Transcripts For CNBC Squawk On The Street 20160718

Lag last years reports. What that means for the markets. Softbank buying arm holdings for 32 billion in cash. Well give you the details, some insight and context on this massive deal. Republican National Convention kicks off in cleveland. Whats on the agenda and what surprises could be in store . But first up futures on the rise to kick off the week. The dow and s p near alltime highs. Markets largely shrugging off the attempted coup in turkey and on a busy week of earnings, b of a beating on the bottom line, 36 cents versus estimates of 33. Deposits up 5. 8. Some of the metrics not matching those of its peers, jim. But still, this is a grind out quarter. Return on equity, getting double digit. What i liked best about it, really, this is kind of interesting, this is a company thats well ahead in mobile and you have an amazing decline in branches from 6,000 to 4600. Yeah. And that is because people are rapidly adopting mobile. Interesting brick and mortar story where you have still one more disruption via the absolutely terrific app that they have, also book value 16. 68, well this will be important because what will happen is they can start buying back stock tomorrow. Lets watch, you see jpmorgan started going up after they reported. This is this day they have to hold back and the day they can come in with guns blazing when you have a discount like that its interesting. Efficiency ratio 75 down to 66. I liked it. I liked the quarter. Ive liked almost all the bank quarters. The journal said earnings are not so hot. I struggle with that. I just try to point out that the earnings arent bad. They didnt quite get there. Return on average, common equity 9. 2 . Ive got it. Its still tangible book they were at 6. 5 on average. But i think that this was a quarter that was just a fine quarter. I mean, one of the problems that one of the things we have to keep in perspective, werent they supposed to have horrible quarters because the fed didnt raise . Net interest margin. Trading wasnt bad off brexit. Trading was not bad. Capital markets activity okay. Trading up 12. Vic up 22. The shares have lagged the peers this year. At b of a. Stock down 19 this year. She didnt get about to buy they didnt get to buy back as much stock. Plus 2 yield. I agree with you. Look, is it like the greatest quarter ever . No. Jpmorgans quarter was a good quarter. Expenses are coming down for all these banks. Yes. Thats important. Including at bank of america where i think they were down 221 million. Yeah. I mean thats just jpmorgan had a significant decline in expenses. Expenses since 08 b of a. The bat mortgage coming down. Decent quarter overall and thats how competitors will look at it. Decent quarter overall. So where are we . Were through. Jpm, citi, wells, b of a, Morgan Stanley on wednesday. Golden slacks which could be a problematic quarter. I love the fact everybody thinks its a problematic quarter. People are saying maybe the trading wont be that good. Maybe they dazzle us with trading. After what we saw with brexit there was a risk on, i usually dont use that term, people wanted to take a risk, get the things going. First they want to take it off and put it on. Its all good. Thats just called we call that in the business stupidity. In the business. Of the mix of earnings i mean were going to get gm, travelers, ge. Travelers will be good but watch. Initially people miss it and then they peel through the numbers and you cant believe how good it is. Met life last week, is this about people expecting rates to go up. Morgan stanley said no rate increase until 2018. One of the things i love about travelers they buy the highest quality munis. Never any risk. What if youre in the business of selling annuities. Whats going to happen to that . Yeah. Business has that has to be a terrible business and yet the stocks dont go down like they should. I mean the insured, chub is still on fire, travelers, but when you go over the charts, insurers look great but thats like i think that could reverse. People will start liking the banks a little more. You do . I do. The quarters arent that bad. Because they can start returning more capital. They do have a lot of capital. Once theyre in there as a bid underneath you will feel better about buying the stocks. You think thats fanciful . Not necessarily. Doesnt sound fanciful to me. How much we had harold ham on squawk arguing that the rally weve seen is due to the market celebrating trump. Did you see how ambassadorial andrew was when he questioned that . Is that the word youre using . Yes. It was kind of like i think he would have said youre nuts. Thats ridiculous. But what he did was say, you know, with all due respect, came in with an all due respect attitude. Use the all due respect. Yeah. Very surgical. And turkey, just as we continue to watch the fallout. I keep thinking about the committee to protect journalists a great organization. First thing i think of too. The worst. Number one in terms of jailed journalists in turkey. Its great a victory for journalism but i think about the first amendment. Hes tried to shut down souch social media and has to use a face time app to communicate. Geez, face time, apple, like and didnt use twitter. Well thats shut it down. Yeah. But apple, theres were getting good numbers out of india. I thought there was a good piece this weekend i read, india is i think were going to talk more about india, dominos having a great run in india. India will be the next big frontier for apple but i think it was Pretty Amazing to hear that and then the lear was down big and came back. And one day i thought i was doing great in the lear, just Getting Better and better, 1988, they devalued and did a reverse split. I said im losing fortunes. Big portion in arsalec supposed to be the whirlpool. Turkish lira. The italian lira hasnt come back yet. They got rid of it. They did. Dont you think were going to see it again one day. Beautiful currency. You never know. Never know when those can come back. Lets talk yen and the yen and the british pound here. Of course this hugeeal this morning. Whoa. Japans softbank will acquire chip company arm holdings 32 billion in cash, arm is based in the uk. Designs chips for many smartphones including the iphone that represents more than 40 prooem that price, 43 over where the stock closed. Fascinating deal here, of course. A huge bold bet from massa son who runs softbank who made a series through the years most good, couple not so good, the investment in alibaba, perhaps the greatest single investment ever made. He bought that huge stake for virtually nothing 15 plus years ago, monetizing some of it, sold 10 billion recently. Jim and carl, the arm holdings deal, 32 billion, 60 times earnings at least, 20 times revenues, 33. 6 times ebitda, the multiples on all fronts quite high. Annuity stream. Not about the iphone or about cell phones. Its about the internet of things and the believe on the part of mr. Massa son that this is the future, this is where he needs to be, and with arm he will be there representing essentially an annuity dream store all of the stream for all of the devices that will be connected mobilely to the internet. Not your phone, but everything. It always surprises me intel didnt buy these guys. Just a bunch of cambridge professors came out with probably the finest intellectual property of the year because it doesnt burn a lot of bat fof t. Their stuff is a light battery user. With nintendo go when you play it its like a battery hog. I have not played it and will not play it. I am not playing that game. Hasnt found charm hasnt found anybody. Did you know its 28 cheaper than if they did it a year ago because of the brexit and the pound and yen. Although most of their earnings are in dollars. True. So therefore you have terms like that. Im saying it was brexit not unlike 1987 when we put on a lot of a sale on our companies, and the japanese came in and bought it it was a one time only with the stock market, david, remember when the canadians blocked potash as a national treasure. Yes. This is the best tech company in britain. In the uk. Will someone block it that is very much would be atypical for them to do Something Like that. Such free traders. Yeah. Thats hard to imagine. In fact on the regulatory front this deal could close as soon as the end of august. Come on. It could close in six weeks. No regulatory here. Not talking about one strategic buying another which is interesting, of course, because you would expect perhaps there would be interest from other strategics, the likes of an intel, although their regulatory could be an issue or apple or samsung or qualcomm. Probably not. I cant say that ive surveyed the market at this point and neither has arm because really while massa son was thinking about this for months i am told, the approach was really made very recently and at that price they were willing to say okay, sold to you. You have a lot of companies that earn their money overseas so its its dollars at 66 cents on the dollar, in other words you can save the tax because they use overseas earnings. The chance of an interloper here seems to be low given the incredible multiple hes willing to pay here. Do you think [ inaudible ] didnt like this . I dont think that cash i dont know what role he had, if any. Amazing deal. Massa son saying this is my next big bet, big it is and im going to be here a long time to come. Apple is often linked with them because of this battery life issue and these guys have the better technology. Intel a competitor. I think intel is coming on. We will hear from intel this week. A couple of quick couple shares on alibaba, pressured people from softbank, and alibaba position. They are locked up for at least six or nine months as a result of the deal they did in selling that 10 billion. Split because clearly theyre not putting more money in there. Theyre spending 32 billion on this. And they are still in the process of trying to deleverage even though theyre adding