Transcripts For CNBC Squawk On The Street 20160815

Rallied on the opec headlines in the last few sessions. Honeywell going into software, tpg buying two cable companies, work day with a cloud deal. And apples ceo on the record. Tim cook commenting on declining iphone sales, succession plans and saying ron johnsons hire was, quote, clearly a screw up. Much more from the Washington Post interview coming you. Clinton victory better for stocks. The cover story of barons today. The numbers behind that. And then, of course, week two of the olympics, we just saw andrew playing some table tennis. That form he just demonstrated is not reflective of his true ability, by the way. Do you think he got it was good. Do you think he was told to wrap and decided to muff that one . Maybe. Were go egetting a lot from an. A good week in rio. Yep. What was the highlight. Seeing what its trying to do for the city of rio and the economy of brazil is going to be i love the way olympics sort of operate on a parallel track to history. Right. We see it in beijing, saw it in sochi and this once again is a truly interesting developing economy story as we even though we Pay Attention to the likes of usain bolt. Was there local enthusiasm for it, magnitude you would expect . Theyre warming to it, would be my argument. Early on a lot of skepticism about the value of hosting these games. I think theyre beginning to get a sense of the party. We were just talking about some of the highlights for us watching on tv, the big star, usain bolt, they put on a show. A lot of the favored gold medalists actually did quite well. Who garnered the most attention, would you say, in your week . You know, if i had to i think the star of the olympics is ledecky, even though phelps numerically is a bigger star, she really reflects where team usa is trying to take the next generation of athletes and shes the biggest Success Story there. A stunning run for team usa. Meantime stocks are on a run of their own hitting record highs in one of the calmest markets in two decades. What should investors make in the collapse in volatilitity which has surprised most of wall street. Mike santoli has a column out on cnbc pro about the volatility vacuum our markets guru peter shack called this the modest melt up. Its been edging higher. Almost any way you measure it, you can do it many ways, one of the calmest markets in decades. Of the last four weeks some say its the tightest trading range, 19 of 21 days, less than a half percent move in the s p 500. Of course the vix is below 12. Thats obviously very low end of its historical rate. A lot of conversation right now as everybody geared up for lots of volatility this year. Buying protection against volatility, crowding into low volatility Consumer Staples and other stocks, dividend yield plays. What does it mean . The kneejerk reaction, too quiet, maybe we have to see a volatility pop, buy some protection. Thats too simplistic. The market can stay calm a long time. Its a result of general agreement that outlook has stabilized, but where is it vulnerable, fed outlook, getting Inflation Numbers this week, jackson hole conference next week, all that stuff can disturb this idea that were in this kind of static, kind of nothing can really upset the market type environment. I do think it makes sense, therefore, to expect volatility to pick up in late august into september, but that doesnt really necessarily have to upend the trend. The trend is there. The credit markets are not giving you a lot of clue, for example, that this is a very vulnerable stock market right now. Because why, because high yield didnt chase oil into the nervous nelly . Look at high yield spreads by sector all are improved. People can say look, its because Central Banks are being generous and all the other reasons, but in general, the tape has been Strong Enough and youve had some of the cyclical sectors come around. One issue treasures have stayed at 1. 5 and the Interest Rate sensitive stocks have managed to hold up even as the groth oriented ones have improved. A lot has gone right to get us to this point. I dont think you can deny that. Interesting to see the record highs come in the week of mixed earnings, mixed Economic Data, hasnt been all good news and continues central bank support. That seems to be the common thread. Joining us with their view, the chief u. S. Market strategist at rbc, jeffrey is the chief investment strategist at raymond james. Good to see both of you. Good morning. Im thinking all of the warnings about how bad august would be at the beginning of the month historically not a kind month, is it too quiet as mike said. No. Mike nailed the story here. The reason that the markets are quiet not because investors have gotten dumb and complacent, its because the economy is in this sweet spot where the Economic Data is coming in slow, steady, very few real big negative surprises, and its the underlying economics and earnings that are really causing this period of kind of steady move higher, rather than investors going to kind of being lulled to sleep on this. Jeffrey, if i see another story that leads with, last august, the chinese devaluation, why is that why are people trying to use last year as a corollary . Because theyre always looking in the Rearview Mirror than forward looking which what is the equity