Transcripts For CNBC Squawk On The Street 20140724

Track for a positive week this week. Our road map begins with facebook. Mark zuckerberg is saying that facebook has more room to grow. President obama poised to support antiinversion tax legislation. Well see. And xilinx ceo gets no free passes. What he said to the man to my right about his dismal quarter. Facebook revenues are up 66 . Mark zuckerberg was on last nights Conference Call. One thing thats so exciting is theres so much more room to grow. People on facebook in the u. S. Spend about 40 minute as day using our service, including one in five minutes on mobile. People spend nine hours a day on digital, such as tv and computer. Premarket at 77, which is double the ipo price of 38. Facebook reports, jaws drop, and then New York Post business today, this doesnt zuck. People go for the highclass headline this morning, jim. But it was an amazing quarter. It was an amazing quarter. Youre going to hear, this thing couldnt possibly be at this level. Typically when you hear those things it follows with the idea that maybe its just all revenues. I think 3 is now doable at 2016. I was highest by 50 cents going in in terms of my estimates. Youve got to give it a 90. It was a beautiful play put on, that is, their Conference Call. Mark zuckerberg. This was a good quarter for us. Good quarter. The margins are stunning. Stunning. Its a machine. Its a machine. And they are humble. They talk about a tenyear plan. Zuck gives you a tenyear plan up front and then sandberg tells you why people are going to like them for the next ten years. As the Conference Call goes on, you realize that what they are trying not to be is microsoft. They are trying to have a very longterm view. They are trying not to be google. I can tell from what they are saying, google does a lot of things and hopes that something stick. Z man is talking about things sticking over a long period of time. He talks about the messenger, he says, this is the future. Z man . Z man. There is a school of thought that paper and slingshot and other things that they have tried to do is not always a home run. They are doing things that are actually additive. Look, i think its great that they fail. Actually, i thought there was too much on light rail in terms of the prestige of the Conference Call. I dont know about you guys, but when i go online and google something, i google something and typically theres 14 things that come up in ads that i dont want and it sends me to different places and zuckerberg is really worried about the user experience. And i think thats one of the reasons why they say mobile does it, they answer a lot of the objectives. Mobile doesnt have a lot of ads. And he says, mobile isnt going to have a lot of ads. Isnt that why mobile is 50 of the earnings. To be fair, facebook and google are splitting mobile advertising, period. Right. Facebook share is 18. Google is 40. Facebook is what they are calling the cage match now. Right. One thing that Zuckerberg Talks about and we talk about it, how many hours people spend online, its oneninth of the time and he wants it to go to onesixth. As the Conference Call goes on, you get the sense, wait a second, they are being really conservative. What i got from the investors that i spoke to, they are not even monetizing and they took down their expense growth, i believe. I know. The leverage here. Leverage meaning what they can bring to the bottom line. They have no content costs. You see the little cap x. Its like the ebitda. We built this chart, which is an amazing chart because you can see over the past few years, right when desktop in 2012 right when it was about to start flagging out, they got religion on mobile and people said they were late and look at that trajectory. 40 of ad revenue last year. Remember, it was 5 when they came public. This company has been very humble. They admit they screwed up on mobile and then theyve come back. Most Conference Calls that i have dealt with this quarter, there have been numbers that are manufactured by a lot of buy backs and this was an slept quarter. Humility goes far with investors, typically when you back it up with a 3 possible number. Incredible growth overall and therefore a multiple on your stock, as you say, or 16. You struggle because lets say 50 in 2016. Companies obviously are going to grow. Great. But its a big number. How do you find what to pay for 3 . And i tell you whone thing, it growing three times the average stock, maybe four in pure oxygenated growth. 90. I present to you 90 in facebook. Total ad value is time warner combined. We are getting word that an algeria flight that was missing has in fact crashed. Thats according to reuters. The flight departed from the west african country of burkina. 160 people on board and it apparently crashed over west africa. Capping what has been an unbelievable week for commercial aviation, all around the globe from mh17 to the crash in taiwan which is weatherrelated, but its been a tough week to fly. And its pretty clear that i know that historically Airline Traffic bounces back after these things but when you see these kinds of tragedies, you know, you try to put them in context of the stock market. It just doesnt work. No. It just doesnt work. Also this morning, General Motors taking charge of the recall crisis. The First Quarterly profit in europe in three years. South america is still very tough. Revenue is down 30. Youve got brazil, argentina, capacity in venezuela coming down. You know, look, this is mark fields first call. Lets make sure were not too negative about this. Profitable north america asiapacific, it gets very important. Record market shear in china. Theres a lot that i like here. First quarterly profit in europe. If you remember, thats something that ali promised. I think mark is hitting the ground running. I dont want to be as negative as gm as the stock. Also because the u. S. Was incredibly profitable but people arent going to talk about that. They are going to talk about the charges. But i think mark fields wouldnt just he was dealt a good hand by alan mulally and i think hes going to be very strong. It was 30 billion in 09 and 15 billion as the margin got cleaned up. And in north america, up 9 . Thats the Fourth Quarter of profits in this country. And the numbers were amazing for gm. One thing about ford, if it anyone was investing in the 80s, they would give you dividends that were, you know, these things would yield 4, 5 and now these days they have much better control of expenses, of medical. Much better control of where they build and how much it costs. Youre going to see a return to huge dividends from these stocks. Hold on to them. We havent touched cad. They say we dont return the mining but construction was up 11 and they see revenue even though they see revenue at the low end. I didnt like cad. I didnt like it because were still talking about resource industries. Were still talking about mining. Copper was up 4 cents last night. Youre playing caterpillar and with it is a big turn in the u. S. I mean, if you look at what didnt work for them, china, which we had a very good pmi last night. Cis, its a russian impact. Bsaf, which is a gigantic play on russia, 50 comes from gas profit and cis weakness that ive seen for russia, theres too much not doing well here at caterpillar to get me excited to give them the runs. Thats why the stock is done. This has got to be more of a mining play. They did see 2 million buybacks in this quarter. Good luck. You squeeze the source by blowing away revenues. Its some of the best growth ive seen with this quarter. You dont queasy them with buyback. I think its important to point out that they are if they get china right, the stock is going to the moon but they havent. They havent gotten china right. You want to do tea here later . Later. The thing with at t, they seem to be aggressively rebasing their entire list of customers down and that is going to have fewer of them turning off because why would you and its going to put pressure on sprint and tmobile. Its a conversation that we can go into more detail. We also want to talk airlines perhaps. With. Dif tends, gilead. American airlines a. Dividend. 