debt as a result of the debt that will be taken on in the form of a bridge loan for a trillion yen. Whats interesting the tower stocks have been red hot. American tower, crown castle, sba communications. I was thinking because sprint is sped spending money to build out the network. [ inaudible ] but i do think that there is absolutely a belief that the tower stocks are moving because of sprint. Wonder where that wouldnt that be something. American tower its on fire. A lot more numbers tonight including ya loo after the bell. We want to turn our attention to the developing story in baton rouge over the weekend. Three Police Officers killed. More injured. Nbcs jay gray is on the ground with more. Jay, good morning. Hey, carl, good morning to you. Look, the shootout it happened right here, police tells us, really a rolling gun battle. Across this car wash, into the parking lot of the Convenience Store just behind it. What weve been told by police is that it didnt last long, but as we all now know three officers killed, three more injured, and an update on the most serious, still in critical condition, and officers tell us he is fighting for his life. Look, the suspect here gavin eugene long, investigators have said he was the lone shooter but they still want to figure out if he had any help planning or carrying out this attack. Thats why they continue the physical evidence retrieval here on the ground and at his home in kansas city, missouri. Another facet is the digital footprint that he apparently left behind, several websites and social media lines that have really captured the attention of investigators. One, just hours before the attack, he apparently posted a cryptic note saying, just because you wake up every morning, does not mean that youre living. And just because you shed your physical body, doesnt mean that youre dead. Again, that posted just hours before the attack which happened on his 29th birthday. Investigators here from both the federal, government and local and state police, say this is just the beginning of whats going to be a long and obviously very difficult investigation here. Carl . Jay gray in baton rouge, thank you for that. The New York Stock Exchange will hold a moment of silence for those fallen officers at 9 20 eastern time. When we come back exxon mobil making a nat gas bid overseas. We will fill you in on that. The ceo of game stop paul raines and the future of gaming after po comongo. Dow going for seven straight gains. Havent done that since march. More squawk on the street from post nine in a moment. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade exxon mobil entering the bidding for an oil and gas business. Agreed to an offer from Australias Oil Search total, exxon coming in with a higher bid last night worth . 2 billion. Oil search and total have until july 21st to submit a revised offer. Interested in what exxon is putting together . A lot of the Americans Oil and Gas Companies have come down so much. New guinea is not a stable situation. Theyre already there. This is a great producer maybe if oil were augmented by exxon mobils technology and discipline there would be more there. Weve been waiting for big oil to step up to the plate and buy some of the companies. And this is what they buy . This is very disciplined company which has one of the hottest stocks in the market in 2016. Although i can remember there was takeover spec in this name when it was 60, 70, 80 four years ago. Rumored names. A rumor but finally happened. And outbidding someone. This is not exxon. Its so not exxon to the point i kept thinking i read the two sources in exxon three sources, finally was acknowledged by ex. But this is not going and buying, you know, a depressed cimarex or ka re, so or a pioneer. Or anadarko. Anadarko. Often rumored. Yes. Often rumored. Oil has come down. Were going for inner oil. Kind of interesting and contrary. Turkey is necessarily a oil giant, but certainly the geopolitics hasnt done anything to spike the price of crude. But so interesting they just did a big deal with israel for noble energy and it was rather remarkable. The Noble Energy Deal was all about this gigantic feel off the mediterranean so they can run a pipe through turkey through israel and hit western europe so hostage to russia and happened a couple weeks ago. I think theres a lot a natural gas sealed in gigantic. Some think the largest. Everyone is claiming they have the largest. Marcellus is supposed to be the largest. Turned out to be the largest natural gas field in the country. About to have a moment of silence for fallen Police Officers in baton rouge. Their names matthew gerald, aged 41, montrell jackson, aged 32, the father of a 4 month old son and brad garafola, 45 years old. Of course the tragedies in baton rouge coming days after the assault on police in dallas. The president over the weekend denouncing the attacks on Law Enforcement in this country. Heres that moment of silence. Its here, but its going by fast. The opportunity of the year is back the mercedesbenz summer event. Get to your dealer today for incredible onceaseason offers, and start firing up those grilles. Lease the c300 for 379 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. I dont know about you but im excited. First mad dash of the week. Theres a stock called twlo the first really great tech ipo weve had and it doubled and then tripled. David, the analysts have come out and spoken theyre going newt on it. This is a company that participates in the upside of a lot of businesses including uber. Right. And i just have to tell you, airbnb, a great company, dont know if youve used it, a great company, as this thing comes down because theyre mutual, theyre anxious to recommend it if it comes down at all and you should be a buyer if it comes down at all. Ive heard about pricing an ipo at a level where investors will be pleased but maybe they could have come in here. We talk about that a lot and the answer is absolutely but the bankers, no one was going to this is the first one out of the chute we had in a long time and bantsds to make sure it wanted to make sure it worked. Exactly right like the old days where they know they have to get you back in. They lost you so much money with the ipos. This was the bargain. Theres plenty of stock behind it so they can always do the secondary after, you know, obviously after the lockup. Stock up almost 200 . You did it right, should have been here but they didnt do that. Remember, linkedin was great. This was great. What did we get last week, the japanese line, so they priced that okay and then right. The one on friday was also priced farely well. Yeah. So what were seeing is trying to get the unicorns off too. This was a classic unicorn. If you had been like like arm holdings got a bid this would have been a great bid for a Software Company better than buying linkedin but they didnt want to be sold. Lot of chatter in tech. When you asked last week, about a semi deal, so we did get arm holdings. That was a shocker. Massa says everybody per person 1,000 chips per person is coming. In other words, the internet of things is going to explode to the extent that theres going to be manufacturing that equals each of us will represent 1,000 chips being made because of all the things we have connected. Buy brunswick. No. Not good. Not my boston whaler or no. He didnt mean that. Bigger than me. Yes. I am a small thinker. He is a big thinker. He is. Were going to take a look at arm and the other stocks associated with that deal. Of course a lot of other things. See Toll Brothers ringing the opening bell a few minutes away. Youre her youre watching cnbcs squawk on the street. Live from the Financial Capital of the world. The opening bell in about 60 seconds. Stocks are up for three straight weeks. Already were halfway through july. Weve got the best month since march going although two equals march gains we have to maintain this pace of what july has already done. I keep coming back to redemption monday, that day after brexit, the monday where the most money, one of the most moneys had been pulled out, one of the top ten days that people left the market. Isnt that telling. That was when you had to buy. Sad. Meanwhile the weeks got it all, earnings, the Gop Convention kicking off tonight in cleveland, ecb, obviously our share of geopolitics as we keep an eye on turkey already istanbul down about 5 , as you said the lira has rebounded somewhat. I find when i look at whos going to report even today, and this yahoo quarter we havent talked about yahoo that much. We will. Oh, yeah. The faber report. Just around the bell in a little bit. But i just think this is an important day. Out of nowhere. This day is going to have ibm, up ten points. The bell ringing at the nyse. Toll brothers celebrating its 30th listing anniversary. At the nasdaq, viveve focused on womens health. What are you looking forward to tonight . Netflix. I think its interesting netflix has still not been able to crack into the movie business. You know what theyve got this i dont know if youve seen it, this new war machine movie coming out, brad pitt. They do. 60 million. Spent a lot of money. They did not get theyve been not able to grab some of the big movies that people have been saying they they lost out to be able to have a couple of guys a movie the fox, just because people just felt like they dont want to dont necessarily want to deal with netflix. Remember, its really been absolutely fabulous for serial tv but for the birth of the nation they bid 20 million versus fox 17. 