Transcripts For CNBC Squawk On The Street 20160812

Stop. How is spain doing your ask, italy doing . We dont have it today. Oh, my gosh. My kids are there, the italian gdp is going to come out. Come on, guys. We were lower in europe. Back to the big three. The joke has been the last few days weve included spain and italy, not that they are inside joke. Thank you. When the show starts. Yeah. Im sorry. Were in the show. Okay. 10year note yield hanging around 1. 5, where its been. Were a bit below that today and wti had been up there was a rally when for some reason people believed the saudis or their jawboning. To our road map this morning and it does start with the markets. The dow, s p, nasdaq closing at record highs yesterday. Where do we go from here in big Retail Stocks on the move this morning after some earnings. We also got overall retail sales. We will break down the busy week for the sector and go live to rio, of course. You saw carl, the u. S. Racking up a lot of medals. Carl is talking to the athletes and will have a lot of good stories for us. It was a record day on wall street with the dow, s p and nasdaq closing at record levels on the same day. This was the first time that had occurred since 1999. So far were set to open a bit lower. Retail sales coming in below at least what the street was expecting that being the overall, retail sales in july. Auto and gasoline down 0. 1 . There had been an expectations we would get a 0. 3 increase. Yeah. Im not buying that. Not buying it . No. Im a bottoms up guy. I try to find a retailer that didnt have a good month. Its very hard. Other than gap stores. Good month versus expectations. No i really want to believe year over year sales declines are good. No. Thats very true. Its relative, not absolute. But the fact is, is that the backtoschool season was set up well. Whatever numbers you have in the past may not be as important as the future. The inventories are leaner than i can recall at any time since the environment became promotional a couple years ago. Denim is selling well, knits, very good time in mens and im wearing a tie that is a pvh tie. This is exactly the hottest selling stuff in a lot of these stores. Right. Traditional pvh apparel. Its calvin klein, they have 50 share in shirt and. I we will drill down on some of the reports out nordstrom out and jc penney. I like. Talk about the Broader Market for a moment because one of the only benefits of getting older we were around in 1999. I was reporting. You were running a hedge fund. Indeed running a hedge fund, talking 40, 50, 60 times earnings for cap stocks. Stock splits that moved stocks up 20, 30 . Splits. Which have no fundamental value. No. I mean splits were something, used to think which stocks are going to split next was an issue, largest cap stock was cisco sold at 60, 70 times earnings. I did. We saw cisco 600 billion, microsoft, ge over 40 times earnings but three months away from the top. Okay. And the nasdaq then which weve finally reclaimed 15 years later. Look at cisco as an analog and will help people. 13 times earnings 3. 2 yield. One of the three highest companies in terms of the amount of cash on the balance sheet. This is not the cisco of 1999, but we were here because of the juxtaposition, too juicy not to talk about it, but i like the cisco now because the cisco now, which does report soon, im not saying buy it ahead of the quarter, but a lot more rationality. We will talk about a stock today that happened to have a remarkable number, acia, this is one of these companies that basically its a disruptive telco play. Its a profitable company. Its scorching, going to have a remarkable number, up more than the most of any stock. When on the Conference Call you understand why, a better mouse trap to make it so we have high speed video with the chinese company, not trying to get a big mouthful in, but there are reasonable valuations on companies that are profitable and then there are companies that are profitable that typically werent 1999, that we are putting a multiple on that, while kind of outrageous, but youre looking at situations how do you value a company, some of these companies are growing 100 that are profitable. By the way, im talking about about ebitda, not adjusted. Understood. Not even adjusted. Youre right. Clearly nothing the similarities to 17 years ago are slight. But, of course, at that point the market was recognizing we were at the cusp of a revolution. David, we were wearing hats and some of those we were. We were wearing a lot of hats. At the cusp of a revolution again but its different. Its Machine Learning. Its artificial intelligence. A. I. Its theres hp, i hope we get to do this. Dont know if its a faber report. Meg whitman bought silly graphic. Thats Machine Learning. The quarter that n individual ya was Machine Learning, Mark Zuckerberg dropped in the facebook Conference Call if you can have the interactions in an automated way where you fire off a text and get a response to be asynchromoniously so it doesnt take up your attention, that is those words what Machine Learning is about. I can order on my cell phone while talking to you and playing a game and getting the scores of the even though a preseason game of the eagles beating tampa bay at once and sitting here and watching the olympics. Understood. Thats the world, david. You know how much bandwidth you need. You need nvidia chips, acacia to do the back stuff, hpe to be able to deliver the basically this huge data center of property. Data center machine learn understand what you want before you know it is whats moving. Only a couple companies playing, but those are the stocks leading this morning. We will talk more about that i think in the weeks, months and even years ahead if i can go that far. This what is were talking about. These guys are ahead of us right. Grand master chess players are we pawns . Yes. Lets get to retail earnings while we ponder that. Plenty to talk about. Jc penney not up to where revenues were. Samestore sales up 2. 2 . Still below estimates. Nordstrom, though, set for big gains after reporting profit of 67 cents a share, well above expectations. The Company Raised its guidance for the rest of the year. Start off with nordstrom, a nice bit, saw macys and kohls yesterday up sharply even though they had samestore sales declines at macys, people took the numbers and at kohls as well, better than had been anticipated. The stock is you. Kohls and nordstrom nonpromotional on the Conference Calls saying things are better. Our Loyalty Programs did better. We had the right merchandise. Both are going to come in clean to a backtoschool season. There will not be Promotional Price cut which we like. Nordstroms anniversary sale unlike what the hedge funds were telling me turned out to be strong. That anniversary sale difficult. Different time frame. Rack was very strong. Nordstrom was on the Conference Call i felt a little defensive saying listen, yeah, there are regular stores doing well but Nordstrom Rack is doing extremely well. You started thinking what happened in nordstrom the previous quarter. Maybe that was an overreaction down. These guys are fighting their way back in terms of off doing more service again and having better apps, better execution and loyalty. The theme of the decline of the mall is still real. Isnt it . I think that this was a quarter where what were going do is kind of look at the individual companies grasping at straws of how it happened, about the credit card. Ive been speaking to bankers in the last few weeks. A big increase in the number of in the number of charges on your credit card. The consumer feeling more confident because of jobs, because of hiring. Were caught in a political season. I dont mean to be political at all but the actual credit cards the amount of debt being taken on has since the great recession, come back. Increased. Thats whats best. When you get kohls, nordstroms, jc penney was better, i am in the going to go with jc penney wasnt that good, it was very good. Why do you hing it was very good . Allison has a road map. Look at the comp store guidance. I am looking at it. Comp going into the holiday season, he will be returning capital. Billion dollar ebitda in 2016. Hes doing aggressive in what im looking at the Consumer Spending using the charge card at nordstrom, jc penney, costco, the charge card is back. To carl in a second. It was interesting how much press macys got for the closure of the 100 stores. We talked about it yesterday but sort of i guess because were so close to it, but its a bigger story than that. It is because out there in the rest of the country. Remember our at comcast we talk where we work, our previous cfo used to talk about its not growth, not profit, we want profitable growth. Michael, who is now not with us mike runs a p e firm. Genius when it examines to explaining how Companies Make a lot of money. Macys had not embraced profitable growth. They had embraced profit. They are putting their money behind those stores were not money losing but they will put their stores behind the growth part of macys and thats why macys can get a higher multiple. Quite a good call. And blue america is doing well. They make most of their money iff, perfume. Highend perfume revenue is water. Charging a lot of money for water. I will keep that in mind. I dont really buy any. Au de toilette. I cant even say that. Lets get out to carl in rio who joins us after an exciting night of events at the olympics. Carl . Hey, just unbelievable, david. The story of u. S. Dominance in the pool, at the gym and the names were starting to become familiar with. Simone biles, simone manual, katie ledecky, nothing compares to phelps versus ryan lochte. The 200 individual medley, the throw down as nbc sports called it phelps wins for the fourth straight games, lochte in fifth. Phelps the fourth athlete ever to win the same individual event four times in a row. Question is, is this the showdown between phelps and lochte. We talked to lochte in the last hour and he basically said not so sure. He said he was retiring in 2012 and i said he was going to come back. And he did. So im definitely im saying hes going to come back for 2020. You think he will be in tokyo . I think he will be. If he is you will be too . If he is i will be there. Medal count looks good. U. S. 38, china 30, japan 22. A little margin of error there between us and the number two spot. Phelps does swim tonight in his final individual event. Thats going to be the 100 meter fly. Its been a relatively tough category for him up against chad le clos once again and the past few times he has won its been a slim margin. The total margin of victory has been 0. 