Transcripts For CNBC Squawk On The Street 20240622

Boosts guidance shares higher. Disney, cbs and fox slapped with downgrades at wells fargo and sprint ditches contracts. Youll hear what the ceo had to say about that. Walmart did miss the q 2 results. The retail giant also lowering the fullyear guidance. Home depot raising their full year outlook. Revenues beat consensus with total comps up 4. 2. A year ago up 6. 4. People said today its hard for walmart to argue the consumer is weak when depot is killing it. Home depot is remarkable. They dont put up new stores. The technology, salesforce. Com, the merchandising, the staff, the energy, the low cost, the fast in and out, contractors coming back, the amount of money being spent on a call. The Conference Call will explain the areas theyre doing better. This is a juggernaut. Home depot is probably the best right now in terms of this kind of big box. Walmart. Its not the worse we have. You went down there. I thought the moment was selfafacing about what they have to do. I watched that interview. It was painful. It was painful because that man, a young fellow, basically had to say we dont have the horses. Well get the horses. They do have the yield. Those throwing it away now are saying i dont want to wait. But everything that he told you was indicative of the fact that the stock had to go down. They underpaid their people going to spend a billion dollars. He gave you a heads up. Im not saying he told you to sell the stock but he told you its a long term. And hes been adamant for those trying to get ahead of it that its a longterm. Hes selfafaced when you speak to him. I want to hear what they have to say about china and merchandise. But home depot, theyre taking sales from mom and pop and sears. Every average ticket up 1. 7. Transactions up 2. 6. Experience better than just about any other retailer. On the walmart front, if it was about the wage hike, that might have made sense, but theyre talking about pharmacy and slik damage. Whole new reasons to not like us. They put out a release and basically what it says is head winds in u. S. Business, pharmacy reimbursement rates i didnt know that. Im not asking you to use the Procter Gamble packaging for razors but come on. I mean, shrinkage . Give me a break. I think i heard woppner this morning say well be down. Give the guy another, im going to use a term, give him another year. It may take a year. This is a whole new set of things that are wrong. And by the way, when you say shrinkage, what you have to say is whos running the stores. When we look at the costco manager, its the same one thats there since the store opened. I remember the ceo before this fellow, the new guy, very good, and i once told frank i didnt like the flats i bought for my tomato plants. He says receiseeds. The level of the tale. I then send him a little note about a guy who helped me get tomato baskets. Then its to the store. Im talking about a level of precision. Home depot is drone like in terms of where they strike. Theyre remarkable. And to go up against them, just must be such a bummer every day. Does that mean you have hopes for lowes tomorrow . I do. We have Housing Starts today. You could Craft Stories about housing. Its clear and one of the things home depot has said, one day were going to hear people come in and start investing in their homes. Thats whats happened. Now were going to hear about people spending above gdp for their homes. The gasoline money is going into their home. You want to fix your home up when its gaining value. You want to. You go to home depot. I throw people business, but home depot, when i walk into home depot, im king. One point on the macro. Adding hours and adding money to your average hour at walmart may be bad news for the stock but for those on the marginal part of the labor force, if youre young or semi retired, thats good news. It is, and they have to raise it a little bit more. This is a shared economy where people are desperate for shifts. They leave walmart and go ride a bike for a company. Everyone is trying to pick up a little extra income. I do find that the great retailers are the ones where they pay the people the most. People want to see the same person when they go to their retailer. I go to my costco and this is before i had the tv show and stuff. You know . Id be like hey, they know you. Im not saying its cheers. Its not cheers. I mean, here we go. We know what you like to drink. Its not like that. Its not that situation, but there is kind of a hey, how are you doing . Can i help you . Hard to do when you get to that size but it does count in china shares down 6 . In concerns people have tried to put the last few weeks into perspective. We had the big falls in china. The bulls came at it, and then the bears came at it. The bulls managed to approach the net as some have said. I think that someone this morning, jim cramer on twitter was saying when are we done . Enough with china. Never. China is apple. Ive got david from sky works on tonight. There was an article that said 89 of their products were from china. This china tech trade which is avago and korvo and sky works. It causes tech to go down and then people put their money in domestic and that goes to home depot because home depot does not have stores over there. Home depot goes up more than it should. Everything is exaggerated. Next thing you know home depot is up 3, walmart is down 2. 5. Thats been going on, and im not going to say you can stop it. Tjx has no business in china. Home goods sells well. You look at who has business in china and who doesnt, you say im staying home and im not going to tech. That has been the pattern. You mentioned Housing Starts. 1. 21 million rates. Were to back. Thats year an eightyear high. June up. And oftentimes in starts we say its multifamily. It was Single Family here. The highest since 07. Look. The rent is absurd now. The key thing that happened was that this spring the banks started making it so you got a loan if you needed it. Im not being facetious. The way you got a housing loan was to be able to say ive got x in the bank, i have this home thats worth x, and you add them together and i need a loan for it. And its a loan that is equal to what happens if i lose my house and i have the money. Then they loosened up this spring to where you dont have to put money down and they have to take a little bit of a risk. Well talk to a bank today. They have to start taking some risks in order to make a little more money. Its wells fargo and jpmorgan and its working. Its too expensive to rent. Your home is going up in value. Youre not a fool to rent. Not everybody has enough money, but this is all part of loosening of the banks. Its no longer as hard to get a mortgage, particularly one for more than 500,000. Its not as hard. Its still difficult. And when you go to get a loan for a beach house, that was just a that would be like are you kidding me . A second home. And now its like well look at it. I went to a bank to look for a loan for a second home and they were like, you know, incredulous. I said well, i dont know, if faber were here, i would say this is my 15th home, but the fact is that banks now listen. And they dont just close the door and theyre not afraid of the regulators and thats really important. Something to watch as we get closer to the fed minutes tomorrow. Disney, cbs and fox being downgraded. The firm siting what it sees of shifting from content. Maintains an overweight on what theyre calling paid tv. That was an ouch. That was an ouch downgrade. Im sure bob iger not happy that he was lumped in with the other guys. Makes an investment in buzz feed. These guys are saying listen, theres a great line. It says we remain pretty happy wi with come cast. Thats what i said when i was 12, pretty happy. How about a smiley face . I do think in the end what theyre saying is the multiple is going to contract for people who make content and expand for distribution. This is negative for anybody with foreign sales. Pacific crest with a chart of ad sales at Networks Like discovery where youre heavily leveraged overseas in fa. Not a lot of live programming. Everything that can be streamed, i wish i hadnt streamed that true detective. That was a waste of my time. I want those hours back. Where do i get those hours back . Terrible. When we come back, sprint scrapping the twoyear contract and the ceo now in this war of wards with t mobiles john legere on twitter where just got worse in the past few minutes. Later on well talk with a former microsoft executive. Take another look at the futures. Dow is going for four straight. Weve not had five up days all yearlong. More squawk on the street in a minute. Td ameritrade, theyre always working. Yup, were constantly making thinkorswim better. Like a custom screener on your desktop, that updates to all your devices. And you can share it with one click. Wow. How do you find the time to do all this . Easy. We combined every birthday and holiday into one celebration. different holidays being shouted back to work, guys i love this times of year. For all the confidence you need. Td ameritrade. You got this. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Sprint announcing it has become the latest wireless carrier to do away with twoyear contracts. Customers lease their phones. Sprint ceo speaking out on squawk box about his ongoing twitter feud with john legere. Take a listen. Its not a marketing strategy. As i said, we keep it competitive. It keeps our employees excited. Hes been beating up on our employees were way too long. Thats over. Were back and winning customers. And were not going to let anybody continue to insult sprint. Sprint is in the path to recovery and we dont like it when somebody insults sprint and i guess somebody like john legere, we have to talk to him in a language he understands and a language he uses pretty well. Latest battle involves call conference. Marcelo tweeted about a study that says that theyve gone to last. Ledger takes issue with the numbers. Numbers going back and forth, and frankly i think were both marveling. These are major ceos and maybe everybody else should be more like them. I dont know. Twitter was made for this fight. But i do think that in the end, look, i was surprised sprint had as good a quarter as it did. These companies are on the move doing the right thing. This is a competitive industry, and these guys dont like each other. Sometimes when you dont like each other, it becomes dallas, philadelphia, it becomes baltimore, pittsburgh. Thats what these guys are. And thats okay. I think its okay. I think there are moments in rivalries where its okay and the gloves are off, and the teams dont like each other. It really is okay. I mean, look. As fans, we have been waiting for a game like this forever. I mean, these guys hate each other and its like, you know, lets there are no refs or horse collar tackles. No one goes and says 48,000 for what you said. Theyre letting these guys play. You want a good game. Youre paying for your phone, you want the best contract you can get. These guys are being allowed to play. I think the winner is the customer, and i like that. Do you have to choose stock wise between these . I dont know. I have to take t mobile because of the Balance Sheet, but marcelo came out swinging. I think john legere was not ready. John, dont get me wrong. Youre invited here and everywhere, but marcelo had so much game today. It was opening day. He went with his starters throughout. I think theres a sense hes upping his game to meet ledgers, clearly. Hes trying to get in the playoffs. The playoffs have been done by verizon. We may see sprint and t mobile in the playoffs. Verizon bought aol. This is allowing these two guys to really focus on killing each other. Its a death match. It has everything that you want. Its ultimate fight club, concussions. These guys, theyre proconcussions, lets have more concussions. It is a great battle to watch. No question about that and its nowhere near being done. When we come back, well count down to the opening bell. One more look at futures and well brick yng you up to speed walmart and the disnedowngrade when squawk on the street comes back. vo rush hour around re stts a6 30. M. On t no. But for me, it starts th the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passiois tpoweyours. Can a a subconscious. Mind . A knack for predicting the future. Reflexes fasr than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Lets get cramers mad dash. You keep coming back to the theme of china and tech. Yes. And ill tell you. This is part and parcel. Stand disk has downgraded hold to sell. This is a terrible chart. And san disk is flash. China when their market goes down, people buy less, sell tech. Its a tiresome trade because theres a lot of other places that actually use tech besides china but get used to when you see the china index down, theres an algorithm that says sell tech, the semis, san disk will be caught up in that, and i dont fight that. You cant fight it. Its just overwhelming and if china is down tomorrow, this will be down tomorrow. I know certain things feel so routine that you want to bet against it but you cant. On this note, a little more broadly, weve been through these episodes, cypress, greece. You get the fever and it breaks. Do you think this is a long lasting fever . Until we see the next quarter and learn, wait a second, it looks like china is still buying tech, itll just be one more one, and those who are fed up with it, i suggest that you go buy home depot or tjx. You go buy kroger. You want to get revenge, buy kroger. Dont try to get against the consensus. Its right. Theyre too powerful. Takes us to oil and conoco. Citi upgrades the big oils. Theyre talking about conoco. Conoco has been one were over and over again, people say is that dividend safe . Citi is saying its time to buy these. Now, one of the things thats happened is the oil stocks went down first. And i can show you numbers later about how much the oil stocks are down year over year. Some of them are down so much theyre basically disappearing. If youre a huge institution, you cant wait until you get to 38 oil and start buying conoco. This is an institutional call to start buying these big oils because theyre now discounting much lower oil prices. Individuals at home, dont feel reassured. Big institutions are going to have to start making decisions about whether to go in this group and theyre going to go for the majors before they go for the minors. Interesting. I remember you were watching exxon at 80 and broke it. That was crucial. Now, oil is a very complicated subject. Natural gas is going better. The Master Limited partnerships are doing better. The Oil Independents are not doing better. People are trying to figure out if the chevrons dividend is safe. Conoco on the call said their dividend is safe. This is a great yielder if you believe oil can stay above 35. Thats what i feel the next level of concern is going to surface. Well talk more about that in a little bit. The opening bell about five minutes away. My name is rene guerrero. Im a senior Field Technician for pg e here in san jose. Pg e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. Raising a family here in the city of san jose has been a wonderful experience. My oldest son now works for pg e. When i do get a chance, an opportunity to work with him, its always a pleasure. I love my job and i care about the work i do. I know how hard our crews work for our customers. I want them to know that they do have a safe and reliable system. Together, were building a better california. 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August, we know seasonally weak. Weve been through a lot. S p is down 1. 5 points for the month. Its hard to kill the market when Interest Rates are so low. I dont want to say the dollar is stabilized. Its a little bit too strong today. Also when we trade oil one more one in a given day but then we back up and say wait a second, home depot is not getting that Additional Capital just because people feel richer. The employment numbers are good. The Housing Starts are good. Weve got this dichotomy of u. S. Doing well. So thats part of the plus. International doing poorly. Thats the negative. And they balance out. I have copper today coming in on 49 off the peak. This is incredible. The old days, i remember i had the Waste Management people on. There was a time when they could make so much money off the copper thrown away, there used to be copper brokers at the landfills. Those days are over. Unbelievable. Just massive more limit down action in various markets around the world. China. But youre right about this country. In fact, usa today publishes a study that says of the 6. 