5 million and fox went with them. We need to see them be able to break out war machine done by the same guy as big short which was the movie that i loved and thought was clever. I think you have to watch to see what theyre doing in movies. The adam sandler, did quite poorly. They are a tv, long form tv that needs to crack into movies to go to the next level. Thats what i want to hear about. Youre talking feature releases that dont go to theaters. Thats where theyve been very, very weak. You dont hear any success about those. And i think thats what you need. You need to hear they are more than just a long form series. Really . So thats going to get the people who havent signed up yet to say okay, i might do that . Thats the word, yes. People who disconnect their netflix at this point. No. Not a lot of people unhappy with the service. You have to go to the next level and the next level might be this. Understood. Im going from the street that we have a fellow calling movies better than anybody ive seen and this guy is saying thats pao what people are waiting for, full length. Maybe war machine. Why not create a streaming bundle around your brand, in other words, well give you all of these things and then in addition, well give you this other programming. What a great idea. Sports or other things like that. And netflix led bundle is what you will buy if you are not connected to a cable provider. You came up with or is that i just came up with that right out of the blue. I dont know, popped into my head and now im going to leave and go pursue it. Let me ask you did you just come up with it . That is a great idea . You think so. I bet he addresses it tonight. No. Listen, i dont know. But when you look at what hulu is trying to do, hulu is trying to do that, trying to create a streaming bundle around them as the Key Entertainment hub. It makes a ton of sense. With other programming added in, so that thats it. Because they got to figure out price points in terms of the streaming bundles so they can represent a price point that is competitive with, obviously, and at a discount to what youre paying for your bundle programming. You have to offer headline movies that really catch peoples attention and they have not succeeded to date. Hbo has done that you think . Not as much as you would think, i guess. They get more of the big Movies Running on hbo once theyve been out. They do. But i just think that this is where netflix has fallen, has not succeeded and the last quarter was not that good. You would like to think maybe people would subscribe and want to see war machine and brad pitt which i do. Me too. That could be the movie, a break outmovie and the adam sandler has declined at the box office. Netflix made him a not the draw he once was. Thats fair to say. One thing we know about movies they sell a lot of toys. Hasbro, beats by 2 cents. Partner brand revenue up 15 on star wars and frozen, inventory growth was a concern for some. Thats why i will ask the ceo tonight when i have him, the stock down badly, you got to this has been one of the great runs for the first half of the year. And theyve got it has been very disney. You always when you look at it think, okay, its the way to play disney, hasbro, because theyve got frozen and Disney Princesses. Nerf and maydo double digit. The throwback. But these people are worried about espn. People playing this. I dont think this stock goes down that much longer. Take a look at matel, very weak quarter and the stock came back. Now, obviously, are they pokemon go . No. But they certainly have been around for a long time. Done a pretty good job. The stock gets hit badly you might want to go for it. I have to check the inventory market. Between hasbro and matel, matel larger after hasbro eclipsed it quite significantly. Matel does a lot of work well. Salesforce. Com to figure out what the consumer wants. Hasbro has great technology. This is just they dont they have become far more organized about what people want. Used to be seat of the pants. Nothing seat of the pants about hasbro. Theyre brilliant guys and if that stock gets hit you pull the trigger. After the bell hear earnings from yahoo a sense to the performance of the core business there. That being the key part of it in terms of the operations of the company. But not the value of the company. Of course that is its stake in alibaba which i want to check the shares of as well. If youre looking for an update on and or some answers to who the potential bidders are for that core business, dont expect to hear anything on the call today. Those bids are not due until after the call even will take place. As for that auction of the core business looks like they will receive at least four bids, perhaps as many as five, and then it will be a bit of time until they determine that is the people advising yahoo and its board of directors thats running the process for the sale of the core business, will be you would imagine few days, a week, if not more for them to determine the best bid. Maybe even go back and forth if they get some competitive bids. Remember its not just the core business, its also potentially the real estate associated with it, patents, and contracts will also be very important here. So it does take some time to make sure that the contract is what you want it to be. There are financial sponsors in the running here. Any number of things have to go on after they receive the bids which will still be after the earnings call. Dont expect to hear anything about it. Geez. Thats disappointing. I thought that we would get a little this is going to be a nothing quarter then. Youll get to see how the performance of the business is, whats going on with the mavens. The may vens. Yes. Yeah. Mobile and advertising. Rev. Coach is broken out its high for the year. Bear ups it to an outperform on what theyre calling stronger sales prospects. Remember when this name was truly troubled lastle. They have resurrected. Been very Good Management changes there, and Victor Louise has done a fantastic job. I watched ralph lauren they did good changes. Some of the Fashion Companies are trying to come back and the winners this has been a very this accessory business, it seems to have been putting in a bottom, except for fossil, no bottom, no bottom. Strength in a lot of retailers ross stores, tjx, dollar tree, hog, which has had a series of very rough days. True. Dollar tree data in general i was looking at the charts they had stalled. Maybe this is the next level. Its interesting to see what Semiconductor Stocks are going up on takeover talk. Hock is not about to sell broadcom. Youre buying broadcom, thats foolish. Broadcom is a big partner with arm holdings so maybe people are doing a read through like that, and apple going up on a similar read through. Arm holdings by the way is up 42 . Of course it was a 43 premium thats being paid by softbank in the 32 billion all cash deal under which softbank will acquire arm holdings. Masa son who created softbank who runs it and made the big bet to buy the huge stake in alibaba many years ago, that has turned out to be one of the greatest investments of all time, bought vodafones Wireless Company and turned it into a leader in japan, after it was a lag gerred but a slip on sprint has decided this is his next big bet. He says today is the most historical day in softbanks history on the Conference Call that began for u. S. Investors. Im not interested in the multiple im paying 36 times ebitda, he goes on to say we announce the owner of the Chip Design Company that is absolutely number one i invest at the beginning of every paradigm shift, in the internet of things, its going to explode. Thousand devices per population what i was trying to explain will be connected and its not just going to be things people carry around. Everything will be connected. Hes right. Visionary. Would have bought the stock lower but given the fact that youve got that yen pound, it is just didnt take long for someone to say, you know what im going to take advantage of this pound going down. Strike when the iron is hot. Hope they have good security is built in when everything is connected to everything. I know. I know that the harmon guys were telling me you dont want your car hacked while driving. Your entire world could be hacked when your everything is connected. How often have you been hacked . Not that often. Check your mail. Im on top of it. That fbi guy years ago when doing the cyber stuff said dont connect to the internet with your bank. Dont do it. Its like well difficult. At least i use one computer for only that. Thats smart. Never go to any other websites. Thats smart. All right. Dow down about 8 points on that note lets get to Courtney Regan watching more on the floor. After a record week last week for stocks, so far everything is kind of been taken in stride especially as weve seen domestic and global events. Investors could possibly be distracted by. We do see the Dow Jones Industrial average down by 13 but the s p down ever so slightly. The market still taking in stride the fall in oil prices. Looks like for crude were sitting around 45 and falling a little bit there. It feels appropriate also to take a look at Global Markets after the attempted coup in turkey as well as the softbank bid for arm. European markets slightly mixed there. Japan nikkei a little higher. We believe it was closed for a holiday, hang sang higher, shanghai lower. Theres a lot in focus today when it comes to financials because the Earnings Reports do continue to come out. Bank of america this morning putting up a strong report for both the bottom and top line beating profit though still falling because of the continually low Interest Rates having that impact on the bottom line. Charles schwab shares are higher after posting better than expected revenue and in line earnings. Some deal news moving stocks this morning. Take a look, first at lending club. This Company Naming blackrocks patrick dunn as chief capital officer part of some of the financial names were seeing move. To the deals, exxon mobil bidding 2. 2 billion for papua new guineas Interoil Corp saying exxon mobil has the superior oil bid after beating out an offer from oil shares limited. Take a look at specialty chemical maker farrow, after reports say the company turned down acquisition officers offers because the offers were too low. The stock taking a sharp leg down again today. And i need to wrap it up with retail names. Burlington actually coming out with guidance upping its guidance for both samestore sales and earnings. Saying its earnings expected to be 28 and 30 cents from its prior 20 to 30 estimate. That also beats analyst expectations for 24 cents. Crable sales for burlington between 4. 