10 cent dividend. Doug barker on with a great interview this morning. I know american is great. How quickly do we take for granted that american is great . Tonight, Steve Liesman is talking tax policy. Steve liesman gets tough with xilinxs ceo. They are comparing to your rant years ago. Plus, trains, planes, and profits. And what is the Railroad Operation telling Jack Koraleski about the economy . The dow is a few points from the train day high. More squawk on the street in just a minute. The cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. You presented several conferences where you had an average annual growth rate for fiscal 2015 but lowered it 5 . Why did you stear us towarer us higher rate. Its not a question of if. Its a question of when. In this case, the big surprise that we had was the rollout of the Wireless Infrastructure in china. We had expected the third round to happen earlier than it currently is projected to happen and were being very cautious now to make sure that we hit it. Cramer with tough questions for xilinxs ceo. You did almost a mea culpa on this one. Sometimes you do your homework and then sometimes it doesnt work because they take it back and several occasions in the spring, they said that china was ramping multiple years and then they said that china was bad, that china was pulling back. Why did we focus on xilinx . Because it was the worst performer, one of the worst quarters ive seen. But most importantly, technology is on fire. So how did you miss china . How did you miss aerospace . Mark haines told me no free passes. When somebody does it wrong, moshe is a casualty of what mark is talking about. Big day for airlines, meantime. Both american and united and continental posting better than expected profits. Jetblue in line next. Were going to talk with southwests Ceo Gary Kelly later this hour. But american is getting the buzz because of the billion dollar buyback, 10 cent dividend. This is becoming the norm for the industry. Well, i think people are going to say, wait a second, the marketplace of the journal has four new air startups. People are saying that too many planes are coming on and seats are going to go down. I think this group is still investable but i dont like to see the ual i have ua on the brain because i have stock that is up huge. Theres so much this morning. So much. So much. Including ipg. Do you want to save it . Lets do it now. Ipg, you recently had the ceo on recently. A couple of days ago. This is a company that i spoke about at the end of may. This morning, elliott management, which i said was buying the shares, does file with the 6. 7 stake. Although, a lot of it is options, by the way. Its interesting how these turn out to not just be the common but a lot of options that they purchased to create the common stock. But 6. 7 saying we want to engage, we think the shares are undervalued. Nothing more than that. They are not putting it in writing, we want you to sell yourself or we believe this or that. One of the more activist activists out there. In addition to so many other things they do, argentina is another area that theyve been focused on. Michael roth took this company from zero to hero. When the deal fell apart, they said on our air that this company is going to be acquired. This company just won the microsoft account, which is monster. They got the pizza hut account, which is grand. They bought facebook ahead of the quarter. Wow. It would be amazing if he has to product him anymore. We have some lines that werent perfect. They did inline but it reminds me of being picked on by nelson health. Well see. Part of that may be the buying or the rumors reporting on elliott. They are there now and well see what happens. Excellent. Well get cramers mad dash. And what a day for wyndham ceo. At t and starbucks. Were back in a minute. 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In many ways, this is the story of how a Company Created a cure to a horrible disease and the market likes maintenance drugs that dont cure. Here you take a course and thats why its selling at nine times earnings with the greatest drug every introduced in the world. It may become the largest drunk of all time. 3. 5 billion in the last quarter. That will be substantially higher because people dont know they have the disease. 84,000 for, what, 12 weeks. A lot of pushback. And we cure the disease. You never hear cure. Heres the problem, david. Much of the calls q a will be devoted to, will the insurers pay . Everybody if they knew they had he hepc and took this pill, they would bankrupt them. I wonder if they can afford to say how much money they are really making. At the same time, if you have this dreaded disease, you would pay anything. A lot of people dont even know they have it. Right. You can say it will bankrupt the system, half the people dont know they have it at this point so it would take time. What do you pay for a cure . This is a sunday school question. And having to pay a lot for their care when they get liver cancer or whatever it may be. The insurers want the insurers desperately want competition. The patients desperately want this drug and i think that when push comes to shove, they, the insurers, must pay until another pill comes along. Peggy hamburg has not been that quick. Paid 11. 5 billion for pharma sec in sales they are going to do that. Miss yellen, listen to me. That is in year one. We have the opening bell and so much to talk about right after this. We started zya with the thought that the kid on the back of the bus might have a song that he has in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device, up to the cloud it goes, back down it comes, sounding better. 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That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbc squawk on the street live from the capital. Opening bell in just a minute. We have to go back to early 2006 to get a number that the Unemployment Rate is at. In the meantime, this dont trust the market theme, how many days . 26. When do we just say, yeah. All right. Some of the names we havent gotten to, but some of the biggest names, facebook last night, caterpillar, 3m, at the big board town square media, live Event Properties celebrating its ipo. Its a drug Device Company specializing in ear, nose, and throat conditions also celebrating tonight. Under armour, jim, we have not gotten to. The revenues basically crush it. And the margins are up begin. Kevin is an innovator. What i liked about this was in a subtle way hes taking the big shots at nike. Hes saying footwear is strong. Everyone used to laugh about his footwear. International strong. This thing is a juggernaut. It should be up even higher. It was one of the few Growth Stocks that got hit that has come back to the level that it had before the swoon. Congratulations. You are killing it. The hallmarks of neike. A lot of it is the fact that we didnt think it would happen. People think of innovation and they think of the pc and the cell phone. I think what kevin plank is doing, remember what he said at the university of mare layland, was a necessity. Under armour closing on a 10 gain. Qualcomm is going to be one of our big losers despite the beat for guidance. They had this fight with china. They were talking about how china was a problem. If you look at what qualcomm said, qualcomm will come back because the analysts cant handle it. They had great growth but there were royalty issues in china that made it so people were surprised and they expected a big blowup. Be aware that china is not so great for qualcomm. You know who china was great for . Who . Nokia. They sell a lot of equipment in china. Nobody talks about it anymore but, wow, what a comeback. Youve got to take the bad with the fascinating. To keep the good for nokia. Twitter is up. Were going to be hearing from them. There was a note sent out that User Engagement is not as good. Its going to be about User Engagement. It is. Right. And user metrics in terms of growing the actual but in the end, twitter is a company that if youre looking at earnings, its overvalued. If you look at facebook on earnings, its undervalued. Thats why facebook got that gain. By the end of the day they come back and surge. I really just tell people that facebook is going to become a moscowan stock for every portfolio manager, like google, like apple. These are the big three. Ford looks good. 3m, as usual, its hard to make sexy, so to speak, but 1. 