Transcripts For CNBC Squawk On The Street 20160830

Theyre flat in the uk. Weve taken that apple money and applied it immediately to the stock. They are. Theyre also still buying bonds up like crazy over there. Put the money theres so many weird things going on theyre actually hoping to fund the transaction by which denon is buying bonds. Any way, lets get to bonds, you answered, 158, crude down today and you can see brent nearing at least 50 a share. Weve got the latest s p 500 case chiller report, showing home prices rose 5. 9 . And thats why unemployment are strong, and paychecks, doing consistently strong business. We keep running into these numbers that are somewhat positive. Well get to conversations about the broader market. Want to get to the roadmap, as well and it starts with apple, which is the market also. The european ordering the company to pay over 14 billion in back taxes. Plus, any hopes of a deal off. And a bid for hersheys, saying there is no actionable way forward. Ill give you the details on what exactly went down there, and a new face of united, the Company Placing a top exec from american airlines. He left one and went to the other. Very smart guy. Very technological. Lets start with apple. Any trust regulators have ordered up to 14. 5 billion plus interest because the eu ruling effectively say that apple benefits from things in ireland that are illegal. Illegal, jim. Its interesting. This morning like a lot of people have been running to do a lot of reading on this, trying to talk to some people who might understand exactly whats at stake, and i i got back to may 21st of 2013. Do you remember when levin appeared and mccain was the subchair of this investigations committee, where they were looking at taxes paid by u. S. Corporations and loopholes and they went into in great detail, ireland in particular in all the different ways that they claimed apple was avoiding paying taxes. Apple has quietly negotiated from the government. This is a statement, an income tax rate less than 2 under the statutory rate of 12 , as well as other European Countries this was written back then and they also went into great detail how apple paid less than that because they really were actually not a taxpayer anywhere. They they had for tax purposes existed nowhere and they talked about these ghost companies. They do. And they apple came back and said were the largest u. S. Taxpayer, which is true. Which is responsive. They are by far the most proitable company in the history of the world. Theres always been this question about all the things that they you know all the intellectual Property Rights theyve sent to ireland from where they do so much of their business overseas. They made a deal. Irish money took it away and the fact is, it is a deal and if ireland is a sovereign state, you made a deal. Were you supposed to check in with the eu . Arguab arguably, if i were the eu, i would say every single deal has to be run through us. But to do retroactive is a little bit difficult. We often criticize our government when they do something retroactive. To be consistent is this going to be a strong man . If youre intel, what are you worried about . If you had a special deal with ireland, you probably ought to be worried. Right. Doesnt appear to be having that large an impact in the market. Of course apple is going to vigorously contest this, could take years one would assume. And people close to apple had been saying this would be the number. Now yesterday there was some tony numb phony number. No one endorsed that number. The fact is were all stuck with the notion of sovereignty. Weve been conditioned since brexit that eu basically is trying to become a nation. Right. And in that sense, you can have a separate nation within a nation, but ireland would argue that its got the right to be able to negotiate these things. Without having to go to the eu. Surely Going Forward theyve got to go to the eu. My problem is, how can they be rerow active . T the eus side, is they have every right to have taxes, they can do anything they want. Of course. King george iii. And apples going to be the the most Profitable Company the world has ever seen and i go back to may of 2013 where it was a great focus in terms of tax avoidance, all legal, but something that came up. Tax avoidance is legal. Tax evasion no. Lets get a look at whats going on, and go live to julia in brussels. Good morning. Reporter good morning, i think guys i want to respond to what you were saying there. I think the European Commission would argue here thats 14. 5 billion irish taxpayers own and do benefit in the country but the Irish Government doesnt want the money. They want to protect the relationship of apple and others in the country. They said they believe this ruling is going to be overturned and less about how much Corporation Tax they pay, less than 1 as you quite rightly pointed out. Theyre saying this is more about the country, the government thats doing the collecting, in this case, ireland. When i spoke to the Competition Commissioner this morning, she said exactly that. It was all about ireland and their tax practices. Listen in. This is a company who makes a lot of profits by selling wonderful products to european customers and apple have set up in ways that they themselves are completely of course in their good right to do, but ireland is not in their good right to give them tax benefit, which are selective only to this company. So some context on apple, 14. 5 billion is dwarfed by the estimated 215 billion theyve got sitting in cash piles overseas. The adverse scenario, the worstcase scenario put forth by j. P. Morgan was 19 billion and even in that case, it would be immaterial to apples share price. There are bigger questions, what does this mean for the current setup of apple and the tax arrangements for ireland, and how will the u. S. Treasury respond and what does this mean for investigations into mcdonalds and amazon. They could also see pretty big fines. Julia chatterley, thank you very much. Taking me back to 2013, take a look at all of the statements from mccain and levin and apple back in 2013 when apple was the focus here. And i would argue many things uncovered by levin, seemed to be the things the, u is going after in terms of this case. Doesnt it argue for the need for comprehensive Corporate Tax reform . There are so many things that are dysfunctional. And when it comes to Corporate Taxes, i could argue there could only be tax at one level. If we simplified it so much wouldnt it be nice if they didnt feel the need to come up with all of these different ways to have their foreign sales havened in one place where they were getting extra ordinarily low rate, but brought the profits back . Yes, and thats what we want che. I studied Corporate Tax. Its been a long time. The idea about Corporate Tax is its owned by shareholders so you get the dividends and the corporation pays the taxes and the company and then you pay. Thats not right. The idea whereof its domiciled seems to be kind of fanciful. All of this seems kind of made up and thats because we dont have a tax policy. Right. And finally, on the stock itself okay, thank you. And on overhang for the stock, is this a oneday story and we kind of forget about because its going to go on for years . Yes. Were going to talk about the iphone 7, and people are going to say what about that ruling, and youll say, thats under appeal, and irish of fighting it and thats about the eu and you know how screwed up the eu is. Thats kind of like where were going to be. We can just fastforward the tape. I didnt get an apple invitation by the way, for the launch, and im not hurt. Youre not hurt . Me thinks maybe thats not true. Maybe you are a little. I was a little hurt. I think that invitations forthcoming right away. I was very hurt. I was hoping you wouldnt bring it up. Lets get to the other story quickly and well deal with mond mondelese and hershey. And jumping from one legacy carrier to another and well look at futures and again, were going to have a lot more on mondelese walking away from hershey. Weve got to talk about that. Lets talk about that. Forget the airline executives. Were back after this. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. Theres no deal between mondelez and hershey in a statement late yesterday, mondelez says, following additional discussions and by the way, those sdediscussions w between the ceo of monday lease, and irene rosenfeld. After the release, im taking taking into account recent shareholder developments, we determined there is no actionable path forward towards an agreement. You can see hershey shares are going to be down over 10 and mondelez is going to be up about 3 . Jim this was always a tough one from the start. Because of the trust, the presence of the Hershey Trust which controls hershey, 80 of the vote, 34 of the economics. But as i reported in that first day, there had been months of back and forth between rosenfeld. I always had the question as to well, when it was rejected, so forcefully that 107 bid that was made initially by monday leelem they never get around in discussioni discussing the perceptions bilbry had, versus what mondelez was having to pay . You can tell you people familiar with the situation that ro rosenfeld said we may go to 115, but she was told 125 has to be the starting point for negotiations. Theres no level of earnings power can justify this to 28, 29. I cannot justify that. Not to mention the earnings from the kitkat license revert to nestly, thats 10 of ebitda. Thats something that monday lea mondelez has been making cite f of. Im hearing the trust has added a lot more members, was impossible to negotiate with. People saying to me, there was simply nobility to figure out the problems at hand. You have the company on the one side, but then you have the trust and what was simply an in bil ability to make decisions about the economic level they see at hershey, sell their steake at some number. Hershey is well run, but i guess the trust account get in the way of the management. The amendment is pretty good at hi hershey. Theyve done a good job. I guess the disfunction is at that trust level. It doesnt affect the actual team that run hershey, which used to be not good at all because people felt they couldnt get taken over, so they did what they wanted. It was a pennsylvania constitutio instituti institution, and they moved operations overseas, and became a lot more economic. Its a wellrun company, which is why i couldnt see the higher bid. Its not a bad company they can do more. No, although there had been on the hope on the part of mondelez, you create this global confection company, they had cadbury already. Its interesting from the trust perspective, and by the way, if you havent kept up with it, a number of members have left, because of the attorney general shes out. Shes out because she got convicted. But that trust will recompose itself late this year, early next year, but at some point, one would think given almost all of the assets they owner in hershey stock, maybe they want to diversify from a domestic chocolate maker. You could make an argument they could benefit and be acting responsibly as trustees, diversifying and that doesnt seem to be something that is in the offering, and mondelez, this is not some sort of thing were going to wait in the wings until the trust is reconstituted. Theyre done. Okay if theyre done, like santa fe theyve already they have bankers. They obviously didnt like their current they werent satisfied they were not satisfied with the current lineup, so what does she do . Thats a great question. Food stocks roll red hot, even though the Consumer Food Package Group theyre going to continue to be opportunistic, and youre going to start hearing these Kraft Kraft Heinz deal trying to put monday disea mondelez back together. I dont think theyre ready. Kielloggs. And did you know hedge funds now attract ip addresses and who is communicating with whom. Apparently its legal. Ships from saudi arabia, how much oil there is. They talk about virtually anything. All of it may add up to absolutely nothing. Im going to stay close to this. Theyre trying to justify the hedge funds and theyre doing all sorts of stuff. And who are the big guns at mondelez . But in this case, they had a view, jim, there was an opportunity to do something at an appropriate structure, and price, and they were wrong. Well, its like the pennsylvania has a long history of these trusts the barns foundation, the gerald school, it just seems like pennsylvanias got a series of people that try to shell their assets to make sure they cant do anything because of the trust agreement and the trust agreement seems to be pro fund. Trust in hershey is everything and doesnt appear that is not that is going to ever not be an independent company. Right. Well, i ill tell you want i thought this one eye thought they were going to come up. I really did. I thought there was going to be a diesel. Did you . I thought hershey would take the money and run, be able to fund the school forever. Kind of made sense. Unlike the bank crofts, when it came to dow jones, and murdock. Obviously the stock was reflecting this idea a deal could be done. Yep. No. No, no all right. But yes to cramers mad dash with the count down of the opening bell. Future this is morning, were about ten minutes away from the open. Were squawk on the street right after this. Were drownin. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. 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. Hey, its been crazy with school being back so were constantly going over our data limit. Oh, well, now all of our new plans come with no data overages. Wow, no more overages . So that means. Go on. Say it. Well finally be in control. And were back. Introducing new at t plans with no data overage charges. Weve got about seven minutes before the opening bell. Lets get to the mad dash. We didnt get to that executive departure for american, so lets get to it now. American people had two great people, doug barber, doing a good job, not the stocks reflect anything at all, and scott kirby, who felt maybe he would be the ceo. They said doug doesnt fit in, he grabs the number two job at united airlines. Oscar mununos, has been there for one year, from csx, and he had a heart transplant, good luck to him because thats tough obviously, and theres been things that have been working there. Ontime baggage, best in the industry, ontime performance. But people perceive kirby as giving him a big bench. This has been the lagered. The group is so far behind, were about to get the passenger numbers the world travels bad, david because of terrorism. So i think that if you get excited about this and then you get slapped in the face with some bad numbers you wont be too excited. The transports the rails have bad numbers and theyre going up. This is not a reason i think to be as excited. United continental was doing better. They were doing better in the last year so dont feel like wow, finally theyve got a guy who is a magician. The numbers have been better. Hes a relatively young guy. They paid him 13 million on the way out of a american. Its not clear they needed to, but they did, and the next day takes a new job. Is the eu happy with that . Maybe theyre they do a lot of business. May show mad moneymad mone on in europe. Theyre going to be looking after you. Youre potentially going to be a homeowner somewhere in europe. We wont say where. Wait until when we come back, well talk about it on air, but right now well just keep it between us. Right. Luxemborg, where is that . Stop it. A lot more for us on squawk on the street. Abercrombie no eu and they they screwed up. Well look at that and a lot more right after this. Ly a hug. This toy is a reminder that someone cares. These are a chance to be part of a team. And this is the chance to succeed. Female announcer with your support, everyone at sleep train proudly dedicates their time, hearts, and resources to giving local foster children one important thing hope. Hope. Hope. Not everyone can be a foster parent. But anyone can help a foster child. Sleep train your ticket to a better nights sleep youre watching cnbcs squawk on the street. Were live from the Financial Capital of the world where the opening bell is going to be ringing in about a minute and a half. Theres a lot of corporate news. Well find some walmart news around the bell, too just from the sales of the walmart family trust. Its interesting. Not marketmoving necessarily, but what in your opinion yesterday, it was the banks right. The key to this market, this broad question i like to ask you at this time, what brok and citi, the old avago, but david get this, they say zilence will be bought. 