Reporting a 57 drop in Second Quarter profit as production slide. Change of feelings in j. C. P. Bouncing back after falling yesterday. The retailer refuting published reports about cuts in its financing. And whole foods beats on earnings but the sales growth misses expectation. Well talk to the coceo walter robb later this hour. First up, coming off an upbeat july, futures show a strong august adding to the positive sentiment, claims lowest level since early 2008. Not participating, though, is exxon. The dow component with an earnings miss. Profits falling 57 in the Second Quarter. The Conference Calls not until 11 00, jim, but there were no big onetime items. A little confusing . Exxons become a very plodding company. I always like to rate the Oil Companies by the Production Growth because in the end the companies can be growth stocks. Eog, how can you compare the two . Were a Global Company but you get lots of cash generation from exxon. You got 4 billion in buybacks. They spend fortunes to find oil and theyre just not finding enough oil. Theyve spent more money on finding oil, how would the stock do . I dont know. The buyback really does prop it up. A big story in the journal about how the production boom in this country has eluded exxon and chevron and to what degree that will depend. Hard to turn them around on a dime. Spending 38 billion at exxon and even more at chevron to find oil. Right. These are companies if you look chevron has a much better record of finding. Chevron has great gulf properties. Bp has a pretty good record of finding, obviously the Safety Record was of concern and therefore the gulf claims but exxon is the one if you look at the chart it will shock you. It has not been doing well for a long time and yet it doesnt really come down, but if you look at some of the great independents, you just see unbelievable numbers. If you go look at Continental Resources which is the bachen, if you look at eog, if you look at companies that are just related to u. S. Oil, those are the best. Yeah. Those are the ones that perform. One oak, is one oak theyre doing restructuring. Best performer in july. They are creating value, they are splitting off and doing mlps. Royal dutch, i dont want to complain too much about exxon, you see that stock going down hideously. Not as good an operator as exxon. You do have a pecking order here which i would put chevron at the top even though the article did indicate chevron not as good. Pg final cents beats by couple pennies. 2014 earnings 5 to 7 estimates about 7. I guess you could expect him to come in and try to calm everyone down . Mr. Mcdonald who is no longer with the company you know, no longer the ceo, set this company up to do what was right. I felt that he did get the bums rush in the end because its not like a. J. , mr. Laughly, is a fabulous executive but its not like he turned it around in a couple months. These things were all in place. 4 organic growth i would like to see. Kimberlyclark blinked in diapers in europe and Procter Gamble trying to do more of an emerging market strategy, but line by line there are a lot of divisions not performing up to par but you do have a terrific Great American, dividendboosting company. You cant expect a ceo even one who was the ceo of the company for quite some time to come back in and effect change in a rapidorder fashion in a company as large as pg. The time line is not going to be that long. Hes not in there for ten years clearly. There is going to be a successor. And who disproves that . Who is the greatest turnaround executive in this country right now . Alex gorski, he didnt turn around Johnson Johnson by making aggressive moves. But i will say that Procter Gamble is now up from 6364 where mcdonald said, do you know what, we got to start taking costs out. These companies we told clorox took a lot of costs. I know clorox isnt going up the way proctor is, but you got to harry how much procter was in the pipe. When people get sacked you want to see what they put in place. I feel bad for mcdonald. Hes an army ranger and strangle me with his hand and kill me like that. Ranger choke hold . The trachea just collapses. Usually you just faint. They dont kill you. Put you out. The cfo was on squawk earlier today and talked about having laffley back in the country. It felt good, it feels good. Im very optimistic about the future as we look forward. Obviously a. G. Has worked with this team for many years. Its great to work with this him again and were committed to serve consumers and create value for consumers and shareholders. Well, you know, the problem here is you are still paying 18 times earnings for a 4 growth. Health care looked good. Volume up 5 . And people point out its a ten handle its ten at unilever. Theyre doing better but still lagging their peers. Unilever was odd, because the guy when he did his hes a terrific executive. He did his Conference Call and said emerging markets are slowing. But Procter Gamble was so lackluster in emerging markets they had a lot of room to grow. In the end the companies are just where the money is being made day after day in this market. 3m, day after day, Johnson Johnson, united technology. Big cap, international companies. By the way, if we change the Corporate Tax code, i can see the Companies Earnings exploding. Really could. Lets see if that actually happens. 4x an issue here as well as the other countries. It takes off 2 on the health care segment. Foreign exchange on the grooming segment where its been a real weakness continually you get a minus 3 foreign exchange, very good point. Speaking of repatiation and job growth, what did you make of the claim numbers . Fabulous. People are saying auto shutdowns havent been as bad, maybe its an outlier set of data or maybe tomorrow will be really good. The sequester the sequester, industry by industry, didnt hurt the defense industry. It didnt hurt the airline industry. A lot of Airlines Complained about travel. Hertz down a little bit. But i do think the claims are good, they had not added up to what happens tomorrow so far, but this was the kind of number where the fed message is on hold but the tape can go higher. Look, the two most important numbers this morning, well, no, the one most important number was 50. 3. The chinese pmi was 50. 3 and the european pmi 50. 3 and the european turned around. The hsbc measurement was different. I believe the good numbers and not the bad. How about that . Thats perfect. Thats per feskt. Thats the way the market is operating. The claims today, the jobs number tomorrow, one day left to nail the number and win a pretty good prize this month, id say. Tweet us the numbers, squawk, and the prize is a duffle bag, you name it, simon, squawk on the street gang, one minute until the friday release at 8 30 to submit your predictions. Best of lusk. Its a big number. Definitely. Speaking of big numbers, by the way, i know we got to get to this yelp huge. The fourth. It will open at 47 and change. It will go higher, 50, 53, maybe 55. Facebook, schlumberger, starbucks and now yelp. Yelp. Im glad we got yelp. Is would worried there. Dont underrate yelp. Why . Because they have a model that works better on mobile than desktops. I was going over that quarter i got to tell you, its an outstanding number, it was a tw twoperson company ten years ago. They have more cities. If you want people at home to know what this is, this is the portable yellow pages. Remember, in the way it used to be, can you imagine carrying yellow pages around, look at this, this is my plumber. They do it on the web. It is social. It is mobile. It is cloud. Its the holy grail, the trinity of cloud, got it. Social mobile cloud. Ncaa was the nasdaq 100s biggest gainer for the month. Trip is one of the best s peres for july. Starbucks is coming up. Yelp up six. I mean, please, its an outstanding quarter and its a 2. 6 billion company and it wont it wont be it will never be profitable, because apple will buy them for 75 because theyre a good partner. Okay. Then we dont need to talk about it again, do you . Youve laid it all out for me. Mr. Cook, here it is, you have social and mobile, and you already have cloud and it will be a direct competitor against facebook and google and its a blocking action, apple is already a good partner. I just want a small thing, ill take 100 gs, i put this deal together right here. Perfect. I say it every single day it was a great quarter. Shares of jcp rebounding after falling 10 late yesterday. Retailer refuting these published reports that commercial lender cit abruptly stopped funding some future shipments to pen ney. They expect to close the quarter with about 1. 5 billion in cash on its Balance Sheet. Meanwhile citi does take it to a sell regardless saying they see no progress. Their price target 211. They say a turnaround 2014 or after. I think you can have delayed turnaround without thinking that cit, which is often that story didnt make sense. Did it make sense to you that it it was just strange that it didnt make sense. The retailer wouldnt seem in the state where you would start to hear stories like that also in theres something going on were not aware of, maybe citis right. Maybe its going terrible. You have to put the china orders in september, thats when macys put their orders in. If you want a stock to go down, you spread it. Some people would say its a story from my old print days thats too good to check out, but had they, i think they would have found out it was wrong. These kind of cases as a retailer you have to come out and refute it immediately if, in fact, its not true as was the case, but a lot of people ganging up on old bill ackman. You got to talk about that when you look at herbal life yesterday, jcp yesterday. Every storys an ackman story. Whether or not theyre trying to sort of pressure him. Ill come ill see you jcpenney and raise you Procter Gamble. Im done with the unremitting that ackman doesnt know what hes doing given that Procter Gamble is in very good shape. Praise where praise is due, my friend. Well talk about ackman and p g later in the hour. In the meantime what is Warren Buffetts favorite tv show . Find out next. Weve got the pictures to prove it. Also ahead a parade of top executives including the coceo of whole foods and ceos of Tanger Outlet stores, cigna, marriott and the executive chairman of the cme. Better than expected. Better than expected. Some people say not better than expe expected, but a good lineup. Futures are up triple digits as we kick off the month of august. A lot more squawk on the street. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. And guess who turned up at the new York Premiere party for breaking bads final season last night . Warren buffett, a selfdescribed super fan of the show. He posed for pictures with the cast before viewing the first of the final episodes. There he is with twotime emmy winner aaron paul, of course, buffett thinks the story is compelling and acting is superb, our understanding hes been on set before taping stuff, if not for the series, but the stuff theyve shown internally in omaha. The creator of it did talk about how netflix made it so that this company that his production successful because you got to watch all season before the august 11th opening and he credited netflix as one of the reasons its been so successful. When i have Bryan Cranston on, he did say that he patterned his crystal meth operation off of apple. He always said, listen, it was never distribution, if you had the finest product, they would come, hes a product driven guy. He talked about how the whole thing is an allegory for the ideaological nu ologicaological jobseian character. Kranston is basically a company that said we build it, we build the best, cranston did have the 99 pure crystal meth and the 94 cartel meth could not rival it, right . Right. Apparently that is not the case. We are not talking about the pantene numbers, the pantene numbers are just okay. His crystal meth, highest quality there. Lets talk more about whole foods down in the premarket, the natural and organic Supermarket Chain beating the street. Fiscal Third Quarter profits 38 cents but sales lowerthanexpected and well have a conversation with james robb later this hour. They say the first few weeks of the Current Quarter 58. Is there a reason to be worried . Buffalo wild wings, sally smith on mad money the same situation, stock traded down four in afterhours trading and ended up being up five, there was a ninepoint swing. Ive gone over the whole foods quarter which at one point was down 10 with a fine tooth comb. Its a consistent quarter. Two quarters ago they did not deliver what they wanted this quarter they did. Theres a lot of what i regarded as turbulence on the Conference Call, guys trying to poke holes at whole foods. I say good luck to them, they got it wrong, they delivered. Robb on the call said bring it on on when he was asked about sprouts. Pricing at 18. A competition from fairway. Cantor earlier in the week taking it to the neutral saying its no time to be greedy. As mr. Robb said theres always been a lot of competition, bringet on. He feels really confident right now. Two quarters ago he didnt feel confident. They were critical of themselves and disappointed. One of the things i want to talk to him about, the detroit store, everyone is running from detroit, whole foods runs to detroit. What a Great American company. You do forget, i think, seven, what is it, we say 75, some of these stores are more than a decade old, jim. The new stores are doing exactly what they want and thats still remarkable growth. Chicago po chipotle and starbucks, a pantheon of people behind the scenes and they all talk to each other and whole foods needs to do a credible Infinity Program not unlike what starbucks has, theyll do it. But this quarter there was a guy that said, listen, i was at your really kind of funny. A new guy, identify was at your des moines store and that was not a good store. They come right back, have you been to our, mentioned the oxnard store. There was such an timothy, its not like they are idiots. Theyre the best operators there is and the people were, like, you know, slamming them, will you give me a break give me a break okay, i will. Im happy to give you a break when you want one. Thank you. I felt there was a lack of respect on this call, frankly, respect of what this company has accomplished and do you know what, some of these analysts, let them get behind the deli counter, see how they do. Slicing ham. Right . Yes. The fresh ham. Well talk to robb this hour and well thank you to the ceo of sprout at 11 00 a. M. After it opens. Sprout probably going to win as fairway did win, but do you know what, in the end, the best man wins and its going to be whole foods. Its just a remarkable company. You know, and look, i mean, look what they did in boston. They put a lot of stores in boston. You think there is cannibalization, we havent seen it. Mr. Mackey and mr. Robb, you deserve better than what the people gave you on the Conference Call. On that note, jims mad dash is up after a break. [ male announcer ] here at optionsxpress, our clients really seem to appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. Hey ray, my uncle wanted to say thanks for idea hub. O well tell him i said youre welcome. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. Yea, and these ideas are across the board bullish, bearish and neutral. I think you need a bigger desk, pal. Another one . Traders love our trading patterns, now with options patterns. Whats not to love . They see what others are trading like the days top 10 options trades by volume and get ideas yea i have an idea how about trading that in for a salad . [ male announcer ] so come trade at the place thats all about options and futures. Optionsxpress. Open an account today and get a 150 amazon. Com gift card when you call 18882800154 now. Optionsxpress by charles schwab. When you call 18882800154 now. Youre not made of money, so dont overpay for boat insurance. Geico, see how much you could save. Welcome back to squawk on the street, im phil lebeau with breaking news. July auto sales ford reporting an increase of 11 last month a smedge below the estimate which was for an increase of 11. 8 . The big driver last month, it continues to be trucks. Fseries pickup sales up 23 in the month of july. We are going to get gm numbers in about a half hour. All of the automakers, david, are going to be reporting today and look for a lot of numbers being the best july since 2006. David faber, over to you. Wow, since 2006, well see you a bit later in the show and get more of the numbers. Mad dash time before the open, of course, lets talk cbs. One of the things that happened this quarter whether it be comcast who we work for with despicable me or cbs, were seeing programming having an impact, okay . And they did this series under the dome. Im reading the book. Its A Steven King and its done by simon and schuster, frightening book, really, what you are seeing is hits move the needle. You wouldnt think that but its pretty amazing. Its, of course, advertising drives cbs as opposed to so many of the Cable Networks where its really retransits and carriage agreements but retransits very important here and dont forget the feud going on with time warner going on right now, cbs gets paid by the retransmission by the Cable Operators and digital has become very important for them. And remember, netflix, you know, the payments, cbs has a body of work thats run all over the world. These companies are all very well managed, the nfls going to make them a lot. Remember, the nfl, you have an extra week of the nfl in this quarter. Be careful. That could bring huge gains for all these guys. We know that Buffalo Wild Wings said its going to be good. Obviously you smooth everything out, but Buffalo Wild Wings a lot of people go and watch the games there. But cbs, comcast is pretty good numbers. Disney reports next week. Well get to directv and Time Warner Cable two distributors later in the faber report. Not so good there. Theyre still making money from selling i love lucy thats the beauty of content, not a lot but they still make a little. The amortization, these are phenomenal numbers. Larry tisch was the guy that came up with the retransmission, the black eye of cbs, he created the launchpad for cbs that has brought you a lot of good years. Well see how the feud goes with Time Warner Cable, tomorrow is the new deadline again where they may pull cbs from Time Warner Cable. The opening bell. Can save by s. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Bob will retire when hes 153, which would be fine if bob were a vampire. But hes not. Hes an architect with two kids and a mortgage. Luckily, he found someone who gave him a fresh perspective on his portfolio. And with some planning and effort, hopefully bob can retire at a more appropriate age. Its not rocket science. Its just common sense. From td ameritrade. Yelp. You are watching cnbcs squawk on the street. Ring my bell and we will ring the bell in just about a minute and a half here at the nyse. We closed out the month of july yesterday, best month since january. S p is up eight out of nine. And for the year, guys, s p up 18, dow up 18. Vix down 25. Nasdaq up 20. At this rate, at this rate, jim, the year would end up for the nas up 34 and a half if it continued at the pace. These are remarkable numbers. Obviously there are companies in the nas that are driving everything. Google in the usa today i know we both, you know, google play tops app store, google i think will make a comeback here. Apple will get a ruling by the president this weekend where he overturns the idea that the apple 4 will be blocked from at t, apple will go higher. The Large Cap Companies in the nasdaq are doing incredibly well, sandisk, return to capital. Over and over again the companies doing the right thing by shareholders, rather remarkable that the companies themselves are the reason why its gone up. Its not all fed magic carpet ride, not at all. We should point out for the s p in july the best 5, one oak, f5, alxion and cellgene and trip and the worst, mosaic, intuitive surgical, expedia and broadcom and jcp. Holy cow, very interesting list. Cellgene, its still cheap. I know that sounds crazy, its still cheap on 2015 numbers which is the way you have to value it. Got to look ahead to 2015, yeah. The opening bell a look at the s p on the top of your screen. The big board American Homes for rent, a reit, especiallyizing in Single Family rentals celebrating its ipo today. A lot of stories did various Financial Instruments centered around rentals this week. Bed bath and beyond doing the honors. Stock jumped when soda stream reported a good number because thats a major place to buy the canisters. On the amh, its important to remember if Mortgage Rates go up, renters come back because it becomes i know all the Home Builders come on and say affordability was the greatest ever, it was when Mortgage Rates were lower. Mortgage rates are still low, come on. I mean, come on. Im just going by what i heard on the horton call, cancellations. I know its true. I know its true, although, then, that would indicate if you dont consider this low, then the feds got to stay in there because then were not normalized at all if people cant deal with a 4 30year. I think the fed was shocked at how badly home sales junes not a good month. Not a good month. Hey, sorry. Thats all right. Im not taking you personally. Toll brothers, they are where they are because, you know, they are who we said they are to quote dennis green. Of course, if uf missed yesterdays fed action, of course, fed on hold. Ecb this morning on hold. Bank of england, on hold. Although draghi did say the risks were to the downside. Well watch exxon this morning. According to s p our friend christine short it is the biggest miss for exxon since they began collecting data in 99. The second worst was 18 cents. This is 35 cents. Well, look at what ill tell you whats remarkable for what . Its not down four, its not down like royal dutch. Again, a testament when you meet with the people from exxon or you talk to the people in the industry, they all revere exxon because exxon has a 50year plan. Im not kidding. Boeing mcderny has a 20year plan and exxon has a 50year plan and they spent a lot of money thinking about what will happen in 2020. In the year 20 in the year 2525 theyll have a good number. All right, what if i want to buy it off 2525 numbers right now . What am i talking about now . Oil companies are doing well right now. Eng is doing well right now, i dont need to buy xom, four billion buying back stock and if they spent the additional 4 billion exploring and didnt hit the stock would be dramatically lower and doesnt have a great yield either. Apple has regained the largest market cap by a few billion. I am sentimental, this is what im talking about the ridiculous virtuous circle, jeffreys raises price target from 405 because they cut it too far to 450 and they say it will still disappoint. The new measurement for apple is the disappointment measure. How much will they disappoint, if you think theyll disappoint huge, you got to buy the stock. They may not disappoint huge but small. And everyone has to raise the price target because the stock is going higher. This is a remarkable situation how analysts were going up and down and how wrong they are again. Lets point out the s p is now officially at 1700 which for a long time this year, gives, was an aggressive target. Right. Was virtually the high on the street and now we have the likes of a tom lee at jpmorgan saying 1750. He did nail it. A lot of people feel that hes bullish. He turned out to be right. Theres a lot of people that said, listen, we got to wait until the revenues come in and when the revenues come in, well start buying the s p, where are they going to buy the s p when the revenues start coming back, higher. Is your playbook for this month or the quarter to continue to buy health care, look at cigna not moving a lot, but membership way up. Do you continue to buy health care . It tipped over 90 yesterday and its one of my favorite companies. I do think in 2014 youll have turmoil in that group because people will figure out Affordable Care, but so far theyre the winners. But, no, i want to go to cummins, cummins engines reported a really good quarter. In china if you have two good months of pmi data people will be spectacularly impressed by cummins which basically said its a chinese company. Watch caterpillar, heavily shorted, there was a panel i watched, it was a very persuasive you ran the panel. Yes, yes. Presented a short thesis a caterpillar. How did it doing . Pretty well. It was at 83 and change. Where was it in the panel . I have no idea. 85. To have a short miss in this market. When they make it, i say, yelp you with the yelp. Yelp is heres another one. Does telecom and staples, do they continue to lag for the rest of the year . I think they do. These are bond market equivalents, people worried that the tenyear goes to two lets say they think the tenyear goes to 2. 75, theyll sell those again and the reits as well. Remember what jamie dimon said when we interviewed him, he said jpmorgan is set up for higher Interest Rates. Theyll make a couple billions more. The other guy will make the same thing and you Want Companies with earnings momentum and the big banks have earnings momentum, i think those are great to go and i think the industrials are terrific, up 125 here. Happy days are here again because of china. China . Really quick here, google which some are using as a proxy around 900 to see whether its true resistant, whether its new support. Your feelings on the big high techs that you mentioned the last half hour . You go back over the google Conference Call, it was really good. I mean, theyre spending for the future. They have to catch up with facebook. Theyre doing this programmatic add program but they said next quarter theyll catch up. Google will have a big upside surprise next quarter. Facebook tremendous number. Amazon was a great number and people decided to nitpick, but look where it is. Netflix, remember when netflix was supposed to be bad . Look at that stock. So, does it worry you that theres no room to make a bear case for anything in this market. Periodically youll have downdrafts, yesterday you could get in front of a visa or a mastercard and pick them up at a good price. Cellgene, had dropped and gilad, and you do get your spots. So, you can make an intraday bear case. Intuitive surgical, our friend herbal life, greenburg, he came in and had a good bear case on that. Someone recently had a bear case on Community Health and that worked out. Intraday bear case. Yeah . You got five minutes. These are long days. Yep, its over. Intraday bear case. Too late. Byron meade came on and told me about margin pressure. When you have natural prices going down and no margin pressure. When you have companies being able to fire so many people, remember, the hiring is not big at these big companies. No, no. Theyre making a lot more money with fewer people. That may be a tragedy but its also what they are doing. As we said s p at 1701 that is an alltime high for the 500. Lets get to pisani to see what is else is moving. They are throwing in the towel on the pullback, from july 23rd to the high to the low that we had july 25th, do you know the pullback . 1. 3 , we cant even get a 5 pullback at this point, so we havent seen any heavy selling in the month of july. In fact, july was a very light month overall. Even lighter than july of 2012. And i think most importantly the trading communitys starting to get comfortable with the concept of tapering. Theres a belief perhaps the economy can handle it and the fed has done a reasonably good job of assuring everybody that the tapering will be gradual, rate hikes long, long way down the road. So, the stock market can move up even if Interest Rates move up and thats what people want to see on friday if we get a decent number on nonfarm payrolls over 200, 225, rates will move up but stock market possibly can move up as well. That and with the adp numbers that started turning peoples heads around. Car Sales Numbers, i home you heard from phil, best july since 2006, well get the rest of the numbers today. Domestic auto sales should be at 5. 72 million the best since september, 2005. The light truck are on fire. October 2007 probably the last time we saw these kind of numbers, 6. 7 million, 6. 8 million. Big numbers in oil and construction thats whats driving the sales of the truck industry overall. Do you know what im not happy about today . Exxon, the big miss there and it was largely in the downstream earnings area. The big miss has just hurt the s p overall earnings. Exxon is the Biggest Company out there and the big miss, earnings in the s p at 5 this morning, thanks to exxonmobil, earnings for the overall s p are now down to 4. 3 thats a big move to the downside. We were moving up here, so its kind of knocked things down. But there is some very good news out here. There was a new zone discovered in the permian, thats the big texas area for oil and natural gas that apparently was successful. In other words, theyve discovered a lot more oil in texas. And thats overall very good news. I see pioneer natural resources, pxd, which is one of the companies that are involved here, jim, was very successful. And that stock is moving up rather notably here today. Finally just want to mention American Homes, here we are right behind me, waiting for it to open, Single Family home rental reit, interesting concept, priced at 16, the low end, 24 million, still waiting for that to open somewhere around 16, guys, back to you. Thank you, bock. Pioneer natural, the permians been around, one of the oldest basens, and boom, you got new Technology Come in. You mentioned consumer products, procter is moving up and clorox is reversed and going up and kellogg is the only one disappointing. I doubt that will stay down that badly. The number seemed good to me. Lets ship to the bonds and the bond report and rick. Good morning, jim. If you look at Interest Rates. A twoday chart of tens we cont hold lower yield levels or another way to say it is we see a lot of selling come in at support levels in the treasuries whether you are talking about cash or futures. Open the chart up a bit, and you could see on the 620 chart that we are now above the the right sides now above that left side very significant, this 260, 261s significant. Lets switch gears. We know its been a draghi thursday, so lets look at a chart intraday of the boon. First of all, notice how its come back in yield. Most of the comeback in yield on both those charts was the 830 numbers on initial jobless claims and if you open that chart up to 620, wow, a completely different pattern. The right side and the left side are not the same as the ten. Remember, we are 164 in a boon. 264 in the ten. If you were playing that dirty shirt relative value trade u. S. Versus europe on the Interest Rate side, you did pretty well. Lets switch gears to currencies. Lets forget the euro a minute, lets look at the pound versus the dollar. Looks a little spongy on this chart, but if you think its spongy there, look at the euro versus the pound on a oneyear chart, euro is just smashing the pound on a value trade and if you look at the dollar index, especially over about the last fivemonth period you can see why this 81. 