markets are doing and your other two guests have nailed it. I do think that earnings have come in better than the lowered bar expectations. I think that will continue Going Forward. Youve got very easy comparison coming up in the third and Fourth Quarter because last years earnings were terrible. And i do think the market is in a transitional phase from an straight driven bull market to an earnings driven bull market. How do you measure valuations right now, jonathan, now that weve had this record run . Is it still the case that they look pretty decent, relative to bonds and since theres no other alternative you have to go in even if they get more expensive. Where we are and what the range has been historically. Were at 17 multiple on stocks, the average has been 14. The range has been from 6 to 24. So we are closer to average than we are to anything thats extreme and, you know, you were saying before, stocks are returning stoch capital to shareholders as compared to what a bond is, that investors are just being forced into the equity markets and i think were still, i dont know, third inning, fourth inning of this trade, nowhere near done. Jeff, you mentioned investors look in the Rearview Mirror, harkening back to the shocks of last summer, but doesnt it mean when the market has been as calm as it is, maybe were not as prepared for whatever unknown shot might come and disturb things . You know, you cant really predict black swan events. I can tell you the equity markets dont care about the absolute of good or bad. All the equity markets care about are things Getting Better or worse, and we think things are Getting Better and going to continue to get better. Does that include wage growth, jeffrey . You know, youre looking at openings now outpacing hiring and the jolts data. How close are we to significant wage growth, the kind weve wanted for a year or two . When i was seeing accounts in baltimore and philly and new york last week, i think the ceo of paychecks granted its small companies, but he said their average company wage growth was up 3. 7 year over year. So i do think youre getting a hookup in wages across the country. Did you see the cover of bar barons this weekend, its starting to look like hillarys world was the cover, saying that when it comes to the stock market, hillary would be easily digestible and the bottom line was, status quo. Do you agree with that . Yeah. I probably do agree. I think the market was probably discounting Something Like that even before even before the last couple weeks. But its really clear at least in the polls data that, you know, trumps run for the presidency is looking less likely and hillary is someone who we know better for her policies are more similar to what were experiencing under obama. If that does reverse and he starts to gather steam again, in the next few weeks, or months, i mean theres still time for that to happen, what would that mean for the market . On one hand the cutting of the Corporate Tax rates and there are Certain Industries and barons go through them that benefit from trumps policies. Would that be a net benefit to market . If you look at where trump represents for a lot of folks its a question of uncertainty. Even some of the policies hes espousing hes the first one to say this is a starting point for a larger negotiation and so, therefore, the market is not going to know where things end up, whereas i think that the markets perception of hillary is what were seeing right now in terms of the general world order what is were going to see under a Clinton Presidency. Jeff, does the Election Year pattern, do the way the markets are handicapping this election, resonate in terms of how things have happened in the past . Are we basically writing a new script here . No. I think theyre following the pattern of the past. I actually a week ago yesterday, i was on capitol hill with two insiders, beltway insiders ive known for years since i used to live there and they give a tip of the hat to Hillary Clinton. Whoever wins the white house they think wins the senate as well, so right now, at least the people i ta you clk to, think h wins and the senate flips. And thats okay for markets at this point . They did mention an interesting word, a greek word that means the ruling by the worst possible people and then they added, in a country free of 111 million how can we select these two as the best candidate to run for president . I think the big story here, one thats starting to get some more momentum, is that regardless of who wins we are likely to see more fiscal stimulus on whoever is president next and so this market environment is likely to do a pivot towards cyclicals and banks and materials, once we get much more clarity on whether and what exact type of stims we w e stimulus were going to see. This lead by defensive sectors could change in 17 which would throw, you know, investors on one end a great opportunity want to own banks under a Clinton Presidency . Barons points out shes a supporter of the Consumer Protection bureau and not as friendly as say the trump view of scrapping dodd frank. And like i said were talking about under either president , but i think that what youre looking at is if you see a pickup in demand that is forced that way by fiscal stimulus your why going to see a pickup in Interest Rates that will