10 , is it broad com . Now david when i see that, we talk about takeover activity in the semiconductors. David how often do you see citi initiates . Sure. Every so often, analysts try and getting some going. It is. Youve been talking consistently just in general about consolidation among broadly speaking, the chip makers. This is the beginning of the common parlance. Its like citi what i regard this is its so obvious that theres consolidation. Lets put ail name out there sky works got a new cfo. Maybe theyre going to sell. Its a little nut. He mondelez should buy. Chocolate chips, which are the best kind. People dont know were being facetious. And disneys not going to buy mar marvel because they own marvell. And the tactical rotation, omnicell, celebrating its 15th year of trading over at the nasdaq. There they are clapping away. You can see the hq exchange on the board. Let me say if the eu is after apple. Yes. When they see monsanto talking with the buyers dont they say is that when youre going to get where they say, listen, you didnt check with us, thats not going to happen. They have been very muscular, as have our antitrust regulators over the last couple years. And monsanto has a decent chance of getting to an agreed price essentially, and theyre going to want some deal productectionn that very front that says, okay what are we going to get. Theres been some offers but what are we going to get, because you raise that point and theyre going to be fearful, even though theyll argue there are no overlaps, it doesnt actually make sense to challenge us on this front, it doesnt mean it wont happen. The european deal with america, and ball corp has just exploded higher because theyve been able to this is like pretty good olygopoly, and they had to get the deal done. Orlan the ftc having stabbing problff problems . They dont have enough people, i dont know. Its hard. Do you know how many documents youve got to go through and what youve got to look at . I dont know, i just find its a bad time to do a deal. It is, and do you know what . Thats not a foreign thought to a lot of ceos who might be considering a big deal. It is definitely a gating issue. I keep waiting for the law firm to come out, thats involved in these and says dont try it but that would be one weve never heard. The law firms are always like, its okay. Its going to be all right. Its going to be fine for you. Dont you worry. I know. Crazy. Crazy. Office depot, theyre going to stay in business. Like honey well, utx. Aint going to happen, dave. We should play that tape. I know. Its hard to knowledge. No, it wouldnt have been able to happen. And hes retiring in the spring of next year. Now hes retiring any way. Codys out. Hes leaving. After a great run. We know what hell be doing in his spare time. I saw a moving truck next door. What . I saw a moving truck next door. Well talk about stuff when we go off air. Dont bring it up. The walmart family trust which was set up in april of 2015, jim, it was set up set time, the Walton Family Holdings Trust was set up about 6 shares outstanding, and to facilitate shares in order to keep Walton Enterprises ownership from rising much above 50 of walmarts stock. Walmart keeps repurchasing so much stock. So theyve been a seller lately. There was a transaction i think it was yesterday or today yesterday the second sale by the trust since it was set up and theyve represented a good amount of the volume lately, 13. 65 of the total volume that traded on 8 19 and 8 22. How much . 13 1 2 . In those days. They own about 170 million shares but theyve been selling. I just want to point that out. Only to keep the Walton Family owns more than 50 of walmart. Ive got to tell thank you aggressive walmart is rocking the whole industry when you see food deflations, some stories interesting story of the day about food deflations. Yes. Youve mentioned it. Its milk, eggs, corn, and these supermarkets are hung. Super values being hung. Now, david, walmart was the elephant in the room in this Dollar General call, but walmart is lowering prices dramatically. Walmart is just basically being the walmart of holds, where they disrupted the industry. Theyre disrupting on line, theyre disrupting bricks and mortar. They feel empowered by the board and jesus, they own 50 . If doug mcmillman has their blessing they can do whatever they want. The Walton Family is always controlled terribly. Now theres desperaifferent par the company, grandchildren and the dividends come to some number that is astronomical every month. I just give my hats off to them. Its a great story to see the comeback of walmart. I dont feel its great about the stores yet, that could happen. The web is offering jet. Com, we did tacan talk about that, b walmart is disrupting the industry, where a lot of companies are deflailing because of walmart. And you think they have comeback . Every day low prices, sam walton. Even though efforts are being made on the omni channel are yet to be realized. Im saying if youre Dollar General and you had lower prices for more than 400 goods because walmart is cutting prices. Walmart is a Sleeping Giant thats awake, and mcmilan is upsetting look at target. Target did not have the numbers. I think some of that is walmart. I dont think its the weather. I think its walmart. They raised wages for their employees, maybe thats helping. No if they can keep their employe employees, they can stop spending money on training. Walmart is being so aggressive, its just wrecking a lot of corporate proo f corporate Profit Margins including the food business and a lot of the house wears. Lets get to abercrombie and fitch. It was 1 billion 1 2. The whole mall story, Urban Outfitters had a decent quarter, and these guys cant put it together. This is very disappointing. Whenever you talk about challenging, it wasnt that challenging for Urban Outfitters, which as free people, which i regard as a competitor to abercrombie. They have a little bit better fashion. Where . Free people. Im not aware of that. What is that . Free people . Free people. Is that one word or two . Its not a movement. Its a store chain. You have free people, anthropology. Urb urban the flag ship had good numbers. Aber kr ab abercrombie is fashion. Now, david i dont know if you saw that the crew is going j. Crew is theyre selling. Theres a lot of stuff going on where the malls experiencing turn over. Obviously macys, theyre not going to tell us which 100 stores are closing until after xra christmas. We went to tj maxx because we think thats going to be a free fall when that hits the market. Retail this is a month you shouldnt be focused on retail. Pvh said things are good, but g3, astoundingly bad. They sell tommy hillfigure, and calvin kline, and pvh sells cal ly calvin kline and underwear. Who can explain these industries . I think warmer weather hurt a little bit, but they claim the second half will be better, but g3 has been scalded. Its a bad way to feel. No one likes no one gets in the business to lose money. No, although plenty seem to manage to do it. Yes. Im waiting for bids in biotech. Im looking at the broader lets call it fapharma. Merk, pfizer, all down, cell jeans up a tiny bit. And yesterday, on scott wobners show. Drones are becoming par lilance now. Anything chip, anything intellectual property. Morgan stanley, so im watching the chip stocks and they are doing well and im watching the bank stocks. I dont know if you saw wells fargo go up 2 . I did. And you know how they buy more than 10 and as they buy back stock theyve got a walton situation. It creeps up. Finally apple down half a percent, what the eu wants and its worth you know, by tomorrow half a story on a 575 billion company they told us it would be 13, 14 billion, and here it is, 13 billion, and we got a positive note from jpmorgan saying its a positive. Its positive . How do you spend that positively . It appears apple Going Forward tax rate is not effected. So there you go. Its all about the go forward. Its kind of like politics. They can issue bonds. Thats a good thing. They can issue them over there and the, eu will pay them. Give me something that makes sense. I saw a deer last night. Farmers are bleeding from their eyeball. 