6 million jobs created since the crisis, 44 pay more than 53,000 a year. More than the jobs that pay less than that. Only 27 paid 30,000. They were trying to get this middle skilled worker a job that pays more. Thats middle skilled. A lot of times i feel the president s labor secretary want you to go to cal tech. Id flunk out of there. Come on. Middle skill jobs are fine. Lets get to the opening bell and a look at the s p at the bottom of your screen. The Tortoise North American Pipeline Fund celebrating the recent launch. Well keep our eye, walmart, the topic of discussion first and foremost. It doesnt happen a lot where you miss on earnings and revenue is ahead. Thats why i say, i dont know if you really want to sell it down here. I like that yield. Look, its not my favorite. By any means. Tjx, home depot are all better but the traffic was up. You have to start somewhere but they have to start spending and i think when you go to a walmart, someone is attacking me on twitter. Im a shopoholic. I go to walmart, and i went in and they didnt have anything less than size 36 pants where i went. I dont want to put on weight to go to walmart. You mentioned tjx a couple of times. Its the biggest gainer. Comps come in at 6. The estimate was three. Home goods was, numbers were off the charts. The ceo, she will never promote herself. Heres a fabulous retailer and shes not about coming on tv and not about saying how great she is. Shes just about doing the numbers. I have a fabulous home goods, and when you want to do the beach house, you go to way fair for the furniture and home goods for the plates. The stuff is so cheep. You dont need to steal it like the shrinkage issue. A lot of movers to the up side in retail. Raw stores, coach gets an upgrade over jeffreys. Not getting enough appreciation on their new lines. Raw stores ross stores is one of my favorites. They have bargains. Macys is hard because they dont have an outlet. Nordstrom rack is fun to shop at. They have great prices. Anyone who has got a discount strategy is killing it. Anyone killing to the home is killing it. Lets talk about dicks. They have a miserable golf business. Dicks is one of the companies that i think you have to pay close attention to. Thats nike and under armor and a stock that is on the move. Under armor and nike are still doing incredibly well. Every time i try to get kevin plank on the show, he is somewhere opening a new store, playing a new game. He is a ferocious competitor. But mark parker, you deny what hes doing at nike, hell run over you. They raised the full year, revenue was in line. The first thing i thought this morning was how is the golf business . Its still bad. If they were to close that, i know that would not be what they want to do. Youd see some beautiful numbers. The foot locker, i saw a downgrade today. I happen to like the this is health and wellness. Thats the way you have to look at it, health and wellness, and i think when you think of health and wellness, you think of under armor which has the connected fitness of 140 Million People and you think of nike because worldwide theyre a power house. Theres two companies. Theyre not like sprint and t mobile. Theyre not name callers. They play it at a little higher level. Not hard to do. Urban is struggling in the wake of all these strong retailers, though. The Conference Call. I hear them on the Conference Call. I love them because theyre philly guys. Its like going good and going good and im liking it. Congratulations and anthropology, the mix august not that good. Boom. I mean, boom. You know . Its like wow. And this after a few upgrades, i think in advance. Bought back a lot of stock. By the way, home depot has bought back about 40 of their stock from seven years. Urban outfitters is probably in there buying stock today. Im not a seller of theirings. All this is not necessarily a precursor. But i dont like the fact that when they just cant get it right. And when ross stores gets it right and theyre regarded as a bargain and when tjx gets it right, you have to respect the consumer whos saying im not paying full boat for anything where the prices are high. Home builders are following this home depot nosews, lennar. In the old days, it usually took a day to sink in that Housing Starts are better. This is the second straight month, because there was a revision. Theres a housing shortage in this country of tremendous proportions. What happened is we have this amazing household formation births. When you look at japan and say how did they shrink . They dont have births. We have households being formed. People cant stay with their parents forever and this is part of that and they want homes and these companies have great order books. Theyre doing 30 growth. No one was paying attention. This is a Leadership Group again. And the mashrgins are good and e costs are coming down. Hard to get a recession or a bear market if housing is in a dramatic up trend. The fed would have to do something nutty and not Pay Attention to china. A lot of people say i wish they would do this or that. This is not a broad recovery. Its a housing recovery. John stump is the ceo of wells fargo who first put it in my head how important homes can be in terms of Ripple Effect. Thats what youre seeing. Its based on the housing start number. Thank you china and all these other problems overseas were keeping our rates down. Looking at jpmorgan after the upgrade yesterday. Hows that doing . That group is being hurt by the compression of rates. That tech and tech are not going to be good here. And managing those two groups can overwhelm anything. Yeah. Star bucks, we never really talked about evenings at star bucks adding alcohol to some of their stores. Howard schultz has spent a tremendous amount of time trying to train people on very good Conference Calls about day pars. He looks at real estate and the clock and thinks how do i get more business in the evening because my places are deadweight loss at that hour. Thats why some people are saying this is not a needle mover. Howard has been looking at this for a long time. When he rolled out, when he did mobile, he rolled it out in portland and he realized he had a winner. This is like 70. Hes really trying to do this measured and by the way, when you serve alcohol, theres a whole set of new you have to be careful. Because theres a factor with alcohol that makes it so there can be trouble. But i say watch this. Hes going to have more people using the deadweight and thats important. Hes doing so much thats good whether it be all the things that would indicate that hes trying to get at cva and wall green together to hire people. John legere straight of aheads. I knew he was going to do the compton thing. These guys, its like im watching tv on twitter. It is one of the great internet names out of the twitter. I like wells fargo and theyre pretty happy with comcast. We stay focussed on tech and finance, we go wrong. Its that cut and dry. Walmart is subtracting almost as many points to the dow as depot is adding. Dow is down 23. Lets go to bob before i say it, mcmillen, a very nice man. Lets get to bob on the floor. Reporter good morning. Before i get to that, and youre right, an interesting dichotomy when home depot and walmart. In china, thats affecting whats going on in our commodities markets. Sixyear lows in a lot of the big commodity sectors. Copper down. Shanghai was weak and even the hon congre hong kong index wa. The morning started okay. But then things fell apart in the second half as people realized that it looked like the China Securities finance corporation, this is the company that buys the governments slush fund, essentially, that buys stock wasnt stepping in. And they told people on friday they would only step in in unusual volatility situations and they appear to be sticking to their guns. I think that caused a little bit of concern over in china. Other emerging markets were weak. We had the bomb in thailand, and thailand was down as well. Here in the u. S. , i just want to put up walmart and home depot. We only have one new low in the s p 500 at the open. Thats walmart. Home depot is a 52 week high. Theres a tale of two cities here. I saw lower guidance, and i think its important to point out why they lowered the guidance. Number one, they made a point theyre investing more in wages in training. They said they were going to do that. I think thats a good thing. Theyre investing in ecommerce. A good thing and the numbers are holding up pretty well. There is a Foreign Exchange impact. Thats not surprising. They have sales in china. The weaker pharmacy margins was a surprise. I think that was the one downside. Positives, u. S. Comps up 1. 