, they are disappointed with the outcome and looking for a debrief about the selection. meantime take a look at defense stocks all trading higher today sara >> absolutely. boeing adding the most points to the dow's rally right now. morgan, thank you.

from defense spending to the budget to tax reform, white house and gop lawmakers are looking for a legislative win. mitch mcconnell and treasury secretary steve mnuchin yesterday in louisville calling it the president's highest priority with us, jared bernstein, chief economic adviser to vice president biden. gentlemen, welcome to you both jimmy, is this the best shot, tax reform, for a legislative win for this president >> you know, it's the best shot. which i think shows you sort of how much trouble the president's agenda is in i just don't think they're still very close big article in politico today saying progress has been made. when i looked at that time and talk to people, to me it doesn't seem like there's a lot of

progress made. those pay fors are the stumbling block. >> i remember when obamacare was an existential problem for the gop, both leadership in the senate and house are painting tax reform as easier are we talking tax reform or tax cuts ultimately? >> excellent question. revenue neutral tax changes such that you cut the rates, broaden the base you buy rate cuts with a broader base what jimmy was just describing -- by the way, i give the republicans some credit for their list for pay for, some of which, i must say, make sense to me capping mortgage interest deduction, eliminating the deduction for business interest. as jimmy said those are really heavy lifts.

and there are highly paid lobbyists who will fight you tooth and nail. >> i would add to that taxing 0 401(k) savings plans, any chance that could get through >> ask president obama how easy it is to start taxing, you know, savings accounts when they tried to change, you know the college savings plans. that went over like a lead balloon. republicans at some point have to make a choice how deeply do they want to cut individual rates, corporate rates and are they willing to do the immediate expensive of capital investment instead of deep corporate rate cuts

>> if your bottom line is that this all seems to be trending more toward a straight tax cut does that mean that the deficit hawks in the republican party would stand down it would involve blowing out the budget or fudging a lot of the ten-year budget math. >> exactly that. tax cuts are not a smart idea. that may not be a popular view but it's not a country or economy screaming for tax cuts our corporate tax code is a hot mess but straight out tax cut will just load up on the deficit. i don't think there are that many true deficit hawks on the republican side. at end of the day they'll come up with phony dynamic scoring and say they have growth effect effects. >> they're not going to let a

trillion dollar cbo revenue loss stand between them and what they believe is the cornerstone of what the house and senate agenda as well as the president's agenda. >> jared, if laird were here, he would say as he said in the past, let's do corporate first, handle repatriation, get it down to 22, 25. >> if you're talking about any semblance of reform, no. you have to go it both sides nowada nowadays you can't really talk about business tax reform without considering pass throughs. we argued about the supply side forever. i think he's wrong on that the evidence is with me, i think. but at the end of the day, we may well be looking, as jimmy suggests, at a plan that just

loads a trillion bucks on the deficit, wash your hands, go home it's a dumb idea in my view but that may be where things land. >> there were options, not to get too nitty gritty but we heard this before from the administration, taking away the ability to deduct state and local income taxes that raises a lot of money taking businesses' ability away to deduct interest that will raise a lot of money why do you see this reform so farfetched with big ideas like that to raise some cash? >> i think very obvious, quote, unquote, victim. homeowners love the mortgage deduction. you have people, you know in blue states and not so blue states the victims are obvious. that seemed to be the more politically palatable way of paying for this.

>> i'll put that to you also, jared. if you're expecting tax cuts you don't think the math will add up either. >> i want to underscore the point you made a second ago. i give the negotiators credit for the less they came up with on the pay fors. one of the reasons we have so much distortionary leverage. on debt financing, it's negative by the way, if you're going to have full expensing, you can't really allow for interest deduction or you really create very screwy incentives. >> they had that list a year ago. >> i think to jimmy's point -- >> that's an old list. they haven't made any progress. >> exactly i like some of the things on that list, tax reform always is

on precisely the fact what i call a loophole you call your great job creation program. >> we'll see what happens. getting promises out of republicans. jared and jimmy, thank you when we come back it's been a rough ride for energy. sector in a bear market tumbling a lot this year. is now the time to buy trump agenda and focus, report out of politico says the administration making those strides on tax reform. former romney adviser ed conard when we return the second best gain of the month for the dow and german dax having its best day since july 12th so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face.