15 . It doesnt make sense at all. Makes no sense. Lets get to a man who always makes sense of this market, bob pisani has more on the market this is morning. Good morning. We see asia a little bit higher. Europes mostly in the green, although the one exception is the big miners, the dollars strong again today, this is three days in a row, a bit of a problem of some of the commodities. If you look at antof agaste, and glencore, youll see that in the lower quarter. Banks were a big driver yesterday not just banks but even the Insurance Companies have been awoken recently, so its been about three strong days now really since the jackson hole speech where is financials have generally out performed, so morgan stanley, key, bank of america are up, but even the Insurance Companies like met life and prudential doing a bit better here. This this is very important because the banks and financials have awoken, and banks are up about 10 so far this quarter, a Market Leader and technology art. This is very important because financials and tech are the two biggest sectors in the s p 500 and if they start moving in a big way, they drag the rest of the s p 500 along because of their heavy market cap waiting. Materials and industries, s cyclicals have also been strong and the money coming out of the interestrate sensitive groups so utilities and telecom, and Consumer Staples have been good here. Utilities and telecom are like 3 of the s p 500. Very, very small. So to move up from technology, and footainancial stocks are do overall, thats important. I also want to note were finally going to have a separation between Real Estate Investment trusts and financial stocks. Weve been waiting for this for a long time. The move was announced two years ago, so tomorrow, the Real Estate Investment trusts are going to be carved out of the s p 500 financials. Theyre put in there, they really shouldnt be. They trade independently, even though theyre Interest Rate sensitive. It make some sense to create a new sector. You will not see a separate read sector until september 19th, when youll see it created out there. So reits are about 20 of the financial sector, but thats about what materials are, thats about what utilities are. Thats a significant exterior. So essentially theyre creating an 11eth sector there, creating a movement of money. So helping rates, theres number of things, Interest Rates remained low, thats important. They are very high dividend payers, about 4 on average, and people who can invest aggressively, particular those looking for dividend players. S vn 9, thats the big etf. There it is on the top, the white line, up about 11 . S p 500s up about 6 overall here. The sectors expensive because people have been plowing money into dividendpaying stocks. I just want to know the xlf, the et if y etf you would own for financials, theyre going to pay a special dividend in the middle of december. 20 , theyre going to district as a special dividend to the holders to account for the fact theyre going to have a whole new sector in the s p 500. Right now, the dow down 15 points. David back to you. Thank you very much, bob pisani, lets head to the bond pits and join Rick Santelli at the cme group in chicago. Good morning. Good morning, david. Theres not a lot of change, other than the five groups who are a bit higher, everything is a bit unchanged at levels a bit changed from prior to jackson hole and janet yellen and stan fisher. Charts are on tap again. Look at the twoyear. Now how its in the upper end after the friday move, its sort of stuck. So its threes, somewhat fives, but when you get to the long end, you can see for yourself, tens kind of playing with the lower line, in terms of giving up most of that runup in rate and you see the third year is definitely given most of it up and if we look at one week at the dollar index, the money ball, the chart everybodys talking about, good article in the journal today, it is up again about a third of a cent. The notion goes if youre trying to get a handle on are we pulling some of this normalization closer in time, more towards contemporary activity, it should be noted in the dollar index and it is up. If you look at a chart going back to february of this year, this 96 level, and were approaching it, is very important. It hasnt been the definitive top or bottom but gives you a change in complex. Pay close attention, but also traders do say the firmness has a lot of issues globally that could be pushing it. If it was about the fed wouldnt it be more aggressive and there is something to that argument. I talked about the five year and the third year. Theyre kind of doing a little different thing t. Real. It shows up when you look at 30s minus 5. It is now the flattest, the narrowist, meaning when you take third year minus five year, what you have left is the smaller since christmas, in 2007. David faber back to you. Thank you very much, mr. Santelli. More evidence of increasing competition between google and uber, were going to explain, and thursday night, be sure to watch the premier of ground zero rising, freedom versus fear, reported by jim cramer, the original cnn documentary gives an unprecedented look of the redevelopment of the world trade center, thursday at 10 00. Thank you, david. Youre welcome. Im looking forward to seeing it. Weve got a lot more. Stay with us. The competition between alphabet and uber seems to be mounting. David drummond, google executive on ubers board is stepping down. Drummond had a Critical Role in incestment arm gv, but with googles increasing involvement in the auto market there, have been concerns over conflicts of interest between the two companies. This gets into an area im fascinated which is simply the raise of allton mouse vehicles, what its going to mean, how long its going to take is a subject of great debate. Your we not talking about the rise in fatalities and how this would be an answer. I was a waway when ford camet with what i thought was the stunning announcement. I went to see them in silicon valley. The dating facer is the pulsing of the laser, so you can make it understand what it seems. When i saw the spike up in fatalities by the way, mr. Fish speaking of fatalities. Jay fishman. Hes one of the great people. Was. He did a remarkable job. He brought it to my attention and said are you aware theres spike in fatalities. Remember he used to watch his data every day . He was one of the great executives. And it was texting. But now, i think the hope could be the question will be what the Business Model looks like and google of course has been a head to some extent in terms of develop of allton mouse vehicle. What will uber look like, will the service be a Subscription Service . It is easy to million the two of them competing in that arena, along with apple, potentially, and ford and gm and everybody else. Dellphis that was another deal. That was like weve got to remember things. We have more of an insurantitutl memory for things. Its hard. Ive got a lot of Digital Space left. I ordered the extra meg from verizon. Up next weve got stop trading with jim. Whether its bringing cuttingedge wifi to 35,000 fans. Or keeping a Hotels Guests connected. Businesses count on communication, and communication counts on centurylink. Your Business Needs Better Technology to drive better performance. So you need it to be reliable and fast. Really fast. Introducing the comcast business Summer Savings event. Fast Internet Speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. Get some of our most advanced products at a great price with over 500 in savings. Call today and ask how to get these savings plus a 250 prepaid card. Comcast business. Built for business. All right. Its time for stop trading. One of my long Time Favorites is ulta. The stocks got up to a 42 before they reported and the stocks went down every day. A lot of people said what was the matter . They had great numbers, and this was the curse of high multiples. If you dont blow the numbers away, if you just do the number, thats in the enough. Youre seeing ulta come down. The way the game is played with the high mutual funds, they did not make it so you can say, i cannot believe it. They just did a good job. Dont freak out but understand good numbers so the 40 multiple is justified here . You cant have a 40 multiple without making so people raise numbers dramatically and they did not have to raise numbers dramatically. So, no, you cant. This is just one of the things that happens in that group. And now as the stock goes down, the multiple gets reasonable accidereasonable, obviously, but people ship back to macys, and nordstrom, now you can say jcpenny should be doing better, im just saying you go back to low multiple. Theres some aversion to the mean i hate to use that term because its so technical. But people are buying lower and selling multiple. That just is what happens. A company have felt why dont more police use it, taser. I think tasers an important story in terms of whats going on in the country. Rick smith, hes been ceo for a while. And hes built a whole software echosystechoo system. Ill see you back here tomorrow morning. I like walmart, theyre selling because they own too much. And i want to know about wells fargo and buffet. Coming up, more on apple and that eu tax penalty, including michael noonan. Squawk on the street will be right back. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Good morning and welcome back to squawk on the street, im david faber, along with sara eisen, and Carl Quintanilla has the day off. Lets get a look at the markets. Youll see that we are well, not doing much of anything. Nasdaq is up a bit, crude is also up, as well. Our big story of the morning though apple being ordered by the eu to repay 14. 