Transcripts For CNBC Squawk On The Street 20160726

Our roadmap begins with shares of mcdonalds after reported earnings that mixed expectations. Well dig into the report. United technologies is up on earnings. Ceo Gregory Hayes is going to join us live for an interview. And the Democratic National convention kicked off with a bang. Well go live to philadelphia for the latest. But first up, mcdonalds with earnings. Sales in line, but earnings miss on the bottom line. 1. 25 a share, global comps up 31r3 31. Stocks are down 2. 5 . A year ago they were down 2 and people are looking at all Day Breakfast and saying, is this all its brought. I think theyve got some promotions that are good. The stock rangers on pokemon g japan, so it was where it was before this. Its by no means the swan song for easter book. The guy has done a remarkable job up 30 points. Can they miss in a quarter period . Yeah. The rest of the world doing pretty good. I think easter brook has done a good job. I dont think all Day Breakfast has done its growth. You need some technology. And i know hes going to Bring Technology but he hasnt brought it yet. Especially at the interface where you order. Exactly. Analysts looking for expansion of breakfast, but comes on a stay stiefle takes panner a p panera, chipotle. The downgrade says, look, were going to go in recession and these stocks do poorly in the recession. Youve got twin downgrades on the industry. I dont feel the call because i dont believe were about to have a recession, so its hard to just onifiy all ify on a gro. If you listen to the wage calls on the democratic convention, the steifle call is a tough call. We got two cells in the chipo e chipotle. I dont think its justified but i recognize this industry call is going to res nate all day. They say recession likely in three to six months. Im glad he became the chief economist. Well stay home and have peanut butter. Schmucks is the plan. Schmucks . Yes. If you say so. Thats the plan. Spam. Hormel. Do a little deep pantry. I thought campbells did a good job. I even ate the baby crackers, banana. Utx out with a beat and a raise reporting adjusted quarterly profit of one dollar 82, raising the fullyear forecast. Well talk to greg hayes later on. Dupont raises its full year. 3m with a miss cuts the full year guidance, and cat beats but cuts its Profit Guidance again. Job cuts, take a listen. Were leaning now, but were going to get a little leaner and meaner and thats one of the reasons we took our outlook down in the second half is for a little bit more restructuring to come for 2017 and beyond. But were looking at a very strong balance sheet, pretty good cash flow in the first half of the year. Were on solid ground here with our market position around the world and doing internally and operationally, very, very good. So they take that restructuring guide from 550 to 7. I cant believe the guy is able to come on and smile. They have become leaner and meaner. When you watch oil go to 42, you think he mentioned oil and gas. You cant have it. Oil cannot go below 40 and maintain. Hes being very cautious mining no real turn, versus dupont, ed breen. There was every single line item was better and well hear from the growth that was more than General Electric and honey well. When youre in a bad neighborhood, do you all right. 1 organic revenue growth. Hallelujaw. 3m is doing minus. 25. You have 3m not doing as well, ge, honey well not doing as well. Greg hayes, i dont blame him for coming on at all. Looks like that 100 plus, honey well bid was a nice no do. It was an aint going to happen from the last time we spoke to mr. Hayes, discussing that honey well bid, made it very wellknown they were interested. As he said, it aint going to happen. Do you want to hear that . He was definitive. I would love it. He talks like the rest of us. This is greg hayes on our show a few months ago. You just cant get this deal done. As much as it makes sense in a headline, it aint going to u n happen, jim. He speaks english. He speaks like we do. Hes not practiced. There was no coach do you think there was a coach there . Well, there there was. They were hoping he would stay on sort of message, but he he went with the, im a real person answering real questions. Hes too good. Yes. And ed breen, i like these guys. Were going to be hearing from dow, i believe, of course duponts merger partner. Lets not forget that enormous deal moving towards completion amid the separation of the businesses over time. I think they may close that deal. I think its done. You think it may . Why even use the qualifier . Because i think theyve got the right disposals. Theyre not fighting the government. Its about seeds. When i look by the way you know, can we just sometimes solute people . The dupont seed number was extraordinary. They had 3 growth, up 12 in terms of earnings. Everyone did poorly in that. He did great in that. Volume growth, really large. By the way, ags new products. You dont have a lawn. Its more for latin america. If you had a lawn, you would know. Thanks. As of now, i do not. Lawns help to not understand america. If you follow twitter we do all the tweets of your blaplant tomatoes. I dont to hear again about my plants. This is me being likega ghan, so leave it out. Its not like Marlin Brandow . Its more like marlin saying, you got the goo. I can see the horror. And not starting as smoothly as planners had hoped, john harwood is in philadelphia to tell us what you might have missed last night, john . Reporter carl, democrats came into the convention with the problem of decent. We saw them very angry over the leaked emails showing the dnw favored Hillary Clinton. They forced the resignation of Debbie Wasserman schultz, the party chair. They took the gavel out of her happened. They even booed Bernie Sanders when he called for unity, but the Democratic Party threw everything they had at this problem trying to bring the Party Together last night. First of all, they tried a famous hollywood comedian, sara silv silverman took the stage. He was a Bernie Sanders, and appeared with al frank in, the saturday light comedian. She told them to stop it. Can i just say to the bernie or bust people, youre being ridiculous. [ cheers and applause ] reporter then they had the populous hero Elizabeth Warren out ripping donald trump and Bernie Sanders himself as the cleanup speaker for the conventions first night, made a passionate appeal for unity in the service of a greater good. Trump thinks he can win votes by fanning the flames of fear and hatred, by turning neighbor against neighbor. By persuading you that real problem in america is your fellow americans. People who dont look like you, or dont talk like you, or dont worship like you. Any objective observer will conclude that based on her ideas and her leadership, Hillary Clinton must become the next president of the United States. Reporter but the emotional heart of the evening fell to michelle aloobama, the first la. She told a moving story about how the white house had been built by slaves and now her young daughters play in the yard with their dogs, said that thats what makes America Great right now, it doesnt have to be made great again. Dont let anyone ever tell you that this country isnt great, that somehow we need to make it great again, because this right now is the greatest country on earth. Reporter Michelle Obama delivered that speech without ever mentioning Donald Trumps name, but with the highly effective takedown, she ended it by saying, Hillary Clinton, im with her. Bill clinton tonight, is going to give him speech at the convention that will be the prime speaker in the 10 00 p. M. Hour. Bill clinton has been terrific at past conventions including the 2012 convention on behalf of president obama. Well see if hes still got it tonight, carl. Thats going to be one high wire act tonight. Well be watching tonight, our john harwood in philadelphia. Yesterday, you said if you think trumps going to win, you have to sell industrials. If the demes are going to win, weve got glass steagall. Last night was not a antibusiness night. Ive been going back and forth. The ceo of new core, a company that has benefited from tariffs. The United States basically shut out korea and china and you see the earnings come through. Remember, donald trump said, listen, we should pull out of the world trade organization. Im beginning to think this is a little bit of hiyperbole. Its too much of a tariff. It would be a shut down of trade. Remember trump came out very against nafta. It is very interesting we have a carrier plan from indiana to mexico. New core building a plant in mexico, about 15 minutes from my place down there and what i could is mothink is most intere is theyre not closing anything. Are you keeping your business in the United States or are you closing down and moving to mexico . That inspires trump. You heard him yesterday, trump speaking about apple, he said theyre going