give relief to banks, better for m a activity which is good for the banks. Not necessarily good from a regulatory perspective but the other issues will be important for a variety of cyclical parts of the economy. Jonathan, jeffery, thank you. Have a great week. Good to see you both. You bet. When we come back tim cook approaching his fifth anniversary as the ceo of apple. We will fill you in on what he told the Washington Post in an eyeopening interview. Take another look at the premarket. As we kick off a busy monday morning. More squawk on the street from post nine at the nyse is straight ahead. Youre here to buy a car. Tim cook approaching five years on the job as apples ceo. In an interview he said running the most valuable company is, quote, sort of a lonely job but added hes not looking for sympathy and expressed optimism about the future of the iphone. Over time im convinced every person in the world will have a smartphone. The greatest market on earth from a Consumer Electronics point of view. That level of performance is going to skyrocket and gets a little more granular on the challenges of the phone cycle. Sure. Namely the Media Attention and demand for something bigger and better every single time. You know, i guess it would be comforting on one level to hear cook say to investors, look, the iphone has a tremendously bright future, its the platform that were going to be relying on for a long time but a little bit of misgivings about the fact that he doesnt have something else, you know, so to speak in his pocket or at least thinks that it has to be some revolutionary quantum leap next. They asked him specifically what about the next big thing. He said were not saying were not going to be doing anything else, but yes, the iphone is still an unbelievable product category to be on. I thought it was notable what he said about Corporate Taxes and the fact that apple gets called out for stashing all of its cash overseas. Why cant you bring it back and the fact that some members of congress have gone after him. He says its not a matter of being patriotic. It doesnt go that the more you pay in taxes the more patriotic you are. We dont have a competitive tax rate and i thought that was notable because that is a hot button issue on the campaign trail, something that donald trump wants to do is lower the Corporate Tax rate from in the 30s to 15 . Yeah. And then on that retail person where he said i hired the wrong person for retail talking about former nixon john brawit initially bringing that in the fact that he admitted that. Post tries to pin him down on other big projects namely a car. He said we always viewed that people love surprises. We dont have enough anymore in our lives. Look at how movie trailers are previewed in a year in advance. We generally know whats going to happen when a movie comes out and that is going back to the jobs culture of 15 years ago where they held their cards so close to the vest. Although becoming harder. Yeah. I mean, there have been so many leaks on the iphone 7 coming up. The nikkei last week saying its going to be an all glass iphone. I guess thats the next year iphone, tenyear anniversary. With iphone 6 about april, close to half a year before the launch, the reports were basically accurate about what it was going to have. Clearly not going to be a surprise with regard to the iphone 7 necessarily but whats interesting about cooks stance that the world loves surprises and Just Trust Us in a sense is, you know, i guess the question is, has he kind of has the company continued to earn that sense that we know youre working on something great. Actually doing pretty well and participating in this rally after record highs since the earnings report, whether its in anticipation of the September Iphone new release or the fact that it was a better quarter for apple and there has been this rotation, mike, into technology in general. Exactly. Once the market got a little bit of comfort with the idea that theyve seen the worst of the iphone cycle which would seem to be what last quarters report said, then were fine. Financially speaking its an amazingly defensible stock to own. Obviously with the buybacks, cash, low valuation. Got advice from warren buffet on the shareholder return which was interesting. My favorite market stat of the morning, guess how many consecutive losses meaning backtoback losses the nasdaq has had since the end of june. Not many. Zero. None. Okay. No two days in a row. Since june 25th. Thats crazy. Its been seven straight up weeks which is the longest stretch since i think in years. Yeah. Four years. Four years. 2012. And for the s p its been six weeks out of the last seven. Higher. When we come back we will talk to art cashin on what he is expecting from todays trade and the week ahead as we count you down to the opening bell. Futures here looks like were going to start this week on a high note. Dow up 41, s p futures up more than 4 points. Nasdaq futures to carls point up 7. More squawk on the street from the nyse straight ahead. Your Business Needs a lot of speed. 