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their dealer network streamlined and nimble. businesses count on communication, and communication counts on centurylink. breaking news now on north korea and china. >> treasury announcing they're targeting more companies and individuals when it comes to north korea. chinese companies shall russian entities, ten in total, plus six individuals in response to north korea's ongoing development of weapons of mass destruction.

they're going after china-based companies. we've seen them target banks before this is clearly about putting pressure on china to help with north korea, specifically companies that have fronted for north korea when it comes to the import of coal they've gone after three china-based companies that have collectively imported nearly half a billion dollars worth of north korean coal between 2013 and 2016 they've also targeted two north korean companies responsible for the export of slave labor when north korea does construction projects in continents like africa, et cetera. the key takeaway here is that they are targeting companies within china if our competitors or treasury is wondering why we, quote, unquote, broke the embargo treaty because it's been published on the website this is now public record. >> interesting development there. thank you michelle

caruso-cabrera 20% off its most recent 52-week high on pace since the worst month, kildof both here at post nine thanks for being here this morning. >> good morning. >> if i could broaden it out a little bit, crude oil between 30 and 55 roughly 18 months we were between 85 and 110 for like four years. >> yes. >> should we settle in for this being some kind of stable range or is there something that's going to disturb it? >> we are looking for barring an october surprise we think we're pretty much stuck in the range we are watching for two developments do we get a default situation in venezuela? $2.5 billion come dug in october and november if they default that could be significant for venezuela's production outlook the other october surprise we are watching is do we see the

united states withdraw from a nuclear deal does president trump decide not to certify iran? barring those two development weiss think we're stuck in this range for a while. >> those two things, john, are on the supply side of things is that what we're on the lookout for? otherwise we're in this equilibrium? or do you think one thing is going to sway it one way or another? >> this is the time of year when refiners dial it back, they shut in to make their winter slates, ememphasize heating oil ahead of the peak we've seen demand trend up for the first time in quite some time for our gasoline and fine products has been pretty robust. that's why our refiners are doing well we're in for a tough slog here and i think the geopolitical worries about venezuela and even iran might be a little overstated only because i think we'll be alone with the

sanctions on iran this time around venezuela is so hot in terms of being indebted to chinese interests that they're going to have to keep operating. >> here is the thing we watch on that they're not going to potentially lend venezuela any more money and they have less than 10 billion in reserves. the math simply does not work on staying solvent. we think this default is a clear and present danger, nothing to do with additional u.s. sanctions. they cannot get out from under this debt burden. >> production cuts when is the line where those mean nothing they mean little now, at least on daily trading. >> yeah. >> they haven't meant anything to me for a while. >> i think it becomes meaningful in 2018. that's when the ipo takes place. that's when the saudis need this price in that sort of mid 50 range. i look for going in the november meeting when we potentially see much more meaningful action in

terms of a willingness to pull barrels, get this mark market in the right place for 2018. >> at the november meeting they're going to talk about either extending or terminating the production. >> i would not be taking the terminating side of that bet but, you know, i think basically it's a question of is it in april or is it june or potentially november extension >> what about the u.s. president trump has a policy of energy dominance has he been making progress on that, is it having an impact in the market >> the biggest impact with the u.s. is simply the iceberg of u.s. producer hedging. once you hit that $50 mark u.s. producers come in and hedge that production we talk about an improving fundamental position, 70 million barrels drawn in the u.s as long as u.s. producers will hedge out production once you hit 50 you are pretty capped, barring any geopolitical development. >> price differential between brent and wti is such that it's

encouraging our exports and i will say president trump's charm offensive seems to have worked they have really stepped up their purchases out of the gulf coast. >> when do we have to worry on the demand side about the very long-term structural turn away from oil and gas essentially the stock market kind of pricing some of these sectors like that time might be coming relatively close. >> i will tell you, the reason we're talking about the npo, why abu dhabi is selling assets, what does it look like over the medium and long term it reflects concerns in the middle east about demand going forward. >> s&p 500 now only the buggy whip industry has a smaller footprint in the sector. >> my buddy wants to bet me in ten years will the u.s. use a third of a barrel for every thousand dollars of the u.s.