28 of a second. I know you guys just got retail sales, guys, but were going to do a spot in the next half hour about retail here at the olympics as we go shopping for both you guys both you, jim and you david. Thats in the next few minutes. Carl, i have to tell you, im getting a read about latin america in the last in the last few weeks. I know this sounds it sounds a little insane. But im getting a more positive read. Argentina getting a positive read, colombia a positive read and hearing, yes, im going to say it, brazil is doing a little better. I know its all anecdotal. When youre around there, i heard you about soap and whatever, but is it really possible that brazil could make a comeback . I think people are starting to talk about positive gdp once again. I think back to earlier in the week when we talked to carlos ghosn of nissan who made his way around to dealers in rio who are arguing to him, consumers may not have availability of capital to buy a new car, for instance, but theyre expressing the willingness to buy and from where this economy was two years ago, thats a huge step. Thats big. It is. We will see you shortly. On the beach, kind of foggy. Theyre so exciting. It is. I mean the events last night were incredible. That 200 im the peak of swimming all four strokes, distance to a certain extent. I remember going to school and talking why did east germany beat us. There is no east germany. We know why they beat us. They were all on steroids. I mean the east germans womens east german swim team. They were kind of they were on i dont know. Im glad theres no more east germany and so are they. Is fox heading towards a settlement over the roger ailes controversy . The latest there. Another look at futures as we wrap up this week of trading. As you can see we are headed for a lower open. More squawk on the street live from post nine when we return. There it is. Italy and spain. Thank you. Oh, thank heavens. I feel better now, end my week calmly as you see. Largely european markets are down this morning. Back here on our shores, new developments for roger ailes and 21st century fox. Reports say the company anticipating settlements with some accusers, though not clear how many people the company would settle with but the number of women who say they were victims reportedly reaches into the double digits. Jim. Oh, geez. This hasnt really affected the stock that much although it is down since we first learned about it. The group is not that strong. But there is an argument to be made that as this piles up, and as management, perhaps, Senior Management at fox is forced to potentially confront the idea of cleaning house that you would have a change to the to some extent in terms of fox which is an engine for profitability, the fox network, at 21st century fox. This is a personality business an we know that they had tremendous earnings this quarter. The fox news. Could you just make a case based on the fact that it was a juggernaut, its hard to replace what is the most profitable form of journalism sp. It is. At this point james and lackland being thecochair with his father are not taukts change in the Conference Call in the way fox news is programmed or they approach it. Some say youre not going to gill the golden goose. Again the mounting potential evidence, paul weiss, of course, the law firm continues its investigation. Which, by the way, is a real investigation, despite what you read about in the papers. The question, does it mean they will be forced to remove other managers at fox and, therefore, again, would you over time see a change or potentially important talent leave . We dont know. Its an interesting story to watch. Especially also from a governance standpoint, and culture standpoint at the Larger Company itself. Right. Its harder for me because im an earnings per share guy and i just had liked the fox very much. That fox news the gross profits were fabulous. They were absolutely fabulous. I just dont know whether you can if we were talking about a major retailer who Stefan Larsson leaves old navy and goes to ralph lauren, thats a change. Why would we not think the Major Division of the major retailer if that guy left you dont think the product will be as good. It has to be as good under rogers ailes. Im not talking politics. Im talking performance. Up next jims mad dash as we count you down to the opening bell. Another look at futures. When we are about nine minutes away from the opening bell. More squawk on the street from the nyse straight ahead. [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. Enepeople want power. Hallenge. And power plants account for more than a third of energyrelated carbon emissions. The challenge is to capture the emissions before theyre released into the atmosphere. Exxonmobil is a leader in carbon capture. Our team is working to make this technology better, more affordable so it can reduce emissions around the world. Thats what were working on right now. Energy lives here. What is freedom . Yes, its riding a horse across fields and stuff. But its mostly getting to watch your directv with unlimited data from at t. Were setting families free. So they can stream away and not squabble over whos using how much. So go, family. Watch. Freedom. Ha seize the data get our best unlimited plan ever so you can stream and surf all you want. With unlimited data from at t all right. Its time for a mad dash on this friday as we head to the market open. A market, of course, that hit highs on all three averages yesterday. Thats why i wanted to pick nvidia to talk about, kind of what intel was in 1999. Its in all the sweet spots. Brian cra zan itch trying to get it to be in the sweet spots. Theyre in deep learning, selfdriving cars, theyre in highend gaming, theyre in data center and in Virtual Reality chips and every one of those lines, was well in advance of where people thought it would be and very big quarter to quarter. Not year. Quarter to quarter acceleration. Off and to the right. Every single business that theyre in, you cant you need their graphics processors in order to be able to have the best cars, the best games. Because you cant run at a speed that makes a grand theft auto look like its more than real. When you look at a game like nba 2 k and looks like an actual game. It does. Nvidia not that the software isnt fabulous for take two but it needs nvidia chips. This is an area that i urged intel to go into during the old days when i said listen, if you want to grow, go buy this company. But you know what, they just became a powerhouse on their own. Theyre in the highest if you buy a car, Internet Things for a highend german car is loaded with nvidia chips. Theres a lot lot of lot of nxp semi, the number one market share. Free scale with a lot of thats number one. Free scale was always big. But david, this was the most impressive of the semiconductor Conference Calls. It was really, really good. Its not up with twilo which was the best of the calls that had to do with software. Right. Other than acacia, disruptive telco equipment play where i feel you got to be if youre in thinsar, siena, if youre in infineon you have to be careful and read the acacia call because you will sell those stocks today. You like that acacia. Theyre very, very smart and have a silicon based very inexpensive loved by the chinese going to be adopted for 100 g the standard. These companies are very, very good, david. And the analog to 1999. So many are profitable, not i could mercle. These are run Companies Run by real Business People and i didnt mention broadcom. You didnt. Thats not the nick nicolas broadcom. Were going to be watching a lot more stocks, of course, including the one behind us. That is quite a move there. Quite a company. Our market has been making a move as well. The market open right after this. 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. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell ringing in 40 seconds or so. Of course again, at the outset we talked about the references to 1999, the last time all three major averages were at their highs. The multiple then and now quite different but does not mean the multiple now is not aggressive especially after earnings season you can make your arguments it was strong but i can make my arguments it was mixed. I am not going to disagree at all. I think its going to cause soul searching that we got there too fast again but its a reluctant bull market. Its been very quiet. Its not anything that i was hoping you would ask me the key to the market. What is the key to the market, jim. Back the in the days we were speaking about there was a Company Called silly graphics, silicon graphics, highest, Fastest Computers in the land faster than sun micro. Well you know what happened to silly graphics this morning . Got bought out. Meg whitman bought it. Sgi. How the mighty have fallen but the companys product was never bad. Thats once again hardware, software coming together, Virtual Reality, data mining, Machine Learning. Its the secret. You heard the opening bell here, of course. You see the s p real Time Exchange back at hq. Higher heros u. S. Rang the bell celebrating the 11,000th veteran hired since the organizations 2007 inception and that cheering the at the nasdaq is for the ymca of greater new york. You mentioned sgi. A tiny company but up 29 on the hp deal. Hpe by the way. Lot of people felt hpe was about to split itself up again and do something. This could be already splitting themselves off with the enterprise business. Another brilliant move by meg whitman really capturing this understands where the highend data center why would a 200, 300 million deal be anything anybody would care about . Its a signal of where im saying its a signal of it tfl is so to speak from hitchcock, its kind of what the story is not based on but shows