91 does meet profits up 6 . This is closing in of the highest of the year. He prides himself and if you look at the big industrials, they havent had very organic growth. Hes come up with 4. 8 organic growth. Health care, which a lot of companies have come on strong, electronics, he does 6. 3 growth. Hes buying back stock. He may be, of the Big International executives, the most forward thinking of all. Remember, new products count a lot of what they end up doing with a new product and then it shows up in earnings. He and dave cody, gee, he and dave cody are hitting it out of the park in the 14th inning. In perhaps contrast to ge. Ge is the margins will come back. Dont worry about it. They have very good organic growth. They couldnt bring it down to the bottom hine. This was a monday store gain for a 3m stock. 15th bigger stock than at t. Remember when st. Merck, the anticholesterol drug, these combinations look, you remember when roth said his company was bigger than u. S. Steel . These comparisons are factuos. Virtually everything is bigger than u. S. Steel. Very quick, dunkin is down. What is the excuse for the not great. Ins. I was upset about dunkin. I had the ceo of chipotle on. If you go to chip potly in neot york, they will say they are showing you stop complaining dont blame the weather. Dont blame the ingredients. Blame yourself. Lets move on to at t this morning which is down about 1. 85 . We mentioned it briefly at the top of the program. Give you a little more detail here. What is going on is quite interesting. I dont want to get too deeply into the accounting side of it. But remember when tmo introduced all of these plans that said, hey, were going to free you up and then at t responded and is introducing new plans that essentially free you from the contracts in many ways, a lot of this is resulting in an aggressive repricing of their entire Customer Base and it does seem to be coming down a bit. The idea is that you get that done and you get it done quickly and then you start working your way back up and you bring it way down but it can have an impact. There had been an expectation, though, as they repriced, perhaps 70 of their entire Customer Base, i believe is what they said, that you would accelerate revenue recognition because youre changing the way that people buy the equipment, youre loaning people the money, youre taking that up front but because they are cutting price overall, its not having that impact and they seem to be determined to move through this very quickly. Its also havening an effect of revenue user because of the price that is coming down. If you have record low at. 86, youre not giving up any new customers. Tmo was able to capture some of the customers that lost. Are you going to be able to get new customers in thats the question here. By the way, is uverse doing quite well. Lets not forget the direct tv deal that is in the process. Its pressuring at t sales this morning. Can you keep churn down at that level . What does that meet for sprint and tmo . Its going to be a tough road there. By the way, on sprint we noticed shares are quite weak lately. Weak. I anticipated originally originally. So many reports that they had some by the end of this month. Thats not going to be the case. Although, the report that ive gotten is that it hasnt been knocked off course. Its simply taking longer than anticipated to really make it work in terms of t excuse me. T and sprint. Thats been moving through the market and sprint has been coming down as a result. The wireless margin, are they in the same no. Its not comparable. Verizon is getting more aggressive and youre going to see that. The margins are still up 50 versus at t. I dont know. I think remembverizon is a supe company. 5. 2 yield. Verizon, google, apple, you could build a diversified portfolio versus the average. I know any of the jewel stocks are passe. Dow is roughly flat. Pisani is on the floor. Hi, guys. Hi, guys. Were up in europe and kind of a disappointing day for the ipo market. We had a bunch of biotech ipos, town square media, some of the fine people here work there behind me, they priced really 8. 3 million shares at 11. The price call was 14 to 16. Some of the other ones, all priced at the low end or well below expectations. So not a particularly great day for ipos. Ill keep an eye on town square. 11 price talk, 14 to 16. You were talking about our highlight because i love industrial companies. I know 3m doesnt sound exciting. Heres what is important. They sell in more than 100 companies and sell literally thousands of products. The important thing here is overall very good numbers here. Sales climbed 4. 9 . For 3m, operating income rose across all of the divisions. Remember, they sell in health care, in industrial, dozens and dozens of industries. Thats why you want to watch the company. Overall, the numbers were good if not outstanding. Caterpillar, you were talking about beating on earnings, revenues definitely on the light side for them and the problem is, this great diversity they have is starting to hurt them. Look where they sell. They are all over the world here but north america, europe, middle east, africa and asiapacific. The problem that they specifically talked about was weaker sales in china and africa and the middle east. When you get this broad geographic diversity and start weakening in certain areas, thats the problem that you have overall. Lets talk about these other companies that are reporting today. Take a look at these names here. Very good production there. Cooper was very strong. A dollar. Expectations were 80 cents. It being looks like the beat but i dont believe there was an operating beat and revenues were on the light side. Thats the reason that diamond offshore. Pulte has reported. Its tough to tease out things here. Up 25 at b. R. Horton. Orders up only 2. 2 . Finally guys, the auto companies, just to show you that, better than expected, gm, a disappointment. Dow opened very flat this morning. All right. Thank you very much, bob. Lets get to the bond picks. Rick santelli is here. Hi, rick. Carl, theres a lot of things going on on the economic front. We see that pmi in china definitely moved to the highest levels since march. 52 handle. But keep in mind, that series is only as old as 2011. Its hard to get a big perspective and we had a drop in claims. Seasonalities accounts for things like layoffs in the Auto Industry this time of year. Well keep it simple. Lowest level since 06. What did that do to the market . Rates popped up. Thats what is supposed to happen. Open the charts to may, five settlements under 2. 5. And that is technically significant. We talk about it a lot. Thats the correlation. Makes sense. Lets switch gears. Look at pound versus dollar twoday. The pound is deteriorating a bit. They are walking back. We lost the 170 plus handle. China, pmi i mentioned, look at the dollar versus the yuan on a shortterm chart. How low . Havent had the numbers this low since march of this year. Carl, back to you. All right. Rick santelli, thanks. Earnings lifting shares of southwest to a higher level. Well speak with the Ceo Gary Kelly live in just a moment. [ male announcer ] the mercedesbenz summer event is here. Now get the unmistakable thrill. And the incredible rush. Of the mercedesbenz youve always wanted. [ tires screech ] but you better get here fast. [ daughter ] yay, daddys here here you go, honey. Thank you. [ male announcer ]. Because a good thing like this. Phew [ male announcer ]. Wont last forever. See your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Shares of Southwest Airlines are trading lower. Why dont we go to gary kelly, chairman and ceo of southwest. First, gary, thank you for coming on squawk on the street. Our pleasure. Okay. Lets get right to it. Theres been multiple years where you were the only company thats made multiple money. Has this industry become a secular grower and were not going to go back to the feast and famine days . Jim, that would be terrific. Southwest has been profitable for 41 consecutive years and were well on our way here to 42. But the Legacy Airlines, every single one has been gone or gone through