5 billion in taxes to ireland. That stock as you see is down really not that much. Were going to have a lot more on it in just a minute, plus well have an interview with michael noonan, whos he will appeal the eus ruling, but certainly well want to hear more from him. Well also have Economic Data crossing the tape right now, Rick Santelli is at the cme group with that. An august red from the conference report on consumer conference and its big. Its triple digit big. 107. 1, the best read since last year. Its a solid read. There must be somebody filling out surveys. Sara, back to you. Yep, nearrecord highs, rick thank you. Lets get back to the huge news of the morning, out of europe, regulators saying ireland has given apple illegal tax benefits worth up to 14. 5 billion gl 14. 5 billion, and apple is ordered to pay it back. Jul julia chatterley covering it in europe. Reporter as you quite right here point out, apple ordered to pay 14. 5 billion to the eye ra Irish Government. They want to protect their relationship with apple and other u. S. Firms and they said they believe its going to be overturn overturned, that its more about the government collecting the taxes than it is about how much they pay. The inference being this is once again the European Commission brussels overstepping the boundaries, thats the message, too, from the u. S. Treasury this morning, as well, theyre saying this will Impact Investment in europe. Thats the question i pose to the Competition Commissioner here. I said whats the message to u. S. Firms trying to invest in europe, listen in. Were sending a message to any taxpayer in europe. Being multinational, standalone companies, big or small, european or Foreign Companies this is a wonderful place to do business and to invest bent y, have to play by the rules and not to rely on unfair tax benefits. Reporter all the concern was people saying this is going to have a detrimental impact on investments. If we look in terms of apple, 14. 5 billion is nom chiropractnothing compared to the 215 billion sitting here overseas. Jpmorgan saying a bigger price would have no impact on the bottom line share price. Were shaping up for one heck of a legal battle between the Irish Government, the European Commission and apple that could have far broader spillover effects for u. S. Firms in europe. Not to mention the potential diplomatic disputes that could cousin. The u. Could have. The u. S. Treasury, already saying theyre disappointed in the decision. Do you get a sense there was some political ramifications of the decision when commissioner vesteard delivered that eye eyepopping number . Reporter there were considerations of what it would be. Theyve said this is about increasing competition in europe and leveling the playing field. The message from the treasury has been look we believe were being penalized. If us abobrussels have been mor particularly, this is a very bold message and could have implications for the trade agreements negotiatied here. And after just meeting in july, julia, thank you, reporting from brussels. Apple held a call this morning with reporters, jon fortt was on that and what about the executives say . What was the tone of this call . Funny you mentioned the tone, sarah. Very strong words for the European Commissioner. Basically, apple said, the cfo said that numbers that were used to compute what the supposed tax rate was, that apple paid were madeup numbers, that European Commission was way out of bounds. Let me read from a Statement Apple put out, the European Commission launched an effort to rewrite apples history, ignore the irish tax laws and ignore the tax process. Ill skip down. The commissions move is unprecedented and has serious widereaching implications, effectively proposing to replace irish tax laws with a law of what the commission thinks the laws should have been. Apple goes on to say, it would create up certainty and part of what i asked on the call was what is apple looking for, as far as redress, as far as what options does apple have, not just legal, but in the way its communicating and the executives said pretty clearly were looking for all of europe to take notice here because this is a sovereignty issue, and its a certainty issue and going to have a lot to do with how we invest. Apple saying theyre the largest taxpayer in the u. S. And in the world and given the fact apple is by many measures the Biggest Company in the world and certainly profits are huge that perhaps isnt a surprise. Heres part of what the issue is, as ive looked at it, a lot of people looking at, as julia mentioned, this enormous pile of cash, over 200 billion sitting in overseas accounts. In the u. S. , when apple gets asked about paying taxes on that amount, on repatriot and apple says 40 thats a really high amount to bring back, you wouldnt want to be taxed that money on money trying to withdraw over sea when is it gets asked about stayipaying ta apple says the value isnt based on where the goods are sold, its based on where the intellectual prurpt operty is created, that was in cooper tti, to be repatrioted to the yes, a area, and theyre arguing to u. S. Lawmakers bring down that tax rate to repatriot. Everybody arguing over this big pile of cash, and from all appearances, apple has a very strong argument theyre obeying the letter of the law. These Companies Use transfer pricing to shift intellectual prices and direct the income associated with that intellectual property, taxable income thatll go to the u. S. , where theyre taxed at a very low rate, ireland being the key one for them. And these laws were written before the digital area we live in, before we had these software firms. Take a look at whats happening in silicon valley, look at the tax rate apple pays versus facebook or google, which arent creating physical goods. Theres vast difference the communities are getting and theyre arguing what about the Police Departments and Fire Departments and schools. So not only on an international, but local basis, theres this big challenge of how do we deal with a Digital Company and Companies Operating how they were. Jon we will to bring in jean muenster, a cnn analyst, has been a longtime bowl on the stock, good morning, jean. Good morning. So you say investors are unlikely to punish apple for this tax ruling. Explain that even with a number that was a record amount and worse than many of the wall street sort of worsecase scenario wh scenario whispers here. As you said, its an eyepopping outrageously high number. To the magnitude we dont hear before, but the reason why its just simple math and the math is that this is worth about, if they get penalized 14. 5 billion, which is unsure theyll pay that but assuming you pay it its going to be about 2 1 2, almost 3 per share in crash. At the end of the day, the numbers are pretty small. Probably the bigger concern on investors minds is what this means for the relationship. I was just going to go there. What about the political implications the fact apple is a poster child for a big Multinational Company both here in the u. S. And europe, that gets away with lower tax rates and not to mention its going to have potentially years of legal battles with the European Union. And the European Union should be careful about how they approach this because they want invest this. From u. S. Companies so theres some precedence thats going to be set by this, that goes without saying. At the end of the day from apples perfective, theyre trying to create products people are going to want to buy and if they keep doing that their relationship with the consumers is going to be strong, which is paramount in investors minds. The regulatory quagmire, you want to avoid what microsoft ran into in the 90s where one issue balloons into another issue, and you in effect, make eny ins out out of a powerful regulator. Are you factors in the possibility of that and how is apple doing with its rhetoric, kind of marshaling some allies to its side but perhaps avoiding that potential extreme outcome . That outcome was particularly painful for microsoft because had to do with how they were bundling different products and some antitrust things around that and some of the things google is going through in terms of how theyre displaying search results. In apples case, its a little bit different because they operate from a technology more of a technology silo, so for them its about continuing to make the phone be successful, and so that was a huge problem for microsoft, potentially could be a problem for google down the road. In apples case, given the nature of what they do, its not as sensitive to some of that regulation pressure as some of those other companies. No matter how it got this way, ireland is a large center for actual tech business, so in other words, maybe they domiciled there initially because of favor favorable tax treatment, is that something thats going to potentially change, in other words does this takeaway one of the attractions for the ireland tax industry . I definitely think it could and i think thats why theyre pushing so hard is to keep this together, at the end of the day, im sure theyre very talented in ireland, but these companies can find talent anywhere in the world, so i think that its important for ireland to keep this together for local employment. I would just point out, apple would argue theyve been there since 1980 and had nothing to do with the tax issues. They went there for technology when they had a few dozen people. But gene, there have been issues that apple has run into in europe in the past when it came to itunes and those seem to have fizzled out but the way europe handles these regulatory and antitrust competition issues has more to do with how competitors are affected than consumers benefit. Even though apple as you said operates in this sort of silo, theyre a virtually integrated company, isnt there a danger in stores and perhaps Even Services made specifically for apple products by apple that competitors could argue, were not being let into this market for iphone services because apple is locking us out. If theres antagonistic relationship they also find ways to have problems. 