you that she understands where the future is going and that and that hp is going to be part of the equation. They are back, they are in the room, they are doing data center, they are doing Highspeed Communications backbone work and i just want to my hat is off to her. This is not an easy turn. Right. But its a real turn and she should be congratulated and shes done a great job. Shes put them back in the mix, david. After a difficult year last year for the stock, this year has been a good one for hpe, of course, in part because of that huge deal to spend and merge. But the other and the other part, the hpq, the actual printer and pc business thats totally dependent on sara eisens call since she does that 5 08 yen analysis every day that is quite compelling because ka mat su and the japanese Printer Companies cant compete against American Companies if it were fair level. If it were fair. And they didnt keep that yen down, wed kill them. We have superior products and superior state of mind not only like Steven Seagal in the movie hard to kill. He was hard to kill, maybe not so much anymore. But that was some of his seminole work. It was. Great body of work. Moved like a cat. I know. Olivier, se gal. I agree. The two neck and neck. Yeah. Speaking of neck and neck, no, thats not a real transition, alibaba is up again. Goldman sachs comes out, they really like it. Thats conviction buy which means they didnt have conviction about the previous buy. They didnt feel it completely. They were there but really werent invested the way they needed to be emotionally. Now theyre allin at goldman sachs. Your interview with joe tsai yesterday was a lot of soul searching how bad china could be if this is happening. About how china is leap frogging us. Now i mentioned this acia and im probably emphasizing a company thats not that big too much but its a Fiber Optic Networks at a lower cost. Their consumer, zte, 46 of the revenue, china. Remember what he saw saying, joe tsai, when mobile adoption clicked his sales went up. Thats because of this china pull through of metro and interdata Data Center Long haul Metro Networks are now leapfrogging us. In other words their telco is leapfrogging our telco. And we dont have any huawei here. We dont. You took that a place i didnt expect on alibaba. Because i think acacia when you see a stock that is you wont stop talking about acacia. Because i talked about it on mad money and said listen i am going to stick by my nephew and ben, cliff mason my head writer he said jim this is not 1999, this is a Company Making money thats really good that has a better disruptive product and i said the stock is up 40 . We cant push this thing. Were talking about acacia, not alibaba. And my nephew and ben stiller said, jim, acacia is the antidote, this what is you do on mad money. We find acacia and we find twilo and thank you, youre welcome to all the nice people who said jim, thank you for acacia. Because this is a real company. Okay. Well great Conference Call. People watching alibaba up 2. 7 . To finish up that conversation quickly, they are pushing theyre getting rid of gmv, theyre pushing analysts to look at some of the parts valuation at alibaba which i think is somewhat interesting. Reporting the segments, cloud, media, and, of course, the core Retail Business and thats where goldman goes right away on sum of the parts target price of 120. Which is interesting. Yahoo is up 1. 5 . By the way, alibabas earnings have done more for yahoo stock than selling the core business even though we you know the media was so focused on that. I love accelerated Revenue Growth. Always addicted to it. Call me guilty on that one. But what i i thought was very interesting, david, you watch the retailers go up and whether they should continue to go up. We talk about the strong dollar and how it hurt them. Yes. Ive waited for someone to put to quantify it whether it be tiffany or disney or whatever. On the macys call, they have a very, very strong cfo she talked about how look our International Credit card sales, this is really interesting, were down 12 in the quarter, which is better than being down 20 the previous quarter. Suddenly i realize holy cow theres a thats an actual Empirical Data how hurt the strong dollar really hurt. Thats going to start annualizing easier which will make you want to own the stocks again. There is real data out there that makes you feel im trying im not trying to reassure people at a level. Im trying to say why we got here. Understood. Those are different. Maybe tourists spending more money here as a result of a weaker dollar. Consumer feeling more confident and the cross currents with people they say despite this election, always say that, and there is a sense that job growth is more permanent and i know there was a fabulous article in the journal about the chinese taking our jobs away and where they do. Going back to the 1990s the changes that have taken place in the economy. It is an interesting story. Im building a bottoms up from credit card companies, large retailers and Real Estate Investment trust and retail was very strong for the last three months. Couple other names i want to hit. Valeant always interesting. Crazy week in the market with it up after earnings and down yesterday after reports of investigations, criminal investigations by the u. S. Attorney. You think the smoking goop will matter there . Its never been the case. One other thing i would throw out is the usually we ignore these but the idea that you get these strikes, these civil suits from former shareholders. But you know what you know, some may be the large shareholders. Sequoia was a large shareholder. Do you see those come and potentially also be added into the mix of all this litigation that valeant is facing in addition to everything else. I thought i wanted to do a vulcan mind melt with you for a second. Live long and prosper but i think its the major hm, os that will sue. They were the ones that were allegedly bilked. They would be the logical ones. They are not good enemies to have. They arent. Thats an interesting point. On a need to drug basis, they might want to switch. I am not have things going long or short in a stock going down, but joe pa pa will have to spend time with the u. S. Attorney. This is not his business. But the u. S. Attorney f they choose to go aggressive, you will hear about some of the characters that used to work there. They will spend some time. They may have to get counsel so to sneak finally because im not going to be here, on medivation, the situation weve been following some time, its going to get sold. It is. It seems to be a fairly robust frup of bidders but the stock may reflect that medvation at 65, 66 at this point. But you do have i mentioned this the other day quickly but celgene, gilead, pfizer, merck, and sanofi all showing expressions of interest. You know who is interesting not showing an expression of interesting its not clear anything will get done prior to labor day but im going to be away like so many for a little bit, keep an eye on that one. I want to return to Brent Saunders and allergen. Hes going the opposite. A lot of people thought he would be in there buying. Very small stuff. 5 billion to buy back his stock at this level and then he will reload for another 5 billion if this stays and its pipeline for him. Developing a very good pipeline. Hes the opposite of these other guys who might find pipeline chaegds. Eli lilly should be in medvation their pipeline is getting challenged. Maybe so. Who should be looking. Thats a lot of potential. Some of these biotech stocks like biomer rin, using the strength to raise capital to do these very difficult drug trials, but yeah, medivation is on the block. Notice who else is not buying and i salute them, whom i love so much in big pharma, alice score ski, that war chest, everyone else was spending like a wild ban chi, ban chi, season four was the best of all. Okay. But i do think that there was a remarkable by alex and j j. He didnt blow his head off. Let the other guys do it. Lets get to bob pisani for a check on what is moving this morning. Good morning, david. Mixed on the markets here. Remember, closing at historic highs yesterday. Energy up as oil stabilizing around 43. Banks are having a little tough time today, but not dramatically so. We have enough data points on the retail to make general conclusions already. The important thing is weve had five Department Stores reporting, including dillards and nor strom all had beat expectations. Dillard operating income was included for everyone except for dillards. As you see here the Comp Store Sales were weak for them but overall good numbers. Overall, heres couple of observations. The weather was better for the Department Stores. The inventories commentary better lower. Tighter expense control. I didnt hear its a promotional environment very much. Seemed to be more full priced selling. All this was good news, set up very well for lowes and target and tjx will be next week. What happened nordstroms, very specific issues helped them. Store specific. Tight ini venner to control but very more talk about narrowly distributed brands like brandy melville and top shop making them more specific in terms of the destination. They had a very successful rewards program. They revamped it. The shopper earns rewards points. Lot of people on that. Off price remains strong as well. Anniversary sale that was really strong even though it was in the Third Quarter and didnt really count it was the highest sales volume in history. So nordstrom had a bunch of things working for them specifically, but dont kid yourself. Just look at the numbers here. David made this point earlier about whats going on in the stores themselves. The full line for nordstrom, down 6. 5 . Thats the Department Stores. Thats the trend were seeing. Nordstrom rack, the discount, better, 5. 