to do it. Theyre going to bring iphone manufacturing back to the states. He has this view. How in the world is that going to happen . How what . All i can tell you is tonight, there are you know more than 25 buys. Theres one sell put on yesterday. We will get some i know we got a lot of earnings to discuss but verizon will be among them because we continue to see people keeping their devices longer and thats a read through to apple. It sure is, and Texas Instruments. And tmobile and some others are getting this week. Were already gotten vz, and print. I am a martello believer. Your pokemon team. Hes on yellow but that has to do with the color of sprint. Hed be on blue if he worked at another team. A lot of earnings to get to, including under armour and others, and greg hayes on earnings, take another look at the premarket dow fell monday for the second time in 12 sessions. More squawk on the street from post nine in a minute. Its a golden opportunity to experience breathtaking lexus performance in streetlegal form. For a limited time get great offers on our complete line of f sport performance vehicles. At the lexus golden opportunity sales event. Keep your eye on under armour today, down about 2 in the premarket. Earnings meet, revenue in line, but some scrutiny online. Well talk about that and a lot more when squawk on the street continues. Can a toothpaste do everything well . This clean was like pow. It felt like i had just gone to the dentist. My teeth are glowing. They are so white. 6x cleaning , 6x whiteninga in the certain spots that i get very sensitive. I really notice a difference. And at two weeks superior sensitivity relief to sensodyne i actually really like the two steps step 1 cleans and relieves sensitivity, step 2 whitens. Its the whole package. No ones done this. Crest healthy, beautiful smiles for life. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. All right. Weve got about 11 minutes or so before we get started with trading on this tuesday. We want to talk telecommunications. Verizon out this morning, weve already heard previously from at t and sprint. They dont look great, but they dont look terrible. Turn was better, ebitda was better, but not a pllot of plan when it comes to people homes. Were looking for 75,000. 86,000 postpaid, not nearly as good as print which added 180,000. Sprint was more Competitive Price wise. Marcello saying theyre going to not be as competitive, maybe raise prices. I thought it was most interesting, the comment on yahoo, scaling up to be a major player. Bought by verizon. Yes. Verizon is a domestic company. Theyre talking about that and i just think they are trying to come up with something that is not just cell phone. Maybe thats because, again, everyone is concerned that apple will be just plain bad tonight and that 7 doesnt do what people think. Mcadams thought the 7 was going to be great, but thats his book. That is and people say thats why when you see people go past the equipment installment plans then their bill comes down, so the argument in terms of keeping your phone, suddenly, its cheaper, why wouldnt you keep it. Others say what youre hearing is the 7 are what people are waiting for when it comes to apple. As for verizon and this new theyre calling it an ecosystem around broadband and the enter n net of things. Can they offer something we take . Maybe the International Package and you get it if you take a verizon sub, but you dont go elsewhere if the nfl would give them exclusivity. I think thats what drives people to keep the service they have yes. Which of course is the glue, or change carriers. Sports does tend to do that. What sprint was saying, is its price. Sprint was a great quarter. If you can make it noncommodity like direct tv, with at t, maybe you can shore up. Now, verizon, it doesnt really need to shore up, its the biggest. No they reiterated their guidance. There is the cost of that strike and the wire line margins were pressured as a result of that. That did hurt things. The call is going on. Well give you more as we get it. But this is becoming major communications company, not a major cell phone company. Well be watching verizon, and the opening bell coming up, and joe swedish, from anthem, is going to be joining me since the government blocked anthems deal to block sigma. Announcer alvin and the chipmunks want to remind you bacteria can hide in food and make you ill. Wow announcer but you can keep bacteria from ruining your day with 4 simple steps clean, separate, cook, and chill. The roadchip to food safety starts at foodsafety. Gov. So i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices. The markets hot. Sync your platform on any device with thinkorswim. Only at td ameritrade. Youre watching cnbc squawk on the street live from the Financial Capital of the world, the opening bell in five minutes as we chat a little bit earlier, make some room for the utx ceo in a few moments. Weve worked our way through a lot of earnings and have your eye on some things that arent posting numbers. Most mobile eye. We dont know what happened with mobile eye and tesla. Tesla is auto pilot and is a little opaque about what happened. Its crushing it. A lot of crazy earnings. Under armour, i thought was fine and you talked about their opening a new store. Taking over the old faoschwartz, one of the most expensive rents in the city. The inventory is still down from the previous quarter and theyre hurt by sports authority. What theyre spending to get sales is too high. Is it . And i think people will focus on that later on. Gilead later used the line you never want to hear about a big new drug. They basically said, there will continue to be a gradual decline in new patient starts about their hepc, that was pretty much all she wrote. But their guidance didnt seem how is it impacted as a result of that, jim . Thank heavens theyve cured a lot of people. They have. Its 12 weeks, its very expensive, but then youre done. Right. Its not a maintenance drug. Its not like taking lipitor for the rest of your life. Celgene, that its not applying for a new version for multiple myeloma, but thats a great maintenance drug. It doesnt hurt your pro hit margins. And tc ventures, he jay came in and bought a ton of stock from netflix. 600,000 shares, the lead director of netflix, that was noticed. He was on the board of street. Com. Wow, jay didnt have to buy that, and thats snapped a lot of the short sellers next. Now theyll come out and say jay doesnt know what hes doing. The reason ive been behind netflix is tvc told me this is the company to watch. Jay hoge doesnt buy any islands but thats a lot of money. That is a lot of money. As much as steve nguyen. Dont forget, he bought and bought some more. They report this week. Fbr does cut time warner. Disney has had two downgrades as fbr seeing peak earnings in the studio. They had that alice didnt do so good and theres people itching away from espn. Time warn time warner faired pretty well here. And Great American told a pretty good story from the time isnt 60s, right . Yes, there has. But theres still concern about the cable networks. That will be dogging this group forever. Yes, it is. The major star yesterday when you talk about retail, gap stores, nordstrom gets an update today. You see the restaurants down and the retailers up. It was a flip in the previous quarters. And for all the talk we just made about downgrades in restaurants, goldman does take starbucks to the americas conviction. They said 19 upside. If you owe us the call, howard schultz, this 4 comparable growth in america was a problem because they had an introduction of the problem and they changed the loyalty thing. And they had the frappaccino happy hour and they screwed up. Howard schultz said that. It seems like they cant do both of those at the same time. Goldman using the 69 price target the whole way, but i thought this was a very important call. By the way, also the whole foods take into a sale call by them, competitive environment, sprouts take to a buy. Lets get the opening bell on what already has been busy earnings day. A lot more coming tonight. Get a look at the s p at the bottom of your screen. At the big board, United States Commodity Index trust celebrating the 10th anniversary of the United States oil fund. At the nasdaq, retail opportunity investments, operating on the west coast. Texas instruments. And whats so fun seny is 3 years ago we would be praising 2 order growth. They did a really good job in execution. Not a good week for apple in that. I keep pointing that out because as we know, when apple reports tonight, 27 buys, one hold one sell, two holds. The midday sale yesterday, i think its important. Remember i say theres a lot of soft buys in apple. Jpmorgan comes out and says numbers are going to be disappointing. His September Quarter is down 1. 