245ithey would, maybe in thee of an app developer who wants to have their app sold in an app store and a business that wants to be indexed on google. Apple havent had in terms of a showing and they just want to sell apps just kind of across the board. If there was a precedence, that apple was using their influence in letting some Companies Win and lose, i think that would be a problem for them and if that ends up being the case that would be a problem. As it stands, its a little bit different than maybe some of the other Companies Like microsoft and google would approach it. There are aspects where a competitor could say theyre not being fairly treated but apple does a pretty good job of keeping a level playing field. Before we let you go we have to ask you about the next event, crit cryptic invitations are already send out. What can they expect ahead of wednesdays event, with the shares ahead of it in the last few months . I think as far as the announcement, its pretty well flushed out, kind of the big feature is going to be this better camera, one of the importance of the better cameras, this should help App Developers like pokemon and that i think is going to be a step forward for how people use the phone, but more importantly and this isnt very exciting but is this large base of some 275 million people, that have phones 2 years old or older. The streets looking for about t 230 million phones so this large wave should give comfort that growth will return to the iphone over the next few quarters. Gene muenster, well leave it there. Thank you, and well see you in the next hour. Coming up when we return were going to have a lot more on apple including an interview with michael noonan, who will join us shortly. Stay with us. With this degree of intelligence. Its a supercomputer. With this grade of protection. Its a fortress. And with this standard of luxury. Its an oasis. Introducing the completely redesigned eclass. Its everything you need it to be. And more. Lease the e300 for 549 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Welcome back to squawk on the street. On the heels of a bloomberg report, according to the merger, both shares are moving higher after a trading halt in the session, back over to you guys. Thank you, dom. Markets down southerly, near the flat line, on yesterdays volumes, the dow is on trap to wrap august with six months worth of gains since 2012. We have chief global manager at charles schwabb. David, yesterdays rally was the general kind of calm in the markets in your mind, the way for the markets to say were okay with the rate increase finally . You look first of all, this week, you dont expect to get much action, in fact, its very quiet here this morning. But more importantly, the economy is generally looking very good. I think the message really from the fed is the top line is about the rate increase, but the underlying message is the economy looks very good. Theyre more than satisfied with the unemployment rate, they dont worry too much about inflation, they look around Business Capital spending could be a lot more robust than it is, produ produ productivity, housing looks fantastic, and given the numbers that came out yesterday, i think everybody is feeling fairly comfortable, and this kind of level in the market is no surprise. I think its because the economy is feeling reasonably good. Jeff, along those lines weve seen within a relatively calm market, which yesterday granted low activity, but maybe the default is to go up when something happens like yesterday. There is sort of industrial, financials, technology, and those bondlike sectors on the wane wane. Is that something that you think can continue . Im worried about the volatility. The markets have moved up but weve seen analysts expectat n expectations over the next 12 months to move up, as well, very different in the prior year and half when they were headed lower. The gap between analysts expectations of earnsinings ove the next 12 months and the last 12 have been the widest since 2009. Expectations may be a little bit too high going into september and october unless earnings deliver mike and im a little bit worried were not going to see as much growth on the bottom line. Jeff wouldnt that be the logical set up if were coming out of an earnings reception, in other words, wouldnt you see that gap widen out . Im not overly concerned theres gap there, im concerned its the widest gap since 09. Its a little too earn lists a analysts are looking for 18 to 20 globally, therefore im worried, estimates are a little bit too high, and mike think about september and october, weve got a fed meeting, a boj meeting, weve got some questionable data on the pmis, the jobs report. Youll got poling on the italian referendum, and a u. S. Election coming up, maybe making for a more volatile time period. I would add one more factor because its on all of our minds, this apple eu ruling. This isnt the first time weve seen a government go for a retroactive payment. Does that introduce some sort of new risk for investors to comp plate . We saw a retroactive rule on inversio inversions, pop liulism is in t air, is this something investors have to deal with . Theres big political component in just about everything, but certainly a big political component in the market, whether its taxation, or Central Banks do, in the background, going back to the fed meeting for a moment, we always spend the entire two days arguing about the way theyve been running their banks the last 50 years is going to work. And the resounding answer is definitely no. Buried are some things commits are probably scratching their huds abo heads about. Mr. Sims, said you cant talk about monetary and fiscal policy, theyre married, theyre together, thats it and thats the way it is. And by the way, fiscal policy might set the price level. Thats what his phrase is ftpl, the physical theory of the prize level, and any of those economists who remember milton friedman, probably 99 poi. 9 , ts religious, or sacreligious, and its going to make more volatility, and take a while to figure it out, but at least in the United States, were sitting on a whole lot better economy than europe, and as yia and chi in that list. Thank you very much, david blitzer, and david. And happy birthday. No sweet deal coming as you can see, these two stops moving in opposite directions, monday disease mondel mondelez, abandoning its deal with hershey. Youre watching squawk on the street with the dow down 58 points. So many things can go wrong. Its my worst nightmare. Every second that power is out, my citys at risk. Siemens digital grid manages and reroutes power, so service can be restored within seconds. Priority number one is keeping those lights on. It takes ingenuity to defeat the monsters that live in the dark. Snack maker mondelez walking away from its take over bid from hershey. Ending talks for a last few months of potential acquisition, after a two month Long Campaign saying it made the call after quote taking into account recent shareholder developments at hershey. We determined theres no actionable path forward towards an agreement, and would have created the Largest Candy maker of hershey, down almost 11 , mondelez up 4 and a big part of the strategic rational, guys was for mondelez, which is a Big International company, sells a lot in europe and emergenting marke ameri markets, but the back story, that was ann ilusive statement. That was certainly a complicating process here, and the trusts, 80 plus vote and 34 economic interest, has