bankruptcy. They have produced solid profits and are beginning to return value to shareholders finally. I think thats all a good sign. What is good for the industry is going to be good for Southwest Airlines. There are not a lot of startups. There are four new startups. Boeing stock is down today because people are saying no, dont worry. Plane inventory is building. Is there a new challenger coming in or is it going to stay the way that we see it as the big five . You know, jim, ive been in business almost 30 years and for that entire time, consolidation has been constantly predicted. And thats really finally come to fruition. Its a very mature industry, especially domestically today you find fewer startups and right now the industry is in a wonderful position where demand is strong and supply matches that. So, you know, the opportunities are fewer today than they were 30 years ago but southwest, were in a very strong position. Weve got a very low cost structure and great brand. So we know were going to face competition whether its a startup or a Legacy Airline and were prepared for that. Well, lets talk about load factor. One of the reasons that people wanted to own the airlines is because they get on the plane and its crowded. Do you ever see a number and its 90 or is this as great as its going to get . Thats a great question. Again, you go back to when i started the company in the 80s, we had a record profit in 1986. So Energy Prices have been a real game changer over the last 30 years. You have to have virtually every seat filled to have a chance at making money. So were all looking at ways to optimize our Route Networks so we dont have those empty seats. We lag the industry a bit because were a point to point airline. So i think theres opportunities for us to boost our loads. 90 system wide, no, thats probably a stretch. Gary, i know that this is an earnings story that were going over but youre a Great Airline man and i think we are all pondering the idea that we are seeing some turmoil in the actual industry, whether it be obviously malaysian or we saw something in africa today. Is there anything fundamentally changing about worry in the industry because obviously israel ban i dont know. Im trying to put it in context. I know its not a money story. But whats your thinking about the airline business, internationally, what based on what is going on . Sure. Its a fair question. No, i dont think anything is fundamentally changing here. Were all very aware of risk around the world in our industry despite the Aviation Airlines continue to be the safest mode of travel. So well continue to keep safety as the top priority and look forever opportunity to mitigate risk. There are opportunities, of course, to look at flight patterns and routes that are taken in dangerous parts of the world and well need to continue to do that. The International Aviation arm of the United Nations is engaged in investigating this Malaysian Airlines latest event, which i think is a good thing. But well continue to work hard to make what is a very safe form of transportation even safer. Gary, one more question not earnings related. The today show this morning did a story about this passenger in denver on sunday who claims he got into a dispute with the gate agent, tweeted about it and then couldnt board the plane until he deleted it. Wow, rudest gate agent in denver. Not happy. That is a longtime customer of Southwest Airlines and im very hopeful that weve repaired any hurt feelings that he has. He completed his flight there, of course, but conflict is going to take place in the world and, of course, we want all of our people at Southwest Airlines who work very hard, by the way, but we want them to deescalate and not escalate a conflict. So im i think thats behind us. Its a good i think mistakes were made and well just work really hard to make sure that we keep that customer. Hes a great guy and weve apologized to him. Hopefully hell keep flying on Southwest Airlines. Youre a straight shooter, gary, and its always a pleasure to speak with you. Again, remind people, this airline. Well get to trading with jim in just a minute. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. 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This company has a lot of earnings power and new drugs. Do not give up on celgene. Down two usually means down three tomorrow. Dont give up on it. And airgas . Sketchers, apparel on Fire Technology and i use my shoes to the club every saturday. Thanks, jim. 6 00 p. M. Eastern. Home sales and market cap when we come back. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different 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 the future belongs to those who challenge the present. Welcome back to squawk on the street. The new home sales number is down 1. 8 . 406,000 seasonally adjusted annualized rate. Were looking for a number much better than closer to 500. By the way, our last look, the best level since the First Quarter of 2008 was downgraded all the way from 504 to 442 so that gives it a minus 8. 1 . Even a larger scope when you think about what the number was when it was originally released. Diana olick in d. C. Will give us an idea of what this was and how much it occurred. Diana . Im not surprised at that seeing 18 jump to 500,000 in may was irrational. It didnt make any sense. Now we have a revision back down to normal, 442 for may and then down to the numbers of 406,000. Yes, its a big miss on the new home sales but its a lot along the lines of what weve been hearing from the Home Builders. These are not closings, which are what the existing home Sales Numbers are. These are people out shopping for a home in june. Most of them are mortgagedependent buyers. They show higher revenue due to higher prices. Pu p pulte said that price point was up 5 and theyve been focused on the higher end buyer. We have a 5. 8 month supply sales of new homes. You want to see demand and supply even sixmonth supply is normal for a housing market. We have Housing Starts that are very low and this is showing that the demand is very high when we see sales coming down this low again. Still waiting on a price. We expect the prices will be higher for 2014 as Home Builders have not only been raising prices to deal with land, labor, and nearly costs but also because they know the buyers out there are the higher end buyers, not the entry level. Back to you, sarah. D. R. Horton is down the most of the bunch. Now to facebook. Shares of facebook are up more than 100 since the ipo price of 38. Facebook announcing Second Quarter results. That certainly beat on the bottom and top line stock op. Almost 6 . Ceos Mark Zuckerberg saying that mobile has room to grow. One thing that is exciting is theres still so much room to grow. On average, people on facebook in the u. S. Spend around 40 inmanies eai minutes each day on facebook including one in five minutes on mobile. People spend about nine hours a day engaging on digital media. Theres way to improve that people can share. Obviously its about mobile. Lets bring in a Research Analyst with a. G. Is that an accurate characterization of how these numbers look to you . I think it was a stellar quarter and they are downplaying it. One of the most impressive things for me was the amount of flowthrough to the bottom line. So for every incremental revenue they got on the dollar, 86 cents of that was able to go through the ebitda line. Very strong quarter. The 62 mobile, thats certainly impressive, especially when it was nothing when it went public. Where does this number seem to get to in terms of mobile . I think were going to see that number go to 75 less because the desktop business is growing but at midto high and single rates whereas mobile goes up 152 versus last year. There isnt anything that is really going to change that. We think over the next 12 to 24 months, its going to be north of 1475. What about the facebook versus google sort of race for any kind of digital ads . We saw that its making less money per ad and, therefore, its expanding. Were not seeing that kind of relationship in facebook. Is facebook doing better at monetizing ads than google . One thing that is different is were still in the early days of modernization. They were up this quarter which was an acceleration versus last quarter when it was up 118 . A company like facebook, which only has 7. 