3 in online, even better. Nordstrom a microcosm of whats going on now. The samestore sales everywhere else, see the same story. General decline here. See dillards had 5 decline here and thats been the trend so far, getting around those stores themselves has been the big issue. Weve been talking for the last few days with traders down here, about these old chestnuts that we all like to talk about, sell and go away and as goes january goes the year and a lot said theyre not working well. January barometer up 7 . The august summer swoon, august is week up overall. I talked to my friend jeff at the Stock Traders almanac and he made an interesting point he said the president ial election cycle really has a big influence on the stock market. The last seven months of election years, are strong historically. Theres only been two losing years of 16 elections since 19 52. And august, by the way, all this is strong in an election year. As for sell in may and go away, he said no, that doesnt work. Should not sell in may and go away in an election year. So the bottom line some of these old chestnuts dont work because the president ial cycle is exerting a pull on that. More on trader talk. Cnbc. Com. Back to you. Thank you very much, bob pisani. A check on oil with Jackie Deangelis at the nymex. Jackie . Good morning to you, david. Oil prices crossing the 44 mark in the session high this morning. So were getting a nice lift here today. Now the opec freeze talk possibly supported by the saudis is certainly a piece of the story. Two schools of thought on this. The negative side to this would be the saudis wont agree to a freeze because they dont want to give up share to iran, but on the other hand, remember, that deputy cp is very committed to doing an ipo in 2017, maybe 2018, to raise money for the 2 trillion sovereign wealth fund. Supportive would be Higher Oil Prices might be time to set the stage now. Some people saying this is a 2 trillion incentive for saudi arabia to come to the table and actually do something here. In terms of production, remember in the United States, were down over a Million Barrels since june of 2015. Opec production has not fallen substantially and that could be the key to this market. Something to watch here over the next few weeks. Back to you. Key to this market. Shes picking up on thank you, jackie. Key to the market. The key to the market. Have it. Jackie has her keys, you have your keys. Freight up today. I like to see that. I think the alibaba interview was the most important thing that happened this week. Thats hyperbole, come on. It changed the tone of a lot of really . Yeah. Why . Thats a monster big company. It was interesting and fascinating people, just in terms of the gauge, of a data, versus the consumer versus wholesale, retail numbers. No. Alibaba was okay. Acceleration of the consumer in china. All right. All right. Up next, plenty more from rio where we find our Carl Quintanilla. Carl . Hey, david on a day where we did get the retail Sales Numbers, you know a big piece of olympic revenue is in merchandise. Were going to show you what its like to go shopping at one of the biggest sporting events in the world when squawk on the street continues. At ally bank, no branches equals great rates. Its a fact. Kind of like grandkids equals free tech support. Oh, look at you, so great to see you none of this works. Come on in. 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 one thing at the olympics you have to get used to are long lines, lines to get in, lines for security but then lines for shopping. This is the olympic mega store here. The big retail presence where people will wait upwards of 30, 40 minutes to come in and spend their own money. Every olympics has a mascot. This is rios his name is said to represent all of the brazilian animals rolled into one and hence, has all the powers of those animals. Kind of cute, kind of terrifying. Of course if theres a National Sport in brazil its soccer. Brazilians are obsessed with soccer, ignoring the other events not going to as many and thats why some of the stands are empty. Buy something for jim and david. Jim, this coffee mug, and david, for the swimming workout, rio towel. Say hi, jim. Hi, jim. Hi, david. Hi david. One of the benefits of being a global sponsor, visa is the only card you can use here. They dont take mastercard and they dont take american express. Thank you. Guys, i dont know if youre in next week but the next time we are all together, at the table, youll get those gifts. Shopping a big part of the experience here. Back to you. Thank you. Thank you for the towel. And more importantly, carl, thank you for great coverage this week. Fabulous. Great pieces. And, obviously, you know, the minute by minute reporting as well. It really has been exciting to watch. Yeah. Proud youre my partner. Thanks, guys. Really proud. Thanks, guys. Really good. See you soon. All right. Safe travels back. One of these days the three of us will be back together. I know. How about the way that charlie, who is a very competitive man, boxed out everyone, ceo of visa. What are you talking about that when you say at the olympics . He does these events, a very good brander, i think a sh rauds man, doesnt like the press that much. No. But has been branding visa in a way very powerful. People want to go to the games. Apparently hes the man to see. Me, im going to tokyo by the way. Ive already decided. Going to tokyo in 20. Couple of buddies of mine. Carl kept talking about us going to south korea in 18. I am not going to miss the olympics. This is too exciting. So we booked it. My buddy and some other guys, 2020. Tokyo sounds good to me too. I need to go. All right. Were all there. Its only four years. It goes by so fast. As do our shows because were up to stop trading with jim right after this. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov the light bulb, a bright idea if you use the right ones. Led bulbs use 85 less energy and last a long time, saving you up to 100 over their lifetime. Heres an idea replace yours today. [light instrumental music] it is time for stop trading. Important retail sales number today in one of the line items, food and drink. Not that strong. An whats difficult for me is that brinker reported a quarter that again, like nordstrom and macys is like guys, were kind of doing okay. Good read through to the darden too. This is casual dining. Chilis. But david, what is selling well is beer. I want to turn to constellation because they have Ballast Point which is selling well, moulson, the consumer is spending on liquor. And the consumer even though you may get the read through that says theyre not the Companies Involved in the industry are having as good a time as the retailers that you see fly. So lets not cup fuse the broader Commerce Department numbers with the reality. Brinker was a strong quarter. A lot of people are trying to make sense of it all because, of course, the consumer is everything in our economy or 70 to be fair. Using their charm. You have a strong jobs number but retail sales number from commerce that doesnt look as strong. You got delinquencies starting to rise on certain areas of credit. You have to look at the overall credit numbers, the st. Louis fed puts out good numbers. The overall credit numbers are rising, credit card. Why i like that, is thats consumer confidence. And that tends to be lasting. And thats what lacked since the great recession. We havent had that. Thats a good sign for the country. That the consumer is willing to borrow a little again. We got a little too much like our parents. We did. Were still in that having that problem, jim, when it comes to a mortgage and housing it does appear you taubz about this a lot, 74, 74. We dont want to revisit like the lax standards that took hold in 03, 04, 05. Kohls, nordstrom macys and if we were to look at their credit card receipts they would accommodation loyalty credit card. Quite impressed something is going on and real. Because theres too many Department Stores for good numbers, oh, they figured out their mom strategy at macys or omni channel. No. The consumer is taking the credit card and spending and its good and its one of the reasons why these moves may not be over so quickly. Have a great weekend. Yeah, you too, partner. Thank you. Just to our to carl, i dont know, i like d never allowed to tell people how much you like doing the show. Maybe they cut your pay. Dont want that to happen. Keep buying houses. Have a great remember my father said, says youre over extended. Looking down, hes good. Coming up, donald trump could pay nothing in taxes, at least thats according to the New York Times jim stewart and he will tell us why. Speaking of donald trump moodys economist zandi says he is the biggest threat to the recovery. Mark will break down what the economy would look like under President Trump or president clinton. Squawk on the street will be right back. Matters. D both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Bacteria can hide in food and make you ill. Wow announcer but you can keep bacteria from ruining your day with 4 simple steps clean, separate, cook, and chill. The roadchip to food safety starts at foodsafety. Gov. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Good morning and welcome back to squawk on the street. Happy friday. Im sara eisen with david faber and wilfred frost this morning live from post nine at the new york stock exchange. Our Carl Quintanilla is with us from the olympics at rio. The markets pulling back from the record close for all three of the major indices. The dow off by about 24 points. Still looking at a higher week. The s p 500 off just fractionally same with the nasdaq. Wti crude continues to gain. It is up a percent marching toward 44 a barrel. Hillary clinton making a key speech in michigan yesterday criticizing components of Donald Trumps agenda on the economy. Have a listen. I dont think mr. Trump understands any of it. He hasnt offered any Credible Solutions for the very real economic challenges we face. So joining us now from washington is gop strategist and former rubio manager Terry Sullivan and democratic strategist morris reed. Morris, well start with you on Hillary Clinton and donald trump really. We spoke earlier with the chief global economist at citigroup on Worldwide Exchange and he said hes worried about the United States because if donald trump gets elected he sees the risk rising of a trade war, and if Hillary Clinton gets elected he sees the risk of a trade war as well. A lot of anxiety by the nature and tone of what both candidates are saying about trade. However its one thing to run as a candidate and another to be to run a government. I dont think well be as bombastic and antitrade when either one gets into the office. I do, however, think that Hillary Clinton has a better track record and plan of expanding markets so im not as i dont see it as a glass half empty. I think that both want to get in the oval office understand the way to expand jobs is to open markets. Thats what i believe fundamentally. The opposite of what theyre saying on the campaign trail. I realize its an appeal to populism but Hillary Clinton doubled down on that stance yesterday, saying no way on tpp. Dont you think it would be difficult for her to reverse course if she gets in elected. Once you get in office and start to deal and negotiate with the congress, we have different branches of government. Trade has traditionally been a good thing. It hasnt always worked out for every sector, but i believe that there will be compelling arguments that tpp, frankly, would be a good thing for the american economy. So she may say this now, but when you get a paul ryan or a leaders in the senate may have a different story altogether. Terry, both candidates seem committed to huge infrastructure spend around a quarter of a trillion dollars according to clinton. More than double that for trump. Do you think either will actually deliver those sorts of numbers and can they, in fact, afford to . You know, isnt it sad listening to morris talk about how our hope is that they these candidate dont mean what they say from an economic standpoint, that were hoping that its that theyre just talking to try to win over voters and that these arent really going to be their policies. Its really put our country in a bad space from a competitive standpoint. You know, theres no telling, i think that Hillary Clinton is more likely to be believed than donald trump and that might be scary. You know, at least trump says crazy things, theres no expectation that hes going to do them. Hillary clinton has a record of doing, you know, things that arent friendly towards the economy. And, you know, she was the original one that wanted to take over health care and thats a problem and a concern and especially from an economic standpoint. Terry let me be clear about this to you, politicians say things, you know, you run campaigns, so have i, on the stump but the reality when you get in office and have to work with different branches of government it is not a total torre system here. If Congress Makes a compelling argument and a case to go forward i believe there is a compelling case that the tpp would be good for the american economy. What candidates say now and ultimately what they do one, two years down the line, if the evidence proved good they should move forward. Right. And i guess i totally understand what youre saying and agree what im saying, isnt it awful we have two candidates right now we really dont believe are going to do what they say theyre doing. Thats a terrible place. I run campaigns for 20 years. I know what youre saying and that candidates sometimes fudge a little bit but now we have two candidates we fundamentally believe are lying to us and thats awful and we hope theyre lying to us. Lets move this conversation forward. Beyond the Infrastructure Spending what is the progrowth message from Hillary Clinton . Its interesting because i get sort of [ inaudible ] looking at the reviews people gave her pretty fair reviews and the New York Times as well. I think she needs to double down on something democrats dont do. The Corporate Tax system. Our Corporate Tax system is abysmal. Were terrible. Were the worst in the world. If we can find a way to create to redefine our tax code, create a gate System People can bring income back to america that could spur the economy along. I think that this is something that Hillary Clinton could see allies across the aisle, the paul ryan, will work with her on these types of things. Im hopeful this is something she can focus in on and double down. Were hearing that from donald trump. Do you think that Hillary Clinton does have a message or more of an opportunity to reach out to republicans across the aisle with a pore progrowth more progrowth economic message going into Corporate Taxes and not bashing the tpp even though shes come out against it. I think she has a huge opportunity. A lot of republicans, especially fiscal conservatives, who are scared to death of donald trump. And theyre also scared to death of Hillary Clinton. And so, you know, if she has an opening to seem less unstable and win over some key republican votes shes going to need that in College Educated white voters in suburban areas, upper income, that arent going to be trump voters she needs to encourage them not to stay home but come out and vote for her. I dont know if she can do it because her policies have been consistently left leaning. Yeah. Whats interesting hillary has a track record of working with republicans. Remember when she was in the Senate Republicans worked well with her. I think this is an opening for her to start to reach across the aisle and get consensus now, that tax code is something she can do it on. Infrastructure is something she can do it on and she should really drill down on this health care issue, child care issue. With donald trump being 30 points behind her with white educated women this is something that can make a difference. It is a compelling argument to women. Well leave it there. Thank you very much. Good discussion, Terry Sullivan and morris reid. Big day of excuse me, big day tore retail earnings. Courtney reagan has the latest for us. Good morning to you. Jc penney results arent as positively surprising as maybe some other Department Stores, but certainly show forward progress. Jc penney lost an adjusted 5 cents per share, better than the expected 15 cent loss. Revenues slightly shy at 2. 92 billion and that key comparable sales metric improving 2. 2 over last year. 0. 2 shy of consensus. Cojuan and Company Notes a likely limited upside for shares since the Department Store only reiterated its full year guidance. Ceo Marvin Ellison is hosting his first Analyst Meeting where jc penney will reveal its threeyear forecast when we might get more on the Conference Call. The strength of the sephora shops, calling out rollouts in rural areas. The Home Department also strong. Ellison calls the new appliance test shops excellent. Reiterating the strategy to focus on less weather sensitive categories. We heard that from him last quarter. Nordstrom catching a break beating on earnings and comp sales, slightly light revenues. The Department Store raising its full year Earnings Guidance slightly as well saying its anniversary sale which shifted later this year was even better than recent sales trends. Nordstrom rack again the stronger performing segment, though nordstroms website comps grew 9 , notable because 20 of nordstrom sales come online. Now dill dardss top and bottom line better than expected but comps were light. The ceo classified the results as poor. Noting continuing impacts from negative apparel trends. Thats a little different than what we heard from macys. On wednesday ill be in texas at the jc penney analyst day and sit down with Marvin Ellison and hopefully hear more about the quarter and plan forward. Thank you very much, courtney regan. Another recordbreaking night at the olympics. Carl is in rio with all the highlights. Carl . Hey, david, we talked about gymnastics and swimming this morning but congratulations Kayla Harrison the first olympian to win gold in judo from america in london, back in 2012, sought to defend that this time around in the half heavyweight category and did win. Now the first woman to win multiple golds in that category. Shes talked about retirement being a possibility, so we asked her a few moments ago what comes next . Mma is definitely something im going to think about. It could be, perhaps, very lucrative for me. Something i think i would be good at and excel in pretty fast. But at the same time is it going to fit with me and my persona. Its completely different from the olympic stage. You know, in judo, after every match you bow to show respect to your opponent and you shake their hand and i was hugging the girls after i was fighting and its all about Mutual Benefit and welfare, judo, and in mma i feel like its a lot about trash talking and entertainment and you get fights not necessarily baited on your merit as a fighter but based on things that dont really matter. Shes going to be an athlete to watch. Finally from that kind of gold to this kind of gold, these are olympic pins and theyre made by all kinds of sponsors, athletic teams, even media organizations. Heres a cnbc pin. Trading these at the olympics has its own entire culture. Take a look. This one is really nice. Inside olympic park a tradition nearly as old as the games themselves. Pin trading. What if i give you this one for this one. Oh, no. Come on. This is very special. Sponsors, committees and Media Outlets come to the games with an arsenal of pins to distribute and recipients trade them like a form of currency. This pin right here, is one of the most coveted pins. Learning to trade is a sport in itself. Im doing the one on one here. You cant swoop in. Thats big bad. Thats bad. Very, very bad. Where you dont even have to qualify. When you see these guys Walking Around with like 200 pins and they got pins theyre professional traders. Professional traders. You dont trade with them. Hey, man, that pin is worthless. Theyre all worthless. What are you talking about. Its an amazing way to meet new people at the olympics. This is my security lanyard. I got sky sports, visa, i got brazil, i got nightly news, today show, cnbc. Ill bring this back. You can have a look but cannot have the pins themselves, im sorry. You didnt bring us any pins, carl . What . He got me a towel. He did . Very nice. Really nice. I know. Hey, carl, youre finishing a great week of coverage, of course. Im curious, hard to have one highlight or a couple but anything in particular that youring going to remember more than other things youve experienced during this week . You walk out of this game, this one in particular, its my fourth games, really rooting for