5 level is so significant. Now, whats the cable chatter out there on time warner, mr. Faber . All right, thank you very much, mr. Santelli. Hey, this theme whats bad is good, take a look at shares of Time Warner Cable this morning, because, in fact, it is up. Now, its up again because of that continued consolidation chatter, more on that in a minute, but when you look at the numbers themselves it wasnt a good quarter. In contrast and, yes, identify will play the homer right now to comcast yesterday, Time Warner Cable didnt deliver on a lot of the metrics that you would look at to sort of judge a quarter being a good one. For example, we talk about broadband. Thats the key product now. Highspeed data adds for this company were below what were the expectations. They were looking for as much as 70,000 in additions of highspeed data, they came in at 21,000. We put together some of these for you. I think we have them instead of just looking at the chart of the stock. There it is. Thank you. And you can see right there, 21k, thats not what they were looking for. As for video, we know people are pulling it out, slowly at first and then perhaps suddenly. I have a belief on the slowly part. Nonetheless, you can see it there, the key is highspeed data, they didnt do it. You can take a look at their total cable subscriber, 11. 1 in video, and voice are at 4. 9 million. Thank you. And that gives you some sense. But overall, not a great quarter. Now, why is it up . Well, you know, glen britain is moving out, rob marcus is moving in as ceo. On the call mr. Brit did say, quote, you know, we are going to, our objective is to build value for our shareholders. Remember john malone at liberty as we reported along with charter which they own 27 of had been trying to generate enough interest amongst Shareholder Base of time warner that they would get a deal of some kind or get to a conversation. That hasnt happened and time warners feeling is you will use our Balance Sheet to benefit your shareholders, no. Would time warner turn around and buy charter . Perhaps not at this level. Well see the consolidation chatter, at this point it doesnt appear to be going there but the stock is up. I want to get to directv, it was not a good quarter and the stock is down 3. 4 . Why . They did lose 84,000 subs in the u. S. Latin america, though, is the key growth component for this company as you take a look at subscribers in the u. S. And churn. Lets go to latin as well, because there youll see what was not expected. 165,000 additions. That was well below. You can see what they did just last quarter. And the average monthly churn skyrocketed to 3. 1 . Wow. Should point out, you know, this trades at about ten times forward of eps, for Time Warner Cable you are talking 11 times cash flow, so the valuations may simply hold up for these companies, jim. Latin america is showing theres a tremendous trade restraint going on. I think theyve become argentina a little bit antiamerican. Questions, of course, about brazil which is yes. Huge. Latin america is no longer as friendly to the capitalists as it used to be. Argentina the best world index in july. Up 12. 5 , is that ridiculous . Good stock market, but not that good to america. Whole foods earnings beat and raised guidance not enough to please wall street, the stocks down a touch. Well talk to the coceo walter robb and hell share his companys game plan for growing the natural and or organic game plan. Thats up next. And this will be your premium right here. Sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. Love this guy. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] bundle home and auto and you could save 760 bucks. Alright, mama, lets get going. [ yawns ] naptime is calling my name. [ male announcer ] get to a better state. State farm. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Theres a look at the heat map almost all of the s p components, of course, in the green. Its up s ps up 16 to 1701 and the dow up 123. Thats alltime high. Yeah, interesting we were mentioning truly i saw an actual stop trading order and balance truly so many orders coming in. Pretty amazing. Shares of whole Foods Trading lower this morning, trading much lower in the after market last night after some people think that sales growth weaken and i say some people think because i qualify those comments. Earnings for the Third Quarter did beat the street. We are just so lucky to have walter robb, hes the coceo of whole foods. How are you . Good morning, everybody. I want to get right to the point in the february Conference Call you were a little disappointed in your numbers. In may you were positive in your numbers, i felt the same confidence you exsulded in may even as the analysts tried to nitpick your number. Do you feel as confident now as you did after the previous quarter . I feel very confident about where were headed. I mentioned 50 new leases in the last 12 months. 94 leases in the bank ahead. I think it was a great quarter very consistent results on sales and on gross margin and on the net income, so were feeling very good right now. Now, walter, there was also a thesis reporting thing among the analysts, they think that fairway is coming public and sprouts is coming public and a lot of the companies trader jeffs expanding, saying that basically you were not able to maintain your price structure because theres so much competition in your market. Was there anything really different in your price structure versus say the last seven quarters . No, these are all competitors we know well and theyve been around for a while, some have more money than they used to, but i think the market weve said consistently were just continuing to make these investments to continue to keep ourself competitive because we think its the right longterm strategy for whole foods but you see the balance between the price investment and the Gross Margins are something were continuing to do. Walter, in a feelgood portion which i cant resist because it does matter, detroit, everyones fleeing, you moving in. Hows that store doing . You know, its so far above our expectations its just incredible. Were about eight weeks in now and weve been really, really pleased with the results and i think serving all of detroit and showing that we can flex a little bit on size. Work a little bit on our pricing and our selection its been a very wonderful store so far for us. Walter, you know, earlier in the week well mentioned cantor taking you down to a hold not just a valuation but on some of the remodeling costs on some of the stores. How significant are those . And how much of a conceptual change do you see to some of the physical spaces . You know, i didnt see that part of the downgrade but i saw i think, you know, im not sure i really under the question, im sorry. I guess im wondering, to what degree are you going to remodel and how much is that going to cost . I see. Were going to spend probably 650 million on new stores and remodels this next year and those costs are well in line and, you know, i think if you look at the return on invested capital which is the output of that effort, i mean, were hitting new highs in terms of the i think were 19 for the stores over the last couple years. So, i think the use of capital, the stewardship capital is in good shape in this market. Walter, is it time now after the incredible threeyear supply of new stores in the pipeline that you took up the 1,000 store projection because it seems to me that you could easily put 1,200 in particularly after what youve done in boston where it seems like there is no saturation or cannibilization despite the increase in stores . We havent upgraded the number but the confidence level is were accelerating the growth and you could look and say the number could potentially be higher. Im not prepared to put a higher number out, but i can see our way to a higher number. Also, some of the theres a little bit of a misperception among some people that youre changing the size of your stores and, therefore, changing your template, but in truth you are opening some of the largest stores and smallest, for the smallest you are doing well and the Square Footage for the largest doing even better. Thats right. I think what weve said well fit the right size store in the community and thats allowed us to flex from 20,000 to 70,000 and the store in brooklyn coming up this fall, thats the largest store. The store in chicago, thats a larger store. I think we kind of have the ability to do a range of stores which gives us more flexibility to open more stores and hit that target with the number of stores in the United States. And, walter, once again, mad money can do its show from the 40,000squarefoot brooklyn store perhaps from the greenhouse above it . Thats a deal. Thats a deal. Thank you. Youre changing that whole neighborhood. Its going to be terrific. Its on the canal as the man goes to detroit and the canal changes the price values of everything, walter robb, thanks very much for coming on to squawk on the street. The man with the plan and a canal. Thanks for having us on this morning. Yep. 6 in 60 with cramer is coming up. Le lexus enform, including the es and rx. This is the pursuit of perfection. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. 6 in 60 by jim on an important market day, chesapeake is first . Chesapeake is finally snow longer outspending itself. But this stock can go higher. And donnelly downgrade. We had them on and announced an unbelievable quarter and 30 of the business is catalogs and printing. Contrail resources. Were talking about pioneer, concho has 630 acres in the permian. This stock should be much higher. Mgm . People are talking about china should be so bad, how can the Revenue Growth be 20 . Upgrade for amt. A lot of people gunning against American Tower but not raymond jay. They say you got to buy. Vulcan. Vulcan is a great tell of Residential Housing can with when things were bad in florida, they were down. And coming back big, much betterthanexpected numbers. Lets talk about tonight. Youve got a lot to cover. Weve got marketo and salesforce. Com and this is david payette, everyone is worried about restasis, its bankable but i got to find out more. Im worried about thegeneric competition for o of their largest drugs. Well see you at 6 00 and 11 00 p. M. Eastern time on mad. And a huge lineup of ceos, were back in a minute. Youre not just looking for a house. 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One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. Welcome back to squawk on the street. 55. 4 is ism manufacturing, a strong number. Well get back to that in a minute. Thats july. June Construction Spending goes the other way. Surprise to the downside at down 0. 6 of 1 . Were expecting up half of 1 . Lets look at some very important metrics here. The low read on this ism going back to june of 09 was in may at 49 right on the nose. Now, if we look at the 55. 4 since that number, of course, its the best, and its the best level 55. 4. Boy, we have to go way back, since june of 11. Thats a quick look. Prices paid to the exact opposite they did in chicago. Instead of moving up, they moved down from 52. 5 to 49. New orders moved up sharply from just under 52 to 58. 3. And maybe the most important index within that report would be employment in lieu of tomorrows data and it moved up smartly over a threshold. They hit a threshold jump from 48. 7 to 54. 4. So, Construction Spending disappoints. Ism surprises. And joins the ranks of the pmis around the globe. Back to you. All right, rick, thank you very much for that. We do want to bring your attention to American Homes open for trading. The stock lower on the debut. Ticker symbols amh, they did sell 44 million shares at 16. Priced at the low end of the range and if you dont know, its the second largest u. S. Homes for rent market after blackstone. Potentially some would argue, some might argue coming to the market a little bit late in the game but well see how it trades later on in the session. Lets dig deeper into some of the data rick was just mentioning, our senior economics reporter Steve Liesman back at hq already having a banner morning talking grateful dead, steve, what do you see . This sa blowout number here, carl, its a huge number and its important because its the first piece of data for the month of july and weve thawked for a while here about how important the july data is, kreid i ceding the weakness of the Second Quarter and the question is did the weakness continue, apparently not. Im doing a double take on this number, carl, because the Production Index of 65, i thought maybe they had a misprint there was 56. You have to go back, im just doublechecking this, back to july sorry. June may of 04 to find a production number that was that strong. As rick said, the employment numbers strengthening. The new orders number, i wanted to see when the last time we had a number of 58 was. Hang on. Just give me a second here. Ill tell you, but its been a while since its been that strong. Got to go back to the middle of 2010 i think and also the inventories number being low, that also bodes well for the future. So, the Manufacturing Sector really knocking it out of the park, carl, and this is going to be i think beginning to set up expectations, again, where the tapering in september. Remember, the economy doesnt have to be as strong as the fed predicted it was going to be. Theyre certainly going to be lowering their forecasts for the year given the weakings in of the first half, but it has to show that its expanding and that would be suggested by this number here, carl. Steve, does it square with any of the regionals that we saw yeah. Philly or chicago . Regionals have been strong in general, carl. Rick mentioned that, and its suggesting that youve had this little bit of a swoon in the spring and summer and now its coming back. Now, what i need to do and i cant do this right now. A little more detail. Is figure how much of this was autos. Remember, you dont have auto shutdowns. Phil lebeaus been talking about this a lot. I dont know if its all autos, if its broad based, though, its good news. Steve, lets ask our next guest. Thank you very much. Steve liesman with the strong data this morning. Lets bring in the aerial investor director of research and pnc, good morning. Good morning. Charlie, first to you, steve was highlighting the strongest points in the ism survey that weve seen in a couple years. Is it your sense that this is reflecting the outside strength of autos or a more broad based recovery in the u. S. Economy . Its more broad based than that. Its autos. Its housing. Its energy. All leading to goodpaying jobs which are going to bring down unemployment. And it spells a strong recovery. A higher than the 2 everybody is talking about, were going to get to 3 , 4 and that means bond prices are going to go down. Bond prices are going to get hit hard and the stock market can still do significantly better from here. Charlie, you safe the bond prices are going to get hit hard. Weve obviously seen a little bit of this already after bernanke first came out talking about the taper back in may. What do you think happens now . Because the ten year were still sitting at the levels just under 2. 7 . Remember, the gdp data still isnt that strong. Well, its just starting to get stronger. And we were at 1. 