5 market share right now, they are going to likely double that in the next four to five years and they are playing catchup to google. The amount of usage that youre getting on facebook, the engagement in the platform, we havent even talked about the other apps that they have, whether its Facebook Messenger or instagram or soontobe whats app. People are obviously looking for question marks stocks are selling from an open. Some of their new we are initiatives, like poke in paper, all those still young arent setting the world on fire. What is going to drive it higher . Well, like i said, there is more not only on the facebook platform but all of the other apps that theyve got. One thing that they caution on the call was that because of the tough comparisons and because of the large numbers, they are going to see a little bit of deceleration in their top line. They are going from 70 and 60 type top line growth to 50 and 40. As i mentioned earlier, the operating leverage remains very, very strong. I think especially as whats app starts to monetize. So we want to hold you down here on specifics. 25. 27 right now. Youre talking about different potential for revenue streams. How do you value the stock at . If you share our view that the market share for facebook is going to double over the next four to five years, they are going to need a 2. 5 billion market. And so their top line should continue to grow 25 to 30 and ebitda even faster than that. If youre being looking out two to three years, this is going to be a stock that has a potential to touch triple digits. Our 12month target is 85 but there is potential for upside from there. And a bullish call on facebook. Arvan, good to see you. Thank you. When we come back, caterpillar is weighing on the dow with an uncertain global picture as they bring costs in. What should you be doing with the stock today . Well talk about that. And a few hours away from Steve Liesmans exclusive interview with the president. 5 00 p. M. Today. You cant miss that. Squawk on the street will be right back. My motheits delicious. Toffee in the world. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Welcome back to squawk on the street. Take a look at angies list which is getting pummeled down to lows. Its 7 cents worse that wall street was expecting. The company spent more money to acquire new customers, carl. Back over to you. Dom, thanks so much. Caterpillars revenues missed. Caterpillar ceo this morning said hes pleased with the companys Second Quarter. Take a listen. What were faced with here, though, is basically two years of flat on flat top line. Were doing great in finding ways to be more efficient and lean in our manufacturing and lots of other things operationally that will really pay off down the road. Im happy with where were positioned right now. Lets bring in jpmorgans managing director. Its great to talk with you. Good morning. Good morning. They do bring revenue down to the low end. How long can the bulls support a story based on costs coming down and buybacks continuing . You know, i think thats a great question because they raised the guidance by 10 cents and 9 cents was simply share of purchases that they are going to accelerate in the Third Quarter. Our concern on caterpillar has always been where is the bottom in the mining business. At this time last year the ceo was calling for flat revenues this year. And at the beginning of the year he was calling for minus 10 and minus 20 and here we are down 40 still in the mining business. Is china going in the wrong direction . China in and of itself is not a huge market for caterpillar but its a huge markup for mining products. Its indirectly a big business for caterpillar. The competition is not helping. Lets pretend that you have a long term and youre willing to deal with mining weakness for a while. How long can construction make up for that . Construction cant make up for it overall. North American Construction business was actually up 20 and yet their total revenues were down 4. So until we see the bottom in mining, its going to be really hard to offset the destruction that were seeing on the mining side. So were looking at a year, two years, maybe, it depends on where mining finishes up. So the question then becomes, ann, whats in the stock already . Is the better construction already priced in and therefore the stock doesnt monitor rebounds . We are neutral on the name. We were concerned about where mining will bottom out. If you take this quarters revenues in mining, they were, on an annualized basis, they were about 20 billion. It could stay there for a decade if you go back and look at prior cycles. So, you know, thats where i would argue that caterpillars ceo, that we saw the bottom in mining and the business should be strong Going Forward and a contributor to caterpillar. So i think that caterpillar may be ranged for the rest of the year until we see where mining cap x is going to land for 2015. Right. We have this conversation every quarter and obviously it is a tough hand to be dealt but in the end, do you think this is an execution management issue or are they in the midst of a giant storm right now . I think thats a great question. I had that conversation with caterpillars ceo on numerous occasions and, in my view, i think caterpillar has always struggled with forecasting its end markets and therefore we found every cycle either oversupplying demand or undersupplying demand and they are not having to cut back like we saw last year. So i think that the group cause of caterpillars problem is its inability to forecast some of these highly complex global end markets and perhaps down the road investors are going to start asking, well, why are we in all of these markets if we cant forecast them. Is that what youre asking right now . I think the question needs to be asked, yes. What about just in terms of broader implications in terms of the overall economy . Have we looked at it as an overall barometer to really glean anything about overall demand and strength in this Global Economy . I think we can take a few readthroughs and takeaways from the report. And i think the biggest one is that were just in a very complex world right now. Weve got pockets of strength in places like north American Construction and weve got growing risks in a lot of emerging markets, latin america, middle east, china. You know, i think we are just seeing low growth and with that just brings a strength of weakness abound all over the world. If all of this is true, ann, they are in markets that are opaque and they are not good at predicting the future, who can . Is their rival better at it than cat is . Perhaps not and thats why they wonder why we are in these complex markets, nobody can forecast earnings and overproduction and underproduction, i think its a tough question for management. Ann, always good to get your point of view. Appreciate you coming to the camera. Caterpillar is the big drag on the dow today. Meanwhile, ford and gm reporting this morning. Gm missed its qe reports and our phil lebeau is live in chicago with more of those. Hi, phil. The recall is getting questions from General Motors just a few minutes ago. Ceo mary barra says i believe we have addressed the major outstanding issues when it comes to hunting for defects so it become as question of whether or not they can put this behind them. There is a certain impact on the performance in the Second Quarter. The company earning 58 cents a share, 1 cents shy of analyst estimates on the revenue side. Heres a look at what the shares of General Motors are doing today and like ford and other automakers, it has had problems moving beyond the 36. 5 to 37 range. The company will be taking 400 million charge to handle the Compensation Program being run by ken feinberg. This morning, the ceo of General Motors talked to us about that program and the money that they are putting aside. There is no cap on this program. Ultimately, the cost of the program will be independently determined by ken feinberg and ken feinberg alone. The 400 million charge that we took in the Second Quarter is our best estimate of the potential exposure based on the data thats available to us and work that we did with outside third party actuaries. Lets shift gears and look at what ford reported for the Second Quarter. Beat the street by Third Quarter revenues. Same for ford. When you look at shares of ford, however, intraday, you can see that investors are much more optimistic of where things are at ford. By the way, carl, ford reporting a record 2. 