2 and 4. 5 . So that is better for them. Hasbro under a little pressure after putting up a pretty good Earnings Report for both sales and profit. Thanks in part to Disney Princess frozen and star wars and groupon getting an upgrade today. Havent heard that name in a while. Overweight to overweight from neutral. Piper jaffray says theyre Getting Better at focusing the deals for the products as well as the geographic regions. Carl, back to you. Thank you very much. Courtney regan. A check on the Energy Complex as well. Jackie deangelis at the nymex. Good morning to you, carl. As courtney mentioned oil prices are in their sweet spot right now opening the week lower, hanging out around 45 a barrel. Very interesting because we had a choppy week last week, big moves in eat he direction but ended up relatively flat. And traders are saying to expect much of the same. Now the fundamental story is still intact, too much supply, not enough demand including with the summer driving season to churn and work through it. The recounts here in the United States have gone up for three weeks in a row. Some people taking that as a sign drillers are more willing at the higher price on a relative basis to drill that will push prices lower. The dollar watchers are saying that dollar index is pretty steady, looking around 96 at this point, not really impacting the trade the way it has over the last few weeks or last few months. Finally those tracking gas prices 2. 21 is the National Average according to aaa. This is higher yes, but still under the 2. 76 that we saw at this time last year and, of course, events in turkey not impacting the oil flow there. So oil prices could continue to see downward pressure. Bang over to you. When we come back a lot more on the attempted coup in turkey and Market Impact of what is a tense geopolitical situation. Also season two of binge is streaming. Bryan cranston, walter white, on cnbc. Com, hulu, apple tv, also house of cards producer, Dana Brunetti coming tomorrow. Dow down 23 points to start the week. Back after a break. With usaa is awesome. Homeowners insurance Life Insurance automobile insurance i spent 20 years active duty they still refer to me as Gunnery Sergeant when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and im a usaa member for life. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Im in vests and as a vested investor in vests, i invest with e trade, where investors can investigate and invest in vests. Or not in vests. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement lira, lira,lira, lira,. I follow the well written word wherever it takes me. That is the one thing that i know unequivocally its the place to go. Its never failed me. When i follow my instinct and moved by a piece of material, whether its a play or screenplay for a film or tv sew or whatever, it doesnt matter. Its all about how well written is this text that supports this great story and without those two things first in place, the character doesnt mean much. Bryan cranston of breaking bad and movie the infiltrator when he chooses a product he assigns a numerical value to story, script, director, cast, time away from home, and we asked him if distribution gets a line. Not yet. No. Doesnt care whether it goes to amazon or hbo. Because its distribution of crystal meth in breaking bad was extraordinary. Hes a great man. I dont know if anyone saw lbj. I got to meet him. This i great you got him. I think hes the most intelligent about his profession. This guy real deal. Wow. Done it all. Its interesting hes not as focused on like how it gets out there, as opposed to just making sure its quality. Opposite of my netflix wrap. You have to imagine hes going to bend a little bit eventually once these studios and platforms go after talent like that. Aggressively. Right. He was extremely nice. Did you find that . Hes a gentleman. Youve seen his trump impression. He did a trump impression on the today show last week unbelievable said it was a character he would like to play. Yeah. Briyan cranston. Great man. Cnbc. Com binge and also on hulu and apple tv. When we come back stop trading with jim. Mild start to the week with the dow down 16. Dont go away. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. Time for cramer and stop trading. Couple powerhouse downgrades. Bonnie herzog comes out and says buy the munster beverage. It could be soft in the u. S. The stock has been red hot. The problem in europe. Be careful there. Herzog is very, very strong. An then piper came out with a downgrade of 3d systems and stratasys because hpq. Thats right. Hp ink has finally started to get this was the year theyre going to come in 3d systems. I have seen and been critical about hp and its remarkable. Be aware this is the 3d stories. Thats why these are getting hit badly because hp ink the printing. Yes. Company. They have a very corporate, thats not personal at home hobbyist but absolutely fantastic corporate 3d printer and im going to give them credit because ive been critical of them. This is something they do very well. Dont go speculating on a 3d or statty sus to make a comeback quickly. Hp is for real. My hat off to them and ive been critical. Highprofile analyst calls today. Merck is one. Downgrade. Finally starting to get traction and take it off the list. That was interesting. By the way j j coming up. Very good read through. Look, the stock has been so red hot. Tomorrow morning. Zimmer bio, and striker, raised the price. The orthopedic business, very important business for j j, kind of not done that much, this could be if they get that right and pharma right. Wow. Back to one of our leads, masa son, who runs softbank, continues on his Conference Call saying interesting things. Sprint shares have been down. You may have saw. He said its turning around were helping them with the spectrum, financing becoming selfsufficient now and gives me room to consider my next big move the purchase of arm holdings, sprint becoming Free Cash Flow positive and goes on to say guys, that yoda says in star wars listen to the force. If you listen to the force. The force. Masa son says this being softbank is the best company to invest in our debt. No other company is better than softbank if you are a debt investor because we have virtually no net debt and a great crew upon. Whats the p e on 2037, the breakout year . He has a 500 year plan. He can borrow for 500 years in japan. 2835. A good year. Great year. Yeah. I dont know how many of us will be there to see it. I dont know about that. But i wouldnt buy it on that years the fact he paid a lot of matchup foney for a company liked but that stretched the bounce of how much you can pay for a tech company. Its a lot. A lot of years. Whats on mad tonight . Hasbro down 5. Were going to have to spend time on that. You know its like valiant or something. Valiant makeobreakout day for valian brian golder in, listen to him, a company not only has not lost its way, but a multibig think powerhouse in toys. Not all polk mon go. Although pokemon go is so much fun. Rolling out 26 new countries. Now he can share it with the rest of planet earth. Its something. When in italy last week couldnt play. Theres nobody there. And said David Cameron the foreign Prime Minister couldnt play. I said he would play but london wasnt rolled out. Now he has a lot of time on his hands. His diary is light as he said. His diary is light. Well see you tonight on mad money 6 00 p. M. Eastern time. When we come back, bank of america beating earnings. Well talk about that and more on the market and geopolitics after turkey, richard, blackrocks chief investment strategist. Were back after this. In a world held back by compromise, businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. Free wifi is nice but also risky. An open network isnt encrypted, which means your personal information isnt safe. Movie times . Great. Online banking . Use a secure network. Protect yourself from prying eyes. The more you know. Good monday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, simon hobbs and david faber. Stocks tiptoeing into a busy week. Earnings season under way. Big tech will start to roll in after the bell. Were watching baton rouge, turkey and the Gop Convention kicking off tonight. The National Association of Home Builders has its monthly Sentiment Index out. Lets get to diana olick for the numbers. Hey, diana. Hey, carl. Builder confidence in the Single Family Housing Market drops 1 point to 59. Thats a miss. The street looking for unchanged at 60. Anything above 50, though, on the National Association of Home Builders Sentiment Index is considered positive territory. We were at 60 one year ago in july. The builders continue to say theyre having trouble with land and labor cup straints but cite Consumer Confidence given Global Economic problems and the looming president ial election here in the u. S. Of the three components of this index, though, current sales and buyer traffic both fell 1 point to 63 and 45 respectively. Sales expectations over the next six months, though, dropped 3 points to 66. Regionally unchanged in the northeast, midwest and south, but the west did see a popup in confidence, 1 point to 69. The west where were seeing most of the land constraints but builders are also seeing very high demand, though, given the low amount of supply for sale. But again home builder confidence overall nationally down 1 point in july to 59. Back to you guys. Diana, thank you very much. Lets turn to the broader markets as carl mentioned not a whole lot of action but importantly the dow is holding on to the recordbreaking gains we have seen earnings season roaring on with bank of america, yahoo and netflix reporting today. So how much higher can stocks go from here . Joining us to discuss it