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The market is at a very interesting area, trend line resistance in the s p at 2191 to 2194. And it seems to have restrained the market and as much as it sounds silly we made a trifecta brand new high, there is some risk that were approaching stall speed here. That they did it in such an incremental fashion that really hasnt swept up everybodys attention. So they need to following crude here and they need crude to give them enough energy to push through that level. Is it any more stubborn resistance level than 2100 was . Not really. But i think the fact that it is, you know, you can reach up, we havent been there before, seems to be providing some resistance. I think if they get through it, then 2200 be becomes almost a given. So this is i think a rather key important key and important area for them. And if its a given we get, you know, lets say to 2200, does that act the way 2100 did. In other words it kind of was defined the upper end of the range for more than a year . It could well. I think the market is gbeginnin dig down through things. What will the impact of brexit be now. It looks like thats going to be postponed into 2019. In the next couple weeks were going to be getting to get some data out of britain as to what the impact has been. I think the story overnight is the british 30year is now yielding less than the u. S. 10year. Like 1. 2 or something crazy. Stunning. Stunning. I mean, you had told people that months ago and no one would have believed it. So of all of the Central Banks with a bazooka the bank of england had one. Chinese stocks popped, japanese gdp disappointed and hong kong stocks are trading at a ninemonth high. The story overseas at least when it comes to equities has been strength. The dax went positive for the first time all year. China has a special case, number one, there are rumors theyre going to Better Connect hong kong and shanghai, sent shanghai up the equivalent of 400 points on the dow. And also, the weaker data that you spoke of, prompted rumor they are going to be forced to put more stimulus into the economy. So the best of both worlds. Bad news is good news and see where they go. Of all the information were going to get this week, the retail earnings, fed minutes, what are you looking forward to the most . Im going to dig down and be wonky about the fed minutes. You know, they kind of said good things, labor market was turning around, some of the risks had disappeared, but what held them in place was the lack of pressure on inflation. I want to see how big that discussion was. Out on wednesday afternoon. Art, thank you. My pleasure. With that in mind the opening bell is just moments away. Stay with us on squawk on the street. What is freedom . Yes, its riding a horse across fields and stuff. But its mostly getting to watch your directv with unlimited data from at t. Were setting families free. So they can stream away and not squabble over whos using how much. So go, family. Watch. Freedom. Ha seize the data get our best unlimited plan ever so you can stream and surf all you want. With unlimited data from at t enepeople want power. Hallenge. And power plants account for more than a third of energyrelated carbon emissions. The challenge is to capture the emissions before theyre released into the atmosphere. Exxonmobil is a leader in carbon capture. Our team is working to make this technology better, more affordable so it can reduce emissions around the world. Thats what were working on right now. Energy lives here. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in just over 90 seconds on this monday. Where were going to get a lot of retail earnings, some inflation data, fed minutes, but what a run it has been of the nasdaq winning streak on a weekly basis at 7, the longest since 2012. Weve talked about the lack of consecutive losses on the nasdaq. Even the s p has only had one since the end of june. And oil is a large part of that. Were moving some of those concerns from earlier. A part of it. The other factor i would point out last week that really dominated the better earnings were Department Stores coming out macys and kohls. These are stocks that gained double digit percentages over the last week. They have a long way to go to make up, down 20, 30 over the last 12 months but there were glimmers of hope in the reports. Still declining sales but the notion that a lot of businesses are dealing with it better, managing their inventories, macys is closing 100 stores, kohls saw the Profit Margins expand, good size, and nordstrom the best of the bunch actually keeping its outlook. Being that consumer is in decent shape. The miss on kind of government reported retail sales but thats not been a great guide for the companies. Absolutely. Well keep an eye on all of that. By the way, home depot tomorrow with tjx and urban, wednesday target, thursday walmart, lowes will sneak in there. Interestingly, often a bridesmaid to home depot but the last quarter i remember actually outpaced hd. Theres the opening bell and the s p at the bottom of your screen. The big board today, its shopfy and winners of their build a business competition. Well have more on that in just a moment over at the nasdaq, staffing 360 solutions doing the honors. A lot of research out today in the retail space. We can start with what jefferies has done, cutting Dollar General and best buy to a hold. Eat he on valuation or in the case of best buy maturing of the 4 k tv cycle. That was interesting. The penetration is hitting a critical point where you could see best buy comps slow. Looking ahead to the holiday season, the fact that everybody is selling 4 k tvs including target and the other competitors. The target on this one from jeffreys from best buy down to 36, 12 months on hold, saying that 4 k tvs have dropped 30 in terms of average selling prices and that could really weigh on best buy. Exactly. Thats your best buy top line for the holiday season. I think that was the call there. One move from this morning is saysco, syy, the food distributor on earnings, up 2. 