35 b . They bought back a billion dollars in stock. And ecommerce sale, 16 . Thats pretty good. I think it was 17 last quarter. Still holding on pretty well. The big problem for walmart is the same with all the retailers, theres no Revenue Growth. Look at this. Were talking 2 or 3 Revenue Growth. Its just not doing very much here. 3g Revenue Growth, thats why you get a 15 times multiple. No real Revenue Growth. You compare that to home depot. Theyre growing close to 5 Revenue Growth a year. You get those kinds of growths every year, you get a higher multiple. Home depot has roughly 22 times forward estimates multiple, and theres your simple story on all of that. 22 times multiple versus 15 multiple. Theres home depot on the top line. Up 16 in the year. Walmart down 18 . Its a matter of Revenue Growth. Separately, i want to point out the continuing damage that there you go. Up 16 and down 18. I want to point out the damage continuing to be inflicted on the slower Global Growth story. Copper at a sixyear low. Aluminum down. Were seeing damage in all the usual material names. Alcoa, dow chemical, anything in the Material Group down once again on concerns about slowing in china. Right now the dow down 40 points. Back to you. Lets go over to the bond pits this morning with rick santelli. Reporter good morning. Is it really a story about slower Global Growth or a story of ongoing slowness in the global system and how Different Countries and different economies are dealing with it . What theyre doing directly, indirectly and what affect that is having. That is the story traders are talking about. What is china doing and why . How much of Oil Continues to be demand, a story we somewhat overlook. Just because countries are doing things like qe in various forms of stimulus or controlling the stock market, what is that doing for their economys . How much are the economies changed from two years ago . Thats the story and lets see how the markets represent that story and remember, the dax, i like that as my benchmark Global Equity tieing europe and the u. S. Heres a twoday of two years. You see how important these low 70s are. Especially at 74 on a closing basis. Twoday of tens, same pattern. Retesting yesterdays higher ground. But when you look at the consolidation on a month to date chart, you can see its coiling a bit with generally lower yields in smaller ranges. Twoday of bunds, very much the same pattern. Lets switch gears to Foreign Exchange. We talked about how the dollar is so euro centric. You see the year to date of the dollar index. Not bad. Higher than last year but not on the highs and its been thrashing around a bit. Now, include the chinese currency. Look at a trade weighted dollar index year to date and look how much stronger the dollar appears to be. Back to you. Well see you later. Oil prices remain a story. Bertha with us this morning. Reporter with the pull back in china, thats weighing on the commodity complex with the dollar being stronger this morning but the issue earn very is watching are we near the bottom. They think the Oil Production has come down enough so maybe were near a bottom. Thats what a lot of investors are hoping and looking at. But looking at brent saying a lot of the professional investors are cutting dhtheir longs thinking were going to go lower. When you look at commodities etfs, they were continuing to take inflows informal everybo. Everybody trying to find the bottom. Natural gas trends lower this morning but its held support levels. As were seeing on the east coast, one of the hottest weeks of the year and were expecting to see a lot of need for airconditioning and electricity production. It is still here under pressure today. Back to you. Thanks so much. When we come back, well talk to kel can kelly king. Dow being pulled lower by walmart. Supported by depot. Were down 46 points and back in a minute. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Bb t plans to burster expand its footprint. Bb t plans to acquire national pen bank shares for nearly 2 billion. Kel can kelly king is joining us this morning. How are you . This is a local bank for me, and what i think is most interesting is this is your third deal in a row. You said dont wait. Youre not going to do anymore deals but you obviously are a huge believer in the socalled branch, the bricks and mortar. Why does this strategy still work in a day and age where everybody tells me im going to be Digital Banking . Thats a great question. What weve found through all the research that weve studied is that while Digital Banking is clearly a transformative process thats going on, its really about a longterm paradigm shift in our industry. Over the past 50 years theres been changes from drive in banking to atms, so Online Banking to debit cards, and now to Digital Banking but all of that is about transactional banking. The others a pelkt aspect is relationships, trust. That has not changed in my career. So while we and everybody else are and will continue to invest heavily in Digital Banking, the real assets of the relationship is trust. When you talk to clients young and old, theyll tell you the number one and number two priority in picking a bank is a local branch. Kelly, do you think youll be able to maintain enough local to go against the nationals . The reason i point that out is this area has never been a booming growth area. But it has a lot of National Banks that have moved in and lost the local flavor. Is this about having a local flavor bank maintained among an area where the National Guys tend not to give to the local community. Tend to really have a footprint that is basically come and see us, were the big guys . Are you keeping a local flavor . Jim, we really are. We started with we call our Community Bank approach about 30 years ago. We have 27 Community Bank regions today. Well be adding one in allentown which will be our 28th. Each one of those regions is fairly rigidly compact. Each one has a president , a single leadership team. We expect 95 plus of the decision to be made locally. The reason is because we want to be a Community Bank. Were a large bank with a large back room. We can provide efficient wellpriced services to our client. We want to be close to the client, make good decisions responsive. Thats about being involved in the community. We dont try to acquire Companies Like National Penn, we dont try to come in and take it over and rub n it from north carolina. The people running the things there, is a local leadership team. We are fourregional president s in pennsylvania. All four are longterm pennsylvania bankers. We talked to you after the last deal. Has the regulatory view of m a in your space changed since that deal . Carl, i couldnt say necessarily so much since that deal but i think over the last year or so, i think the regulators have gotten comfortable with mergers. I know some of my peers disagree with that, but i think theyre comfortable with mergers as long as the acquiring institution has invested in system, the corporate governances approaches to be able to run a larger institution that is complex and meet all the rules and requirements. If youve not made those investments and youre not making the standards, theyre not going to approve it. We decided not to resist and make the right kinds of investments, have a positive attitude and be prepared to enter into transactions like this when they became available. Weve been very blessed and fortunate. We were prepared. The opportunities were there. There were great companies. And now National Penn. We feel very fortunate. Excellent. I know this strategy has been working for you. Youre taking advantage of a country that allows us and youre the only guys that realize it. Congratulations and thanks for coming on squawk on the street. What a story. Happening underneath the noise of big, large, multinationals. Bank of america, jpmorgan, wells fargo, everyone felt no more mergers except kelly king. Well get to stop trading with jim in a minute. One of the patterns of this period is whats hot in retail. We know hardware. Beauty so sa lon. Mentioned in jcpennys call. Pretty good call. Ulta salon. This is the one. Another nonpromotional ceo. Nothing but net. Fabulous same store sales. Go listen to her Conference Call. She understands the pillars of what you need. She, putting her in the pantheon of what is doing well and why. Mary dill dill lon, ulta salon. Whats going on tonight . We have sky works solution, and china down. Sky works go down. Is that the right thing . And then first solar, theyre sold out to 2016. I like the Solar Companies in the Solar Companies. Well see you tonight. When we come back, more reaction to walmart and depot in a moment. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . I know, mommy, but its time to let the new kitchen get some sleep. If you want beautiful results, you know where to go angies list. Now everyone can get highly rated service even without a membership. You can shop special offers or just tell us what you need, and well help you find a local company to take care of it. Angies list is there for all your projects, big and small. Pretty. Come see what the new angies list can do for you. Can a a subconscious. Mind . A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Good tuesday morning. Welcome back to squawk on the street. Big day for retail. And the day care out walmart picture looks pretty good. Dow is down about 32 points. Being dragged lower by walmart in part, watching oil as well. And Housing Starts pretty good macro sign of the day. Lets get to our road map. Walmart missing estimates and cutting its guidance. What you should do now with the stock. And wireless wars heating up. Well talk to an analyst who just upgraded the sector. And emerging markets up but what does that mean for stocks here . All that straight ahead. We start with walmart hitting a 52week low after reporting profits that fell short of expectations and slashing its forecast. Addressing the earnings pressure, this is what walmarts ceo Doug Mcmillen had to say. In this case our desired changes require investments which are pressuring earnings this year. Were confident that our strategic growth will create robust Sustainable Growth for returns over time. Daniel, the stock was down about 16 so far before this report and now down almost another 3 . Does this reaction make sense to you . I think it does. The downwards earnings revision was more than expected. 0. 35 on the high end of the guidance. The things they highlighted as pressures dont quite account for all the cut and in our conversations with the company, just this morning, we are also learning theres other operational pressures that were not all entirely detailed in the press release, but nonetheless, pressuring earnings. Like what . Can you give us a sense of what youre worried about . I think the narrative at walmart is the right one in terms of focusing on the customer. A novel idea, perhaps, but one they havent been focussed on, frankly, and i think theres a lot of cost associated with training, wages. I think theres a Ripple Effect up the chain. When you raise the low end, folks that were in the middle and are now the low, they want an increase. Theres unintended consequence there. Theres pressures around trying to clean up stores and make them more shopable. It runs through the organization. To me that all sounds like a good thing. And to quote Doug Mcmillen, why cant people see theyre investing growth and ecommerce and better employee experiences and think longterm . I think doug is focussed on the right things. Unfortunately, he is playing a little bit of catchup. There was probably some underinvestment and maybe overengineering. Hes inherited it and has to deal with it. If you look out a in a few years in the short run, how its going to translate to better earnings. Right now all we see is earnings going down. Free cash flow is down. Returns on investment are down, and investors are concerned. I guess you cant help but wonder with this kind of environment for the consumer, better job growth. I mean, significant improvement in unemployment in the u. S. Cheap gas prices, the fact that walmart is only seeing marge in traffic, does it signal theyre losing market share . Grocery was flat. That pales in comparison to other grocers like kroger. I think they have issues in areas of the store. Center core is deflationary. They havent made adjustments in the merchandise mix. I think thats a work in progress still, and i think at the end of the day, gas savings, as you mentioned, are not being spent. We saw that in the broader retail numbers and walmart is only seeing a marginal benefit from that. And yet some of the Restaurant Owners and some of the other retailers are seeing an impact. What about the pressure on pharma earnings, the fact that theyre not being reimbursed as much for drugs. Was that a surprise . Its been a headache for some of the drugstores for a while. This was something walmart brought up last kweert. And two things are happening. One, the reimbursements are down but theres also a mix issue. A lot of people were cash paying customers. There were better margins attached to that but with Greater Health care coverage, youre seeing more of a more transactions done through insurance and as a result, the margins attached are lower. At what point does this stock become cheap and do you start thinking about the longterm and upgrade it . You know, we cant talk about when were going to upgrade a stock but i can tell you that i think the market will stop penalizing walmart when the earnings revisions stop going down. End of story. Do you expect that . You dont see this as the bottom . Weve had a series of earnings revisions and in my experience, when retailers are cutting numbers, its a series of cycle. And right now were still in that cycle. I think our ability to look out to the end of the year and say, hey, have they cut enough, it seems like they have, but time will tell. If the economy takes a turn for the better or the worse, those earnings outcomes might look a little bit different. Certainly affects has been some pressure and it continues to be more pressure as we move through each quarter. Theres a lot of variables. It was a pretty good cut today. The investment spending has been significant. And now theyre coming back and saying it has to be more significant than they initially expected. Currencies taking 0. 15 off the bottom line. Thanks for weighing in. Daniel from jeffreys on walmart talking about 12 points off the dow. Home builders are doing well again today after Housing Starts rose to nearly an 8year high. D dianna is live with more robust data. Reporter an eightyear high but not near historical norms. The headline doesnt say much but the internals speak volumes. Total Housing Starts inched higher from july to june. Theyre up 10 from a year ago. The split on Single Family versus multifamily. Single up 13 . Multifamily down 17 for the month. Thats a great sign on the Single Family side and its why home depot is doing so well. When a buy a new home or an existing home, you go out and you make your changes to it. But i wouldnt read too much into the multifamily which had been surging ahead at warp speed. Were still seeing Strong Demand on construction on the apartment side as vacancies at rents are at highs. Permits a better indicator of construction, they fell and that was driven by single and multifamily. Multifamily, that was likely due to the expiration of a tax break in new york that had permits running very high. The highest in 50 years, in fact, during the first half of this year. Then it dropped off in july when the tax break ended. What does it all mean . Single family Home Construction is improving slowly. But its still 25 lower than the 30year running average. Multifamily construction cooking with gas. In fact, new numbers today from trulia show apartment construction is above normal in over a quarter of the largest u. S. Cities. But only because the country barely built any apartments during the housing boom and then during the recession. Were actually making up for lost units, not to mention theres been a huge sea change in demand for rental apartments. Well see if it depresses prices when they come on stream. Thank you very much. Up next on the program, emerging markets taking a beating over the last momnth. What does it mean snehere . How do you play it . That, when we come back. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end august 31st. Share your summer moments in your mercedesbenz with us. The drought is affecting at pg e weve definitely put a focus on helping our agricultural customers through the drought. When they do an Energy Efficiency project and save that money they feel it right in their pocket book. Its exciting to help a customer with an Energy Efficiency project because not only are they saving energy but they are saving water. We have a lot of projects at pg e that can help them with that and thats extremely important while were in a drought. Its a win for the customer and its a win for california. Together, were building a better california. Stocks a touch lower this morning after shanghai fell 6 overnight over concerns that may continue to devalue the yuan. How worried should u. S. Investors be this morning . Joining us this morning steven piece and a chief Global Investment strategist. Good to have you here. Good to see you. A few weeks ago if we walked in here and china was down 6, we might have freaked. Whats different . Weve gotten used to it. I can remember earlier this year when there was a valuation of the swiss franc. A lot of contagion fears. Then we began to get more at ease with the issue. Does the fact that were taking this in stride, were down a point for august. Were a point off the all time high, what does that mean . What we dont know is the impact on the chie niece consumer. Weve seen what has happened to the manufacturing and the export sector in china. The question is is the Chinese Consumer going to pull back . Doesnt it seam strange that its pumping liquidity into the stock market and it went down . I think the bigger question is why are they doing it . It speaks to the growth being a bit worse than expected. What were trying to do in the u. S. Is figure out how does it impact the u. S. Growth. From a currency perspective, a weaker yuan impacts a growth but not that much. Its more how does it start to impact things like industrials. Is that where it does in the Commodity Exposure and the consumer names that are exposed to the china . If you look at materials j industrials and even the energy sector, theyve all lagged this year. And that continues to be the case but look at consumer and health care, and these dont have direct ties and two of the best performing sectors year to date. Theres a lot of angst from russia to all those people who compete in asia with china. How do you profit here . I want to throw audiotape chart about the propairs short etf. Do you believe that emerging markets will continue to sell off and would you advise people to buy instruments like this . I dont. I think that as we get past that first rate hike, markets may be a bit more at ease with what the financial conditions are. Remember, right now theyre trading at 10. 