gdp, over or under on that >> i'm going to take the under. >> really? >> by the way, does that mean if they need the price at a certain level the market is going to say okay, you got the price at that level. we're going to extrapolate that forever. will it be that simple >> it's a really interesting question i think you can do the 5% they're talking about now. you can raise your hundred billion. what do you need going forward is it enough to keep the saudi state machinery going? 5%, is that it or do they continually have to sell off more of this national oil company? and are other companies going to do it as well? >> transportation distributed energy, more battery power, lithium breakthrough it's going to be a tough spot for the oil guys to hang in there. >> john, helima, thanks a lot. when we come back on the show, pushing forward the trump

agenda word out that congressional leaders are maand ed conard. "squawk on the street" will be right back experience unparalleled luxury at the lexus golden opportunity sales event before it ends. choose from the is turbo, es 350 or nx turbo for $299 a month for 36 months if you lease now. experience amazing at your lexus dealer.

a court appearance for four alleged members of the terror cell accused in deadly attacks in and out of barcelona. a judge will decide if they will be jailed or released. navy and marine corps divers found the remains in a sealed compartment board the mccain the search for remains continues. angry protesters took

control of an angry council meeting in charlottesville in response to how they handled the deadly protest rally earlier this mon month it took more than an hour for order to be restored no one was injured. dozens of passengers were injured when two trains collided outside philadelphia a high-speed train reportedly crashed into an empty rail car parked in a suburban philly station. no word on the cause you are up-to-date that's the news update this hour carl, i'll send it back downtown to you. >> sue herera, thank you very much limb mating the ability for

businesses to deduct interest and phasing in the interest. these provisions could raise trillions of dollars to pay for lower rates. but i am hearing some pushback on this story from the hill. and that's because any one of these would be a heavy political lift just the state and local deduction alone. the lobbying around that almost killed the 1986 tax reform effort. so republicans are hoping that tax reform will be an easier sell then health care. here is house speaker paul ryan on cnn yesterday. >> one bill through the house and senate procedurally, it makes it much easier. >> notice there, guys, he started to say tax cuts instead of tax reform. maybe that was a freudian slip back over to you. >> i'm sure one day the speaker will be asked about that, ylan

thank you very much, ylan mui in washington for more, joining us this morning at post nine, former bain managing director, ed conard "america's got talent but not nearly enough" arguing that the president is only half right on immigration. is the speaker right is this going to be easier than health care? >> no, i don't think so. whenever you try to raise tax revenue, tax cuts, the lobbyists will come out of the woodwork. i think it will be extremely difficult. no idea if there's consensus until it gets into the legislative process. i suspect that you can, perhaps, get to consensus tax cuts will be very small and probably won't have a large impact on the economy. >> so what's worth fighting for the most what elements of this? >> accelerate growth the most. if you get it down to 25%, probably as low as they can get it, it probably won't have much impact domestic companies pay about

28%. lowering it to 25 won't have that big of an impact. competitors, googles, apples, those guys are down in the low 15, 20%. they're not going to say i guess i'll bring that tax revenue back to the united states and pay 25 instead of 15. you have to get it into the 15% range to have an impact. >> not a one-time repatriation >> i'm all for repatriation. what you really find most companies is that, yes, they appear to have a lot of money sitting overseas they've loaned that money, deposited jp morgan and other places have bought treasuries and then they buy that money back to buy stocks it's really here it's not sitting overseas unused you look at the balance sheets they have cash but lot of off-setting debt in many cases. >> how to juice the labor market and economic growth your op-ed, trump is right to back skills-based immigration what point are you trying to

make from an economics point of view, a more restrictive immigration policy, which this is, which is what we're getting from the trump administration, is not good for growth. >> two aspects to his policy one good, one bad. skills-based immigration, which i think is good, and second is reducing the number of green cards is bad i say he gets it half right. the problem is the congressional budget office projects as the baby boomers expire, federal spending will increase 79% of gdp, driving over 40%. it's going to take growth-killing tax cuts to pay for those baby boomers we're not going to get there with organic growth. we have to do more than just pay the baby boomers we have to defend ourselves against rivals like china by the time we get there. in 10, 15 years their economy will be larger than ours we can't pay for the baby boomers, slow down the growth and do damage to our economy the argument i make in the op-ed