always been the key at hershey. Its not just getting through management and the board but actually dealing with the trust and that seems to be where there was a good deal of miscommunication perhaps or lack of communication in speaking to people familiar with the discussions. It just seems that mondelez went in with one thought and perhaps was able to negotiate to a certain extent, with the ceo of hershey, but really not able to get anything done with the trust, particularly given the tumult of the members of that trust in terms of one stepping off. One wondering what they were thinking of to be frank. They had months of conversations between bilbry and rosenfeld and never talked about price, when was rejected soundly by the hershey board. They said we may go to 115, bilbry said it would take 125 to start a negotiation and they said its not going to happen. There never was a structure they could value here. And the reaction whats next for both of those companies in an industry and space that is challenged by changes in consumer tastes going towards more healthy, changing of ingredients. The market has judged mondelez at better adapting and what about hersheys . If you a trustee of the Hershey Trust, youve got to be thinking about the ability of this company to thrive, do you need to diversify . This would have given them that opportunity, they didnt take it clearly, what is hersheys futuring looks like . They were never considered a like like a target because given all this. They have been slower than mondelez to see they can squeeze more out of margins. Theyre going to be under the microscope when it comes to accelerating value creation. Morgan stanley down grated hersheys stock from 102, from 110. And its not just theyre staying the same size. And no reeses oreo s in the future. Back to that big news on apple, joining us from dubland is irelands finance minister, michael noonan. Nice to have you with us on cnbc this morning. Thank you very much indeed. Youre welcome. By referencing a report out in may of 2013 from our u. S. Senates permanent subcommittee on investigations, this was in the news at the time, they were looking at apple specifically among a number of other companies in terms of the taxes paid and they said at the time, that apple and im quoting here, has quietly negotiated with the government an income tax rate of less than 2 under the irish statutory rate of 12 , as well as the other tax rates of other countries and the United States. Thatt that appears to be where they are focused. Was that assertion correct and why are you disputing the eus desire to get that money back . Well, we always challenged that particular incertion. Apple paid that money, and they say the tax should apply where the Economic Activity occurs, which generates the profit. Now, on my the back of my apple iphone, it says, designed in california, manufactured in china. So i can see how the irish authorities would have a Tax Liability for Economic Activity, that takes place in other jurisdictions. And this judgidea that was f introduced in may of 2013 by our own senate in the u. S. That apple quietly negotiated a special deal with the Irish Government, that is not true . The irish revenue dont do deals. They issue opinions to collarifiy, a tax situation for individual companies. But we never new deals. They have to apply the tax law, which is passed by parliament, and they have to do so without fear or favor across all companies. So i know theres general tendency that apple isnt paying enough tax, but our point is, that if they owe tax, they do not owe it to the irish authorities. They may owe it elsewhere, but not to the authorities. The eu owe, 14. 5 to ireland. You dont want to, why not . Well, first of all, we stand by the legitimacy of what was done in the past. Nobody did a deal with apple and we stand over that. Secondly, we think the commission is getting involved in what is the competence of sovereign governments in europe. The Europe Treaties say that individual countries are responsible for taxation policy. And this is an approach to the back door, to try and influence tax pal see, through competition law, and we dont agree with th that, but more importantly, we think youre in breach of International Tax practice, where Tax Liability follows economic active, and the Economic Activity on which theyre raising the tax assessment in ireland, did not occur in ireland. So do you see this minister as a power play by brussels . I think brussels has changed its position in recent years and has pursued a number of countries and companies in the smaller countries like starbucks and fiat and so on, in luxemburg and holland and others, i think theyve overreaching on their competence and even in the commissioners statement today, she said that if other countries feel theyre entitled to some of this tax, they should lineup and go after it. And that is sounds to me like somebody is not sure thatibility is irelands liability want to. I just wonder with this overreach, if youre worried or you expect this to fuel antieu and antieuro sentiment . A little over two years ago, britain voted to leave the eu and part of the argument was they didnt want to be bossed around by unelected brureaucrat in brussels and i wonder if you support this decision . Theres Legal Process in place, now that commission has reached a finding, we have the right to appeal it and we have a meeting of our government tomorrow, and i will advise the government to appeal this decision. And i expect the government to appeal it, and then it goes to adjudication of the european courts and the european courts will do a full assessment of what the Competition Commission has decided, and what the reasons are behind it. And of course, when that reaches a conclusion, well abide by the decisi decision. We are going to challenge that by way of appeal to the european courts. Minister noonan, this is not the first time ireland has come under focus for its tax practices. Apple has quite a few employees in the country, but weve been focused in this country on companies that invert, they move their tax status, their jurisducti jurisdiction where they have a little more than a storefront, and oftentimes has been ireland which they have an overall corpora corporate low tax rate. Is that fair . Apple employs about 6,000 people in ireland, heading towards 6,000, so they have a very strong economic presence in the country. On the question of inversion, thats a matter for u. S. Tax law. We dont invite u. S. Companies to come to ireland on the basis of inversion, we dont welcome them when they come, but under international law, were not in the position to prevent them. But if the u. S. Authorities beneficiary to do something about inversion, well, then its a matter for the u. S. Authorities to change the law. And just as a matter of where this money would go if the eu does get its way, we understand that rules in the European Union is it would have to go down to pay your debt, and ireland currently has a debt that is nearly 100 of its economy, after the bank bailouts, the National Debt is 200 billion. How are you going to explain to the irish taxpayers and your opposition that you cant take that money to takedown tpay dow . The irish debt this year will be under 80 adp, and the wind hat will regard this as a windfall amount of money and they would require in the first instance to reduce the debt, but they also, as long as its not used for ongoing expenditure, there might be some scope to use it eventually for capital investment, but that would be after the appeal process has gone through, and that is a number of years down the line. Minister noonan, we appreciate you joining us, thank you. Thank you very much indeed. Michael noonan is the irish finance minister. Clearly, hes going to face some political questions at home, as to why they would say no to one of the biggest potential government windfalls ever for a european government, a government that even if his debt is nearly 80 of gdp, its still high. Yep. But clearly they want to theyre playing a longer game. Right, and trying to remain and it would also under mind the authority of their own tax system. Interestingly he says that Economic Activity that led to these profits in his view does not belong in ireland, or is not attributable to ireland. It leaves as jon fortt was saying, this big cloud over apple. I keep referencing these documents from 2013, but in it apples created three offshore corporations and this was senator levin, no longer in the senate,entities that have no tax residents not in ireland, where theyre incorporated, or in the United States where the apple expects are. Much of this would point to Corporate Tax reform, which has been something of an issue in the president ial campaign, but its unclear whether its going to have a life in the next congress. It is interesting the u. S. Treasury is defending apple today maybe thats a start of something. I think thats dont pick on one of our companies. Exactly. We want their money. We dont you want to have it. I have a feeling this isnt going away. Lets get a news update with courtney reagan. Heres your cnbc news update. Secretary of state john Kerry Holding meetings with a number of indian ministers to improve security and economic ties between the two countries. The talks are being held against the back drop of rising tensions in the disputed region of cashmere between india and pakistan. A suicide bomber crashed a car through the entrance of the Chinese Embassy detonating the ok attacker and wounding employees. No one claimed responsibility. And fracois holland said trade talks are unbalanced and cant be completed this year. Earlier they said france wanted to hold talks on the transatlantic traede and investment partnership. And chipolte announced free drinks for students for the entire month, trying to get that traffic back. Thats the cnbc news update for this hour. Squawk on the street will be right back after this break. 