4 . Its one of the big stable boring stocks that has done well already and then the earnings come through today and good enough. I thought that was a particularly interesting given that restaurants have had a rough quarter and we saw softness in restaurants. They supply to restaurants and hospitals and other chains and managed to see 2 volume growth 3. 5 sales growth and got a boost on nelson peltzs 13, starting to tricking out, this came out on friday boosting the stake in cisco. One of the ones they have been bullish on and a stock that is about to hit a record high up almost 30 already this year. Yeah. I mean interesting on the restaurants one of the issues there is the labor costs, theyre considered to be kind of right in the cross hairs of people especially lowend workers getting paid more, a good thing for the economy, not great for retailers, but cisco is based on, you know, volume of what people are eating and that seems to be okay. Twitter, trying to crack 20 today. Got close. 3 cents shy. See if it does it later this morning but it has not had a 2 handle since the first month of the year, january. New york times says strong rebound. Mike isaac with a piece in the times about the companys attempts to work with apple to put a twitter app on apple tv it sounds like, not just the app store, and sort of flesh out the possibility behind this nfl streaming deal. Yeah. Beyond sports. Navigating to realtime video and other video that they have rights to. Certainly makes sense, apple tv going to be the place everyone kind of congregates for this sort of thing, who knows. It is interesting that everybody wants a piece of the real estate no matter what. Right. You want to have people to be able to find you. Yeah. We will talk to mike isaac on squawk alley and more about what may be behind that attempt to work with apple. Im looking at the sector performances here, Energy Starts on top, no surprise, wti goes above 45, last week was a pretty bullish one for the price of oil, oils best week since back in april, but the context is important because it came a week after oil went back into a bear market. 20 off the recent highs. Oil has been all over the place but another opec meeting that folks in the market are looking forward to and theres been chatter out of saudi arabia and maybe this time theyre going to be open to a cut. Remember back in april when they met, they did not actually cut production to stabilize prices. Will this time be different. The bulls out in force with energy, 4517, financials behind energy, usually see those two go together these days. Absolutely. They have been they have been linked. Mentioned before, you know, the strength in energy at least the recent strength has kind of ratified what the credit markets have been saying, were not in for a rerun of the liquidation in Energy Related credit and stocks earlier in the year. I was going to point out val nts as well, an upgrade from an underperform kind of to a neutral rating. People are basically starting to say maybe the investor posture towards this stock with management coming out and being able to sell businesses and stabilize things, i mean, has had many runs kind of above 25 this stock. But up 5 early today. Maybe people think that theres some kind of Reclamation Project you can bet on here. Yeah. On a related note, aig, tepper boosting his stake in agn to 1. 2 million shares and then on another related note, tiffany, peltz apparently out, as trion exits, had a 5 stake in 07, but tiffanies had an amazing run in the past week or two. The dollar has weakened and thats been helpful for tiffany complained about the onetwo punch of the weaker Tourist Spending here in the u. S. And also overseas sales getting hurt by the stronger dollar. Im just noticing the three negative sectors on the s p, utilities, Consumer Staples, and telecom. Which sort of goes with the recent trend, mike, some of the cyclical laggards of the market, energy, health care, financials, are catching up. Is this rotation for real. Its hard to tell with the 10year still around 1. 