is richard turnill, the global chief investment strategist at black rock. Good morning. Good to see you. Good morning. What stands out in this market action, actually is the resilience in the face of many geopolitical surprise, first brexit, and now a failed turkish coup, who do you attribute that to . Lack of contagion has been one of the key themes weve seen for some time in markets. A number of individual shocks, but markets have continued to go higher. I think a lot of that has to do with central bank policy, effectively backstopping Financial Markets here. Low Interest Rates around the world. The prospect for low Interest Rates for long periods of time to come and investors are looking for return and income and that is continuing to drive flows into some of the riskier assets were seeing. The next test surely to be earnings. Well get some consumer names and industrials starting this week. Whats your expectations for those cyclical sectors, those that are most economically sensitive to the u. S. . Well, were hoping to see some signs of an an inflection point. Four quarters of negative earnings for some of the cyclicals, Second Quarter is likely to be another negative quarter for earnings, but were really looking for is any evidence that this stabilization and commodity prices, the stabilization in the dollar, removing some of those headwinds, starting to see guidance forward looking guidance, indicating something of a turning point we think we will see that but quite cautious. Enough to justify the valuations. Your ceo told squawk box last week he doesnt see the stom valuations at this point. We would have to see better earnings to take a leg higher. It sounds like you are expecting that later this year . I think well see modestly better earnings later this is is year but theres a lot in the price. When you look at the valuations of the equity market and valuations of bond markets, credit markets were priced for very low returns Going Forward. We see that most evidently in fixed income markets, 30 of yields across fixed income are negative territory, 60 below 1 . But if you look at the stock market, most stock markets globally trade at or above the longterm averages. Thats most evident in the u. S. We are trading at forward looking multiples above 17 times earnings. Theres not a significant amount of upside to those valuations. Going forward, returns have got to be driven by growth, got to be driven by future earnings, driven by ongoing payment of dividends. We think well see those but likely to result in a lower profile Going Forward than the last six or seven years. Couple questions, richard. The first is you mentioned the move to riskier assets in the search for yields. As far as turkey is concerned, we saw record inflows into emerging markets bonds last week as people chase that yield. Does turkey change that in any way and an indication of what happens when auto breaks down . What turkey highlights if you invested in emerging markets, risky assets youre absolutely investing in an asset class that has volatility. What youve seen over the last few days is actually relatively muted response from Financial Markets, both in direct turkish assets themselves but what youre seeing today is relatively little contagion to broader emerging markets. So emerging markets debt looks one of the most attractive sources for yield globally today. Three of the big headwinds for emerging markets debt potentially turning into tailwind. The fed which has been a headwind for some time looks like its on hold. Commodity prices, drew a big headwind until the beginning of this year, looked like they stabilized particularly the oil price, Holding Around 45 to 50 and then china which still remains a terror risk absolutely looks like its going to grow to stable paths, 6. 7 growth last year. Put that together and yields still in mid to high Single Digits across the emd. We think theres potential for emerging markets debt to go further. Let me ask you about the huge deal that has come through for arm holdings in the uk, the chip designer, 32 billion from softbank in japan. Obviously thats been this huge bounce back after all the brexit concerns. Does this deal change things, the realization that perhaps youve had the 30 move of the uk pound against the yen. I mean does that type of implication move us forward to more deals of that nature, do you think . Well, i view this as very much a one off deal. What it does indicate is that Many International investors are now looking at the uk as a source of value. You see significant declines in the pound, longterm source of investment in the uk reigns very attractive, the economy faces significant headwinds, over the next year or two, but as a source of investment the uk remains one of the most attractive places globally. So i view this deal as an indicati indication, potentially, the uk market further to run. You guys expecting a recession there . In the uk . Were expecting a yes, were expecting a recession in the uk over the next 12 months. That recession is likely to be led by investment spending, particularly areas like real estate where were already seeing some signs of a draw down. That recession although will be cushioned by Interest Rates which are going to be lower for longer and importantly a weaker pound. So the exporting areas of the market, you know, potentially some of the most attractive areas, which where the uk stock market has significant exposure could benefit. Uk recession does not necessarily mean a bear market for uk stocks. Richard, thank you. Good to see you this monday morning. Richard is the chief investment strategist globally for black rock. Leadership of turkey saying a deadly military coup has failed in the country. Thousands rounded up and arrested as alleged coconspirat coconspirators. More than 250 people were killed through sunday. Michele carusocabrera has the details at headquarters. The apparent of the coup may have helped the currency this morning. Start with the stock market in istanbul. Simon, we saw very sharp decline in the turkish stock market as a result of what happened on friday night. See a decline of more than 8 . Take a look at that, though, over the last month, its still positive however. The lira where you want to be focused. Turkeys currency. Were showing the opposite of what we normally do. 2. 97. At one point you could have bought more than three turkish lira for the dollar. It has improved. Turkey is extremely reliant on inflows of foreign capital. Far less wonky way of saying they have a current account deficit. One of the fragile fives that got really torn up when it looked like the u. S. Was going to start raising Interest Rates. You have to be worried about whether or not they will be capital outflows as a result of instability there because it could bring on a currency crisis. In the meantime on the political front, there is a massive crackdown under way by president erdogan as a result of the coup, 290 people were killed, 1400 injured, and in response, 30 governors have been removed, 50 Civil Servants removed, they have arrested thousands of people within the military. So many, in fact, that there have been criticisms from a number of Foreign Policy watchers who say that erdogan the leader of turkey has gone too far and could be using the situation to cement his power even further. Nearly 9,000 officers removed in the Turkish Ministry of the interior, for example. We spoke with a deputy Prime Minister this morning who was the former finance minister and he defended the level of the arrests. Turkey is a rule of law country. They have to face the full force of the justice. So judicially well decide what happens next. He said there wouldnt be intervention into the currency markets they were going to let the markets decide. Sara, that can always change if things get worse. Michele, thank you very much for the update. At the same time were following the developing story over the weekend out of louisia louisiana. Three Police Officers are dead and three others wounded in a shooting in baton rouge. Nbcs jay gray joins us now with the latest. Jay . Hey, sara. Just got an update from Baton Rouge Police who say their initial press Conference Today scheduled for 1 00 eastern pushed back two hours to 3 00. This is where it all unfolded yesterday. In this car wash moving gun battle according to investigators that spilled into the parking lot of the Convenience Store behind us here. Federal agents, police, they continue to search for evidence and answers while we are learning more now about the victims and the man that police say is responsible for this attack, they say that gavin eugene long was the lone gunman here, but they want to find out if he had help in planning and carrying out this attack. Theyre taking a closer look now at what was an extensive digital footprint. Hes left behind on social media, including a post hours before the attack that reads, just because you wake up every morning doesnt mean that youre living. And just because you shed your physical body doesnt mean that youre dead. That part again of a twopronged effort to find a motive and if anyone else may have been involved and to understand more about that motive through postings on social media. Thats the latest live here in baton rouge, carl, back to you. Jay, thank you very much. Jay gray. When we come back, softbank buying mobile chip designer al arm holdings in the cash deal for 32 billion. We will break that down. That beat for bank of america the results making us the thirds u. S. Financial institution that has topped secondquarter profit. Goldman sachs and Morgan Stanley on deck this week. Stay with us. Can an established bank move like a startup . Its a question we get from some of our largest banking clients. The face of their business was tellers. Then atms. Today its their mobile app running on the ibm cloud. Across every transaction, the hybrid cloud helps their data move quickly and securely. Our clients are building out features and pushing updates faster, on five