3,721 pages, that encompasses Hillary Clintons entire state Department Schedule from early 2009 until the middle of 2011, and we read every single paintakisteaking detaild what he found, a treasure chest, eamon. So much attention being paid to Hillary Clintons tenure at the state department, obviously with the president ial campaign in full swing, a lot focused on the overlap of the Clinton Foundation and the state department. We lookedity the at these documd we see a observe of meetings, including a bunch of meetings that Hillary Clinton had with billionaires. Take a look at some of the billionaires who had meeting in that time frame with Hillary Clinton. Bill and Melinda Gates dropped by in october of 2009, sandy weill of citigroup dropped by, and george soros, including some of the meetings from the Clinton Foundation, also dropping by were warren and suzy buffet, and ward zucker man shows up a number of times on Hillary Clintons personal schedule. You just get a sense also of what a grueling job it is to be secretary of state, and you combine that with the fact Hillary Clinton is in all of these different time zones commuting back and forth between her home in washington and her home that she shares with bill clinton in new york and bill clintons own travels, its amazing they spend any time at all. Each day they say where they spent the evening, the socalled remain overnight and there are some exotic locals, a glob trotting former president and globetrotting secretary of state. How long did it take to you read those 3,000 pages . We got them thursday evening, so read them friday through the weekend and yesterday. I didnt the total number of hours. We were going through every page and every meeting just looking for whats interesting. And shes running life inside the state department, she once did a ribboncutting ceremony in the showers to dedicate new showers for state Department Employees who wanted to run and bike to work. So you get the high and lowlevel stuff in the basement, as well. All of that is posted on cnbc. If you want to see every meeting that Hillary Clinton had, all of those documents are up and available for most to look at, at cnbc. Com. Thank you very much, good reading. Yep. Eamon jabbers in washington. Lets get a quick check on the markets. Were down on the averages, and weve got a lot more ahead so stay with us. Rn, the orange mony retirement rabbit from voya. Vern from voya . Yep, vern from voya. Why are you orange . Thats a little weird. Really . Thats the weird part in this scenario . Look, orange money represents the money you put away for retirement. Save a little here and there, and over time, your money could multiply. See . Ah, ok. So, why are you orange . Funny. See how voya can help you get organized at voya. Com. 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. What does a stock market bare supposed to buy . Weve got seven stocks that will do well even if the market hits at trading nation at cnbc. Com. More squawk on the street coming up. Experience breathtaking lexus performance in streetlegal form. Get great offers at the lexus golden opportunity sales event. Get up to 5,000 customer cash on select 2016 models. Ends september 5th. See your lexus dealer. The dow down about 58 points. Lets send it to Rick Santelli at the sara. Id like to welcome my guest. Bob. Good morning. Good morning, rick. Lets start on the with the two points. On the Balance Sheet side, about a week ago, i had a very qualified pointed out if you want to get a loan to buy a house, you get a mortgage. You want a loan to buy a security, you do it in the repo market. Upon questioning, he said its nearly like it used to be, and maybe the fed should sell a few of those securities into the market plaps. Youve said this many times. Why dont you elaborate, bob . Well, for the Federal Reserve to hold 4 trillion in their fort polio really weighs the fed down, it limits their flexibili flexibility, that is options you know, there are no private trades in these i think it is time to lower that portfolio, off to the market. I mean, dont renew the sales. When she opened up her speech, basically it sounded like everything is rosy. Everything is improving, but, you know, having said youll that, were still 25 to 50 on overnight rates and the Balance Sheet is the way it is. These crisis times that required special policies in many ways have come and gone, but central basicing is redefined. Do you agree with that . Not permanent financing either for the government or for the Mortgage Market or whoever needs additional financing. Thats not the Federal Reserves job. You pointed out in the june meeting we had in july meeting eight, but it doesnt matter Federal Reserve boards get to make the request. As you pointed out only the board of governors get to approve it. How many of the board of governors voted thumbs up on a hike. Big surprise, all the governors said no but eight i think is almost unprecedented that always many a shot across the bow off the Federal Reserve president s, who together with their boards asked for the increase in the Federal Reserve discount rate. That was really a portent of the meeting that was coming the next day, and on july 26th and july 27th, and then obviously not action was taken. But on the other hand i think that shows how much of a powerful force inside the Federal Reserve is already asking for increases in the rate. Thank you, bob. We are out of time. Thank you again, sara, back to you. Thank you, rick. With the fed in focus, the markets are drifting lower here, Goldman Sachs is leading the dow as financials remain a relatively strong performing group. And today well talk more about that on the other side of the break. Troad out there. No one surface. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all. The mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 369 a month at your local mercedesbenz dealer. Your Business Needs Better Technology to drive better performance. So you need it to be reliable and fast. Really fast. Introducing the comcast business Summer Savings event. Fast Internet Speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. Get some of our most advanced products at a great price with over 500 in savings. Call today and ask how to get these savings plus a 250 prepaid card. Comcast business. Built for business. The dow drifts lower, lets go to jon fortt. Whats coming up . Thats right. European regulators say apple owes ireland money. Ireland says they dont. Thats that and more coming up on squawk alley. All it dark data. 80 is invisible to most businesses. The ibm cloud has tools that can help see dark data and put it to work. Hello, my name is watson. Working with watson in the ibm cloud, we can help an Energy Company predict pipeline corrosion. And help a startup to use social data to predict market trends. Now businesses can get more out of their data. Thats what the ibm cloud is built for. What powers the Digital World . More communication. Ata. Like centurylinks Broadband Network that gives 35,000 fans a cutting edge game experience. Or the network that keeps a leading hotel chains guests connected at work, and at play. Or the it platform that powers millions of ecards every day for one of the largest greeting card companies. Businesses count on communication, and communication counts on centurylink. Good morning, it is 8 00 a. M. At apple headquarters, 11 00 here on squowall street, squawk alley is live. Good tuesday morning. Welcome to squawk alley. Aim kayla