50. Exactly. A rotation only in part. There is outperformance by the growth groups, consumer discretion flairry and tech, but not coming at the expense of the yield sectors yet. Bond yields remain where they are. This kind of environment strong stocks, high liquidity, low rates definitely seems to be stoking the m a impulse a little bit too. A handful of deals today that are interesting. Yeah. That just as constant low level of deals. Postproperties, apartment reits hot area for reasons of, you know, low Home Ownership rates, kind of constrained supply and, of course, everyone loves reits and yield stocks. Some were saying with macys announcing its going to be closing 100 stores if that does start the trend where these big Department Stores are finally realizing that could be a headwind. For retail reits without a doubt, absolutely. I see under armor up a percent the. Its a great olympic play. Michael phelps one of their under armor a sponsor of Michael Phelps. Bespoke had a great chart of nikes performance during the olympics for like the past seven or eight games, and looked like 80 of the time its in the green over those two weeks. Nike had a great week last week. That is for sure. It was all over the place, right, in rio. You saw it big sponsor. Yeah. Of course. On the medal stand one of the few recognizable logos you see on. Everyone watches and decides they will be an athlete for the next few months and buys stuff and gets back in the gym. Thats how it works. Dow up almost 70. An s p record high, Nasdaq Record high and now the dow joining the club. Lets get to bob pisani on the floor. Record highs all around, carl. I want to point out a very good day in china. Lets put up the shanghai. At the highest level since january and you heard about this increased speculation, the shen zen hong kong trade way may open very soon. Remember the hong kong shapg hi connection has proven success l successful. The shen zen would open up connections for Foreign Investors for smaller tech companies. The shen zen the nasdaq of china. So that would be very interesting. Weve been waiting for a year for that to potentially happen as well. Europe a little quieter. Art made an interesting comment about the idea we may be approaching stall speed for the markets right now but the internals are fantastic overall right now. The advance decline line at new highs, breakouts from trading ranges for many stocks, or bottoming following bear cycles with the Second Quarter, second half, earnings revisions have been very, very modest. Not to the decline that we saw in the First Quarter and the Second Quarter. And weve seen a healthy rotation in the Growth Stocks and cyclical stocks including industrial names. Take a look at the Leadership Group for this quarter here. Semiconductors in general have been strong, metals and mining have been doing well, and internet stocks have been powering forward rather dramatically. Energy in just the last few weeks as weve seen oil stabilize around 43 has also been doing well and weve seen big industrials at new highs like united technology, dover and eaton. Your tech names this quarter one of the reasons the nasdaq has been doing so well. Microsoft and some of the old names, alphabets, amazon and facebook, all are essentially up 8, 9 or double digit right now. Laggards this quarter it was all the names that were interested in the dividend play earlier in the year. The utilities, and telecom and Consumer Staples. Telecom is a small part and even ultsties of the overall market but lagging interest in those as weve seen more cyclical groups move to the floor right now. What hasnt been working . Weve been waiting for banks to work for a long time and other than a very, very brief period you see that little blip up there, in the beginning of july, thats when the early Bank Earnings came out like jpmorgan. There was a flurry of interest at that point but as rates remained low, weve really seen nothing going on with the banks. Just call them a group moving sideways right now. So theres your market check. Want to talk to our very interesting bell ringers today because shopfy had its sixth annual build a business competition making things happen in small amounts of time. The five main winners. Weve had thousands apply for this job here. Lets just talk a little bit about whats going on. Assad, talk a little bit about whats going on, assad seddic of i segway. You build hoverboard products. Tell us about that. We launched last year in october in the holiday season. Sales have been through the roof, implement a platform, five of the winners around the united states. Were one of the uk winners. And you sell out of the uk. Is there any difference in the way youre selling in the uk versus here . At moment our primary market in the uk. Expanded to europe and the growth is still there so were looking for 12 to 18 months of this product thats where we are right now. Move over and talk to barus. A very interesting device, the noninvasive antisnoring device. You would have thought all of these devices would have been invented so far. This is nora, a small noninvasive device put it on the night stand and we stop snorg without touching the senatorer. So we think its a great one. Doesnt require much of a sacrifice on the part of the snoring person. Put it on the pillow inside the pillow. This on the night stand and theres a piece that goes under the pillow. Keep your favorite pillow and using it. Lets move on here. Keep getting everybody in here. Come on over here. Carbon hand forged carbon rings. You would have thought that was a small ring and yet able to win the competition. Turns out a lot of people are looking for really strong beautiful rings. What happened was my husband lost his wedding ring and so he developed a new way of forging carbon fiber to make a ring that would be really strong and light and it took off. All right. We got to go but katherine over here, just tell us entreprene entrepreneurship still alive . Youre doing selfimprovement products. We teach people how to set goals, break them down into threemonth stretches so they hit it by the end of