the only way we can get there is through high-skill ed immigration. as long as we're going to have immigration based -- skill-based immigration, let's not cap it at 500,000. keep it at a million 5 to 6 million workers lot of the growth is driven by innovation you could potentially double the growth rate if you double the workers. that's the onl way we'll solve this problem. >> could you actually get the number of income iing immigrantu to the point where it would help the long-term growth rate doing strictly skills based? how are we defining skills based? >> the president defines it so highly no one can get over the bar and you end up with zero 7 billion nonamericans in the world, 5% that have is 350 million. half of those are too young or too old. half have never been tested. half will probably never get moved. you get to a pool of 40 to 50 million people that would really be in the top 5% of the

workforce and in the sweet spot of the kind of person who would move here and be eager to move here it's not unusual to think we would get 4 to 5 million and we're issuing 1 million green cards a year you start bringing in 25-year-olds, you don't have to bring in their children, spouses, rest of their family. they're willing to come one green card, one top-skilled worker does it put top-down pressure on wages? yes. but they're growing faster than the economy. the rest of the economy's wages have grown slower. high skilled to low skilled you might get productivity increases so the supervision of high-skilled workers who rate the products we can see benefit to everybody. >> do you think congress or the white house or leaders of the country have the bandwidth to take this on, given everything else on the front burner >> no. i think they put forward a proposal on immigration and i was trying to be supportive of

the idea of skill-based immigration and explain why it could have an impact in the long run. do they face enough of a crisis today to go out and solve the problem? no republicans are fearful of putting pressure on high-skilled wages. democrats want to limit it to low-skilled immigration. this president is reluctant to do so. will it go anywhere this year? no it's important for people to recognize this really is the only solution to america's future. >> isn't the administration working on it from another angle? they're doing this workforce development, they're trying to increase the number of apprenticeship programs in this country. >> the way germany does it. >> high-skilled labor and also i think they're going to start to target more of the education system around that as well that, to me, seems like a much better way to push high-skilled labor than try to restrict green cards. >> i will say this we've been trying to do this with education for decades and decades, with no improvement in test scores.

yes, very interesting apprenticeship program the productivity of our workforce is significantly higher and the pay of our immediate workers are higher than their workers. working in manufacturing is not such a great place to stake your future in a world full of low-skilled labor. and so we've tried to do this with education it hasn't worked it might have a small effect, if it does work it will take decades to have a significant impact on productivity we don't really have decades to wait for this. and we can go forward with those programs as well, while we continue to supplement with high-skilled immigration. >> good to see you. >> thanks for having me. >> great read in the journal ed conard joining me on post nine we head to a quick break with the dow up more than half a percent, dsw, shoe retail eer surging after being on the top and the bottom stock buy back it's still down 16% year to date ofb very depressed going into a

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macy's announcing a new president to be at the head of the company. courtney reagan sat down with the ceo of macy's and joins us with more. what were some of the highlights, courtney >> good morning to you, sara we sat down here with c oechlt jeff gennette who just took over that top job five months ago at a difficult time in macy's history. sales have been down for ten straight quarters, those comp sales we pay so much attention

to, falling 40% year to date a number of new strategies, including that shakeup management shakeup, bringing in hal lawton from ebay, as well as consolidating three organizations into one, all part of a plan to drive sales >> we believe that by the pricing decisions that are not going to fortify into a structure that we can grow faster we take markdowns on a yearly basis. having science inform those decisions at a much more robust level than they are today will help us grow faster, turn inventories more quickly, get better margins, drive more sales. >> department stores and their stocks have been hit especially hard recently. it's all from falling mall traffic, increased consumer choices and negative sentiment for retail in general. but gennette does think the department store format is still viable in the future. >> i'm actually encouraged by a number of my competitors'

positive results it's there to be won i think we've got a consumer that wants macy's to win again it's getting the right recipe, strategy with the right talent to drive it. simplifying the processes so we can go as fast as the speed of our customer, macy's can win again. >> wrond the organizational changes they're also making changes in store like this new centralized cash register. each floor has one central location now where shoppers will go to make their purchases this store has a special pickup for your online orders and soon there will be lockers. if you don't want or need to interact with an actual human customer service representative, you can go to the locker and pick up your online purchase sara >> interesting idea. courtney, thank you. good interview stock is getting a little bit of relief today 2.5%, still down 50% over the last year. courtney reagan. we'll stick with retail now. nike shares down 9% in the last week footlocker's big miss. that stock now the worst s&p