brazil. Their economy is trying to catch a second gear here. Theres so much hard work to do in reforming. Theres so much inequality and poverty, put this game has given them a little bit of a head start. I will be thinking of them. The stock market by the way, a new oneyear high today, ill be thinking them over the next year. Carl, thank you. Carl quintanilla. Time to come home. Youre having too much fun, dancing, shopping. We miss you. Thanks, guys. Thank you. When we return, after closing at record highs, stocks are, well you can see, down a bit. There it is. Donald trump speaking out against the moodys report saying his economic plan would hurt the economy. Were going to have moodys chief economist join us to respond pap lot more ahead, stay with us. Dentist if an electric toothbrush was going to clean better than a manual. He said sure. But dont get just any one. Get one inspired by dentists, with a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque and rotates to sweep it away. And oralb delivers a clinically proven superior clean versus sonicare diamondclean. My mouth feels super clean oralb. Know youre getting a superior clean. Im never going back to a manual brush. Markets are partying like its 1999 all three indices soaring and hitting record closing highs. Yesterday. Is this the beginning . Joined by tony, Market Strategist at pimco and bill smooeds, ceo and cio of snead capital. Tony, start with you, weve seen record highs and Oil Prices Stabilizing and a reasonable earnings seasoned got record low bond yields. Whats the factor driving the equity market higher . Its been a simple thesis. Interest rates are low, the spectrum into higher risk assets credit instruments and equities. The glue that keeps it together is continuous Economic Growth globally and it does exist. Economies dploeblly are growing at a risky situation but still growing, providing cash flow to pay out dividends to pay Bond Investors back the interest and princip principal. The economies look great but not okay. The backdrop is a low Interest Rate climate without question. Bill, to what extent are people buying stocks because theyre the pick of an otherwise pretty unattractive bunch right now . Well, there is that. You know, theres an enormous amount of money out there and people have pretty much despised this bull market the whole way. But we think theres a risk in there right now that you dont have to deal with by getting out of the market. That is that the most expensive stocks in the s p, the 100 most expensive, trade for about 52 times earnings. And the 100 cheapest trade for about 10. 2 times earnings. So, rather than worrying about whether to be in the market or out of the market, we think this is a really good time to think about okay, lets own merry tortious companies that dont have favor right now and leave the very well favored Revenue Growth stories to somebody else. One of your top picks is the banks, is that right . Yeah. Its interesting, you know, a year ago, year and a half ago, everybody just admired the daylights out of wells fargo. Now the ceo is adding 10 or 11 million at his holdings at the lower prices and no one wants them. We think that its very possible that whoever gets elected president of the United States is going to be as fortunate as Ronald Reagan was in one respect, and that is, the demographics of household formation in the next ten years are spectacular and the banks should be a big beneficiary of higher velocity of money, Mortgage Loans to the largest population group. Tony, despite bills views of being able to make some picks or continue to go higher, recent trade flow data showed a lot of money out of active funds into etfs. Given this Interest Rate environment at the moment, buying stocks its like active stock picking now less relevant than it used to be . So what youre saying is beta is more important than alpha. We believe in a risky situation where asset prices have been inflated by Central Bank Activity one has to be more mindful of beta risk to say to simply buy the market. One has to be very selective about what he puts in his or her portfolio. So were looking for securities that will bend but not break if the many stressful scenarios many people envisioned do come about. Picture china, for example. The risk associated with it that many point to or the brexit related issues or the u. S. And europe and japan Central Banks are having less impact on economies and that creates a certain risk that should make you somewhat leery about beta risk and buying the market so to speak. Yeah i would agree go ahead. Sara, i would agree with that. Think about this way, right now, the s p is getting disproportionately overweighted in tech and not to pick on you folks but you spend an amount of time each day talking about tim kaine and exciting new futuristic things and that is the risk to the indexer today. The indexer is always at risk when the group thats done really well the last couple years gets to be an outsized part of the index. So i would argue just the opposite, that again, not across the board, but this is a pretty good time to lean on value and to be a little bit nervous about just straight old s p indexing. Its a good point, bill. I wanted to get your take on the retail Sales Numbers that we got today. Headline number disappointing. I just wonder, though, if this kind of equity market that keeps hitting new record highs needs to see those kind of not all perfect economic reports so that the Federal Reserve stays on hold . It seems the markets have amnesias because the last piece of data, major data we had on a consumer showed it was the best quarter, the second quarter, second best quarter in ten years. In fact, also digging into 4. 2 gain. Third time in ten years we had a full handle on Consumer Spending and within the retail sales report, very importantly the last few months, were very pro bust. Socalled robust. Socalled control group which gets brought into gdp, 3 annualized gain. Exautomobiles and gas, 8 gain as well. We shouldnt make too much of a volatile report plus its a clearance month, july, people are shopping for sales. Its not a big month in terms of what happens. Tony, thank you very much. Thank you. Thank you. Thank you both and have a lovely weekend. We will have to leave it there. When we return, on the show, pulitzerprize winning columnist jim stee wart is here. Why trump could pay nothing in taxes. Stay with us. Youre watching squawk on the street. Ing the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the global economy. And you thought we just made the gas. Energy lives here. Hillary clinton and donald trump unveiling tax plans to stimulate the economy with mrs. Clinton planning to release her tax returns to the public today. But our next guest says donald trump could be paying zero in federal income tax. Joining us at post nine jim stewart New York Times columnist, cnbc contributor, glad you wrote the story. I often say that to you when you show up. Its funny, i know you did a lot more reporting but real estate guys when you talk to them, they say, he may not pay anything in taxes. Exactly. When i first started looking into this a few weeks ago i said come on. Youve got to be kidding. He has to be paying something. Hes he claims to have hundreds of millions in income. No, probably little or nothing. The more i delved into the tax code it became clear he could be paying nothing. Why . What is it about the tax code and real estate . The main advantage he gets as a socalled active Real Estate Developer is the ability to take paper losses, mostly from depreciation, of all these various, you know, llcs he owns and offset it against ordinary income. Now that used to be possible for average people who invested in real estate partnerships and that was deemed such an outrageous loophole it was wiped out in the 1986 tax reform. This being, you know, the real estate lobby, they carved out this exception for active Real Estate Developers such as trump. He can take massive paper losses, because we all know real estate doesnt really depreciate even though you get the schedule an write it down, and then he can offset his income. You can keep these llcs going forever or another massive loophole for Real Estate Developers if you sell one property, and buy another, you dont pay any tax on the gain. Now that used to be true for regular people too for their homes and they wiped that out. But again, Real Estate Developers got carved out. Dont get me going on this. Its outrageous. Hes not necessarily doing anything illegal. Its not illegal. Hes taking advantage of the provisions there. B, how many times do i have to say this, we need tax reform thp pes is an outrageous example. When running for president step up there, lets just see the returns. If youre doing it legal youre not ashamed of it put them out there and let us see. I was going to ask that. Wondering if this you think politically is the mystery of why we have not seen the tax returns and if so, why. Hes not doing anything illegal as you said. Well i think it would be a political firestorm it turns out he pays so little. The percentages and the issue, because you use these devices and get your adjusted gross income down to maybe zero or some years as weve seen he actually did report losses. So, you know, its the rate suspect the issue. Its the absolute amount hes paying in taxes probably extremely minimal. I think he would come under fierce assault if it turns out that thats the reason. It seems to me this is the obvious reason. Theres a principle in the law if you dont produce evidence you can draw a negative inference out of it i would apply that here. Until he produces, i think we are entitled to conclude hes paying little if anything in taxes. These tactics would they show up in his personal or company tax returns . The personal tax returns. Amazingly he lists 564 business entities in which he holds a position. There are apparently others he doesnt hold a position. Thats a lot. Each one of those files a return, a k1. That is passed through to him, personally, it gets his tax returns must run to a massive, you know, bigger than the manhattan phone book and all shows up in his personal returns. He is an active developer therefore benefiting still from this