44 billion profit in north america for the Second Quarter. Thats the best they have ever done in any quarter in north america. Back to you. Whats the final tally on General Motors and the recalls . In terms of the number of vehicles . The number. The number so far, yes. The total number is just under 29 million for all of these, not just the ignition switchrelated ones, 29 million for the year. Yeah, crazy. Phil lebeau, thank you for that. Under armour seeing big gains and beat analyst estimates. Can the Company Really compete with global giants like nike and adidas . Well talk about that right after the break. At humana, we believe if healthcare changes, if frustration and paperwork decrease. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. The ibm cloud is the cloud for business. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were streamlining an algorithm. Were going public [cheering] the fastest inhome wifi for your entire family. The x1 entertainment operating system. Only from xfinity. Under armour came in at one cent above the forecast by a pretty wide margin. Under armour raised its guidance and wall street is pretty happy with those results. The stock is up 11 . Wouldnt you say best performer right now . Best performer this morning. Yeah. One of the questions i know on the call, they are talking about a lot of growth and opportunity. Kevin plank is the ceo in running in international. This is the company that is getting a bulk of its sales in the United States and has really started to expand its sales overseas. People were looking at it doubling from the same quarter coming off of a very low base. They are opening new stores. I thought what was interesting was the tidbit from this call. 40 of sales actually come from international customers. And what plank was doing was emphasizing that theres an international appeal. Footwear is more popular overseas than apparel, which is actually different in the United States as well. If under armour can compete with the likes of nike and adidas, its going to have to grow. The stock is up 40 this year before earnings, i imagine. Yeah. Sustaining that brand, you know, obviously we cant buy stocks but just from noting the behavior of my son when he was younger than he currently is, over these last few years when watching the stock move, its been concurrent. All of his cohert as well. That gets to you 49 margins. That was a big improvement as well. Womens was a Good Opportunity as well, especially with lululemon. Lets go to rick santelli. Good to see you. Good to see you, too. Mark hansen, what a perfect day, thanks for taking the time to join us today, mark. Youre welcome. So last month we lopped off 62,000 when it was originally released to 405,000. You have to go all the way back to april of 2008 to find a number in that area. So big difference. Peter book farr, friend of cnbc, emailed me. New home sales is 425,000 and compare that to the average of all of 2013 at 430,000, give me your comments on all of that and todays number in general. Todays number was kind of shocking down 12 year over year. The big revision in the last month. Remember, demand always precedes or sales volume prices. Our next price, rick, has to be lower prices. People need lower prices to buy houses. This is clearly not a supply problem. Weve clearly changed trend to demand destruction in both existing sales, new home sales, starts. Its all looking the same. One or two months you might be able to blow off but after this many months, this far into the year, this nuclear fed policy for this long at zero percent Interest Rates for five or six years now, this is all we get. This is clearly a structural demand problem. Let me interrupt you right there, mark. I so agree with you. I did this thing with you in february 2009 where they said low Interest Rates, you can put them in negative territory. Thats not going to really help housing. Its not necessarily about the financing of housing. Its about being able to afford a house. Right. And i think thats borne out. Another issue, who the end users are makes a huge difference on how it impacts the economy. Explain. Existing home sales and the surge we saw over the past two years was run largely by investors getting pushed out the risk curve buying houses to flip and rent as an alternative asset class. We saw 33 of all existing home sales this week are from investors. I think thats skewed what people how people look at the macro housing market. Again, this is not an enduser driven recovery. Normalization keeps getting pushed out every single quarter. Now were out to 2017. Consensus estimates for a normalized housing market. Again, rick mark, listen, we have 20 seconds left. I want your expertise. We cant do a counter factual but if we had allowed housing to truly bottom after the crisis, do you think it would have turned out better . It seems like all these years and we dont see Single Family creation and all of those people are shopping at home depot. I put out a report called foreclosures are the solution and not the problem. Yes, things would have probably gotten scarier but now we would have all of those people foreclosed upon. They would have raised capital and been back in the market buying houses as First Time Buyers today. Mark, i could talk to you for hours. Were going to bring you back as we get to next month to see what kind of wild ride we are on. Thank you for taking the time. Into wh when we come back, a big shakeup at walmart. What does this mean for the giants turn around . The dow is up 4 points. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different 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 the future belongs to those who challenge the present. Machines will be sprayed to be made. And making something stronger. Will mean making it lighter. One day, factories will work with the cloud. One day. Is today. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Go to comcastbusiness. Com checkyourspeed if we cant offer faster speeds or save you money well give you 150. Comcast business. Built for business. Welcome back to squawk on the street. The department of energy is out with its quickly report on natural gas storage. We got an injection of last week of 90 billion cubic feet. Thats slightly less than what analysts are trading higher today. 3. 86. But not necessarily so much because of the number, more because of the tech dal technicals here. There is a bit of a buying pattern here. Its roughly double what we saw last time this year and also double the fiveyear average and total stocks. Thats what traders have been watching. They are roughly 20 below where they were last year and we were looking at a 50 deficit. So really we are seeing these numbers close quite quickly. Again, prices right now, 3. 