7 a year ago and were at 2. 7 now and well be at 3. 7 in a year. People that own a tenyear bond will lose 7 , 8 of their principal value. Theyve been buying 85 of indicators, you see job growth, you seeing falling unemployment claims in the u. S. And in europe we saw a very strong pmi read this morning. Similarly japan pmi read and even the China Official read was better than expected. The Global Economy is expanding and the u. S. And europe are gradually getting over the great recession. So, the direction for economics is better. Charlie, in a word, you mentioned, again, this concern about another selloff in the bond space, so what are you guys doing with i mean, youre an Investment Officer there, how are you allocating funds . This is the first day of the month and a lot of people will be moving money around and trying to position for the second half of the year. What are you doing . We still think there will be a great rotation out of bonds into stocks. We still have individual investors. We still have Pension Funds that are overinvested in bonds and underinvested in stocks, we think that will continue. Bond prices will continue to come down. Stocks which are only at 14. 1 times forward earnings are going to continue to be very strong. Okay. Let me just make sure i get this right. Youre saying that you do expect people to move out of bonds and into stocks, is that right . Even though you guys arent doing that right now . No, no, no. We absolutely have been doi ingt for a long time. Weve are saying for a year the bond prices are overpriced, 1. 67 and 1. 45 on the u. S. Tre. S. Tre was a bubble price. And bond prices will continue to come down. Institutionals and retail will continue to move out of bonds. Well, what a way to kick off the month, charlie and bill, thank you both this morning. Thanks for having me. In the meantime, whats amazing the market is doing it all without the cooperation of that name, exxonmobil with the miss, down 2 . 1. 55 is a miss. Its not just a miss its the biggest miss at 35 cents since s p began collecting data back in 1999. Previous to this the biggest miss was only 18 cents back in 2009. We know what was going on in the course of that year. And just to remind you how big this company is, as a result of this miss, s p 500 q2 Earnings Growth goes from 5 to 4. 3 all because of that one name. This will be another reason as well for the russell to keep outperforming. Making the note in the client note this morning that if you look at the s p 500, the weight of Companies Like exxon is so much larger relative to, say, the russell and thats one of the reasons. In the meantime youve got a problem with the refiners. You saw it with phillip 66 and this is all because of the rising price of oil in the middle of the country as you are finally able to get it out. Gm out with its auto Sales Numbers and phil lebeau with the details. Simon, the numbers from the month of july for General Motors an increase of 16. 3 below what the edmunds. Com estimate was for an increase of more than 19 . Lets bring in kurt mcneil the head of u. S. Sales from General Motors joining us from the detroit headquarters. Sir, weaker than some were expecting but still a strong month. Characterize it if you could for us. Greetings, phil. Yeah, were pretty happy with the month. If you look at that, thats 16. 3 , our Retail Business was up over 23 . All of our brands were up double digits for the month, so we feel pretty good about those results. Your pickup sales up 44 . When you break that down, how much of that can you say is the housing market, its the contractors coming in, and how much of that is simply that old pentup demand, a lot of that on the retail side, with people who just have old pickup trucks . I think its i think its a combination of both, phil, both pentup demand in housing. Like you said, up 44 . We see Small Businesses up 61 . So, were seeing some good growth. That segment was about 11. 8 of the industry. Thats up about 1. 5 points, so were seeing, you know, that strong, Good Business and a great time to launch brandnew pickup trucks. Yet at the same time, kurt, year to date, your market share is 18. 1 exactly where it was last year. Do you pick up market share in the second half of this year . Because your come pettepetitors clearly picking up market share. Obviously we see the industry continuing to improve. And to your point weve got a whole host of new products coming here in the back half of the year. Were just launching the new pickup, the new impalas just getting started. The new buick encore and then weve got a new chevy ss corvette. A new regal and lacrosse. A new cadillac cts, so weve got a host of new products that will really help share in the back half of the year. Kurt mcneil, the head of u. S. Sales joining us from the gm headquarters in detroit. One last note, guys, when you take a look at their car sales and a lot of people talk about whether or not car sales will go up since gas prices really havent spiked as they usually do in the summertime gm car sales in the month of july up 24 . Thats the latest for now, guys, back to you. All right, phil, thank you very much for that. Macys and jcpenney back in court today for the final days of the lawsuit weve talked about so much about. Find out what each Company Might say in their closing arguments. Plus, after being stranded for more than a month, nsa leaker Edward Snowden has left the moscow airport. The question is where is he going now . Well get the latest when squawk on the street comes back. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. We do have a new issue at the exchange, American Homes, i think its amf is the sticker symbol, of course amh, sorry about that, which is looking at the rental market. Priced at the low end of the range and is trading lower by just a touch here at 15. 96, i think priced at 16. Well keep our eye on that. But overall some of the housing names are truly either in a short squeeze or responding very well to some of the data were getting. For instance, take a look at zillo hitting the eyes of a lot of traders and trulia, too, theres zillo up 82 and trulia up 19 to 44. For a sector that some had said was beginning to show signs of weakness. You started to see a tail wind after rates came back down, carl, when people started to calm down about the fed tapering. Whats interesting about the moves today they are poping on a day that we just had a raft of strong data that falls into the taper camp that could mean rates are heading higher, completely shrugging it off and, in fact, benefiting. It means a september taper is probably more likely than ever before. I dont know, but thats definitely going to be the debate. Tomorrow, tomorrow, wait until jobs report. Give it 24 hours, is that what youre saying . For the jobless claims figure today. Luxury retailers are seeing double digit gains in their stocks this year, what does it meanwhile for discounters and outlets . Well go straight to the source, steven tanger, the ceo of Tanger Outlets will join us when squawk on the street continues. I khnow, get yours, its th delivering alpha bag, but theres more, yours will be signed by the entire squawk on the street gang. All you have to do is guess fridays nonfarm jobs number. Sweet your guess and dont forget the nailthenumber. Oh, yeah, you have to be at least 18 years of age to enter. Sorry, kid. For all the rules and details go to stocks cnbcnews. Com and you have until 8 00 a. M. Eastern friday morning. Good luck. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac ats for around 299 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. From capital one. Boris earns unlimited rewards for his Small Business. Can i get the smith contract, please . Thank you. Thats three new paper shredders. [ boris ] put em on my spark card. [ garth ] boris Small Business earns 2 cash back on every purchase every day. Great businesses deserve unlimited rewards. Read back the chickens testimony, please. Buk, buk, bukka [ male announcer ] get the spark Business Card from capital one and earn unlimited rewards. Choose 2 cash back or double miles on every purchase every day. Told you id get half. Whats in your wallet . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Tens of thousands of dollars in hidden fees on their 401 k s . go to etrade and roll over your old 401 k s to a new etrade retirement account. None of them charge annual fees and all of them offer low cost investments. Etrade. Less for us. More for you. Nsa leaker Edward Snowden has left the moscow airport after being granted temporary asylum in russia according to his lawyer. Nbcs jim maceda is live in moscow with the latest, jim . Reporter hi, kelly, thats right, we were into the sixth week of watching or waiting for more snowden to come out of the transit lounge at the airport here in moscow. The planets were really lining up to suggest that he would be staying there for a long time, but it was confirmed today by snowdens lawyer that snowden was issued temporary asylum. We saw images at least of his new official refugee passport dated yesterday, july 31st. Good for one year. But this asylum is renewable after that indefinitely one year at a time. So, despite the wait at the airport, this process which normally takes three to six months, in fact, russian officials fast tracked that process, and within two weeks, really, he got this ability now to travel anywhere he wants to in russia. When asked where snowden was going, the lawyer would not tell us. He said that hes concerned about snowdens safety and citing security concerns only said that he had left the airport. Now, a top russian official later today said that snowden was insignificant as a case, as an incident and that the kremlin would not want to see this incident further damage relations with the United States. But its really unclear how the u. S. Is going to respond to that. We understand theyre crafting a response as we speak. But it might mean that all bets are off for that key summit meeting to take place here in moscow in the beginning of september between president putin and obama. Back to you. A lot of focus, yeah, on when they will hold those bilateral talks, jim maceda in moscow, thank you, sir. Meanwhile, macys and jcpenney beginning their closing arguments over the martth through stewart products. Reporter hi, good morning, carl, its been quite a day for jcpenney, the retailer refuting a media report that cit had stopped supporting deliveries for smaller manufactures. Jcpenney said its business as usual that use cit as a factor. And now its on to court and jcpenney joining Martha Stewart living omnimedia against macys. And seeing the parties in court today for the first time in three months and its possible the judge could even render a decision today because hes had all of the post trial briefs for quite some time to really determine who, in fact, has the right to sell Martha Stewart designed products in the categories that macys claims it contractually owns. Right now Martha Stewarts legal team is presenting its closing argument. Jcpenneys team will present after that. Each of those legal teams will get 75 minutes each before macys goes on for two hours of its closing. The judge said he will not ask any questions this time, hell simply sit back and listen and take notes. Macys is no longer asking the judge to pull the jcpenney everyday products that Martha Stewart designed off of the shelves but is instead asking that he prohibit Martha Stewart living from designing any additional products in those categories. Also macys is now seeking damages, attorneys fees and punitive damages and injunctive relief. So, it is possible today that after we hear all of the closing arguments, the judge could render a decision because he has said that he will make a decision shortly after the closing arguments, but we really have no idea to guess exactly how long that will take. Simon . Okay, courtney, we will wait and watch, Courtney Reagan outside that particular court case. Backtoschool shopping season is looming and our next guest is betting that parents will continue to seek out value and travel to tangers 43 outlet malls across 26 states. Joining us now is the ceo of Tanger Factory Outlet centers, steve tanger. Good morning. Good morning, thank you, simon, for having me today. Its a pleasure. Thank you. We saw earlier in the week you came through with earnings we should point out that were above targets and that was driven by strong base rent. As we start back to school, how do you feel about the base business . We feel good about back to school. The Retail Centers in the u. S. And canada are totally stocked with wonderful products at great prices. We are extremely optimistic. How do you feel about where we are with the share Price Performance . Obviously you were saying to me in the break there that youre paying now 2. 8 on a dividend but because its a move that weve had in market Interest Rates since bernanke spoke may 22nd, your stock has clearly been under pressure, thats a natural reaction for a reit. At the same time you have ubs who are calling the stock 25 higher. The stock price 25 higher because of compelling growth. Thats quite a confusing situation for investors. What would you say to them . Well, we are both a Growth Company and a dividendpaying stock. Most investors look to tanger for a total return on their investment. Not just the dividend. Last year in 2012 our total return was 19. 8 to our stakeholders. Over the past 15 years, its been close to an 18 compounded return. So, we have a lot of embedded growth. I might say, simon, also that in the First Six Months of this year, weve had a 4. 5 comp noi increase which we have had comp noi increases for sure. 34 consecutive quarters. But what do rising market Interest Rates mean to you . Well, as a company, we have very little floating rate debt because were only 25 leveraged. And only about half of that is floating rate. So, about 10 , 11 of our total market cap is floating. On the product side, think about it for a second. As Interest Rates go up, the cost to carry inventory for over 450 partners becomes greater. And they want to move inventory faster which in past cycles where Interest Rates went up, they moved better product faster into the outlets at greater prices. Lets talk about that. I know you dont want to talk about individual tenants, but were very focused this week on coach and the decision that every retailer makes being exclusive and in the outlets that you have in order to drive the growth. Do you think that maybe the balance is switching . Coach has a 21 ratio at the moment, to your sorts of outlets, do you think you may lose customers as they move up the value chain . Were very pleased with coach. Weve been partners with them over 20 years. We have a lot of respect for them. We have michael kors and kate spade, et cetera. As far as that category is concerned, we think its a Dynamic Growth category in Tanger Outlets. And your occupancy rates remain extraordinary high, steve, thank you for coming in. Thank you, simon. Thank you very much. When we come back cigna getting a clean bill of health, beating the street for a Second Quarter pushing the stock toward a new high. Look at that chart. The ceo will join us live and break down those results and the state of the Health Care Industry when we come right back. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. Love this guy. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] bundle home and auto and you could save 760 bucks. Alright, mama, lets get going. [ yawns ] naptime is calling my name. [ male announcer ] get to a better state. State farm. [ male announcer ] get to a better state. A quarter million tweeters musicare tweeting. Eamed. And 900 Million Dollars are changing hands online. Thats why the internet needs a new kind of server. One thats 80 smaller. Uses 89 less energy. And costs 77 less. Its called hp moonshot. And its giving the internet the room it needs to grow. This. Is going to be big. Its time to build a better enterprise. Together. Welcome back to squawk on the street, reporting live from the nymex where traders just got this weeks storage report, an injection of 59 billion cubic feet of natural gas, that was higher than classifications of 54 billion to 58 billion cubic feet and we are seeing prices depressed this morning. A decline in natural gas more than 1 . Keep in mind weve seen a slide of more than 40 cents in the last two weeks and traders were looking today to potentially find a bottom here. But that may not happen. In the meantime, were watching weather forecasts as well, theyre not supportive of prices as we are seeing average temperatures to belowaverage forecasts here especially on the east coast but, again, that number 59 billion cubic feet injection in natural gas storage. Kelly, back to you. All right, jackie, thanks very much for that. Now, cignas Second Quarter profit beating estimates by 18 cents helped by lower medical costs joining us is David Cordani, president and ceo at cigna. Thanks for joining us. Thanks, good to be here. A lot of people wouldnt necessarily expect to hear about lower medical costs, what in your experience are you seeing and especially in the week since the Quarter Ended . Sure, relative to medical costs about 60 of our company is u. S. Health care, in that part of our business most of our business is selffunded where it floes dire s flows directly to the employers and the rate in growth in medical costs is a little less than expected about a percent less than we expected. Mostly in the Outpatient Services category. So, what do you think is going on there . Sorry about that. No problem. Just curious, what exactly might be driving that drop in outpatient in particular . Yeah, we had expected to see an acceleration in outpatient utilization and outpatient servi services. It accelerated somewhat but not as much as expected and were seeing individuals make tradeoffs in how and why they are engaging their services. The thing i would highlight is the preventive diagnostic services continues to go up and thats a very positive thing to the benefit of our customers. Certainly if the trend is taking makes across the u. S. More broadly and people acting more proactively before they are hit having to go to the hospital to support the condition its a good move. There are a couple of things, david, that are happening in the Health Care Space which will have a huge impact on your company. Most specifically with obama care and i just wonder in particular, when you guys bought Health Spring a couple years ago the idea was to dramatically increase the Medicare Advantage base. Now we know, of course, that what obama care would like to see happen is that there are fewer people relying on these plans, albeit, they just increase the rates for next year instead of lowering them. Whats the future of Medicare Advantage and what does that mean for your company . Today Medicare Advantage makes up about 25 of all medicare eligible population so its significant. 14 million americans, theyre highly satisfied. A little bit lower average income level, so highly price sensitive, and very engaged with their physicians. Over time we think its going to continue to be a robust market because it delivers outstanding value and great clinical quality and Great Service satisfaction. 2014 will be a bit of a disruptive year. Well grow our Customer Base meaningfully in 2014. There will be some revenue pressure that goes along with that. When you put it into the context of cigna has a whole, we have a very attractive portfolio with medicare. Be able to grow it over the long term. Its interesting because there are people who are saying that the intent of obama care, the Affordable Care act, is to bleed medicare to death to some extent, to bleed Medicare Advantage to death. If you step back we have an affordability challenge as a country. Thats the bigger issue, theres a fundament affordability challenge, medicare is a significant outlay and Medicare Advantage is a subset of that and today the most efficient Medicare Advantage programs are delivering a very strong value for individuals, so clinical quality, affordability in service and increasingly helping the government pay the overall bill that goes along with medicare, so we see it as actually a big part of the solution, but at a macro level we got to come back to the affordability challenge. For cigna we believe its all about engaging the consumer and engaging the physician around value and were seeing it work in both the commercial space and the medicare space which is why were growing again this year. Im curious as well, david, about the future of the state exchanges. There are 50 experiments in some ways you can call it playing across the u. S. But a lot of pressure to this get these up and running. Whats your own experience been with rolling out or trying to roll out the exchanges across the country . Yeah. So, the exchangesing are s s i to be new to everybody, outside the u. S. We sell direct to individuals in about a dozen countries around the world, electronically interfacing and selling directly to individuals, and the new markets and new opportunities, well use our most collaborative physician models to be able to deliver a very good value. We think 2014s going to be a challenging year. Theres a lot of chineg thatof being introduced, were focusing in five states and a limited number of cities in those states to make sure were in a position to deliver a good value and experience service to our customers with our physician partners. Is that because of where you are geographically located or is that because there are only five states where you think it makes sense for your company to be involved in the exchanges . I appreciate the question. Stepping back, cigna has not played in the u. S. Individual and small employer market, so this presents a new opportunity for us. Yeah. So we dont have to enter 15, 20, 30 markets to protect an old block of business. We can look at each market on a fresh basis with a new Business Model which is an attractive place to be and we identified five states that were very attractive where we have great physician collaboratives and theres a good demographic to be able to sell to and over time so long as the Exchange Market evolves in a positive way we see the ability to continue to grow the markets to the extent they evolve in a positive way. Okay. David, so much more we could discuss, David Cordani of cigna. A lot of media stocks are in rally mode. Cbs at a 13year high following last nights strong earnings and Time Warner Cable at a new alltime high and comcast a new alltime high. Time warner cable, 1. 69 did beat, and doesnt appear to be slowing down the stock. And overall with the markets at alltime highs, again, this morning coming up the definitive way now according to Morgan Stanley to play the fed and Interest Rates. And later, why this dog is hanging out at the nyse today. Why hell be on the squawk on the street set very shortly. Youll have to stay tuned to find out. You aint nothing but a hound dog including the gs and allnew is. This is the pursuit of perfection. With the spark miles card from capital one, bjorn earns unlimited rewards for his Small Business. Take these bags to room 12 please. [ garth ] bjorns Small Business earns double miles on every purchase every day. Produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less . 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To give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because now more than ever, the future belongs to those who challenge the present. Lets take a look at whats going on with regard to one set of data points, i guess well call this the abcs of pmis. And what i do see is a lot of strength. Whether you look at china, whether you look at europe and a really fast turnaround in the u. S. Boy, may, we were under 50. A couple months later were at twoyear highs. Im not saying that we shouldnt trust the data. What im saying is, is that we are in crisis control right now. Crisis control. Consider, draghis comments on one hand. I think europes turned the corner. On the other hand, were going to keep everything the way it is. Crisis management mode. Pretty much as far as the eye can see. Well call it 2015. Look at our own central bank. Our own central bank talks about the economys doing okay. Moderate. Theres all these, of course, scripters, descriptions that are put forth, but i guess the real issue is this. I see the crisis control in place. But what i dont see is the crisis. Now, burden of proof. We know about it from jurisprudence side, innocent until proven guilty. I would hope that we could have the burden of proof on many of these programs, healing assumptions versus crisis. But thats not the burden of proof. And thats the main difference, i see, between governments and agencies like the fed and the private sector. Its kind of the cover your butt mentality. In the private sector, where you have a profit motive, you cant do things forever, theres a profit motivation, theres a metric to measure that. But more from the government side, it doesnt behoove any central bank to do anything early. Because should it go wrong, the consequences on that part of the ledger are much worse than potentially doing what i would consider, my own opinion, the right thing and acknowledge there isnt a crisis anymore and maybe stop the programs. But there are a couple of dangers. First of all, i guess, the danger, i dont see danger, no, not carlos danger but heres the point. That should there be another front to the slowdown, we dont have any real soldiers to send to the other front. A lot of people on this Trading Floor talk about, you know, if the feds really or draghis really honest about, listen, if things improve, pull back and we want it to be this floating arrangement, then they really need to get to floating and really quick. Because should there be another dip down the read, what are we are we going to do, buy everything the fed issues . Okay, and if i look at treasuries, i get really optimistic when i see a 270 and 10 because like many, we hope that theres real fundamentals behind it, but there is also a caveat. Ive said for a while, that maybe the worst thing will be the best thing. Because when the white flag goes up, that all is good, were going to see the velocity of money go wild in my opinion, and all the naysayers about pricing issues, well, look it, listen, if detroit in a couple of generations could go from number four to where it is today, lets not underestimate how quickly things can change. Remember, in may we were under 50 in the ism. Back to you. Rick santelli, thank you very much, sir. Coming up next squawk on the street is going to the dogs. Coming up, tv is for the dogs. Literally. Launching today is dog tv. The first and only tv network created for dogs. Its set to entertain, relax, and sometime late stayathome canines. Were giving a whole new meaning to dogs of the dow. Sit, behave well have all the details after this break. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Could save you fifteen percent or more on car insurance. Mmmhmmm. Everybody knows that. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. Xc this is the story of the famous dog if the dog is wagging its tail bowell be busy ah, thats charlie at post 9. Tv is going to the dogs, if you own directv you will now have access to dog tv, a 24hour channel designed specifically for your canine friend. Weve got the cofounder of dog tv, and he joins us with charlie. Its great to have you. Welcome. Thank you. It goes live today. On directv channel 354. Im told 46 million homes have at least one dog. At least 80 million dogs in the u. S. More than 46 million households with gadogs and directv has mor than 20 million households, very exciting. 24 hours . 24 7, all dogs. Im looking at a study from Oxford University from 97, looking at the use of video images to stimulate dogs. How do they respond . We know they see differently than humans, right . Dogs are actually color blind. They can see blue and yellow and they cant see red and green and we alter the colors in post production to make it more attractive and enhanced for them so they enjoy the video better. We have content that is specifically for dogs, scientifically developed. We have music and soundtrack that are specifically for dogs also create an environment for dogs. The images other dogs as were looking at here on the screen . Yes, there are other dogs, other animals, not necessarily just dogs. We have beautiful landscapes, relaxing animation, a variety of things we use to importantly, should be watching television, are you . We want da ution dogs to spend time with their parents. Thats the best thing but, unfortunately, dogs spend a lot of time home alone every day. Isnt the remedy for that give them more company, not to put them in front of a screen with the impression were going to make a sort of in a perfect world, youre absolutely right, but, unfortunately, they stay home alone. We have to work. And thats one way we could help them and we could help dog parents to do something good for their dogs when theyre home alone. Do they bark at the dogs . This could be pretty troublesome for the neighbors. How does to work . We have no barking on our channel because that overstimulates the dogs. So what we do is have sounds that are soothing and relaxing to help dogs enjoy the show and thats it. 5 a month, right . On directv. Is it only a sub model. There cant be advertising, can there . Theres no advertising yet, but we are having a twoweek free trial so people can enjoy and tune in for their dogs and starting august 14th, well be for 4. 99 a month. How do you measure ratings . Are you nielson rated . This is a subscription model, so its a little easier but anyone who is buying the subscription can leave dog tv on for their dogs. Can dogs recognize when its a repeat . Actually they do if they see it over and over they get bored of it. These why we have a very diverse and wide variety of content. Otherwise you could simply loop a lassie film. Youre absolutely right. But that wouldnt work. They will get tired of it. Is cat tv next . Well, were thinking about it, but cats are actually not as social as dogs and they dont suffer from boredom as much as the dogs do, so thats next. Or goldfish tv. Lets go for the dogs next. How about cost of production . How much do you refresh the content . Is it different every day . Yes. Do you shoot new stuff were shooting all over the world, beautiful landscape, other animals. We do a lot of post production, scientific techniques to improve content and make it compatible for dawogs. What about partners. I was in a pets mart that shows dog television. It is movies like lassie to a lot of the dogs staying there during the day or overnight. Is that something you would pursue . Not really. Were focused content for dogs. We want to give them something to focus on when theyre home alone. If purina said can we have a little banner ad, would you put one in the corner . Theoretically its possible. At this point its a subscription model and were focusing on content for dogs. My dog, lucky, i dont have directv, but if i did, he would probably be a fan. Charlie though, does she watch . Is that your dog . They got a shot of lucky somewhere. Starting this morning charlie is going to be our number one fan. How old . Charlie is seven. Shes seven. Shes beautiful. Thank you very much. I wondered if the Trading Floor would let her on. When seaworld went public wed lemurs and penguins. She was getting more attention than i was. Shes the most popular living being on the floor. Its working. Shes watching the television. Gilad, thank you for coming in. Dog tv live today on directv. Still ahead, as trading surges, the cme group is beating estimates. The president and executive chairman of the cme terry duffy will join us live for a first look at the companys Second Quarter results. Well be right back. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles, including the gs and allnew is. 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And experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. Want to show you whats going on with some of the big retail names today. Gap is trading at a new 13year high. The stock up 50 this year. Take a look at limited brands. The Parent Company victoria secret, pink, bath and body works and others, also a new alltime high. Both stocks jumping on upgrades. We should also say jumping as weve gotten evidence the u. S. Economy looking a little better this morning. Lower jobless claims, higher ism manufacturing. A lot of people upping their forecast for second half gdp. A lot of people were asking whether or not were in taper territory despite what the fed said yesterday. Jobs, of course, tomorrow. Tweet your nonfarm payroll guess to squawk street with the hash tag nail the number and you might win this bag which we gave to everybody who spoke at delivering alpha. Signed by everyone here at squawk on the street. There are the rules. Again, you have until 8 29 a. M. Tomorrow morning. I have seen a lot of guesses around 200. Such a safe guess. Be creative. 200 is the sixmonth moving average. Right where adp came in. The joke was adp threw up their hands and went with the five month average. Meantime, dow continues to lose a little ground here but still above 15,600 and the s p is above 1700. Been a long battle to get there. You know, the irony is if i look across the headlines screen on the reporting today, time warner disappointing, New York Times disappointing. Procter gamble disappointing, kelloggs disappointing. Whats also interesting about the rally is it started overnight after the fed statement was perceived as more dovish after the gdp numbers came in and werent that great. Then we got the flip side of the coin. Instead of giving up the gains and being worried about the tenyear, the opposite has happened. As jim pointed out in the 9 00 a. M. , there appears to be some asymmetry to the winners versus the losers. You miss on the quarter, youre down a few percentage points. You beat like a yelp today does, youre up 18 , 20 . Shorts are knocked ou. We should point out this is the best gain for the dow in about three weeks. July 11th we were up 169. So its an impressive move but its nothing that you would say is a quartermaker. There may be a sweet spot thats appearing where the Central Banks are delaying their action and yet the growth is beginning to kick back in. You might find that extends for possibly six weeks to two months. With all that in mind well see. Still a long day ahead. If youre just joining us, here is what you missed earlier on. Welcome to squawk on the street. Here is whats happened so far. A pretty good fiscal year. A good steppingstone back to where we want to be leading our industry. We generate a 98 Free Cash Flow productivity return. 12. 5 billion to shareholders. In the end these companies are where the money is just being made day after day in this market, 3m day after day, Johnson Johnson, united technologies. Big Cap International companies. If we change the Corporate Tax code, you can see these Companies Earnings explode. Were not talking pantene here. The pantene numbers are just okay. Mr. Eisenberg has swallowed the risk. The opening bell. Lets point out the s p is now officially at 1700. I think it was another great quarter and very consistent results on sales and on gross margin, on the net income. Were feeling very good right now. 55. 4 is ism manufacturing, a strong number. Were very excited about back to school. The retailers in Tanger Centers around the country and in canada are fully stocked with wonderful products. Relative to medical costs, about 60 of our company is u. S. Health care. In that part of our business, most of our businesses is selffunded where it flows directly to our employers. Good thursday morning. Were live at post 9 at the New York Stock Exchange with a heck of a market day. The dow putting up its best numbers in about three weeks up 121. S p above 1700. Got some good numbers from claims, the ecb on hold but the ism right around 10 ou clock, a blowout number which took the market to a new level today. Big miss for exxonmobil. The stock down over 1 after the companys Second Quarter profit fell 57 in the quarter. Thats a big miss. Oil and Gas Production at exxon fell 2 . Its the eighth consecutive yearoveryear production drop. And then theres yelp surging after its earnings and outlook beat expectations thanks to strong mobile advertising results. Getting an upgrade to overweight at jpmorgan. Record day for stocks. The s p hitting 1700 for the first time ever. Morgan stanley vice chairman Gary Kaminski is here. Hell tell you whats next. Plus, Edward Snowden finally leaving the moscow airport after being granted asylum in russia. Well hear from the head of the nsa. Also marriott lowering its profit forecast for the year. Well ask the ceo if hes worried about a slowdown in the u. S. And some concerns about the market overseas. A couple hours from now motorola will inveil iunveil it phone, the moto x. Jon fortt is live at the event in new york. He joins us with more. Hey, jon. Hey, carl. This year weve already seen big launches from nokia, from blackberry trying to take on samsung and apple. This is google though. Theyve got the fire power to pull it off, but still the stakes are high. Enter the moto x. Two years after google said it would spend 12 billion to buy motorola. Were going to build this out. But motorola ceo Dennis Woodside isnt focused on failure. His mandate from googles ceo larry page, aim high. Larry is consistent with everybody on his team. He is looking for big innovation. Hes looking for leaps in the consumer experience, and hes looking for tenyear bets, not oneyear bets. The moto x will be assembled in the usa. Thats a big bet. We keep the open views of the skyline. Reporter and right now workers in Downtown Chicago are building motorolas new headquarters here. Its attracting attention from chicagos mayor. This is great. I love this. Reporter to make an impact in the phone market, google probably will have to do more than make a splashy product. Researchers work suggest Marketing Spending has a huge impact on whether a new phone succeeds. And it takes a ton. The most Successful Companies spend hundreds of millions of company. Thats because smartphones themselves are a huge market. Idc projects 919 million of them will ship this year. Carl, i spent some time in chicago with Dennis Woodside, took a look at the phone which well get a closer look at this afternoon. I have Dennis Woodsides first live interview as motorolas ceo coming on at the top of closing bell. It is a big deal, and its been a long time coming. Cant wait to see that. Jon fortt with us. Good to have him on the east coast in new york city. Markets riding high on the latest round on Global Economic and u. S. Data. Interest rates, the fed, housing, all impacting the market. Good topics to ask our next guest about. Want to bring in our friend from Morgan Stanley, Gary Kaminski. Good to see everybody. You have been traveling the country. I have. What do they think about whats going on . Im glad to see the stock market continues to act the way i anticipated it would act when i left this role in a full time role back in april. I think as i described last time i was here, its a very normal things continue to be very boring but normal. One moves into equities, people are anticipating continued good performance in the equity markets, but more important it seems very normal for the first time in five years and thats a good thing. Think about the last five summers. Think about halfway through this summer. Its a positive environment for people to think about longterm investing and theyre doing so. I thought this tweet perfectly encapsulated whats on a lot of peoples minds. Sure, the safe haven persona of the bond investor will move into a stock market at alltime highs, sure. Again, you know, there is a normal tendency forget the stock market is at alltime highs. Think about the 10, 12yir type of returns. You have to think about things in perspective. Were going to talk i know about the bond market and well talk about what i see in the bond market, but in terms of trying to invest in equities, its the same theme you reminded me was a year ago where we heard out of europe were going to do whatever and that started the liquidity boom and theres no reason to think stock isnt going to be a great asset stock. Even after up 20 for the year . You cant think of it that way. We have a lost decade. People are nervous about things that sound dangerously familiar. Some of these instruments built around rentals, for instance. Dangerous or not . Putting on my former hat, yesterday i couldnt help but look at the article that theres going to be some securitization of rental income streams. You just had this ipo list this morning, American Homes for rent right behind us at the post. I will tell you this and i did spend some time in the southwest earlier in july, carl, there is a huge Momentum Shift thats happening and, again, its about Interest Rates, about housing, but this rental the people that are renting homes that have been accumulated by the institutions is a story thats early, early on. Let me tell you why. I used to love when Research Firms put together these thematic pieces. Fortunately, Morgan Stanley just yesterday we came out with a huge thematic piece which looks at what is happening with this institutional age of buy to rent. We know many hedge funds, many institutions bought up all these rental homes. The numbers here are startling. 17 billion to 100 billion. While Everybody Knows its in the southwest, las vegas, phoenix, parts of california, that institution move into housing is now happening in florida, the midwest, and the northeast. Again, you talk about equities, theres great waves of companies that have not even started to take in the value increase that is possible as a result of the move. If that goes up five times which is what the team estimates it will, this huge wave of supply through the Real Estate Investment trust, Home Improvement companies. Do you want to come back to the bond market for a second . You said theres a difference between the kind of people youre interacting with now who are sort of buying bonds and the people who are running bond funds. What do you mean . Its very simple. I get a chance to speak with our great advisers and clients. I was two days on the west coast earlier this week. Jeffrey gerlach stole one of my favorite people in the world, we all know bill gross. Drew zager runs 7. 5 billion in fixed income. Deals with actual clients. Somebody who is actually running money for clients. And this whole media myth about the bond bubble, kelly, its just not happening. What youre seeing people do is youre seeing them change duration. Theyre being mindful of the fact that theres a difference between owning a 30year bond and a 5year bond or a 2year bond when Interest Rates go up. But this idea of money coming out of fixed income and just huge amounts, i have said it, ill say it again, just not happening. Finally, people say this market is just a long series of face rippers, right . You look at all these short squeezes here in. Where does this lead us eventually . How long does it last . What are we talking about with short squeezes . Yelp. You remember the day i was at the post and we talked about the anatomy of a short squeeze. You continue to see it. Its been very hard to make money on the short side. But i dont even know if there has been short squeezes. A lot of people have asked me, we did something months back about herbalife when we talked about what is a short squeeze. Clearly that stock has been up dramatically. If you check around and see whether the stock is still able to be borrowed, in other words fundamental research, can you borrow those shares if you want to short them . The name is yes, you can. A short squeeze is created where you actually take the stock out of street name and you basically put it on the side and thats how you create a short squeeze. I dont know if theres been many short squeezes. Do you feel good about the back half of the year . I continue to think were in a normal environment and that equities will continue to get flows and, yes, i think im very hardpressed to find a reason, a reason, to be concerned because it seems that the liquidity continues to be the driving factor. I dont think it goes away. I dont believe tapering is tightening. I dont believe were seeing any mass exodus out of the bond market. I get to see the flows every day so i think i know what im talking about when it comes to that. You see a lot of the country. Yeah. Gary kaminsky. Sprouts will start trading on the nasdaq in just a couple minutes. Plus Edward Snowden granted asylum in russia. You will hear directly from the head of the nsa on snowden. Im in the cme group. I will be talking to the executive chairman and president of the cme group terry duffy. It looks like they had a good quarter, profits were up 27 . The stock is dipping a bit, but its up 40 on the year. Well ask him all the pertinent questions in about ten minutes and he knows hand signals really well. Make sure you tune in. Earlier in the show walter rob joined us and spoke about how whole foods needs to make price investments in order to stay competitive. Theyre competitors we know william and theyve been around for a while. Weve said consistently were just continuing to make these price investments to keep ourself competitive. You see the balance between the price investments and the gross margin is something were continuing to do. One of the sprecompetitors i spourts farmers market. The specialty retailer forecusses on natural and organic foods and has 163 stores around the u. S. And joining us now is the ceo of sprouts, doug sanders. Thanks so much for your time. Good to see you this morning. Good morning. Thanks for having me on. Look, so we understand your shares havent opened just yet. How much of a milestone is it for your company . Can you are repeat that . How much of a milestone is this for your company . Its a tremendously exciting day. Were excited to come off a great twoweek road show where there was a lot of excitement around the brand. Looking forward to a great exciting day and continuing to move forward and growing sprouts into a nationwide company some day. Whole foods already has so many Stores Across this country. How do you think you can grow from about 163 to maybe ten times as many stores without oversaturating the market . Well, theres a lot of growth in national organic. The health and Wellness Movement is really reshaping grocery, and todays consumers are focused on two things, they want to feel better about the food they eat and