5 below the consensus, but its still a buy. All of these faux buys will turn into holds if they dont do a good number tonight. And what do you think . I dont want to put you out there, but youre willing to always go there. I thought Texas Instruments, when it talked about you cant really read through everything because obvious case when it comes to Texas Instruments. Anybody who is the supplier for apple, but they did absolutely way, semiconductors did well on autos, but it was a particularly disappointing soft quarter. Was noted, i think, fairly prominent prominently, they put somebody quite prominent in the develop of their car apple did, yes. Yes, apple. Its nonstop, the gillis call was saying this is the apple going dramatically lower, value trapped call that ive been waiting for these analysts to do. I fear they dolit will do it if theres some upside. Texas instruments on the call talk about the coming consolidation and whether her people Texas Instruments bought national several years ago, in reference to amd going up, and people think micron is going to get bitter. And david do you hear any takeover activity in the semiconductors . Theres been a lot of murmuring murmur . Yes, sometimes you can hear them. Qualcomm had to take their cash cord and buy some more. 30 billion in cash but most of it is overseas. They dont want to bring it back so youve got to think about deals thats why nxpi comes up yes, thats big numbers. And the idea that you can do something with your overseas cash is obviously much more 53ing given you wouldnt have to be taxed on it. But it is right with talk theres going to be monster bids in that industry. I notice invidia goes up pretty much every day. Isnt that internet a things potentially . Texas instruments calls out, wait a second, peak auto. Its interesting. Have you looked inside an engine . The number of parts. Who conserves that . You dont fix your car anymore . I got out of that game. I had the rag and i was like you, david, playing with the spark plugs. These days its all about softwa software. The software somehow goes kapoot and the whole car doesnt want to run. You need a Software Engineer for your car. Snapon has all of these tools that needs to be advanced. In the end its diagnostics. You need an mri for a car. You gotta go to anthem, get approval. You need a Health Insurer for your car. Really quick, jim, on crew, Morgan Stanley seeing downsi ris in the second half. As they argue, demand is obviously still weak. And yet theres slumber j talking about how absolutely were going to have a recovery, without a doubt, and corlapse talking about a v bottom. Theyre saying listen they cant operate this low in the United States. They just cant. Youre just going to have shutinnin shuti shutins. Id go with slumber j over Morgan Stanley. They made a fortune this quarter, a fortune. What a company. Theres some calls out saying oil is headed right back down to the lows. Im not going against slumber j. Slumber j was to say this is the first thing to say this is going lower and its the worst decline ever. If youre going against slumber j, thats a gutsy thing. I didnt say stupid. Slumber j has been myid idol sie 1982 when i first touched bases. Lets get to president obama pis pasani also watching names. Reporter we have a little bit of a problem. The whole game is based on oil, at least a 45 to 50 and gradually moving up in the second half. Thats not happening, thats not cooperating with the narrative. Bp came out with some earnings, all of them had been trending down and thats whats concerning people. Remember this whole oil stock narrative weve been talking about . Q 1 was supposed to be the trough in earnings for all the big Oil Companies. Q 2 still have losses but improvement q3, further improvement, and q 4, further recovery, the 17th, we sort of have the take off. This glut of gasoline has been pressuring oil and its playing with this narrative. The narrative is based on oil over 50, not down to 40, which is the trend here that weve been seeing in the last couple weeks. This is whats got people worried here. Dudley, the ceo of british petroleum, they had their earnings out this morning. His narrative is pretty simple. His average is expected to move up in 2017. He says markets are going to tighten. The gasoline glut, which is what were dealing with is going to get mopped up. Unfortunately, its not moving in that direction, thats got people a little bit concerned. All the earnings are based on this assumption. Take a look at schevron. Loss of 22, q 1. This Second Quarter was supposed to have 32, q3, 68, q 4, 46, and take off, these numbers double, if oil is at 30 or 35 as some people are talking about, we have a number. Those problems are going to come down. I talked to oppenheimer yesterday. He thinks hes going to have to potentially drop that. Hes waiting until the Earnings Call friday from chevron. These numbers are in jeopardy. We talked about Morgan Stanley, heard by carl bringing that up. Just this morning they came out, we see worrisome demands for supply, demand, and products we see a floor mid30s. So 35, q3 and q 4, not good. Thats not where the narrative is going overall on this. And this affects the whole second, third, fourth quarter. This is fact sets numbers that you use. Q3 would be a slow improvement, q 4, dramatic improvement, and Oil Companies are a major kr contributor for the earnings. These numbers will go negative and that will be a problem for people trying to justify high stock valuations. You see why this whole Oil Narrative is again becoming a major issue. Lets just go on to talk about the Big Industrials, as jim mentioned briefly. The 3m, overall, they beat, their revenues were just a little light. They lowered sales Growth Guidance a little bit. United technology beat, they raised the lower end of their fullyear guidance. Dupont, which is mostly agriculture now, they beat on the top of the bottom line and raised the end of the full year guidan guidance. Its a little bit of a mixed narrative, but the bottom line is no one is dramatically cutting numbers, and nobody on the earnings end of cutting numbers at all. Slightly lower revenues in some of these companies. I overall view that as a fairly good sign. These are the Big Industrial companies that are reporting. Right now, the dow, essentially, flat. All right. Bob pasani, thank you. Now, i was out yesterday, but the litany of emails around the crummy two year note action. Two year note actions are practices for the psyche of investors for the fed. And much of the data, certainly not robust, but recessionary. If you look at down 18. 5, with regard to equities, we look at the unemployment rate. Theres a lot of asterisks there, and the Federal Reserve likes to look at the unemployment rate. All of that doesnt really auger, and thats one of the reasons yesterdays note had such low sponsor ship. 5s may be corrupt a bit by that dynamic so well pay for close attention at 1 eastern. If you look, you can see theres clear been a rise there but when you go to the 10s, on the looking at the same 155 to 158 numbers. Thats very important. Its about the economy and look at boones. What i find fascinating is did you ever think youd say 0 will be resistance to yields or it all depends how you look at it from a negative timeline. If you look at one month, one week at the dollar index void, its slow but definitely going up. In one month, the chart reveals weve gained 1 ya1 2, or parity for the dollar index. Carl, back to you. Rick santelli in chicago. When we come back, a year from separating from ebay, hes with us on squawk alley, but first, the ceo of dow component, greg hays. Stocks up on those better than expected. Dow is up 6 points. Were back after a break. Today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the cla250 for 299 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Time for crimer in stamer i trading. I want to talk about serious sal siris satellite. 1. 7 up from 1. 6 million from the last year. This is a remarkable term. There are 17 you know, the number of cars this thing is in, this thing is becoming standard equipment, and i think thats important because i remember when a lot of people thought it was going to go broke. Congratulations to the Management Team here for turning this thing around. Well, thats greg bufe, chairman controlled by liberties. I think it gets installed in used cars. Remember the average carr on th road is 12 years old. Congratulations. You give up on somebody i happen to love it. I love the product and my kids love grateful dead. Were on this grateful dead channel all the time. Its something families listen to and its going to be something that they first thought, which is its going to be universal, and it is. Yeah. Any way, i thought that out. Were going to do a little bit early. Whats on mad money . Weve talking about opoid addition. This is taking over the country. Richard pops has something that can stop it. This is the Worst Epidemic i know and weve had people die in my hometown, because of opoid addition and not being able to get off the stuff and we have beth moony from key. I dont think you can talk enough about the banks. Theyve been a strong sector. Boy, this retail is strong. Caterpillar is up. Market trying to avoid the first two day backtoback loss for the months. And the winner is United Technologies. I wonder what they have to say. Well find out. Utx ceo greg hais with us after the break. Hi daddy gain the freedom to fumble with the new water and shatterresistant Samsung Galaxy s7 active. Buy one now and get the samsung gear s2 for free. Exclusively at at t. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Shares of United Technologies are moving higher. The company beat the estimates of analysts on both its revenue and earnings lines and raised its guide ebs for tance for the. Greg hayes joins us from farmington, connecticut. Pleasure to have you. Thank you for joining us. Thanks very much, and good morning, everyone. Good morning to you. On the subject of cost, it came up a lot on your Conference Call which concluded. You said one of the key is you remain focused on Cost Reduction. Give us a little sesz of whnse that means. How much more can you cut and what will it be in . You know, Cost Reduction david is a way of life here at utc. We always talk about doing more with less. We announced last december were going to do 1. 5 billion of additional Cost Reduction thatll generate about 900 million in annual savings. I think you saw some of the benefits in the Second Quarter results. Even at Corporate Office expenses, weve cut that by 20 in the last year so were getting transaction in the overhead, on the factory, and product side. Cost is a neverending battle for us. People seem to be celebrating 1 yearoveryear organic revenue growth. I suppose you can celebrate it but it doesnt exactly sound like a huge growth business. Are you happy about it and is that environment you are operating in . Well, it is unfortunate the environment were operating in, david. If you think about it, year to date, were at about 2 organic growth, 1 in the quarter but were starting to see transaction on the aerospace side. Whitney had 4 , our Aerospace Systems had 2 growth. The commercial side was really hurt by slow growth in china where we saw orders for new equipment down about 14 . So still see the longterm trends as being positive around urbanization, around the growth of the middle class, but clearly weve got some shortterm head winds with the slow downs in china and less than robust growth picture out of the middle east and europe. Yeah, you mentioned otis no equipment quarters, as you sat down yearoveryear. How you know, its always difficult for us, we try to understand the chinese economy and i know you do the same. You may have a bit more visibility, but what are your assumptions in terms of the rest of this year and into next, what are we talk something 6. 7 is what theyre talking in early terms of gdp growth. Its certainly 6 1 2, or 6. 7 is a number in a 10 trillion economy. The construction where we sell most of the elevators, clearly were not going to see that kind of growth. In fact well probably just see very slow growth. We talked about a 14 reduction in orders. The actual unit sales att otis are up 4 . Were seeing a pricing environment, but slow growth on the industrial economy. All right, greg, jim cramer here. Hey, jim. Youre a turbo fan. Its been a long time anyone has innovative. This is taking the industry by storm. Why . Well, jim, its a great question. It really goes to the innovation theme that we have at utc. The geared turbo fan we currently have 82 firm and option orders from the engine, up over 100 in t,000 in the las. Its got 16 better fuel burn, 50 lower emissions, 75 lower noise and its really just an application of technology that we do better than anyone and its a great engine, its got a great future and we made a big bet, 10 billion to develop it, but its going to pay off now. We starting to ship the engines and the operators love it. All right, greg, gotta ask, youtube video, indiana factory, closing it, moving to mexico. Surprised that you became the face of nafta with the president ial candidate that hates nafta. Yeah, jim, its unfortunate. Obviously the decision to close any facility is a tough decision, especially as it impacts individual people. The fact of the matter is, we gave three years notice to the plant closure. We have an employee scholar program, which will allow us to offer retraining and education swibs assistance to all of the impacted employees. The key is, while we want to talk about this one particular example, we have to keep in mind free trade is the thing that grows the economy over time. And we shouldnt be worried about tearing up free trade agreements. We should be promoting free trade. At utc, we export about 10 billion a year, primarily on the aerospace side, and that 10 billion of sales is 40,000 of the highest paying jobs in Corporate America. So as you start thinking about trade barriers and tearing up trade agreements, think about some of the best jobs in corporate naerk Corporate America that is on the aerospace side. At the end of the day were going to do the right thing for the business longterm. You know, its interesting, of course mr. Hayes because the last time we had you here we talked about the bulk of our conversation why honeywell was not a good deal to enter into, but you had a brief mention of mr. Donald trump, and at the time had not become the republican nominee. You said, they could get the nomination right, but thats it. You seemed concerned about the idea of a Trump Presidency then. Are you more concerned now . Actually id say im less concerned now. I think were not going to get into the politics of this. We dont support one party over the other. Well work with both administrations. I thought last weeks speech was a little bit of an olive branch to business. The key though is we cant focus on populism at the cost of free trade. We have to find ways to support free trade and also reform our Corporate Tax code, which is completely uncompetitive in the world. I mean, let me quickly you have listen to what enter change yesterday at the press involving the republican nominee, mr. Trump, where he at least threatened to pull out of the world trade organization. Id love to get your response after you hear it. We have been working on trying to stop this government because we dont know what were doing, and not only aloma theyve been trying to stop this before obama, but they dont know. Theyve tried lowinterest loans. Some of these wont get through the trade organizations. Then were going to renegotiate or were going to pull out. World trade organization is a disaster. Its not clear to me, given youre an International Company with the bulk of your sales taking place outside the borders of this country why that kind of talk is not something you would conceivably be concerned about as the ceo of that company. I think, again, its political rhetoric in the heat of a campaign. The fact is, everybody bknows free trade is what drives growth. The loss of jobs to the Manufacturing Sector primarily driven byproductivity, not by offshoring and i think as people understand the real causes some of this reallocation of work to lowercost country, theyll understand we need to continue to support free trade. We went support pulling out of the world trade organization, but again its political rhetoric. Welcome ball come back to t business here. Last year, mr. Hayes, i was reading about one of your competitors developing an elevator that seemingly goes all over the place, not just vertically, but horizontally. Are you investing appropriately in otis to make sure you are not leap frogged by perhaps new technology that does allow for movement that we would not expect from an elevator . I. Spl i think youre referring to the suggestion we have a elevator in a super high rise building. Otis spends about 1 of sales on rnd, actually taking that up to 2 . We spend about 2 200 million an we have looked at some of the this technology around meg lift, and accepting some very highend buildings probably not practi l practical. The bulk of the Elevator Market is in that five to 25 step marketplace. We understand the technology. Weve demonstrated in our test hour, but its a long way from getting ready for the marketplace. Sounded like the elevator from charlie and the chocolate factory. Mr. Hayes we appreciate you joining us as always. Thanks for taking the time with us this morning. My pleasure, have a great day. Greg hayes, ceo of United Technologies, better than expected earning and guidance has that stock up about 2 . And aerospace is not done. Thats one of the reasons the market is moving, taking ge in terms of that engine. Dow almost perfectly flat. Well get more after a short break. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. Good tuesday morning, im carl quintanilla, sara eisen, david faber, the new york stock exchange. Were literally a wash in e. R. A. In earnin earnings, but that fed decision moving, crude remaining troublesome, now below 43. Lets put some data into the mix. We have Consumer Confidence, with Rick Santelli in chicago. Does anybody remember what they were doing valentines day 2008 . Maybe you were buying a home. Todays number, 592,000 on the june read of new home sales is the highest since february of 2008 and thats followed by 572, which was an upgrade, but do keep in mind for a little historical perspective, 1. 39 million was the High Water Mark in july of 05. Now from the Consumer Confidence board, 97. 3, better than we were looking for, and it follows 97. 4, which was the comp last time we were here which was rest graded, downgraded from 98, so that came down a bit. Two backtoback pretty solid numbers and finally July Richmond fed Manufacturing Index at 10 when we were expecting minus 5 and follows minus 10, but 10 is the best since april when we were at 12 what was it . 14, im sorry so the data points were better than expected, which is a trend of late, but as i look up at the yield board, hardly noticed on the long end, a little bit hotter on the short end and 34 billion five year notes at 1 eastern. Lets see how investors look towards the recent data and how they get involved this that action. Well cover it. Back to you squawk on the street. Rick santelli in chicago. Shares of mcdonalds after showing a slow down. Whats it going to take to get mcdonalds back on track . David palmers restaurant and package food analyst at rbc food capitaling. Good morning. Good morning. You write that u. S. Comp you still think mcdonalds is outpacing its competitors by about 50 basis points. How . Its really not doing it with too much value. They have the two for 5, its not doing much on traffic. Theyve obviously had somewhat of a hit with that platform. But they need to figure out ways to stabilize traffic from here, theyre making a lot of money at the restaurant level. Margins were better than expected but clearly traffic is going to have to be a priority from here, renovation is going to have to be something they work on into 17. All Day Breakfast will be an ongoing gift that keeps on giving but clearly they need to figure out a value platform, as well. Jeffrey, what happens to industry traffic in q 2, and what explains the rather dark view of restaurants among some of your sellside colleagues today, stifel going negative because they see a recession is eminent in. Clearly the quickservice category had a Strong Performance to close at 15 and that continued into early 16, so it did slow from those peaks but most would still look at the restaurant category and see Quick Service is outpacing the restaurant, so its just a broader macro question. Mcdonalds is clearly not immune to the industry pressures but as long as mcdonalds is not losing share is hold on to their share gains and you know, again, the key in the back half of the year is more about value, continued breakfast, some increased digital offerings. We expect them to chal everything whenge the out pace category. Mcdonalds is teaming up with pokemon to get people to go as a destination into their stores but are they doing enough when it comes to the Digital Strategy and what metric do we look at to determine an answer to that question . From the survey work weve done, the Convenient Stores for mcdonalds are just average. They should be at the top of the heap. Thats what their brand stands for. Digital interaction will be one way do that. They could do more with direct consumer marketing if they do some of that stuff and if something is highly interactive as pokemon go, that would be a huge win into the u. S. , but no word on that yet. But clearly, that together with food ingredient news is going to be the way these guys can figure out a way to win. David, let me pick up the point carl was taking about these barrish noises coming for the industry overall. He mentioned stifel. Theres also a note out from jeffries where theyre calling the restaurant cycle because of growing past and whats been happening with wages. Same question to you, really, is the industry going to be in difficulty here. Have we seen the best for now . If thats to me, there is a new normal that weve reached in fast food in the u. S. And thats about a 1 comp with a negative 1 traffic. Modest growth, it is tough out there. Food deflations the norm. We dont have the gas tail wind weve had in the past. From here you need to find a way to win share if youre going to have positive traffic and for a large brand like mcdonalds thats going to come down to value and blocking and tackling around in dpregredients and oth enablers. Somebody else is going to be eating somebody elses lunch. No question. Theres going to be some losers out there and one of the things were going to find out as comparisons get tougher for the wendys and mcdonalds and for those that have had value platforms in the past like a burger king, can they keep it going. Theres some questions for the second half that needs to be answered for sure. Finally jeffrey, really quick s there a political regulatory trade here as it relates to pressure to increase the minimum wage . As it applies to mcdonalds . I mean thats been in talk for a while and marcdonalds too the lead on that raising wages in 15. They will have lapped their big increase, and the twofold benefit, is if youre paying higher minimum wages, thats mcdonalds customer that ends up walking in with more dollars in their pocket and the other intriguing part is mcdonalds and their quickservice breath win are somewhat franchised bearing the frubrunt of the higher labo costs from a corporate perspective. Jeffrey and david, interesting trade as we see mcdonalds down more than 3 . Thanks, guys. Speaking of politics, democrats said to officially choose Hillary Clinton as their president ial nominee in philadelphia today. But Party Leaders do expect a continued fight from defiant Bernie Sanders supporters during the roll call vote after sanders calls for unity and spoupport lt night, listen. Any objective observer will conclude based on her ideas and her leadership, Hillary Clinton must become the next president of the United States. But it was first lady Michelle Obama who many say was the highlight of night one delivering an emotional speech in support of clinton, but taking several jabs of donald trump. Dont let anyone ever tell thank you country isnt great, that somehow we these to make it great again, because this right now is the greatest country on earth. We are joined now by ben labolt, former senior advisor, and sara lag fagan former polit director to george w. Bush. How much are your republicans being hailed a powerful and passionate speech by the first lady and. She did a great job. It was one of the better political speeches what i heard in a long time. She didnt actually mention Donald Trumps name, but she made her points very clear about her views that he is not fit to be commander in chief. Having said that, people dont vote on what first ladies say at conventions or perspective first ladies say. They vote on the candidate, and this is a choice between two very different ideologies and donald trump while he has clear challenges, appears to have gotten out of the convention what he needed to have gotten and the race is quite close in many of these battleground states. Ben, i mean, clinton does have a problem with popularity among women, so does donald trump, and a lot of people say i v vanka went a long way. Does Hillary Clinton go on that sne end . It was one of the best speeches the first lady had ever given. She did it through the eyes of her own children talking about some of the hateful rhetoric that donald trump has perpetu e perpetuated even before this campaign. But in terms of the female vote, i think that not only was the first lady effective, but senator warren was particularly effective last night. Were hearing things at it this Convention Like fighting for equal pay that donald trump has opposed throughout his career. So, i think theres clear contrast between these candidates. Just want to broaden the equal pay discussion. To some of the other economics that continue to come up, sara, what stood out to me if watching the coverage last night were the no tpp signs everywhere from the bernie supporters and really youre hearing this at both conventions, protectism on the rise, when did tpp become the politic political punching back . Its really interesting because i think probably a huge swath of voters could not say what tpp stood for. I that just know they believe trade is no longer helpful to workers in the United States. Its been a mantra in the Democratic Party for a long time, although president clinton having signed nafta, i would say democrats have moved quite far to the left. This is president obamas own trade policy. It is. So his delegates to his partys