continents. With the ibm cloud, they can move at the speed of any startup. Profit. Softbank making its next big bet under its founder and ceo masa son buying arm holdings in a deal 32 million in cash. The deal took place fairly quickly while masa son, people tell me, has been thinking about and plotting doing something along these lines for months, the approach was only made weeks ago. And the price being paid is a significant one representing about 33, almost 34 years worth of the current ebitda at the company, 20 years worth of its current revenues and 60 times its current earnings. Arm holdings, though, masa son, believes is going to be a key in what he said is going to be the incredible growth of the internet of things. That is why hes chosen to make it the next big bet at softbank. Which owns still a large stake in alibaba, one of the best bets hes ever made in addition to the leading mobile phone provider in the country of japan. Also, of course, significant owner, 80 , of sprint. That has not gone as well but the hope and expectation is that in this case, it will. 30 years from now, masa son saying on a Conference Call a thousand devices per population will be connected. Its not just going to be things people carry around. Everything will be connected and with that he believes arm holdings will be a huge beneficiary, simon. Of course as things stand at the moment still most smartphones in the world have chips designed. The perceived independence is important to keep customers like apple and qualcomm on board. If there was a takeover that could achieve that arguably softbank fulfills that position. The other problem arm has it needs to invest heavily to shift the Smartphone Market when you have a stagnation within the volumes. That requires a lot of investment that arguably can be mores easily made if owned by somebody else. Of course the ceo of arm holdings was here six or seven weeks ago and spoke to the program exclusively about the investments in the internet of all things and the type of technologies that they hope they will be able to master. For example, cameras that can see when a toddler is moving towards a heat eed oven, that a other ideas. I think its technology were going to see in lots ofp application areas. Certainly in cars, if cars want to be selfdriving, want selfdriving cars, being able to understand the scene and work out whats going on and what might happen next is crucially important. In smartphones, people looking for ever more sophisticated cameras to again detect what is going on. In security applications. In drones flying around. There are many applications where cameras will need to get smarter and were looking at the technology that will create that. Bank of america releasing its Quarterly Results this morning, earnings and revenue both beating analyst expectations. Kayla tausche is engaged with this as the other big banks. Good morning. Following a trend for other big banks as well, bank of america reporting a lot of similar themes that we did see across wall street. The quarter marked by a big boost in fixed income trading, up 22 due to the volatility around brexit and it was a bright spot, but low Interest Rate environment continues to pinch margins compressed by 2 basis points and net income declined across every Business Unit at the bank and at the company as a whole came in at about 9. 3 4 4 billion, the street looking for over 10 billion. Executives told reporters and analysts that the outlook for the companys growth was more positive beyond this year because of a return to growth and perhaps that rise in Interest Rates but Ceo Brian Moynihan threw some cold water on the idea that the companys Business Model would keep getting hit by low rates in the near term. The question can we grow earnings without rates improving we believe we surely can and do that by continued success on things like expense management, keeping an eye stable to growing, stable and growing fees and continue to manage risk well and hold down our credit costs. To that end moynihan gave analysts a new expense target for 2018, 53 billion for the entire company and compares to a little over 56 billion for the previous four quarters up until now. It does highlight the companys commitment to keep the business lean as growth remains slow. Analyst steven called the quarter a noisy one but there were positive surprises efficiency expense cuts among those. Lower for longer rates will continue to hurt. Its priced into the stock, though, he believes down 17 year to date, the stock is still trading below the book value for the companys shares and certainly a lot of this has been expected, its been talked about for these banks, but ha theyre really having to come out and address it now. Indeed. Stay with us. Lets bring in more analysis on what is happening. Brendan hawking joins us banking analyst at ubs. What did you think they had to say today . Yeah. I think that the expense point that was brought up in kaylas story was totally fair and probably the biggest news. Just to give a little pretext, right before they reported earnings they came out and announced they are going to no longer be reporting their legacy asset business as a separate item. Had some investors worried there might not be as much momentum on the expense front. It was important to give the 53 billion target which gave encouragement they will continue to work through this expense story. Nonetheless, this is an extremely large fran chisz and those that think there should be bigger cuts to the Branch Network and head count there. Just talk us through, how do you feel about that . Is that likely . How transformative potentially could that be for profitability here . Well, weve seen branches continue to decline and thats not just at b of a but across all of the large banks. And thats as the channel shifts to more digital, transactions shift to nonbank venues and so not very thematic across blanking. When people think about the expense front and the tie logs i have with dialogs with investors centered around the institutional businesses, Global Markets and banking as b of a puts it, trading the bigger revenue surprise versus low expectations. I think weve seen about a 30 cut in head count in fic over the last several years and most books say were not done, were in the later innings, but still more to come. So i would expect a lot of movement on that front as we digitize there too. This is a company, though, that has been front and center of this costcutting movement before it was in vogue for other banks like citigroup to do this too and i wonder if you think were getting to a point where the companies are cutting muscle and not just fat, not redundancies. Right. Im not so sure that i would be completely in agreement on the characterization they were ahead of citi as citi broke out Citi Holdings years before companies started to do that but regardless of splitting hairs, im with you that there needs to be a lot more work on the expense front. I think that youre at a point where you are hurting revenue but realistically that was unavoidable given the new regulations. Vul car hurt revenue and the bassle rules make Holding Capital against the trading businesses so onerous that youre going to see less Revenue Opportunities iies in those tra businesses. Interest rates are so low that nii is just weak, weve we saw core nim compressed seven basis points at b of a this quarter. Jp and citi compressed but less in the 5 or so basis points level. Its theyre feeling the pinch of the low rate environment. Kayla mentioned the underperformance of b of a. Its at the bottom of a group thats at the bottom of the s p 500 this year, down almost 18 . At what point are there questions about Brian Moynihans leadership. Always been the story as he inherited a mess when it comes to countrywide and all those problems. When does that story begin to shift and the question about his strategy come to fruition . Well, i think we would have a brighter light on that question as it relates specifically to moynihan if b of a was down but the whole group was doing better. The idea he has so much company probably provides some insulation because the b of a versus its biggest peers really not significantly setting them apart on the negative side. With that being said youre correct that the big banks have had a terrible year. I think that the volatility weve seen around rates and in the markets has people worried. Separately were starting to get more and more concerns about how late we are in the Business Cycle starting to see concerns and warnings that you could see credit costs ticking up not only in commercial and oil and gas the way we have seen but to include consumer. If we start to see that you will get earnings pinched and investors dont want to pay large multiples at this stage. One quick one, what is the best bet at the moment in your space . What do you like the most and how rapidly could it gain . In an environment like this in my view you want to hold on to the best franchises. That would be jpmorgan, goldman sachs. Goldman is probably trading at a lower premium. There had been a lot of concern around its ino business coming into its results tomorrow. I think theres a good chance they could surprise to the upside as well keep this trend going for this quarter. Another busy day for you in the banks. Thank you for joining us, Brennan Hawken from ubs. Thanks to kayla as well. Up next, our exclusive interview with the ceo of gamestop, paul raines, how his company is cashing in on the pokemon craze. The dow up 17 points. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card stop taking cialis and get medical help right away. This is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. The pokemon go phenomenon sweeps the nation being named on the campaign trail and pushing nintendo shares higher and retailers hoping to cash in on the frenzy. Joining us is the ceo of one of the retailers, gamestop ceo paul raines. Welcome back to the program. Good to be with you on this pokemon go morning. Yes, indeed. How are you cashing in here . Well, were doing, you know, its really great to see pokemon and nintendo reinvesting in that ipo. Weve known them a long time. Its great to see it transitioning over into the mobile space. Ill tell you an Interesting Data point, we surveyed our stores and had 462 stores this past weekend that are pokemon stops or gems so we did family events and our sales up 100 in those stores and, of course, our pokemon merchandise up significantly across the board. So were very happy to see all this excitement around pokemon in what is traditionally a slower time of the year for video gaming. Mcquarry recently started coverage of your stock and said its not for the faint hearted if you dont believe in paul raines and his team dont buy it. They believe you can execute. In an ideal world how would you integrate what is going on with pokemon and the business . Presumably you would like to be in the game. Of course. Thats got to be the holy grail here. Of course. And yeah, we do believe in our strategy and believe in the management team, of course. But i think weve pointed out in our investor day recently that our strategy is to continue driving dominance in the physical gaming, emerging growth categories like Digital Gaming collectibles and our Technology Brand segment our at T Partnership and if we can do that we think thats positive for the shares. If anybody can do that you can. What does that take. You must have investigated it . Why arent we in the pokemon mobile game . Cant you pay to have the products and locations and the we had a pizza guy on the other day and his sales have roktsds as a result of it. Our sales are rocketing on pokemon as well, simon. We have over 100 growth in our pokemon collectibles. Were one of the oldest licensees, largest distributor of pokemon video games and collectibles in the world. So i would argue we are in the game, launching in november pokemon sun and moon. Were very much in the game and taking advantage of it now. Why arent we more in the mobile game this has been a secretive launch and so forth but we think any investment in pokemon is an investment in that ip. Its good for us. Your stock is down, if we took a 12 month track the stock down 40 . A horrible full, but Still Standing and still, of course, generating the Free Cash Flow in the legacy business. I imagine its the launch of the Virtual Reality headsets, particularly with playstation, that is a bigger deal for you. I think you had a preorder that ran out at the beginning of the month, is that correct. Last year our shares did tumble due to market data and anything else. We had a net income record year of 403 Million Dollars of net income. Our shares and performance dont necessarily trade together and that creates opportunities, but yeah, we do believe were going to have a good fall launch. Were in the midst of launching several titles one of our indy titles song of the deep is one im playing now which is an exciting title. Our Free Cash Flow will be strong. Weve guided to some pretty strong numbers to the year. On the upgrades and hardware i have a note here from telsey that says you captured on the playstation launch 40 to 50 of the market. We did. As far as the Virtual Reality headset launch is concerned slated for october. Yeah. How much stock are you guaranteed by sony here . Are your friends coming through and guaranteeing you a great . Thats what im driving at. We will have the dominant allocation of sony vr products. This is something weve tried to communicate to the market, Virtual Reality by any external measure will be a very large market in the billions of dollars and we will dominate the sony vr part of that launch. Were involved with htc live and discussions with oculus riff but for a lot of reasons title launches convenience, install base think sony vr will be the dominant. We are getting a strong allocation and sold out everything that weve been given on reserves now and were very bullish on it but we have to wait and see. We know for many hardware launches it takes time to build that base. But were very bullish on what sony vr could mean for us. Its exciting. At the same time people will be aware that the Industry Software data is horrible for june down 30 overall. In addition, what else do we get to the holiday period. A nintendo launch and hardware upgrade. Nintendo launch in march of 2017 but two form factors. Ps 4 neo and an xbox 1 slim version. So there will be some activity and upgrades along with the vr. So its not a dooms day scenario. Physical gaming, of course, is cyclically down but Digital Gaming up. Our First Quarter numbers, Digital Gaming was up i want to say 17, 16 . So, you know, there is a movement around physical and Digital Gaming and were participating in both. Good to see you, paul. Come back soon. Paul raines joining us the ceo of gamestop. Thank you. Up next on the show, the republican National Convention. Kicking off in ohio this week. Well be joined by sara fangen, the senior aide to george w. Bush and jared bern stein, their tick on the white house as we look ahead toward cleveland. After a failed coup attempt the faa prohibiting u. S. Aircraft from flying into or out of any airports in turkey. Well hear from the former president and chairman of American Airlines bob crandall on the impact. Stay with us. Youre watching squawk on the street. Announcer get caught buzzed driving, and you could do some hard time. Woman craig. Knock it off sorry, mom. Announcer it could cost you around 10,000 in fines, legal fees, and increased insurance rates, and that could set you back a few years. Buzzed, busted, and broke because buzzed driving is drunk driving. Russian whistleblower claim that there was government ordered cheating at the 2014 sochi olympics. The findings could have serious implications on whether russia can compete in rio. France holding a moment of silence for the nice victims. Thousands of people gathering today including french president hollande on the waterfront promenade where 84 were killed by a truck rampage and 300 injured many children. The attack happened during a celebration last thursday. The leaders of black lives Matters Movement plan to meet today with Atlanta Mayor reed. Theyve been demonstrating in atlanta for the past several fights in connection with the Police Shootings in louisiana and minnesota. And an unusual occurrence in florida. A 3. 7 magnitude earthquake striking 100 miles off the coast of daytona beach. So far no reports of any damage however. Thats the news update. You are up to date at the this hour. Carl, ill send it downtown to you. Thank you so much. Sue herera. The republican National Convention kicks off in cleveland, ohio, tonight. Our john harwood is there. Joins us with what we can expect on day one. Hey, john. Carl, as you can hear behind me expect music tonight. But theres concern among republicans now that they are beginning their convention because their candidate is behind. Look at the numbers from the nbc wall street journal poll, Hillary Clinton with 46 , donald trump with 41 . He has to figure out how to reverse that gap. The Convention Kicks off at 1 00s this afternoon. The attempt to do that. The theme tonight donald trump is running on make America Great again. The theme for tonight, is make america safe again. Donald trumps hoping to capitalize on his reputation for strength at a time of unrest at home and turbulence abroad including the attempted coup in turkey to make the argument that he can better protect the country that Hillary Clinton can. His speakers tonight will include people like Rudy Giuliani former mayor of new york city, rick perry, governor of texas, tom knts from arkansas but also milelania trump the candidates wife, celebrities like Willy Robertson of duck dynasty. Donald trump has said we may see him tonight as he intros deuces melania trump. Dont have that publicly confirmed. Thats one thing that will be different about the convention seeing donald trump more and earlier than in the past. One bit of discord to focus on, the governor of ohio, john kasich who ran against donald trump in the primaries not speaking at the convention. Trump Campaign Chairman Paul Manafort said that john kasich was embarrassing his home state of ohio. Just a few minutes ago on twitter, john weaver, the political strategist for Ohio Governor kasich shot back that Paul Manafort has been working for dictators too long and doesnt recognize values. Paul manafort used to advise the ukrainian ruler victor yan covick. Nice owe quicken loans arena. Thanks for that. For more were joined by contributors Jared Bernstein former adviser to Vice President biden and sara fangen, former political director to president bush. Good morning to you both. Good morning. Sara, john made the point about your old boss along with kasich, romney, mccain not going. How does that change the color of the convention . Well, i think that it does add to the disunity that we see among some republicans. There are a lot of oldline republicans who look at the party today and say its a Different Party under donald trump and theyre not quite sure where they fit in. Having said that, there are a lot of rising republican stars including joanie ernst who will speak tonight. I hope the Trump Campaign will highlight the deep and conservative bench we have as a party. Jared, you worked for a veep, im wondering what you think pence brings to the table and does it soothe out some of the never Trump Supporters who some argue are going to make their last stand tonight . I dont think so. I think what mike pence might bring to the table is some koch money and thats important, but i think what he takes away from the table is a critically important opportunity for donald trump to reset in this convention and i dont think he will be able to do that in part because of the absence of establishment republicans. I cant remember a convention where a president of the party for that convention didnt speak. I doubt sara can either, at least in modern history. But