performer on the year after a disastrous quarter just last week retail analyst randy connick who downgraded the stock yesterday thanks for joining us. >> thanks for having me. >> i read a note mainly competition from adidas. hasn't that been the story last year, too? >> we used data analytics in our research process for over a year we've been tracking the share shifts between adidas, nike and under armour in the running and basketball categories. adidas gained share through the stan smith platforms what we nd noticed in the data the last couple of months was a real acceleration in the running category for adidas, primarily around the boost platform, mmd

platform and given that change to performance-driven products from just fashion-oriented products, which was the rise of adidas last year, we thought that would create a big issue for nike in the marketplace over the next couple of years. >> how big of an issue are we august about nike is still the dominant player in categories like fastball and dominates the secondhand sort of fashion market what sort of strides is adidas making in the all-important u.s. market >> sure. what's helpful to show viewers is size up the two businesses in the north american market. if you think about it, it's a $50 billion business for 45% of the total company revenue base contrast that with adidas, it's only a $3 billion business in north america or 20% of their total company revenue.

think about it, nike is five times larger than adidas in north america, obviously the number one share player. when number one share players see share shifts, the effects can be pretty devastating. to give that flavor of how big nike is compared to i the performance running category, it could be a pretty big deal over the next couple years for nike in terms of a bad thing. >> the way you're kind of posing it is we're talking about roughly zero sum it's all about market share. this is not necessarily a growing category is that your take? and in that context, i know you have some concerns about the fact that, look, nike as a stock still trades at a significant market premium. >> great question. so if i think about the category itself, athletic is still a decent category. if you add up the revenues of nike plus under armour and adidas, you know, it's been in total the industry is growing at

about a mid single digit rate, probably down from a high single digit rate previously. still better than general apparel which is about' low single digit 1% or 2% with deflationary characteristics if i think about the issue here is that we have a little bit of a slowing in the athletic cat gorey. still a good athletic category in north america the biggestish sue going to be share shifts to your point it relates to share shift ago way from nike towards adidas, that creates issues around margins and valuation and 23 times earnings can compress. >> i think nike just needs to get out there and tell their story and take back the narrative on innovation. randy conic, we'll leave it there. thank you. >> from afterrijeffries foot locker is telling that story. >> let's send it over to jon fortt for a look at what is coming up on "squawk alley." >> we have a little rally on our

hands. all the major indices up the dow is up 125. how are the faang stocks faring? this morning they're doing fine. facebook, apple, amazon, netflix and alphabet higher. they've been mixed in the past week ke tdohere a look at how ty' lilyo

tlnch there say fight in miami beach over the minimum wage. kate rogers is there with more >> as the national momentum continues to build in favor of higher wages nationwide, a battle is on going near miami beach. earlier this year a judge struck down a local ordinance to raise the minimum twij $13 an hour by the year 2021. that is $5 more than the state's minimum wage of $8.10. we talked with the city's democrat democratic mayor and he said living on $8.10 an hour in miami beach is not doable. >> how do you live you live because the government is going to help you they're funding you with subsidized programs, welfare programs, social programs. so basically the taxpayers are subsidizing the cost of

businesses >> but for some small businesses, it can lead to tough decisions. we talked to adam meltser, the owner of the daily creative food company. does he start the minimum pay at $10 but doesn't believe wages should go above $13. >> we might run into problems where we would have to decrease the amount of hours minimum wage employees work we also might have to raise menu prices w price which would affect customers and the overall business as a whole. >> one thing is for sure, mainstream business as cross the country are watching battles like the one we're talking about in miami beach they say wages are a top ten issue for small businesses across the country we do know they're one of the things small companies really consider when talking about hiring and expanding sarah, back to you >> kate rothers with the story from miami thank you. when we come back, more on today's market rally looking at a 1% gain right now for the nasdaq

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welcome back to "squawk on the street." i'm seema mody materials standing ow as one of the leading s&p 500 sectors. this as copper hits a fresh all time high here in early trade. freeport is the top performer up more than 3% the rally in copper prices also helping lift emerging markets. some of the commodity producing nations like brazil getting a boost from copper's climb. in fact, the brazil market is up 2% hitting a six year high now we'll send it back downtown for the start of "squawk alley." seema, thank you good morning it is 8:00 a.m. at facebook headquarters in california 11:00 a.m. on wall street. "squawk alley" is live