convention are rebuking him and out of respect for the president , you know, many of these leaders have shied away from that issue. Its a real problem in the Republican Party though, as well. You didnt see it quite to the extent that you did last night in philadelphia, but donald trump is very far away from the tenants of the Republican Party and from leaders in the house of representatives but the base of the party is where donald trump is and so i think that both parties are going to sort of continue to push protectionism for Different Reasons and different forms, but nonetheless, i think business in america is going to via rehave campaign this is how we grow and put people back to work. Then whats the view at the convention now where we are on the wikileaks leak . Obviously we had the resignation there was a suggestion from Clintons Campaign manager again is that the russians were behind this and donald trump last night just dismissed the idea that vad mitt romney Vladmir Putin issues with russia. Is it dying or act sniff. I think how the republicans and democrats dealt with the issue of plagiarism, during melanias speech. Democrats took quick action ash wasnt a chair this week. In early its of russians, we saw the Republican Convention edit the platform to be friendlier towards the russians and weve seen donald trump praise our adversaries at the same time as hes undermining things like the nato alliance. In terms of foreign pot see, this has been really illuminating. Were going to video to leave it there well see what chintcl tonight. Thauks f thank you for joining us. Coming up, davids interview with joseph swedish, to combat the doj suit against that megamerger with sigma. Squawk on the streets will be right back. Rock male 1 the department of justice, anthems purchase of sigma and humana, both companies now going to court to prove their deals are not anticompetitive joe swedish joins me now on a cnbc exclusive. Nice to have you come down, thank you. Great to be here. First time weve heard from you in this sense since the doj came out. Joe let me start with the fact given and reading the complaint, there doesnt seem to be in the part of the doj much room if any for a remedy in their mind for your deal. Why are you choosing to go to court rather than simply saying, okay, and perhaps standing by for what may be divestitures if aetna and humana does go through . Were very disappointed with the decision. We believe the decision blocks access to consumers to affordable healthcare, thats high quality, and gives great opportunity to the American Public to take advantage of two great companies. In fact, were very concerned about the outcome in the context of that blockage of the consumer to the access that i just mentioned. We do intend to litigate and we do intend to rpursue of the development of the facts as we presented it to the department of justice and we once the facts present it, we will prevail. Why double that would be the case . For example, what is the largest thing that you believe that doj has simply gotten wrong in their objection . Question, our sense is the pursuit of the facts, throughout the investigation by the doj. We made very clear that there are a number of benefits to consu consuming public. Number one, as an example, were bringing 2 billion in medical cost savings to the consumers pocket. Number two, we proposed that we would access nine additional states bringing in as many as 1 million uninsured members to the Public Exchange marketplace. Those are just two facts. There are many believes that we believe did not get considered and we hope to present our facts clearly so we believe we will prevail in the end. Yeah, now of course the judge has already been appointed here, but we dont know a trial date. What are your expectations in terms of timing because that certainly plays importantly for your investor base. Timing were expecting maybe a four month trial and hopefully the trial process will begin in short order but we dont have specificity around the logist s logistics. But in any event were hoping for a speedy end of the trial once the facts are presented. S a noted by many, including myself that your merger partner sigma, chose to put out a accept pretty press release and used language that made people think you are not necessarily on the same page. Sure. They talked about if it happens at all, and they certainly said they were considering their options. Weve ladder about some difficulty in you two dealing with each other. Does it make it more difficult to pursue your case and give us the sense why you dont see that being the case. In combination of this scale you always expect dynamic tension. So two companies trying to come together with Management Teams reflecting on best of breed combinations. Obviously there are puts and takes and debates as to how that combination works. More critical is we have to go back to the very beginning together with cignas management. And covered the combo brings credible value to the marketplace. Number two, we took that proposal to the boards. Both boards approved the combination and finally, we took it to shareholders and got unanimous approval by the shareholders. We feel if you go back to the very beginning and the core of why were doing this, were on the right path and weve got facts now that demonstrate that this transaction should be approved. All right. But if youve got one of your merger partners that seems to and this is my want to get out of the deal. It would seem to me to make it more difficult to pursue the effective defense you need to. And let me pause that statement just for a moment. Sure. Theres nothing that has led us to believe they want to leave this deal. Okay. So i cant reflect on a speculation of that nature. I do know i go back to the beginning, nothing has changed, the value is still there for the consumer as it was then, it is today, and those are the facts that we will present in the court proceedings. Some wonder whether you can litigate the fix, you can have divestitures in hand by the time the trail starts s. Th. Is that something you may do . We know remediation plans are a possibility for continued dialogue. We welcome that and hope we could resolve our differences of opinion regarding the facts in an acceptable manner that delivers a great outcome for the consumer. Now, those pwho prognosticat, believe the aetna humana deal has a better chance of getting past than does anthem and cigna. If you were to be blocked by the judge or uphold the injunction and they were allowed to go through, would that damage anthem in terms of its Competitive Position . Well, i dont want to speculate where the judge is going to end up with this. I think thats a very important matter for me tour underscore. We have such strong faith in the facts we believe we will end up in a position to prevail in terms. Marketplace. Weve got two companies coming together and the fact that we are presenting our case together, we will make it very clear to the judge that this is a combination that has to move forward. Right. Specific to some of the concerns of the government they point out in their complaint youve been able to explain how the problems created by anthems problems by blue cross and blue shield. For example, anthem calls other blue plans comrades and arms and works closely with them to win National Accounts from sigma and other insurers and say after this you dont cigna, youd be competing against fellow blues for the same National Accounts and they say that you testified you did not know how the company would resolve this conflict of interest. Yes. Well, first let me underscore that we believe the combination of these two companies is pro competitive. Now, we are bringing to what today, are our 14 states we serve, a pro competitive model by combining the two companies. We have repeatedly said to the department we will compete as cigna outside of our 14 states. I can simply say emphatically, well be competing. We compete within the Blue Cross Blue Shield community of association hospitals, and i would say that its a stretch to say were breatherin in arms. We are competing and given to the scale of combination through companies we will be pro competitive taking better products and pricing to the marketplace. And finally the exchanges under the aca. You were one of the largest, if not the single largest participants. What would this mean if the deal was not allowed to go forward in terms of participation in the exchanges . Couple points of view. One we made it clear we expect to go to nine additional states to get into the public marketplace, hopefully capturing as many as 1 million new enrollees. Many, many of whom are uninsured. I could thats great value to the marketplace and to the American Public. Number two, we have witnessed the Public Exchanges continue to transform. We believe theres been some stabilization, but we look forward to even more regulatory and potentially congressional action that stabilizes the marketplace. We have to have reliability and predictability in the marketplace. When you put all of those facts and figures together, i think we will it know to grow. We have the biggest membership capture today. Even if you lose this court case . At 975,000 enrollees today, were virtually the largest in the public marketplace. With the combination, potentially adding 1 million more members, its a wonderful opportunity to gain healthcare at a better quality and price. Ill let you end on that note. Jo joe swedish, chairman and anthem. Sara . The dow is way down, much more than mcdonalds. More squawk on the street when we come back. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. We have some breaking news on goldman sachs. Let get straight to kate kelly. Reporter a shareholder and former client has sued the managing director for fraud and breach of duty file in a new York State Court accuses goldman of fraudly inducing a Malaysian Bank called eon capital to use goldman as their financial and takeover bid of another bank. They say goldman had a conflict of interest in 2011, allegedly an effort to have curried favor with the malaysian government, now the suit seeks at least 510 million in damages, the latest wrinkle in this scandal involving 1 db, 1 Malaysian Development bank, to establish malaysia as a Development Center in 2009, but seems to have led to a broad misappropriation of funds. A week ago, the u. S. Department of justice filed to seize assets and surrounding have been snared a number of malaysian officials. Another element in this unfolding story. Kate kelly at the exchange for us, thank you so much for that. When we and back, it is dnc day two. Grover norkwurksquist of tax re joins us next. The dow is down about 5 points. Announcer theyll test you. Try to break your will. But however loud the loudness gets. However many cheese puffs may fly. Youre the driver. The one in control. Stand firm. Just wait. [click] and move only when you hear the click that says theyre buckled in for the drive. Never give up till they buckle up. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Im bryan sullivan. A man killed 19 people and injured 25 more in a knife attack at a facility for the mentally disabled at a tokyo suburb, the worst killing spree in japan. He broke into the facility this morning, stabbing 44 people before surrendering to police. In france, isis taking responsibility for a horrible attack in which two terrorists invaded a Normandy Church and killed an 84yearold priest. They were then shot and killed by police. French president hollande called it a vile, terrorist attack. And thats not all. Somalia, two suicide bombers exploded two car at a somali checkpoint, and killed 13 people, six others were injured in the two blasts. And los angeles county, some of the 20,000 residents are returning to the rubble. The socalled sand fire has burned about 10,000 acres a day since it began on friday. There has been one death reported. And that is our cnbc news update for this hour. Back to you. Bryan, thank you very much. It is of course day two at the Democratic National convention in philadelphia, our own john harwood is already there and he joins us now. I suppose its important to point out at the very least today is a moment in history, were going to get a woman nominated for president by a Major Political party that in itself is something. Its a huge event that Glass Ceiling that hillary said she put 18 million cracks in eight years ago now has been shattered and shes going to be nominated tonight. She still has to unify her party though and shes going to get some help from Bernie Sanders. He did everything he could to rally his spoupporters behind t presidency. He was still working this morning when he spoke to the california designation. It is easy to boor, but it i harder to look your kids in the face who would be living under a donald Trump Presidency. Reporter now that theme of children tracked the theme of Michelle Obamas speech, which was the Emotional Center of nominating day. Michelle obama who has spoken at past democratic conventions was at her best last night. In this election and every election is about who will have the power to shape our children for the next four or eight years of their lives. There is only one person who i trust with that responsibility, only one person who i believe is truly qualified to be president of the United States, and that is our friend, Hillary Clinton. Reporter tonight well hear from former president bill clinton, has beening the addres these issues, and Bernie Sanders may have one more statement, there are discussions of him officially nominating her at the end of that roll call. Well see if that materializes. Is that partly because theres still a concern many supporters are not going to get behind clinton . Everything that they can do to bring those supporters together will help. Theyre going to have the roll call, call of the states, which is something that will be cathardic for those Bernie Sanders delegates to call the roll of how many votes for sanders. Of the question is, is Bernie Sanders going to step in and say, i move the nomination of Hillary Clinton. She did that for barack obama in 2008. It is customer as a unity move to provide a gesture on the floor and Bernie Sanders may do it, too. Okay. John, for a moment, thank you very much. John harwood at the dnc. Meantime, Hillary Clinton is planning raise taxes on those earning over 5 million, by 5 , and going to hike some rates of capital gains. Heres what she told cbs 60 minutes last weekend. Who gets a tax increase . Who gets a tax cut . The middle class will not get a tax increase. That has been my pledge. What does miss claddle class . We say below 250,000. In direct contrast to Donald Trumps plan, appearing at tax savings at all next levels, including those at the top. Joining us now is grover norquist, president of americas fortax reform. Welcome to the program. Good to be with you. Your perception, rates of income tax are not of this election the hotbutton issue that they once were . No, its a very important issue. Hillary clinton has gone to Great Lengths to tell people she wont raise taxes on anyone who earns less than 250,000 a year. Thats what her husband did when he ran, thats what obama did. Both her husband and obama raised taxes on middle income people, but they did get through the election before they broke that promise. Hillary hasnt even gotten through the election and because of the pressure from sanders, she said she would sign a wage tax, a tax on all people who earn any income at all, she endorsed that philadelphia tax on soda pop, particularly hardhit handwriting lower and middle income people. So shes already told you that even though she promises she wont raise middle income taxes, shooe shes endorsed it over, and over again. And of course massive tax increases, 1 trillion is what shes admitted to. Thats two series of taxes on individuals, one on businesses. It means Business Tax Reform where we need lower rates is impossible under hillary, because she demands so much money in higher taxes from the business community. Its a very pro tax, high tax position and the Democratic Party, if theyre last minute, at their convention, just endorsed a carbon tax on top of everything else. A carbon tax. You heat your home, if you cool your home with airconditioning, if you drive a car, anything that that uses energy in the country will be more expensive with a carbon tax just endorsed by the Democratic Party platform thats nominating hillary. Its one tax after another versus trump, who said hes not raising taxes net and whose calls for fixing the business challenges, which is our 35 rate makes us uncompetitive with everything in the world, he brings that to 15 so were below china, below canada and england, still above ireland. European is at 25. Were at 35. Of course you have adversions with that, and hillary cant fix it because shes too busy raising taxes. I read several times it would appear last week at the rnc, you were toasting the gops position on tax. Just remind us where we are on the personal what you perceive the promises from trump or the trump camp on personal taxation is this. Theyre going to reduce rates for everybody. Theyre going to go to full Business Investment expensing, full business extensioning rather than depreciation. It will take jobs and growth up to 4 instead of the 2 minus that weve been living with for the last 7 years under obama. This is the lousyist recovery since we started measuring in the 60s and shows with a lack of jobs. Youll be aware there are a lot of people donald trump is concerned could balloon the deficit and we know some of the advisors our own larry kudlow, is trying to warm back some of the projections. You feel with clinton, you feel its kind of already there it is what it is. With trump, there is a perception and correct me if im