particular deduction. Yes, he is. I mean, its what is or isnt an active developer is subject to legal interpretation and could be argued about but one question i had in my mind is, how do you actively manage 564 or more entities while running for president. Is that active management . How active can you be . Jim a lot of people that work for him. Do you think hes going to release his tax returns . He says its because of an audit. What are your thoughts . Everybody says hes not going to do it. He could have done if it he was going to do it he should have done it before now. Mitt romney was paying 14 because of a number of things including his investment in private ekt and things like that. I was among those who criticized him. I look back now, hes a tax hero compared to Real Estate Developers the private equity people cannot be held accountable to real estate. Expecting to see Hillary Clintons 2015 tax returns. Yes. Some time soon, possibly today. Any things to look out for in that. I would be surprised. I looked at hillarys tax returns, im bipartisan. Theyre not that interesting. She makes a lot of money from speeches and other activities. She pays a high rate in the high 30s. I mean, you can criticize them, but not for not paying their fair share of tax tas. We will have to leave it there. Again, just seeing it today, because it had been coming up and thats and you hear it from people, jim, and then you said that cant be, like no, i know real estate its going to be zero, thats the reason. Yeah. Great stuff. A lot think its because hes not worth as much as he says. People wonder about the net worth. Thats a splats iseparate issue but looking at the tax rate which is significant it would be a scandal. A bigger scoop. Were still paying 52 as new york city residents. Dont ask. Its too embarrassing. So high. David faber, release your tax returns. Public wants to know. Yeah. Ill tell you right now, its 52 . I think thats what it was. Thank you very much. Journalists get no breaks. None. Thanks, jim. When we come back speaking of donald trump, he called out moodys for saying his economic plan would put his economic plan would put the u. S. In recession. Listen. Its a ridiculous statement that they come out. I assume theyre democrats because its a ridiculous statement. We will see. Moodys chief economist mark zandi joins us next. Good morning, everyone. Im sue herera, your cnbc news update. The Defense Department releasing video of recent air strikes on isis targets in syria conducted july 26th in northern syria. The strikes came as u. S. Backed forces were trying to oust militants from the city. A wave of coordinated explosions rocked multiple cities in thailand overnight and this morning killing several people and wounding dozens mor. Thai police say they were local sabotage not linked to terrorist groups. Vladimir putin replacing chief of staff Sergei Ivanov in the highprofile reshuffle in the kremlin in years despite the clear appearance that ivanov was forced out putin insists he was making the move at ivanovs request. The deep fried twinkie jumping from the state fair to the home freezer market. Hosest launching the product, its first foreray into frozen foods with a box of 7 for 4. 76 for the first three months they will only be available at walmart. I dont know. Thats the news update. Sara, your neck of the woods because you follow these companies. Im not sure about a deep fried twinkie. Consumer companies were moving towards healthier foods. Not sure it goes with the trend. That would who doesnt love a deep fried twinkie. A counter trend. Who knows. Get wilfred to have one. Been in the states a few months. Hasnt done that american tradition yet. Next on the list. We will go to the ohio state fair. Thank you. You got it, guys. Donald trump and Hillary Clintons economic plans are under the microscope. Hillary clinton often cites moodys research. Yesterday on squawk box, we asked donald trump about moodys criticism of his plan. Listen. How do you reconcile saying your economic plan was well received and expected to create the jobs that youve just told us, it will when moodys says your plan will cause a recession, create far fewer jobs than Hillary Clinton, and increase the deficit. Its a ridiculous statement that they come out. I assume theyre democrats because its a ridiculous statement. My plan cuts taxes. She will be raising 1. 3 trillion in taxes. My plan cuts taxes. My plan will lead to growth. He were going to have the jobs, not her. I think they might have been looking at an old plan or something. It couldnt be this plan. Everybody says this will create tremendous growth. Lets bring in mark zandi, chief economist at moodys analytics to respond. Good morning, good to see you. Good morning. So clear this up for us. Are you a democrat . Yeah, im a registered democrat. And you contribute to the clinton campaign, correct . Yeah. I contributed during the primary to the campaign. And in full disclosure ive contributed to both. I did work on one previous campaign, the john mccain campaign. How do you respond to critics out there that say, your politics is coloring your Economic Research . I guess a few things. One, read the research. The methodology, the assumptions, the results are transparent, laid out. You make your own judgment. Second thing i would say, it was a team. I led a team and we had both on the team. But take a look at yourself and make your own mind. Just to be clear have you looked at the new trump plan . Because i know your analysis is often cited it would cost 3. 5 million jobs, unemployment would rise to 7 , 11 trillion in terms of what it would add to the national debt. Are those your current numbers based on mr. Trumps latest speech in detroit . No. Its not. That was done that analysis was done four or five weeks ago. It does not reflect any changes hes made and will make in what he tried to articulate and did articulate back on tuesday. At this point, we dont have enough information. Theres not enough granularity to what he said to be able to quantify it. Were waiting to see if they post more information on the website and provide more information in regard to what he has in mind and i will update the analysis. So some of your themes stand. You did say in the report that trumps proposals would lead the u. S. To a more isolated economy, cross border trade and immigration would be significantly diminished, Foreign Investment would be reduced on some of his trade plans. The only counter here, mark, its not like Hillary Clinton is opening herself up to trade. Shes come out very vociferously now about tpp. Wouldnt it be the same isolationist attitude . Well, thats a good point. Just what i would say is that the biggest difference between the trump perspective and clinton perspective with regard to future Economic Growth, jobs and x dp, is their policies with regard to immigration. That is the key. Mr. Trump is no fan of immigration. He would require the 11 million undocumented plus people to leave the country. Whereas, secretary clinton has endorsed the Immigration Reform bill ta was passed in the senate back in 2013, the socalled gang of 8 legislation, that would increase Legal Immigration by a Million People per an them, more educated skilled workers and provide a path to legalization, citizenship for 11 million undocumented. Thats a very striking difference in a very big difference in what it means for Economic Growth. Can i ask you about infrastructure spend. Its a theme both candidates have been talking about with some huge numbers involved as well. Can the u. S. Afford those sorts of numbers in terms of increasing its debt load and if the ultimate goal is to boost gdp growth, is infrastructure spend the right path . Does it have the multiplier effects if we look through history to deliver gdp growth . I dont think we can afford not to invest in infrastructure. Its key to the productivity of our businesses, their competitiveness. It will save enormously in the long run and it can be done in a very intelligent, smart way. Both candidates have talked about an Infrastructure Bank and i think thats, you know, a very attractive way of doing it. Secretary clinton has been more bold in her proposal. She would have 250 billion over five years in additional direct spending on infrastructure but you have to pay for it and she lays out some ways for doing that through higher tax revenue, raising tax rates on very high income households. So not doing it would be a huge error. And particularly in the political context, i mean we have bipartisan support for more Infrastructure Spending both mr. Trump and secretary clinton have supported it, the Obama Administration supports it, many in congress on both the rs and ds, so not to do it would be a very serious mistake. Mark, quickly, what do you say to those who see Hillary Clinton as a continuation of president obama who did preside over recovery but it was one of the shallowe esest economic recs in the history of the u. S. And in the last seven years we havent seen growth above 3 . I would say theres a a lot of her proposals are a continuation of mr. President obamas policies. A lot of new things. But i would say that the u. S. Economy has made a lot of progress since the great recession. Weve created over 15 million jobs and unemployment is 4. 9 . Theres still a lot of economic pain and suffering but thats because we dug ourselves a very deep hole, thats taking us a very long time to get out of it, but i think the policies have been generally quite good, and i think going forward, continuation of many of them, not all of them, many of them would be the right thing to do. Mark zandi, thank you so much for joining us to respond to donald trump and talk through some of the economics of both plans. Mark zandi from moodys analysts. Lets get out to carl whos, of course, live in rio with a look at whats coming up. Carl . Hey, wilfred. Its the question we ask during every olympic games. Does it pay for a city to host a. A study has some answers. Well talk about that when squawk on the street continues live from rio. 