9 times earnings, one of the few bargains. A lot of pessimism priced in. I think its a coiled spring. Isnt it classically the case, those of us over 25, that when they raise rates its true. You have the balance of the ecp and the bank of japan in that region, offsetting the drain of liquidity. Nobody likes to wake up and see a low. It makes you wonder if theres something for worry somegoing on. Even show the shanghai is down, its up17 at a tehen the economy is slowing. That doesnt feel healthy. What looks healthy is whats happening in europe. We would be taking advantage of the volatility around other markets to add a risk. The housing recovery here, if you look at through the eyes of the depot as a prism, looks pretty good. Its solid. I would agree. Were seeing that in many regions around the world. Housing seems to be coming back. Heaven hea even in china. Implication for the fed . Minutes tomorrow. Our view is still december. I think it depends on the august employment data. For us, it doesnt change how were positioning the more domestic focus. Why arent you in the september camp . I think theres enough concern with china and sort of the impact of the stresses weve bean in emerging markets on the u. S. Economy. If it comes in september, its positive but for now were with december. People that sell what you Call Solutions or products look at earnings. Theyll look at the economy and say now is the time to buy the market. Theres one who says you dont need that because you have a oneway perp here from the banks. Buy the market simply because of where the Central Banks are. If you looked a what happened in the u. S. When we had kwe qe, earning didnt matter. Thats what were seeing here. The good thing is were actually seeing the fundamentals come through. Its a multiple expansion thats given us the rise in europe this year. You have more multiple opportunity in europe and japan. The u. S. Is much more of an earnings story. Thats why the u. S. Market has lagged this year. If youre bold enough to buy emerging markets are you bold enough to buy commodities and stocks tied to that like Raw Materials . No, i dont think so. Thats a longterm story, not a shortterm down. Commodities still probably headed down a down path. As we mentioned, emerging markets seeing pullbacks in recent weeks. How is that affect things in the United States . Bob joins us with a look at that . Reporter a tough situation. A lot of commodities. New lows dragging down the commodity stocks. Down 6 on the shanghai. Even the hang seng also weak. Down about 2 . That is being reflected in the way stocks trade here in the United States, particularly in the Exchange Traded funds. So if you look at the ashr, that is the etf for Mainland China, thats on the weak side as well. Ftx, china 25. Thats Mainland China. Thats reflecting the weakness in Mainland China as well. I want to point out the damage being done in the emerging market areas where, for example, thailand which has been weakening since june, had the acceleration has weakened as china weakened its currencies. So thailand is down about 15 on the year. All of these currencies, all of these currencies starting weakening in june when china started having trouble but has picked up in the last week or so. Malaysia is now down 20 . Even indonesia, another country held up fairly well throughout the beginning of the year started collapsing in june and then you see the final leg down. Also down now at about 24 . You can buy that in the United States. China having an affect on the commodities markets. You can see today oil is at a sixyear low. Copper, aluminum, nickel, zinc is at a sixyear low, essentially. And you can see the effect this is having on the etfs here. You can buy all these big material names, all in one basket. The symbol is xlb. Thats had very big volume in the last two geeks weeks as chi weakened its currency. These all parallel each other. The attempts to prop up the stock market and recently the attempts to weaken the currency. Xle has operated the energy etf what independently. Along with many of the etfs sitting essentially at 52week lows. Tough situation for all the commodity names thats playing out in the United States. The china ripple affect. Thank you, bob. When we come back, a controversial drug for women could be getting fda approval today. Turns romantic, why pause to take a pill . And why stop what youre doing to find a bathroom . Cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating 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, 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 for daily use. Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Ive had moderate to Severe Plaque Psoriasis most of my life. But that hasnt stopped me from modeling. My doctor told me about stelara® it helps keep my skin clearer. With only 4 doses a year after 2 starter doses. Stelara® helps me be in season. Stelara® may lower your ability to fight infections and increase your risk of infections. Some serious infections require hospitalization. Before starting stelara® your doctor should test for tuberculosis. Stelara® may increase your risk of cancer. Always tell your doctor if you have any sign of infection, have had cancer, or if you develop any new skin growths. Do not take stelara® if you are allergic to stelara® or any of its ingredients. Alert your doctor of new or worsening problems including headaches, seizures, confusion and vision problems. These may be signs of a rare, potentially fatal brain condition. Serious allergic reactions can occur. Tell your doctor if you or anyone in your house needs or has recently received a vaccine. In a medical study, most stelara® patients saw at least 75 clearer skin and the majority were rated as cleared or minimal at 12 weeks. Stelara® helps keep my skin clearer. Ask your doctor about stelara®. Decide whether to approve the socalled female viagra pill. We have the details on the little pink pill. Thats right. The fda is expected to decide on this drug made by sprout pharmaceuticals. Its a little bit of a misnomer to call it a female viagra because it works in the brain. The drug has been rejected twice before by the fda but it got a surprising recommendation this time. When youre looking at what this drug brings. Some of the controversy here is around the safety. Some folks say maybe the efficacy isnt worth the risks. Fainting and sink pi are the issues. Theres been lobbying around getting this approved. We should hear about this by the end of the day and of course the market for sexual dysfunction drugs is very large. If you look at pfizers viagra, a billion dollar drug in the prime. A big decision today. I want to point out here, the accusation or the danger here is that under huge political pressure to not have double standards on the way they treat the different sexes. You mentioned the problems with safety and perhaps not a drug that works as well as you might expect for the risks. Thats right. Folks are saying the strong lobbying campaign, some people who dont think the drug should be approved are worried that could maybe sway the fda to think about things other than safety aefficacy. There are issues here which is why it got rejected before. Its an interesting situation were looking at. Well watch you throughout the course of the day. When we come back, another shot fired in the carrier wars. Sprint aborting twoyear phone contracts. Well talk to an analyst who just upgraded the sector with the dow now positive by six points. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Good morning, everyone. Here is your news update. Thai police have released video in connection with to a bank robbery. The video shows the fan in a yellow t shirt carrying the backpack near the scene of the blast. He takes the backpack off and hes scene later without the bag. Scores of homes remain threatened and mandatory evacuation orders remain. More than 56,000 acres have been burned around the lake side town. American airlines plans to operate the first charter flights between Los Angeles International airport and havana later this year. It will be the only nonstop service connecting the west coast to cuba since travel restrictions were eased. Donald trump remains at the top of the latest president ial poll. A new cnn poll finds trump with the support of 24 of republican voters. That is six points higher than in july. Second place, jeb bush with 13 , followed by ben carson with 9 . Youre up to date. Thats your news update this hour. Lets get back to squawk. It is a tale of two retailers this morning. After reporting earnings, walmart is hitting a 52week low and home depot, hitting a die. Both on opposite sides of the dow. We have more details from the Conference Calls. It shows a stark contrast in where consumers are spending. Revenues not terrible for either one. Home depot report inline earnings. The Home Improvement retailer raising guidance. Home depot giving credit to the improving Housing Market and better spending among higher income supporters. They say there was a Record Number of transactions and the highest average ticket since 2006. Walmart, more of a mixed quarter. Turning in earnings short of forecasts but stronger than anticipated revenue and the fourth straight quarter of positive u. S. Comp sales growth as well as increased traffic metrics. They are lowering the full year guidance to 4. 40 to 4. 70 cents a share. That is down. Now walmart points to the stronger dollars, increased hours and higher wages. And higher shrink. They do exchange that shrink includes theft and damaged goods. That could include grocery items that go bad. Its not just in stores but trucks and warehouses. They have reinstituted a shrink program. They say it may take as much as 18 months to rectify something that isnt fixed overnight. That is true. Meanwhile the Telecom Carrier wars are heating up. Sprint is abandoning a twoyear contract leaving at t as the only one still offering discounted phone prices. Meanwhile sprints ceo speaking out on squawk box this morning about his ongoing twitter feud with john legere. Take a listen. Its not a marketing strategy. We keep it competitive. It keeps our employees excited. Hes been beating up on our employees for way too long and thats over. Were back and winning customers. Were not going to let anybody continue to insult sprint. Sprint is doing well. We dont like it when somebody insults sprint, and i guess somebody like john legere, we have to talk to him in a language he understands and a language he uses pretty well. Its certainly spirited. Lets bring in the founder of government nathanson. He raised the sector to overrate. Good morning. In fairness here, what sprint has inveiled is a new leasing plan. For 22 a month, you are able to get an iphone and you can upgrade that every year. Rather than the twoyear previous commitment. I guess its still a subsidy in some sense, isnt there . It depends. Theres two ways to look at it. You can look at it from the perspective of the consumer and then from the perspective of the carrier. From the consumers perspective, this is much adieu about nothing. You used to pay about 20 more per month in your service plan in return for getting a phone. Now you pay about 20 a month for the phone itself. From the carriers perperspecti theres a huge difference in the accounting and it has distorted the accounting for the whole sector. As you do the sale, it accelerates revenue and ebita and earnings. All the companies are now reporting inflated revenues because of that and inflated profitability and sprint has gone one step further. By leasing the phones instead of selling them, they actually take the cost of the phone off the income statement entirely, move it to the Balance Sheet. Sprint is getting 50 of the ept a from accounting changes. It had nothing to do with upgrading the sector. Actually, its sort of a negative for the sec tar. T sektser. In sprints case, you have an off Balance Sheet that will buy the hand sets and then lease them back to sprint. Sprint already has 34 billion in debt, the cost of improving the network. Overall, what does that mean for shareholders. Are they subsidizing whats going on here . Could he extract value down the line in the nature of the deal that he does . Its not clear. I think theyre trying to avoid putting in more Balance Sheet debt. While theyve raised the equity stake, theyre trying to avoid being fully responsible for sprints debt. The challenge we have with sprint is if you actually adjust for the accounting distortion, the 34 billion of debt you mentioned compares to theyll do about 6 billion of reported ebita this year but half of that is from accounting changes. Youre talking about supporting 30 billion of debt. And of that 3 billion of ebita, you have Capital Spending thats five to six billion dollars. Its very hard to see how theres any equity value to sprint at this price. And i think soft bank is struggling with that too. They dont want to let it go but its hard to make an argument for there being any value to sprints equity at all. You know, we call it the wireless words, and certainly they are heating up. Its become combative i any has evidenced by the twitter wars between the ceos. But arent they all fighting for a pretty saturated market in everybody has mobile phones and whether theyre switching between one or another, what are they fighting for here in. Youre right. Everybody is now fighting for a market that is growing at least in the phone market at about the growth rate of population which is to say, a little, or really, its theulati population growth ten years ago. Youre talking about one to one and a half percent growth in phones. Theres been growth in tablets which has grown in units to a little over 7. 5 . But the tablets are relatively low value. People are trying to fight for the higher value phone. It begs the question why you upgraded the sector. Well, in the funny land of telecom, the last year was worse than this year, and what you saw last year was at t aggressively repricing its base by offering discounts to existing subscribers without having to move to the eip or purchased phone plans. That trimmed our average revenue per customer and the whole industry had to respond. You seeing some backing off of that now. And i wouldnt pretend that the industry is not a highly competitive place. It is. And in some ways, youre seeing a shift from competing on price to competing on promotions on the hand sets themselves. But this year youre starting to see a rise in average revenue per customer for the industry. And during those periods, you typically want more exposure to the telecom industry, not less. Thanks for joining us. Coming up, bb t acquiring National Penn bank shares. Who could be next . More on Bank Consolidation when squawk on the street comes right back. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end august 31st. Share your summer moments in your mercedesbenz with us. What is ahead for the overall market . Maybe a boom or some gloom in we asked mark faber, watch that full interview. Squawk on the street is back up next. Regional bank, bb t acquiring National Penn shares. Earlier we spoke to kelly king about the shift in the Regulatory Environment around mergers. Over the last, lets just say, year or so, i think the regulators have gotten comfortable with mergers. I know some of my peers disagree with that. But i think theyre comfortable with mergers as long as the acquiring institution has invested in the system, the processes, the corporate governances approaches to be able to run a larger institution. Well, when w that analysis in mind, which banks could be next . Simon, best bb t deal addresses a need for that company which is to expand in pennsylvania, specifically around that philadelphia area. Regional banks are very much about putting pieces together. So we took a look at some of the other smaller regional players like a National Penn corporation that shares some similar characteristi characteristics, and heres what we did. We screened for the companies by looking at the S P Regional Bank index. Its a broader index with 90some companies in there. We screened out only the ones worth between 1 and 5 billion now. That left 63 of them. We looked for dividend yields around the median of the overall index. That got us down to 34 and then we looked for positive relative strength. Again, not ones falling with higher dividend yields. That yielded around 35. Out west, pack west bank corp. , up about 2 . 