wrong, that a lot of the policy and the detail is still influx. Theyre working on his its specific tax policy, but keep in mind, if trump is elected president , paul ryan, speaker of the house, and orin hatch, the head of the finance committee will sit down with trump and theyll come up with a tax propos proposal. The tax republicans already have a very good tax proposal, revenue neutral. Its very close to what trump is talking about in many ways and the septembnate is looking at t same thing. Its very easy to come to agreement with those three groups, the house, the white house and the senate, thats progrowth and revenue neutral, or doesnt break the bank on spending. This last president just about doubled the deficit while raising doubled the debt by raising taxes. Im not worried that trump would do worse than o bottombama and. Dont you think trump should release his tax returns as a matter of good faith . This is common practice at this point . His tax returns are his business. Theyre not the governments business. If the ers thought there wirs t problem, theyd be yelling at them. Hillary is trying to distract people from what is the publics business is the hiding of the emails and the russians have those, as well. I would talk about Donald Trumps taxes in order to avoid the law she broke in taking government emails, secret emails and putting them on a private server, subject to other countries looking at them. Finally grover, did you say a signed ple sign pledge was necessary. Absolutely. Weve asked all the candidates to take the pledge. Hillary clinton is on the record saying she wants to take the pledge. The pledge is no net increase. All but two signed the pledge. Jeb bush didnt sign the pledge. His brother did, and he won, but he didnt, and trump has not yet signed it. Or the campaign told me they did sign it. I dont have it yet, when we have it well put it up on the web site, but i dont count it as a written serious commitment to never raise taxes until all americans can see it. I expect that will happen, ive been told repeatedly boy ty the campaign it will happen. I vote for sooner. Okay. We look when you post it, let us know. Will do. Maybe they could know cludetclud include the tax returns at the same time. And as we take a break, sales strong, jumping 28 , especially in footwear and international, but marshagins w a bit disappointing and perhaps investors are worried about under armour taking on that faosharz. Well be back on squawk on the street. Openingslashclosing night it hit me hats for cats. Everyone said i was crazy. When i went online. I got my domain, catswithhats. Com from godaddy. Now these things are feelyin outta here. Got a crazy idea you think you can turn into a success . We know you can and weve got a domain for you. Go you. Godaddy. One market poll thinks we could be due for a very rocky august yesterday again. Find out what he has to say about trading nation at cnbc. Com. More squawk on the street coming right up. Dow is off 26 points. S p stays positive. Let get to the cme group, Rick Santelli of the santelli exchange. Good morning, rick. Good morning, and thank you, sara. Id like to welcome former dallas fed jp, jerry odriscol. Thanks for having the time. Thanks for having me on. Okay. As i read everybodys notions about what will happen on this cricket, krcricket, havent hea much about the two day oppressor. Nothing in this meeting, nogueira in september. Are those your thoughts, as well . Yes, those are my thoughts. First off, the Global Situation argues again it ast it, and sec, theyve not shown the courage of these convictions. Every time theyve taken a step forward, markets start getting shaky and theyre just not prepared to be blamed for financial turmoil. Its interesting the way you frame that. Basically what youre saying is if i look at it and im objective, when the fed talk about normalizing, markets become kind of lose their personaliti personality, and turn into dr. Jek and he will mr. Hy jekyll and mr. Hyde, but isnt changing the it ddid i did am thattic tha dynamic. Is that how you feel . Theyve got to break a few eggs to break the om selet and dont have the courage of their convictions. Lets look at it another way. Theres always going to be global turmoil and especially now in a world filled with all of these wild terrorist attacks around the globe, we hear about it every day. Yeah. The politics of europe is going to be very messy for the next couple of years. Theres an election. They cant tighten. Theres an oppressor maybe they cant tighten. The reason i hear is dollar strength, so im going to ask you on the record as a former dallas vp, is there some secret locked in a desk somewhere on how to race rates without strengthening the dollar . Because i dont think there is. No, theres no secret, and i think that at the december meeting, when the election is over before the year starts, they might just sit down and say, look, if we dont do it now, were never going to do it. So i do sees a possibility ive been saying it since the beginning of the year, theyll do it in december. I hate to go into politics, the other thing that keeps jumping out at me, we did get one tightening, but virtual for the two terms of this president there has been nothing. This administration is pretty proud of their record. The dnc is pretty proud of their record. How do you square that record with the fact that their own fed with their own appointees doesnt have enough confidence in the economy to raise rates from virtually nothing, they did it 25 to 50 . Your final comment. You cant square it, but i think again that argues that theyll finally say in december, look, we have to do it or well have disgraced ourselves. Thank you, jerry. Always interesting to hear your thoughts. Simon hobbs, back to you. Coming up at 11 00 a. M. Eastern, dan shulman, the ceo of paypal. Scared the stock market last week when that Partnership Came through. Well have clarification from the man himself on squawk alley. Youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. You 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. What did you find, steve . Lets get right to it. The outlook for stocks, i guess lame is the best way to put it, or baked in is another way to put it. You see rising less than 1 , just about 4 in 2017. John roberts of Hillary Lyons writes december we remain marginally positive, but believe most of the years gains are already in place. Not true in the next chart, the tenyear yield is seen at 175. 210 was the prior outlook, so just up marginally, so interesting rates are seen staying low. You can see there the other chart has come back. Look at where we are, that same 2 growth expected this year, slightly better next year in the context of somewhat byrne inflation or higher inflation. 157 this year, and 2 next year. I think thats one other thing i want to share is the probability of recession, coming down just a bit, but last year this time was down in the teens. John augustine writes the u. S. Economy is currently in a sweet spot. Stocks up, yields down, gas down. Not sure how long it should last. Americans should take advantage of it while they can. A sara back to you. Cheered me up. I think marginally positive. Take your pleasure where you did, eisen. Lets send it over to jon fortt with a look at whats coming up next. Good to see you, job. Good to see you. Apple and twitter, big day for tech earnings. Will apples be able to outperform. We have paypals ceo will who join us on squawk alley. Finally the dnc, a rough night last night. Where do we go from here in all of that and more coming up on squawk alley. Hello prashant bhuyan. Cofounder of the Fintech Services startup. Hello watson. Your analysis of social media and conversations on various trading floors, helps us uncover insights. Insights that help investors predict market closes, well before markets close. You know, your analysis has helped us improve our predictive accuracy by over 500 . 550. 2, to be precise, but we can always do better. I like your attitude watson. This just got interesting. Why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card stop taking cialis and get medical help right away. Were drowning in information. 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. Its time to discover that in a lexus suv. Theres no such thing as adverse conditions. Come to the lexus golden opportunity sales event this is the pursuit of perfection. Good tuesday morning. Its 11 00 a. M. At the democrat convention, and squawk alley is live. Thats the theme for its always sunny in philadelphia a little nod to the dnc. Good tuesday morning. Welcome to squawk alley. Is it always sunny in philadelphia . Hard to say. A lot of tension this week, and calls for unity marking day one, or john harwood is there with the latest. Reporter sometimes its ease are to forget how much our country has changed and how rapidly. Just eight years ago president obama became the fst