thats not hold on. Let me finish. Innin i think thats a big omission. In terms of mike pence one of the problems there is that hes very hard right on social issues, so those people are either already with trump or they are relatively small part of the base, and hes completely different from trump on so many key issues including trade and immigration, muslim ban, the wall. So to me, its kind of this typical politician thing that they do that really i dont associate with donald trump so much. I think hes kind of messing up his brand there. I think mike pence does bring a lot to the ticket and i think jareds assessment is a little off in that conservatives, social conservatives are behind donald trump. Thats been a problem for donald trump. And i think the selection of mike pence is very helpful in that regard. It will help unify the base and give people who are concerned about donald trump, they will look at him differently and probably support him whereas beforehand theyre still up in the air. Having said that having said that, jared is right in the sense that, you know, having selected somebody that could go directly at Donald Trumps weaknesses with women, with minorities, probably would have been a better longer term play. Thats exactly my point. So theres where i think the problem comes. If they dont come if republicans dont come out of this convention they may get a bounce but dont come out of the convention with a lot more support from what i call the median voter, someone not to the far right, mike pence is to the far right, i dont think theyre going to win in november. So well sara, what is a reasonable expectation, john mentioned the polls a few moments ago, of a classic Convention Bump for trump pence. A typical nominee, you know, would like to see about a 5 to 7 point bump out of convention and, you know, so that would we would in that case see donald trump and Hillary Clinton tied. But i think the biggest problem for donald trump isnt in the top line numbers, the headtohead ballot its in two numbers, in his share of the white vote and his share of the hispanic vote. In that nbc poll, john harwood cited, donald trump is getting 50 of the white vote and 17 of the hispanic vote. Ifs those numbers held which they are far below where Mortgage Rate was, he would get crushed. Myth romney was, he would lose by 12 points. Hes got a lot of work to do as a nominee. Theres a lot of ground that will get covered starting tonight over the next four nights. Sara, nice work in a loud room. Sara fangen, and Jared Bernstein. Sara knows how to raise her voice when she has to. Thanks, guys. Thank you. When we return the faa are prohibiting all u. S. Aircraft commercial or private flying into or out of any airport in turkey. The former president and chairman of American Airlines, bob crandall will be with us next on cnbc. The leadership of turkey saying that deadly military coup attempt in turkey has failed, meantime thousands have been rounded up and arrested as alleged coconspirators and more than 250 people have been killed through sunday. Eamon moya dean joins us from istanbul with the latest. The countrys Prime Minister saying life is returning back to normal this as families and relatives of those victims continue to bury some of the dead. As you mentioned the number of those killed about 140 or so victims, that were People Killed opposing this coup in addition to 40 or so that were killed on the coup side or those participating in the coup. The countrys president is very angry demanding the United States hand over a religious figure they accuse of being of mastermind behind this coup. In addition to that the country continues what some are calling an aggressive crackdown on conpiror tos, participates or plotters partaking in this military coup that includes thousands of judges and prosecutors that were dismissed and about 6,000 members of the countrys military that have either now been detained or being questioned for their involvement in it. A very dire situation in terms of how this coup played out, but the president said hes got the support of his people and says hes willing to entertain bringing back the Death Penalty for those that were involved in this coup and many are saying it is an ominous sign of him trying to shore up his grip on the countrys power. Thousands of his supporters continue to take to the streets saying they are fighting for democracy, fighting for the attempt to buy the military or a fkion within the military to oust the democratically elected president erdogan. Sara . Thank you. Reporting live from istanbul. The faa showing a notice prohibiting all u. S. Commercial and private aircraft from operating into or out of any airport in turkey after that failed coup attempt in the country. Are we likely to see more restrictions as the situation evolves. Joining us by phone, bob crandall, American Airlines former American Airlines president and chairman. Bob, thank you for calling in. No problem. How can i help . So on this faa decision, just give us a little more context, how unusual is it, what sort of factors go into the decision and how long do you expect it to last . Well, of course all those questions are quite unknown. Its not unusual for the u. S. Government to in effect advise the airlines. The airlines, obviously, are interested in safeguarding their equipment, their people and their passengers. So theyre going to rely on the u. S. Government to understand the political situation and provide some guidance and in this case they have and so i do not think its unusual. I would have expected the u. S. Government to provide some guidelines for airline service. We saw over the weekend a number of european airlines, british airways, lufthansa, cancel flights to turkey. What about running a big, Global Airline . How do you make that kind of call . Take us inside those kind of deliberations, especially as they were already just dealing with that terrorism tragedy in nice a few days before. Well, of course, thats right. Once again, the principle focus of any airline trying to decide on it is going to say what can i do to do i need to dodo . I need to do all that i can do to be sure that i dont put my equipment, my people and my passengers at risk. And the consequence is when youve got a circumstance where theres violence around, where theres lots of people, lots of guns and an unknown circumstance, airlines, for the most part, will err on the side of caution and not fly. And i mention what happened in nice. The Geopolitical Uncertainty is high right now, bob. There have been acts of global terrorism, the brexit result. How would you characterize this sort of operating environment . Delta on the call last week said it remains challenging. How would you describe it . In all your years youve seen challenging periods of macro economics and just political uncertainty. Certainly the environment that we have today, i think, i think everybody would agree is a good deal more uncertain. A good deal more violent than has been characteristic of the last 40, 50 years. I mean, there are always trouble spots. But the perception that trouble is widespread and can pop up at any moment is a greater problem today than it has been for many years. Bob, just to come back to the central ban here, as you point out, its about American Airlines and people not being able to fly to turkey but equally important, the United States is saying no airline can fly from turkey to the United States. And that may have a devastating effect on Turkish Airlines because of the structure and the routes that its deliberately chosen were those direct flights. Why do they say that . Just spell it out for us if you would. Is it because of concerns the engineering checks may not be up to standard before those flights leave, or is it because they think that maybe the security ring has been punctured, and, therefore, the threat of a 9 11type event here . Why be so forceful and so complete in the ban . Well, i think, you know theres a lot of conversation around each one of these cases. Could it have been prevented . I think theres a public attitude, if you will, that says, look, in any and all uncertain circumstances, it is better to err on the side of caution. I dont know whats motivating the faa to do it. The department of transportation to do what theyre doing. But there are certainly suggestions in all of the things that you mentioned. Who knows whether the airlines are being properly serviced. Who knows whats on the airplane. Who knows who is on, either a passenger or in the cargo compartments. And given all of those risks, i suspect that, at least in the very short term, everyone is going to err on the side of caution. Bob, thanks for your insight. Bob crandall, the former American Airlines president and chairman. Much more squawk on the street ahead on cnbc. Stay with us. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Lets show you where we are on stocks. Coming up, three weeks of gains and it looks like the gains are continuing, althoughmodestly in the early action. The nasdaq up the most of the three up about 0. 5 . In terms of the groups, technology is in the lead. This ahead of some key Earnings Reports out of the bell. Netflix, yahoo and ibm energy is the worst performing sector. If the dow finishes high i e ess seven days in a row. Lets send it over to john. Good morning, john. Announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. Good morning. Its 8 00 a. M. At netflix headquarters out west. 11 00 a. M. On wall street and squawk alley is live. Welcome to squawk alley for a monday morning. John ford, Kayla Tausche and refugee evangelist guy kawasaki. Our top story of the day is a major deal. Softbank agreeing to buy uk Chip Designer Arm Holdings for just over 32 billion in an allcash deal. Shares of arm surging on that news. This is the largest takeover of a British Company since last months brexit vote. And, dan, if we werent already awash in global news, wed be talking more about how this is potentially game changing. Its pretty