80 branches, 60some offices. Then we look a look in the mid part of the country. Boc financial. Theyre up about 10 year to date. And to the east coast, another smaller mid cap type size bank, this is webster financial, up about 18 also yielding north of 2 . Some of these are candidates but something to look forward to in terms of if regional banks do consolidate. Thank you. Lets go to chicago to rick santel santelli. Good morning, rick. Reporter good morning. Thank you. Id like to welcome my special guest this morning. Dr. Bert. Thanks for taking the time this morning. Its a pleasure. In order to trade markets, you have to understand exactly whats going on and theres a lot of conventional wisdoms but the split decision is the liberal decision split moves being done by the communist leaders to liberalize their currency so they can eventually see the yuan become a reserve currency or is the timing of what theyre trying to accomplish, give us more of an insight into the growth before the crisis. Your thoughts . Well, i think, unfortunately, the chinese are learning that you cant be a little bit pregnant. They let the currency go. It then declined a little more than 2 . And they rushed right back in to stabilize it. I think the problem is, and this has been the problem with the stock market as well. They want to let the free market operation, but once it does, the free market is messy. Things go up and down. And it seems like the government is not willing to let the market find its own level. You cant control markets and what worries me is theres a lot of talk about liberalization, but when it comes right down to it, there is a feeling that youve got to intervene and, in fact, with free markets, you cant control the stock market. And thats a lesson that im not sure the Chinese Government has learned. Im not sure investors have learned that. In the end, if i was a global investor, my positions would be smaller in china and chineserelated Companies Post their tinkering with the stock market and one of your lines, i just love. Is the following and ill read it. A retreat from economic reform is prime obstacle to continued chinese progress. In our last minute, lets dig even a little deeper. If youre a world investor, what affects does it have in trade . Well, look, v, this is the problem. The Chinese Market is called a stir fry market. Its 90 is individual investors going from one stock to another, buying and selling, stirring up the pot, and no wonder the market is so unstable. If what the chinese stock market needs, for example, is international, institutional people coming in and putting a little bit of professionalism into the market, but what institution is wanting to get into the Chinese Market if they think that the government can just say well, you cant sell. And thats precisely what the government did. And it is counter productive. And what worries me is the chinese should learn when they reintroduced capitalism into china, you saw the greatest growth that weve ever seen in history. Where hundreds it was. Reporter were out of time here. Were going to have to stop there but next time youre on, well dig deeper. Thank you. And now well go back to simon hobbs. Thank you, very much. Million dollar home series is back. Were looking at water front for the wealthy. With Million Dollar listing new york star. You dont want to miss these views when we come back. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Were checking out waterfront properties. Two houses in the same market facing off to see which one is the best bang for your buck. Its round two and were visiting Beautiful Lake tahoe where custom california faces off now against nebraska, nirvana, take a look. This custom California Home sits on a secluded half acre along the shores of lake tahoe and includes a detached garage and guest suite. With 3200 square feet, the kitchen opens into a towering twostory great room complete with a fireplace and vaulted ceilings. Accented by exposed beams. There are six bedrooms and four bathrooms. Even the master shower has lake views. Outside, the large waterside deck is ideal for entertaining and homeowners can enjoy all the lake has to offer with a 200foot shared pier, a hammerhead deck and two mooring buoys for 3,449,000. Nevada, aquarter of an acre of serene landscape visible from the walltowall windows and glass balconies. 3600 square feet of open living space. The newly remodeled kitchen, stocked with highend appliances and Granite Countertops and all that rustic charm flowing into the living and dining area, four bedrooms, three and a half past rooms. The master bedroom extends on to a balcony that shows off a view that never gets old with a sandy beach, two buoys and water rights this home can be yours for 3,995,000. Wow. Joining us now is ryan sirhunt, a broker with netcy, international and a star of bravos Million Dollar listings, new york. Good morning. Whats going on at lake tahoe. Theres a lot going on. The second home market, lake tahoe has picked up recently. Special with my conversations ive had with brokers and i like these two houses, this is round two of the Million Dollar home battle to the death. I saw round one on squawk box. Its insane. This is a good matchup. Obviously the big difference is california versus anevada. And the big difference is property tax which we can go into. What are the two taxes . For custom california, your taxes are almost 50,000 for nevada nirvana, your under 12,000 a year. Almost a gamechanger for people. Almost. If theyre coming into retirement. Sure, and if these are second homes for people, theyre not living in them all the time. Youve got to factor in them what everyone does, you live in your monthly payment. Whats it going to cost you when youre not there . How much are you shelling out every single month . I went through how i look at defining properties. And i break it down by their deals. So decor, exposure, amenities and size and were pretty even on both of these. The decor of custom california is nice, koezy. A very woodsy area. But the decor in nevada nirvana is renovated, new, all of this glass which means it has huge views from almost every room of the lake. The nevada nirvana is so much nicer. Its a nobrainer, lower taxes, still have water access and the renovation. Is it a nobrainer, because custom california has a detached guest house and a detached garage. They have lake access, outdoor space and big houses. And your bedroom count in custom california is six versus four in nevada. Theyre also equal distances from the airport so if youre flying into lake tahoe, not driving from somewhere, basically on either side. For me, im a big sunset guy if im going to be somewhere for a vacation, if im going away to the lake, nevada, the big difference is its got western exposure, right . Thats how the states its got western exposure. Youll go on there with your deck and your big sunset views. If you like to go to your lake house for the weekend and wake up and get your sunrise views, its california all the way, but 50,000 a year in taxes. I know which one you like. But what do you think . I go for lower taxes and no guest house, thank you very much. He hates guests. Guests get in the way. My winner for the Million Dollar home challenge round two lake tahoe, the home thats the biggest bang for the buck is nevada nirvana, for taxes and renovations, youre not spending extra money. The location is great and your monthly cost is much smaller. Busy day for you, youre back to jersey. And then back here. Which he whe is the next round . Power lunch. And ryan will be back in power lunch with the next round of competition. Good to meet you. We send it to jon fortt for a look at whats coming up on squawk alley. We dive into new details on the upcoming apple tv and its competition. Robby bach is here, the one that led the team that started the xbox. Find out what hes doing next. And google has got more freaky robots. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm, theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. Good tuesday morning, it is 8 00 a. M. At google headquarters in mountain view, california, 11 00 a. M. On wall street and you squawk alley is live. Joining us today is john broad. Kayla is out today. Joining us on a day where the market is in a range. Apple event, 95 mac has new details on the next apple tv. It will run its own specific version of ios 9, its expected to launch aside the new iphone 6 s and 6s plus models. New design, new support, new remote for siri. The new device will not include the live tv service. Project code name j34, jon. Sounds aul