make sure they dont pay too much. I think thats where our focus on health and value really resonates with customers not just in the natural food sector but with the broader 600 billion supermarket industry. I wonder as well, you heard from whole foods talking about margins. Its going to be something investors are focused on because the more entrants there are, the harder it will be for anyone to fight higher cost of food or to avoid using the lure of lower prices to steal share from competitors. How can you guys keep prices low, get traffic into these stores without sacrificing on that front . Since day one sprouts has been relentlessly focused on health and value. Its not just in its value across the store. We work hard at getting the best deals we can find whether its in produce or whether its in packaged grocery. Our size gives us tremendous leverage. Were continuing to pass that savings onto the customer to appeal to the broader supermarket base and not just the Natural Foods customer. Its amazing how competitive this space has gotten in such a short period of time. It may seem long to you, but it seems shorter to us as we watch all of you players come to market. What is pricing going to look like 12 months from now and is that power going to be slipping or growing . Well, i think, again, theres continued growth in the industry. I think with continued innovation and continued investment in our industry, you will see continued price investment across the board and i think with that innovation and continued competition, its great for the consumer because there will be a broader base of products on the market and making the healthier foods more affordable. We keep hearing anecdotally about the price of an avocado outpacing overall core inflation lets say. Are consumers going to have to pay a lot more for your product in 12 months . Were not seeing tremendous inflation at all. I think, again, with our distributed buying model and the leverage we have with our growing size, were still able to leverage our size, get great costs and pass that savings onto the customer. All right. Doug, thank you so much for joining thus this morning. Thank you very much. Has the makings of like a pepsi coke kind of thing. Watching those two guys duke it out. Love a rivalry. Dow is up 25. Strong quarter for the cme group. Well talk to chairman terry duffy. Santelli has got him when we come back after a break. Preet and peltz got one. Now get yours. Its the delivering alpha bag, but theres more. Yours will be signed by the entire squawk on the street gang. All you have to do is guess fridays nonfarm jobs number. Tweet your guess to squawk street and dont forget the hash tag nail the number. Oh, yeah, you have to be at least 18 years of age to enter. Sorry, kid. For all the official rules and details, go to cnbc. Com. You have until 8 29 eastern. Good luck. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac xts for around 399 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Cme group Second Quarter earnings. Lets get to Rick Santelli in chicago. Hey, rick. Hi, carl. And id like to welcome the big man out of the cme group, the floor favorite, terry duffy. Thanks for taking the time, sir. My pleasure, rick. Thank you. All right. One thing i know for sure, anybody looks at the stock, granted we had a big split, its really been surging this year. You were up well over 40 prior to your announcement this morning. Why dont you tell us how the scenario both top and bottom of the Balance Sheets look at the cme group, sir. Well, obviously, rick, you hit the nail on the head, right, because its all based on volume and on rates, and thats how we accumulate money here obviously. You know, weve had a tremendous quarter with the Interest Rate fluctuation. Thats our biggest product line. Its been fairly dormie for the last couple years. Weve had some activity and hence it sparks the value of the stock. We really stay focused on building up the business and we think the stock price will take care of itself. It looked to me like 27 on profits. Can you tell me a little bit about revenues . There was definitely some improvement there as well quarter over quarter and i believe yearoveryear. Again, i think its just the diversification of our business. Roughly about 27 of our revenues, rick, come from outside the United States today so were doing a tremendous amount of business out of europe and out of asia. We have roughly 150 people now in europe. Were opening up our new exchange over there shortly. We have the clearinghouse up and running and were looking forward to this fall to the launch of the new exchange. Thats a big part of our growth expansion. Well, obviously im sure you would like the stock to go up. Now, please get ready to put this chart up, gang in the control room. If you want your stock to go up, ill give you a hint, you should hope for lots and lots of activity for higher rates. See this threemonth chart of cme stock ver whats going on with the tenyear note yield, there was a surge in the stock price. I think thats very relevant. I dont want to ask you your call on Interest Rates, but maybe you could talk a bit about how this place can really explode if the markets explode with activity. Well, i mean, theres no question about it, rick. Its our biggest asset class we trade here at cme group between the euro dollars and the treasury complex. If that starts to move, we are going to see a significant amount of volume run through the doors at the cme group. Our open interest is poised for it. We have 88 million contracts open on the books at thec me group. People are not anticipating rates being at zero forever. So, yeah, its a very dynamic and exciting time, but at the same time its a wait and see game, and what we are doing is continuing to make sure that people are aware of our products and they can use them to trade to mitigate their portfolios. All right. Lets take a different angle on this. You said you were getting a significant amount of business in europe and i think thats a great thing. What about basel, margins, set aside. I know some of the derivatives and swap rules in the u. S. , many were excited that held cme stock thinking theres going to be an uptick in volatility in treasuries. Your thoughts on that, sir . Let me talk a little bit about basel. Basel 3 obviously is a Capital Requirement that will be a standard throughout the country and throughout the world obviously on how much capitol banks need to hold for different products and it appears its going to be five days of capital for different products. It wont apply to the smaller fcms, but, yeah, this could add significant cost to the banks to participate in all different types of markets, but a lot of them are already complying with the basel 3 requirements. So it doesnt seem to be affecting them from any major standpoint. I was a little concerned. I testified on this just a couple months back. I think it could hurt the Small Community banks. I think it hurt the small reinsures, and obviously clearinghouses that were not part of the crisis of 2009, nor were some of the small banks or reinsurers being subject to basel 3. I hope the fed looks at that and makes the exceptions for not only the banks but the Smaller Banks but for the clearinghouses as well. All right. Now, we were talking about Interest Rates being good for business. Obviously energy, youre diversified in the new york exchange, is good for energy. Commodities a year ago completely different pricing picture. Softness in the price of commodities, will that affect the numbers in the quarter ahead . Sometimes the price has nothing to do with volume. When you look at the price of commodities, the grain markets have been sitting in a very high priced but a very range bound for a very long time. So fluctuation is really where were going to see more trade and in return well see more revenue from the trade. Terry, thanks for taking the time on your first interview on cnbc after your earnings announcement. We appreciate it. Thank you very much, rick. Appreciate it. Carl, back to you. Rick santelli, thank you very much for that. Shares of marriott slipping today after the company cut its full year profit forecast. So is the largest publicly traded hotel chain in the country worried about the Global Economy . Well ask the ceo of marriott in just a few minutes. Plus, the bell is about to sound across europe. A lot of information to digest. Central bank meeting as well. Simon hobbs will get you all the details when we come back. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. [ babies crying ] surprise your house was built on an ancient burial ground. [ ghosts moaning ] surprise your car needs a new transmission. [ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools you need without any surprise fees. Its not rocket science. Its just common sense. From td ameritrade. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Lets quickly recap whats happened with the european trading session. Thats a sea of green. Stocks ending the session with gains where Interest Rates were unchanged. Mario draghi reiterated his theres the bell to mark the close officially. Look at the major european markets. Here is a look at the ftse, france doing well. Better than 1 . German dax, how often do you see a move of 1. 5 . Italy up 2 . Spain up 1 . Even as mario draghi talked about signs of improvement, hes still extremely concerned about the exceptionally weak lending conditions. So while there may be a turn, theres still plenty of room to go for recovery across the continental. Were still waiting for italys high court to rule on sylvio berlusconis tax fraud constriction appeal. He faces a jail sentence and a ban from office if the conviction is upheld. There are concerns it could result in political uncertainty. The center left party already in a Fragile Coalition with berlusconis center right party. Jackie deangelis is live at the nymex this morning. Good morning. The Energy Complex seeing green arrows across the board with the exception of nat gas. Well get to that in a second. I want to look at crude prices first continuing their gains. Watching west texas intermediate up more than 2. A couple factors, that strong july gdp number out of china but also the strong ism number we saw this morning and the strength that were seeing in domestic equities. Bullish sentiment on the back of the fed minutes as well that qe is going to continue at least for the moment making traders here say its a risk on day down in the pits. I want to point out were seeing some strength in the dollar index but that cannot curb this momentum today. Additionally, we have the news out that libyan oil exports were cut due to port unrest there. That note out factored into the wti price and the brent price as well. Moving on to nat gas, we are sliding further after we got this weeks bearish inventory report. We saw there was more of a storage injection than expected and, of course, we are watching weather forecasts as well which have not been supportive for nat gas prices. Back over to you guys. Jackie, thanks. A big mo of in crude. Bob pisani joins us with a look at whats moving down here at the big board. Historic highs once again. Remember, the thesis that everybody has been promising us, these companies the second half of the year, things will be better. Now we have a data point today, the first data point, the isi numbers ism. Its supporting the idea that maybe things will be better. Thats why we moved up, even though Interest Rates are higher. Theres the fundamental question about whether or not we can pull this off. Look whats going on. By the way, its not just our manufacturing numbers, pmis were up everywhere. China was good, europe was good, and now the United States was good. Draghi came on and up held essentially the same thing the fed did. Interest rates will stay low for a very long time. Now the question is can the markets take rates, higher rates . We saw it with the adp numbers wednesday. Up and the markets did not fall apart. Take a look at the tenyear. Its what matters here at this point. Were moving up here. Here is prices here but were moving up, 2. 685 , 2. 87 . Now the question is we get a strong payroll report tomorrow, we get 200,000 or a little over, we go to 2. 7, does the stock market hold up . If it does, theres the proof you can take a little higher Interest Rates and the market does not fall apart. Were at very important Inflection Point right now to test Interest Rates versus the stock market. Lets move on, got sectors today. Its all the growth sectors. The cyclicals, industrials, financial, energy, and material all moving to the upside. Most of them better than up 1 . If it wasnt for exxon, energy would be even higher. Theres been some questions about the strength of the construction recovery. Gener generally vulcan helped support that idea. Commodity stocks had a miserable ride for part of july. Theyre doing better today. A quick comment on the stock that ruined my morning, exxonmobil. I was happy and cheerful until exxon came out here. A huge miss. They had a writedown on the refining. Refining downtime was greater than expected. That happens in july. Lower checkcle profits. Here is the biggest problems, big oil cant grow. They cant find enough to keep growing. The Free Cash Flow seems to be shrinking overall for oil. Theres exxonmobil to the downside. Thats whats holding down the Energy Stocks overall. By the way, guys, Royal Dutch Shell had the same problem. They had a big writedown as well on their exploration in the shale business in the United States because their drilling was kind of disappointing. These companies are so big, its just tough to keep finding new stuff to replace the old stuff. And its something to keep in mind when you look at that oil price still above 100 a barrel. Simon is back at post 9 with a look at mour yot. The fact that the market surged as strongly as it has pushed marriott back into positive territory despite cutti cutting arne, its good to see you again. Youre up 36 but the market being what the market is, its focused on the fact that you have taken down now the full year guidance. Just trimming the top of that. Why is that . Well, a quarter ago we talked about rev par, our same store sales measure being up maybe as much as 7 for 2013. Today we said we thought the high end probably would be 6 . And really thats mostly math. Weve now put two quarters in the books at a little over 5 . Those are good numbers for the United States, but to get to a number like 7 by the end of the year would have suggested a blowout Fourth Quarter. We dont think thats likely to happen. We think well have a good, steady as she goes Strong Performance between now and the end of the year. We should remember that this country is still by far the most important for you as the business stands. Maybe we should have seen from the Industry Data in may and june that things were a little weak across the board here, but why have you scraped in this country at the bottom of the range just up 5. 2 on the rev par metric that you measure . Is that about as exposure to d. C. , exposure to groups . Whats hurting . You have exactly the two right factors. If we exclude d. C. From our numbers, our rev par would have been up about 6. 