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. But the best place to start is in the forest. Kubo i spy something beginning with. S beetle snow. Kubo no. Beetle snow covered trees. Monkey nothing to do with snow. Narrator head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. Kubo wow narrator so grab your loved ones monkey dont even. Narrator and explore a world of possibilities. Kubo come on, this way. Narrator visit discovertheforest. Org to find the closest forest or park to you. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Investors desperate to find yield in the low environment. Stock picks from our traders logon to trading nation. Cnbc. Com. More squawk on the street coming up. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Welcome back to squawk on the street. Over to carl live in rio again. Carl . Hey, wilfred, good morning. Its a debate almost as old as the modern olympic era itself. Is it a smart investment for a city to host the games . The history is not very encouraging. After the fireworks and the athletes are gone, the cost of hosting remains. And according to an Oxford University study, its not money well spent. Researchers say the games have a crowding out effect where nonolympic tourists, even residents, avoid the host city because of congestion and high prices. The uk actually saw a drop in International Visitors during the london games. Some critics argue athletes and their families stay wrapped in the olympic bubble and dont spend like typical tourists. Another downside, Infrastructure Investments dont always pay off. The tab for athens in 2004, 15 billion, is widely blamed for helping to bankrupt the country and sochi, home of the most expensive olympics ever, is home to an under used stadium and Public Transportation system. Which costs russia 1. 2 billion a year to maintain. The question is whether rios 12 Million Investment will pay off. Organizers say the city keeps 60 of any profits. Rios organizers say their bid modernized the city as the recession kept private investment away. Now, of course, this decision has real consequences for future games, guys, because the ioc continues to debate whether or not to take a chance on developing economies like brazil, like maybe africa in the years ahead, or whether to play it safe and keep these games in the likes of an l. A. , or beijing. Carl, i cant believe that there was a drop in visitors to london during the 2012 olympics. It was rammed. You couldnt get around at all. That aside, in terms of the ranking of how successful recent ones have been, did the study go really into that and who tops the list, whos bottom of the list . I mean, the worst case is montreal, back in 72 or 76, essentially left the city with 30 billion 30 years worth of debt. It took them decades to come back interest that. Thats sort of the posterchild for why you would not do this. Obviously the rio organizers are hoping to provide the counter view to that and say look, we didnt have a subway before, now we do, and it wouldnt have happened otherwise. To your question, carl, about the ioc deciding on developing economies for future olympic games, i mean brazil did have a lot of criticism in the lead up, it wasnt going to be ready, dealing with a political and economic crisis, it didnt have the infrastructure. For the most part it seems to have gone smoothly would you say is. Yeah. I mean theres still a lot of protests particularly again michel temer. You can protest now in olympic park which is sort of been a judicial debate here. But theres still a very large portion of the local electorate who argues that money you spent on the games, could have gone to making sure our schools dont leak from the roof and that debate will continue. Good point. Overall, it feels like the sentiment is much better than two years ago after the world cup which is one of the sparks that led to the unrest and the impeachment of Dilma Rousseff . Yeah. Its going to be interesting. I mean, if, in fact, brazil comes out of negative gdp in the next couple years, will people say, its because the olympics were there. Were not going to know the answer to that for a few more years. Thanks very much. Great coverage and safe trip back from rio. Switching focus, big banks are asking the Federal Reserve for an extension to comply with the volcker rule. Goldman sachs, Morgan Stanley and jpmorgan are among the banks asking for an additional fiveyear grace period. If the fed agrees the extension would give them more time to exit Fund Investments and run through 2022. Just for a bit of context on this one, guys, theres been three oneyear extensions to the volcker rule on the generic terms. This is a fiveyear extension ask on the particularly liquid assets. Its an interesting headline and story but flagged already, filed in some of Morgan Stanleys 10 qs. Goldman has mentioned it on the recent investor call. Its not unexpected but it does highlight some of the assets that banks still cans get rid of quite a long time since these rules were initially brought in. An issue they have to deal with but not unexpected and why the stocks arent reacting. Right. Right. Liquid securities i guess of various types. But the overall emphasis of the volcker rule has been felt in terms of capital and risk taking. Absolutely right. More of a niche area, particularly some private Equity Investments they havent gotten rid of yet. How have you not, but its a small part and not unexpected. All right. When we come back, on the show, the popular whopper from burger king now getting a tex mex twist. Youre watching squawk on the street with the dow negative, 15 points. The heirloom tomato. Intenselyflavored. Colorfullydiverse. Beautifullymisshapen. Cultivated for generations, its the unexpected hero of any dish. When you cook with incredible ingredients. You make incredible meals. Fresh ingredients. Stepbysteprecipes. Delivered to your door, for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. Across new york state, from long island to buffalo, fromheer t v from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov burger king attempting to fend off the kpez tigs with his its new fast food trend, the chopp whopperita. Going after that do bole here, jane. Absolutely. Taco bell nipping at its heel. Out city hoping to bring the olympics here, eric says he fears a Trump Presidency will hurt our chances with the ioc. Burger king busey trying to tear the wall down. Has the king gone loco . Well burger king has been trying to get in the mexican food game, at least texmex, and as we said, taco bell gaining on it. The chains been testing. We unboxed it. Its basically a whopper in a or it till la, you dont hold the pickles or the lettuce, off cheesy, mexicanish sauce. Would you have had a whopper in a tortilla. It might sound good. Can i try it . Reporter would you try it . Oh yeah. Reporter why . Seems less fattening. I didnt buy it. Yeah. Reporter yeah, you like it . Its the first time ive ever had taco sauce on a pickle. All right. On power lunch, i will give me review, the anchors will play along eating their versions of the whopperito. One of the challenges for fast food is that the financial gap between eating at home and eating out is wide. Its cheaper to eat at home. Also on fast tap, i will be at the coliseum because tomorrow, the Los Angeles Rams, the Los Angeles Rams return for their first game in decades. And we talked to coach fisher about whether or not hes feeling much pressure to do Something Better than the 79 record here in l. A. Back to you. Yes, thats an nfl franchise moving back to l. A. , sarah. Jane, im explaining to sarah making sure shes up on it, okay. I am up on the whopperito. Which is healthier . Whopperito or whopper. Which is less healthy . That should be the question. Ill tell you this, the comparison i made was more between like a taco bell burrito or a chipotle, this is right in the middle of both. This is probably healthier than a taco bell one and fewer calories than a chipotle. Only 570 calories. 3. 99. I think it looks good. Were not allowed to have your review yet, jane . Shes tried everything. You have to tune no am i usually like everything, but i do have some things. Ill tell you what i miss, this is only a temporary item. They had mac and cheese which was the most deadly wonderful food, fried mac and cheese. They took it out. This is going to be around for a while, but maybe not permanently. Its been around 24 hours. Didnt she once have like a baconflavored milk shake . Yes, i did. And it did not make me ill. So whatever doesnt kill you makes you stronger. That was a jack in the box thing. I guess i dont have vegetarian whopperito. You can hold the meat. Whats the point . Yeah. Jane, thank you. We look forward to your review. That is coming later on cnbc. Also seem to get to bite into one of those. Got to start early. I am hungry. I know. Im also looking forward to the l. A. Rams kicking off. Owned by the same owner as that. Arsenal. Right. There we go. Lets go to john with a look at whats coming up next on squawk alley. Good morning, my nickname is elementary school. No, it wasnt. Were going to have squawk alley early investor to ask what really is the next multibillion dollar idea in tech. Also microsoft making an investment in interactive demon. Were going to have an exferret in both microsoft and coming home before he does, all that and more coming up on squawk alley. Energy is a complex challenge. People want power. And power plants account for more than a third of energyrelated carbon emissions. The challenge is to capture the emissions before theyre released into the atmosphere. Exxonmobil is a leader in carbon capture. Our team is working to make this technology better, more affordable so it can reduce emissions around the world. Thats what were working on right now. Energy lives here. [baby talk] [child giggling] child look, ma. No hands. Children i, j, k. [bicycle bell rings] [indistinct chatter] [telephone rings] man hello . [boing] [laughter] man you may kiss the bride. [applause] woman ahh. [indistinct conversation] announcer a full life measured in seats starts with the right ones early on. Car crashes are a leading killer of children 1 to 13. Learn how to prevent deaths and injuries by using the right car seat for your childs age and size. Good morning, it is noon in rio. Its 11 00 a. M. On wall street and squawk alley is live. Good friday morning, im live on the beach in o