84. Back to you. Thank you very much. Meantime, the president is going to support antiinversion legislation today, according to some white house officials. Steve liesman has an exclusive with the president later today and joins us this morning with a preview. Good morning, steve. Good morning, carl. I want to give people up to date. A senior white house officials talked about the president s views on inversion and basically what hes doing is supporting one or two out there, each from a lawmaker named levin. The president and the white house are concerned about these escalating inversions and obviously the u. S. Companies are being taken over in quotes by Foreign Companies and basically getting around u. S. Taxes. The president supporting a 50 threshold to be considered. Currently its 20 . Retroactive to may and separating it from the broader tax reform debate. Thats also new. The idea was until this point the executives have been concerned about the reputation risk to their companies of doing these inversions. The risk goes away because its why they want to stem this right now and make it retroactive to may. Obviously other issues out there, broader capture form, thousand get to a place where both democrats and republicans agree we need reform and because of the politics in washington, we cant get there. Minimum wage. A bunch of things happening of great import to average u. S. Citizens and especially to markets when it comes to russia and economic sanctions and, of course, whats going on right now in israel. All of that on the agenda later this afternoon, carl. He cant act by executive action. He needs an act of congress and very few people expect there will be action on this particular issue before yearend. I think thats right. I think the president wants to make a point on this, david. Some people are cynical and say, you know what, the president is doing this just to make that point and to see if republicans choose to vote it down. One of the things were going to hear in his speech and obviously in the interviews, hes going to talk about this in patriartic terms. He said that what his daughter is doing should be declared illegal. Senator manchin and heather, his daughter, who runs mylan which did a deal. Yeah. Thats a fun family dinner topic. All right. Steve, looking forward to the interview. Thanks very much for the preview and well be watching into meantime there you go. Exclusive interview, Steve Liesman, 5 00 p. M. On cnbc. And walmart is announcing that its chief is leaving. The rumor mill and speculation mill was running about where bill simon will end up. We can confirm that he has a twoyear noncompete. If you were looking for him to go to one of the many vacant roles of ceo of a u. S. Retailer, it doesnt appear that bill simon will be doing that. For more on what all of this means for walmart, Courtney Reagan is at hq. Its not really a huge surprise to bill simon because it was widely known that he wanted the top job, the c eceo the entire company. Sam simons last day will be august 9th. Greg foran will replace him. He came to the u. S. In 2011 to run the China Division and was previously with australia. He ran all of the International Business and hes had a lot of confidence in mr. Foran. However, walmarts u. S. Samestore sales have fallen for six consecutive quarters. When i spoke to bill simon on july 8th, while the job market has improved, walmart shoppers may not feel that way. I think its going to take a while, six months or a year for those numbers to balance out. Youll see a drop in the rate. And then as more people come back into the workforce, that might change again. Hopefully after six years were starting to gain a little traction in the u. S. And that track is coming at the top end. I think the middle is pretty challenged. Theres a lot of speculation about where simon will go but the noncompete clause in his retirement prevents him from working for another retailer with more than 5 billion in sales for two years. Target, dollar general, jcpenney and others cannot hire simon for at least two years from his retirement date. Back to you guys. Thank you very much. I want to mention, also, courtney, thank you and its a Retail Market in terms of woolworth, highly penetrated, highly mature and thats the challenge and samestore sales, they are competing online. Even the smaller store strategy, given the experience, the man has been in the retail world since he was 17 years old. Also, doug mcmillan, the ceo, has been in for a very long time and has had a lot of experience internationally. So it sort of puts that new hire in perspective when it comes to running the c eceo division. Barely got his feet wet. Two months running asia even though he ran china before that. And bill simon, just to make things smoother, is going to stay on not only for two weeks but hell be a consultant for the next six months. Maybe hell sit for walmart part 3. Well see. When is that coming . No time soon. Those things take time. When we come back, the ceo of Union Pacific will come back live. His thoughts on the latest quarter and the economy when squawk on the street returns. Sh, and for a family of four, its 160 a month. Wow, sounds like a great deal. So im getting exactly what i want, then . Appears so. Now, um, im not too sure what to do with my arms right now cause this is when i usually start throwing things. Oh, thats terrifying at ts bestever family pricing. For instance, a family of four gets 10 gigs of data, with unlimited talk text, for 160 dollars a month. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. E financial noise financial noise financial noise financial noise he cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. Welcome back to squawk on the street. Were watching shares of Royal Caribbean up nearly 8 in todays trade, the company beat secondquarter estimates. Royal caribbean reported q2 revenues of 2 billion versus estimates of 1. 9 billion. The company citing higher demands for its european cruises. Be sure to tune in to power lunch today, a cnbc exclusive, 1 00 p. M. Eastern time right here on power lunch. Carl, back over to you. Dcom, thank you very much. Revenue for Union Pacific came in a little higher than expected. Joining us is the ceo, Jack Koraleski. Good to be with you, carl. We were talking about a harsh winter. Do you feel that its over and done with . You know, i was glad to see winter be done but then Mother Nature that knocked out a big piece of our network for some period of time. We recovered well. We did a twopoint improvement to 63. 5 which is better than our history. We think we handled averse tdve pretty well. Youre optimistic. Why . Everything is headed in the right direction, carl. Just to give you a couple of numbers, lumber was up 17 . Other products like cement and rock, sales in june at 69 million, all of those are fundamentals of the economy and they are all headed in the right direction so we feel good about that. We have a nice carry over from last years crop that is driving our ag. It was our strongest commodity. The current crop for 2014 is looking real good, which kind of sets up not only for the end of this year but into 2015 as well. So kind of all of the basics look pretty good to us. Those who have been watching the rails have been hoping and watching a rebound in coal. Your number was a little bit below. Why . You know, we had lost a contract early in the year and so we had kind of a headwind to make up. Our core volume was only up 1 . And the rainstorms we had basically two 5inch rainstorms that covered our territory from nebraska all the way to chicago right in kind of a quick proximity. Thats the heart and soul of our coal network. That dampened our ability to handle as much coal as the demand was there but were seeing the coal Network School up and so we feel good about the second half of the year. Do you see that move up at this high rate . You know, its certainly a good number for us. We picture somewhere in the 16 million as kind of being a nice stea stead rate for automobile manufacturing. Its still uncharacteristically high. Finally, average operating speed, where did that come in . You know, average operating speed kind of hit a low point because of the storms that we had in june but we are now returning. Were starting to see it and the thing we feel really good about, carl, were having the highest volume of the entire year right now. This morning were running somewhere around 192,000 cars a week. So were seeing our operating metrics improve and thats a good thing. That kind of sets the table for the second half. Jack, just curious what your reaction is to the department of transportations new rules governoring shipping fuel by train to make it safer and more efficient. Does that make your life harder . You know, sarah, there were really no surprises in secretary foxs announcement in the nprm that came out. We have been working in the rail industry, the Petroleum Industry and the department of transportation has been working for quite some time to make today a product that is safe even safer. The types of things that they included in the nprm are not really surprising to us. There are some we are concerned about. Certainly there would be consequences if we had to reduce all crude oil trains to 40 miles an hour thought our network. That will slow passenger trains that share that network and others. So well have to work through that. There are some other options they have on the table that we like better. But, you know, when you look at all of the things that have been proposed and were going to be at the table cooperating, as we have been, and we think that, working together between the customers, the Railroad Industry and the government, the department of transportation, i think well come to the right solutions. I was surprised that the bakin they said was more volatile as a product. Is that true, jack . You know, i have to leave that to the chemists and yeah. To really determine the engineers have going to have to answer that question for you. Its kind of hard to say for me. Yeah. Stay in your lane, as they say. Jack, thanks so much for coming to the camera. Well see you next time. Hey, great. Thanks for the opportunity to joan you this morning. All right. Up next, wyndham worldwide raising its guidance. What is the secret to success there . The chairman and ceo joins us for a live exclusive interview after the break. My motheits delicious. Toffee in the world. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Welcome back to shares up of wyndham worldwide, reporting a jump. Five year an amazing chart. Go to hq, simon hobbs has a special guest. Good morning to you. Yes. Hospitality wyndham worldwide beaten this quarter by four cents thanks to its time share division. Raising guidance for the full year accelerating both its Free Cash Flow generation and indeed its stock buybacks. Joining me exclusively, stephen holmes, chairman and ceo of wyndham worldwide. A solid quarter here . One of many weve had. Weve put up a lot of great quarters and this is another one in the string of good quarters. The stock underperformed others in the industry. Why many analysts have a buy. They think theres room for you to make up here. If we look at the Hotel Section first of all, the hotels division, a lot of people will know the brands. Big brands, 7. 5000, biggest in the world. And launching a Campaign First time on television. Is there a view perhaps youve underplayed some of those brands . I dont know if weve underplayed the brands. Days inn, super 8, power houses in the midscale sectors. Underplaying it . I dont think weve underplayed it. Weve not had the ability to do an Umbrella Campaign up to this point. Why is that . We work with our franchisees, their money going into a fund used for marketing and we have to have blabberation and concurrence we can do an Umbrella Campaign. Something historically the brands havent wanted to do. Weve talked about it, weve had a breakthrough, and been doing it since may. Terrific. Vacation rentals. You place about 5 million families in Vacation Rentals or exchanges each year. How disruptive is air t and bbu . One. Great big bets. Take what the europeans do, extend it around the world to this country. Is it ripping the rug under your feet . Not at all. Its a very large market. Were a small player in. Theyre small in it. Were the largest of professionally managed vacation rental. We do everything from soup to nuts. Lists house, put it into the hands of the consumer. We give the consumer the keys, make sure its handled well. We fix the problems, if problems occur. From an owner of a home standpoint, they can list it and deal with joe consumer or come to us and let us handle it, dot mark macting and deliver the consumer to their home. Would you ever consider air b b . We do the same. Mimic them . Or they us. We do it on a more local basis. So we have people in destin, florida. People in the rocky mountains, actually on the ground dealing with it. Its really quite different. If youre a homeowner, its a big decision to decide, are you just going to list and deal with joe consumer or are you going to put it through us and we will handle all of those aspects and make sure its used properly. If an 4ri679s recommend your stock or people like your stock its because of financial discipline, feebased, Free Cash Flow, share buybacks. What are you promising shareholders for the rest of this year and into next . With respect to what . Performance . With respect to what extra you can give them from where you are now to try and drive the share price . Well continue to perform at a very high level, which is what weve been doing for quite some time. To go back to your earlier question about, theres a gap between us and valuation. The multiple with peers, there is. Its something we need to continue to close and weve been closing that gap and closing the gap, but weve got a long ways to go to get ourselves what should your stock price be . Ill never tell that secret. Really . It should be wherever the market feels it should be but its certainly low at this point. One of the reasons were a big buyer of our own stock. We said this morning were on a pace that will buy at least 600 million of our stock this year since we initiated on the New York Stock Exchange eight years ago, repurchased or paid dividends 4. 2 billion back to shareholders. Were not afraid to give cash back to the shareholders. Were trying to drive value. All in this game together. And this afternoon, of course, the travel lodge mascot sleepy bear rings the closing bell, will you be there . Is there any truth to the rumor that you wanted to wear the costume . There is truth to the rumor i wanted to wear the costume but will not be in costume tonight. I will be standing there with and supporting sleepy bear, but looking forward to that. Its a great occasion. Sleepy bear is 50 years old, and that shows some of the strength and depth of our brands. We have brands that are 40, 50, 60 years old that are part of our collection of brands. Were very proud of that. Just before i leave you, any chance of a tucking acquisition . Always. We look at deals all the time. Our dna, m a. Weve been built through acquisition. We are constantly looking. Always on the prowl for something that makes sense g. To see you. Stephen holmes, ceo of wyndham worldwide. Will you be there are for the sleepy bear . I think you should wear the costume, if thats an option. Yes. I do actually have crowdpleasing steps, which would look good in a large costume that i know. Simon good to see you. Over to Kayla Tausche with a look whats coming up on squawk alley. No sleepy bear costumes on squawk alley but more on this earnings avalanche. Ford posting its best quarter in the u. S. Ever. Phil lebeau sits bown with the cfo coming up. And facebook officially doubling its ipo price. Stellar quarter for that company. Best performer in the s p in the last year. Can it continue growing . Well discuss that, up next. Finally, amazon reporting after the bell. What do bezos and company have in store . All that and more up next on squawk alley. Here at fidelity, we give you the most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. [ male announcer ] if you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end july 31st. Share your summer moments in your mercedesbenz with us. Breaking news here. The ukrainian Prime Minister says he is resigning. According to reports, talking about a breakdown in politics, and in getting his way through parliament. We should note also that the president , the ukrainian president poroshenko has been in charge and leading the charge, and at the helm of this country as they are dealing with the prorussian separatists and conflict there. Bring you the fact, just more upheaval and turmoil in ukraine when the Prime Minister announcing that hes tend eerin his resignation. And the dow hasnt done a lot. Would do more except for caterpillar. Almost 8 00 a. M. At Amazon Headquarters in seattle. 11 00 a. M. On the east coast, and squawk alley is live. And welcome to squawk alley. Obviously, a big day for the markets, althoughs indexes may not show it. A big day for tech as well. Joined by henley blodgett, editorinchief and ceo. Good to see you. Great to be here. As always, Kayla Tausche and jon fortt. Right to it this morning. First up, amazon tonight after the bell, the firephone going on sale tomorrow morning. Expect aces very amazonlike, analysts looking for almosts 20ds billion in sales, a loss of 15 Cents Per Share as the Company Continues to make Big Investments and roll out new products. Citi, by the way, downgraded the stock earlier in the week, in their oends words,