5 . So d. C. By itself is the weakest market because its our home. We are very big in washington, d. C. We have over 100 hotels in this city. And the average numbers at those hotels are negative in the Second Quarter. Why . Because of contracting government obviously. The sequester, but even beyond the sequester its about government demand being relatively week. Urban d. C. Is better than suburban d. C. , but d. C. Is weak. The other thing thats happening is group. What weve seen is shortterm group is the weakest segment in our Hotels Across the United States. Whats really strong is the individual business tra and the leisure traveler. Theyre up 7 , 8 , 9 depending on the markets. What we see is that the individual Business Traveler is back on the road, seeing their customers, meeting with each other, doing the things they need to do in order to move business along. Families are back taking vacation together. Theyre going to the places where they want to go. But this nearterm group where its discretionary, theres a little bit of relative softness there. Government is a piece of that, but i think theres still a little bit of cautiousness in the economy. Do we have a spring swoon again or not . Whats happening with the government . Whats likely to happen with budgets in the fall . All of that i suspect is not crisislike, but its in the background a little bit. Even as the figures and the projections stand at the moment, there are those like citi that say, look, your guidance is so light for the Third Quarter, you are still banking on a very strong return to business and growth in the Fourth Quarter and maybe some in the market are skeptical of that. I mean, is the jury still out to a certain extent . Well, it is in some respects, but, again, were ticking along at a 5 growth yearoveryear. Samestore sales growth. Those are good, solid numbers. We feel good about those numbers continuing and think well get that in about the Third Quarter and the Fourth Quarter. And then, of course, you get around the world and there are some other things which are happening, much of which is very good. We signed 16,000 rooms, new management and franchise contracts around the world in the Second Quarter alone. Thats great growth for us that will come in years ahead. Arne, before we let you go, youre making a lot of people satisfied, if not happy, with the Share Repurchases which are running ahead of schedule. Half a billion dollars in the first half of the year. I think you have authorization at the moment to buy back another 900 million. Where do you stand on enacting that . How do you feel about the price and what youre likely to do . Well, we think our stock is very attractively priced, and we will continue to be aggressive buyers of our stock. Our model as a management Franchise Company produces lots of cash every year, so we have purchased about 3. 5 billion of stock in the last few years. We think well continue to purchase 1 billion or so per year as we go forward. Were the one nice thing about the stock not moving much in the last few months is its become that much more attractive a buy for us. I suspect well stay active in the market. I can only infer what that means for everybody else. Mr. Sorenson, its nice to see you. Thank you very much. Arne sorenson. So i mon, thanks a lot. Nsa leaker edward snow din leaving the moscow airport after being granted asylum in russia. The head of the nsa is talking snowden in just a moment. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. Coming up next on the half, is the jobs report about to send this summer rally into high gear. Where should you be putting your money . Big oils big miss. Whats the trade on exxon and the other big names in that space . And is linkedins rally about to be derailed by tonights earnings . Well see you in about 15 minutes or so. Looking forward to the halftime show. Thanks. Just this morning nsa leaker Edward Snowden has left the moscow airport after being granted asylum in russia. Eamon javers spoke with the head of the nsa at the annual black hat conference in las vegas and he joins us this morning with some more. Good morning, carl. This is the first big hacker and Cyber SecurityConference Since the Edward Snowden news broke. General Keith Alexander came here to speak as he did last year. This year though a lot more tension in the room. General alexander facing some hecklers during the keynote speech, one of whom yelled out a barnyard epithet at general alexander. We caught up with him in the hallway just after his speech and we asked him about his reaction to Edward Snowden. Here is what he had to say. Do you think Edward Snowden should be allowed to come back from russia and face charges here . I do, absolutely. What do you think will happen to him . Thats up to our judicial process. I think hell get justice. Do you want the russians to let him go . Yeah, absolutely, absolutely. I think it should be something that comes out in the rest of the story. Traditionally this is a conference that involves security professionals, folks from the private sector, private individual hackers as well as Government Security experts. They traditionally welcome the government here with open arms. This year though after the snowden revelations about what the nsa has been up to, not so much. We caught up with jeff moss, hes the founder of defcon and black hat. We asked him about this and why he sent an open letter to the government telling them we need a timeout between the Hacker Community and the government. People in the community are very fairly skeptical. Theyre professional skeptics. To them its one thing to think, well, the nsa is monitoring a lot of stuff and its different when it actually gets confirmed. People start behaving differently. Guys, a lot of tension, a lot of emotion around this issue here. Were going to talk to more folks today. Some really interesting things going on here including some stuff that really scared the pants off of us involving how to hack a nuclear reactor, how to hack an oil pipeline. A lot of dangerous issues facing the Hacker Community. Kelly, back to you. Great stuff. Thank you very much for that. Its been a recordbreaking day for markets here. The s p 500 hitting fresh highs and stocks rallying. Coming up next, the earnings squad will be here to break down all of the biggest movers weve seen today and lots more detail on some of the big names that have reported. Stick around. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. Time for the earnings squad where we dissect the earnings story everybody is talking about and try to help you trade the stories you may have missed. Im Tyler Mathisen in for melissa lee this morning. Im joined by Herb Greenberg and cnbc contributor stephanie link. Welcome, guys. First off lets get you up to date. 75 of the s p 500 companies have now reported. 67 beat the eps estimates or targets. 9 have met them. 23 have come in below. Lets start, stephanie, with Procter Gamble. Shares trading higher, better than expected results. 2 cents better and the guide of 3 to 4 organic growth is encouraging. When you drill down though, i thought the most important part was the 5 volume growth, the best in two years for the overall company. We knew that health care was going to be strong, we now home and fabric would be strong. It was the beauty piece that rose 4 in volumes. I thought this was interesting. I think though if you want to take another interesting look, something they stressed and it was something you want to Pay Attention to, when they talk about the organic growth, they also said the organic growth did well even though with the underlying Market Growth rate decelerating. So they were basically able to get there into a really what appeared to be not a great market. Gaining market share and thats actually what the game plan is for this new ceo who can we say that the new ceo, same as the old ceo, has made a difference here or what . Not yet. Too early . Way too early. But he has a reputation of restructuring, of heavy product investment, of expanding into emerging markets. These are all things the Company Really needs to do to grow that organic line. By the way, overall sales growth a meager 2 . So its not like it was knocking the cover off the ball. Better than it has been. Do we have a ipo were going to talk about . Were going to break away from here . Or not . Im sorry, say again, please. There you go. Sprouts farmers market. Up 92 . That would seem to be rather a pop on the opening of sprouts farmers market. Theyre sprouting there i guess we could say. Lets get back to the earnings squad. Sally beauty selling off this morning. Cosmetic and beauty supplier posting mixed Third Quarter earnings. Whats the story with sally . They missed the top and bottom lines, but store traffic from nonbeauty club card customers in the u. S. Was soft. Thats very important because thats 50 of their Retail Business which is more than 50 of the overall business. So theyre basically saying if people arent going in there and getting a deal because theyre regular customers, theyre not going in there. I dont know if theyre go somewhere else theyre totally going some place else. Even though they say theyre launching initiatives, their margins werent bad. Its kind of puzzling. So its one of those things why people are running away from this thing today, i dont know if its that but that was the big standout in everything they said. Any thoughts . Speaking to the margin side obviously theyre able to control their cost structure, so that to me is very important, but i really think that youre seeing an enormous amount of competition in this sector. What do they sell . I dont know about you, herb, i have never been in a sally beauty store. Im sorry, i have not either. But its cosmetics, especially professional Hair Products to the professionals. Have you ever been to a harmon, bed, bath, and beyond. They own harmon and they have a beauty its a massive we have to leave it there, folks, because this new stock is opened and thats the earnings squad for this morning. Join the conversation, tweet us earnings squad. They will be back with simon hobbs. And weve been all over it this morning. Stock hitting record highs as the s p 500 crosses the 1700 mark. Art cashin will be here right after squawk on the street returns. Geicos defensive driver,ke 13. Good student and multipolicy discounts could save you hundreds of dollus. 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Tdd 18003452550 and learn how you can earn up to 300 commissionfree tdd 18003452550 online trades for six months with qualifying net deposits. Tdd 18003452550 our trading specialists are waiting to help you get started. Tdd 18003452550 so call now. Tdd 18003452550 want to show you sprouts which as Tyler Mathisen just said would appear to be putting on a bit of a pop. Thats 103 gain. They did already price above the range of 14 to 16 at 18. 18. 5 million shares of common. Adding some more market cap today, kelly. Just the latest example of food and grocery new issues being big winners. You made the point about annies but thats been one of the best performers and thats symbiotic because they sell at a lot of sprouts and whole food markets. Theyre up better than double. 36. 75. A huge day for stocks. Right now the dow is adding better than 100 pounts. The s p 500 up by 17. Lets bring in art cashin, director of floor operations atu bs. Skr good morning. What do you see here. A lot of people questioning sustainability. Its an interesting day of cross currents. I think we may actually have to wait until next week to get a better result. I think what youre seeing is yields are up to levels where they provided a counter thrust to stocks. Were right at 2. 7 is where bernanke began to talk things back to normal after the taper bump. So thats kind of been washed out. In the past when we got here, stocks began to pull back. I think what you see differently today is new money for a new month. Thats usually a two to threeday process. So that may also conflict with the nonfarm payrolls tomorrow. Well see where that goes. Next week a couple fed speakers and then well start to get into looking at jackson hole and this whole phony to me debate about who is going to succeed mr. Bernanke. You think its all about floating a summers, putting other names out there is ultimately it will go to yellen. I think they want to change the yellen appointment to a yellen anointment and make sure that she is so beloved and necessary that everybody will accept her. I think the debate with all due respect around mr. Summers began to look like a first round tko and thats why the president may have brought the topic up. It was interesting to hear they also threw in the name of don cohn who was greenspans first choice to replace him. To replace greenspan instead of bernanke. Whats the streets reaction to a don cohn . I think its more of an intellectual exercise and supplies some fodder for the friends of fermentation away from worrying about the market. We have to give you guys something to talk about. Something plausible and repeatable, yes. Lets do ism. A lot of economists today say theres no way this number squares with a slow Global Growth environment. Its all about the auto shutdowns. Were going to be looking at weaker data later in the quarter. Do you agree . Yes, you and i have discussed for months the idea that seasonal adjustments since the lehman impact have been screwed up, and particularly this year because the auto shutdowns were completely almost completely different than theyve been any other year, and so that has tended to distort everything from initial claims to things like the ism. Others though respond by saying, well, isnt the lack of an auto shutdown still a good thing . A sign of demand . Were looking at the run rates in the 16s. It is and youre beginning to see reports of more desperate replacements. People saying they drive the car up to the auto shop just in time for it to conk out and have to buy a new one. Just got to ask you two seconds, sprouts. Doubled. Are you surprised . Reaction to that . No. You know, as you said earlier, things like annies, its a very popular area. And occasionally we do get some mispricing in things. So it worked out well. Lets hope they can hold onto it. Its the opposite of the facebook effect. You got that right. Thats for sure. Art, thanks a lot. Art cashin. Art mentions the jobs number tomorrow. You have one more day to nail the number. Tweet your guesses for this months nonfarm payrolls number to squawkstreet. You have until 8 29 tomorrow. Make sure you use the hash tag nail the number. If you win you could be the lucky winner of that duffel bag which we gave to everyone at delivering alpha this year signed by everyone here at squawk on the street. Faber had a little flourish at the end. You know david is full of flourishes. There are the rules, you can read them or not. But need your answer by 8 29 a. M. Tomorrow. The sooner the better. Again, at least if youre going to guess around 200,000, change it a little bit. Give us something to work with. Too many guesses in that range. A lot going on this afternoon. Well continue to watch the action among some of the big winners like yelp and sprout. Lets get over to headquarters. Scott wapner and the fast money halftime. Thanks, welcome to the halftime show. Four hours to go until the close. Lets go up to the wall, see where we stand on the street at this hour. Its a big day for the bulls. Theres the dow, good for 123. S p, nasdaq higher as well. Here is what were following on the half. The social standard. Linkedin in is up a staggering 350 since the ipo but is there still time to get in with earnings looming or are the risks just too high. Plus, the great debate. Exxon suffers its biggest miss since 1999. The stock is getting hit, but what now . Its link versus terranova. First our top story, the summer rally. After the strongest july since 2010, august gets off to a ripping start after jobless claims come in