our product. Were teaching people how to optimize their day and get the most done out of their life so and thats why were here. Thanks very much. Thousands applied. Want to know more go on shopfys website and look at the build a business website on the main site there. Congratulations the winners. Sara, back to you. Thank you very much. We are looking at intraday record highs right now for the s p and for the nasdaq. Part of that story higher oil prices. Lets go over to Sharon Epperson at the nymex with more. Sharon . Were looking at oil prices here in the u. S. Above 45 a barrel. Weve seen quite a run in oil prices. Largely due to talk about producer action. We heard from Russias Energy minister talking to a saudi paper saying russia is working with the saudis to stabilize the oil markets. Whether or not that means there will be a production freeze or some type of action remains to be seen but we are seeing oil prices higher. In the past month, this month alone, weve seen Oil Prices Rise more than 10 . But some slisz out there many who have talked to cnbc say we need to be concerned about oversupply in the oil markets and the fact that the demand really is not there in a lot of key places including the u. S. And china for the amount of supply that is there. Meanwhile taking a look at what has happened to gold prices. Gold prices right around 13. 40, a little above, an ounce and gold prices did get a lift last week when we saw the disappointing retail Sales Numbers and a lower u. S. Dollar, but that seems to have been short lived. A lot of traders were speaking to say they are waiting for the federal reserves next action whatever that might be to see if well see some movement here in the gold market but for right now its just wait and see. Back to you. Sharon, thank you so much. Our Sharon Epperson. When we come back, Andrew Ross Sorkin, live in rio. Talking to some of the u. S. Olympic gold medalists, record highs for the dow, s p an nasdaq as we kick off monday. Well be right back. 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. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. So tell me everything i need to know. Get as much sleep as you can because you will be going full throttle all day. When you think your work is done you will want to see events. Thats half the point of being here. Any tips or trix, special tv things i need to know . Dont lose your security lanyard. You have comfortable shoes. Enjoy it. Its a onceinalifetime experience. Im going to go. Enjoy. Nothing else . Im going to see you on set. Have fun. Youre leaving me here . Ive never done this before. Andrew ross sorkin has had about 48 hours on the ground. Andrew, how is it going so far . Having fun . Having an amazing time, carl. It has been an extraordinary weekend and thank you for that handoff. It was kinder than the video showed, but i really appreciate it. Let us tell you whats going on out here. After winning gold in Team Competition the u. S. Womens Gymnastics Team competed in the individuals and it was something to behold. Madison kocian taking home silver on the uneven bars after russias aaliyah mustafina held off a near perfect routine to take gold. We should also tell you about simone biles, she did take the top spot in the individual valts competition becoming the First American woman ever to win gold in that event. Pretty stunning to itself. It was a big weekend for the u. S. Swimming team. Bringing their total medal koungts at the games to 16. I had the chance to speak to team usa about the big accomplishment in rio. The u. S. Its all built up. This is what the media gets excited for. This is what the coaches get excited for, what usa swimming gets excited for. All trickles down to the athletes. I think its a testament to how hard each of us work for the four years in the quad because we want to go out and represent our country in the best way we know how. A certain set of expectations that we have kind of feel like that is our responsibility, kind of setting it off right, hand over the second half of the game, see how the other sports, to hopefully bring it home for team usa and the medal count. We have a month to come together before the games and really bond as a group and i think that helps. You know, knowing you have that support system behind you and your coaches are with you and your teammates are there for you the whole time. I think thats a really big part of why we do succeed so much and also, you know, we come in knowing were the best. These guys just dominated. But before we go i want to talk about swimmer may ya dir redo she won gold in friday on womens 200 meter backstroke. What she has been doing between raise, though, here in rio might be a little different than you might expect, prepping for her new job. Thats what ses been doing. Going to become an analyst at mckenzie and company, going to start next month. Two nights ago they sent out an elon musk ki an email introducing programs and things we had to do before starting on our official start dates. Im bored in the village and dont have anything to do and my netflix wasnt working that day and i decided to open it up and go through the stuff to take my mind off of it. The good news, she was learning how to use the expense system which is always an important piece of being a consultant. A pro already and quite extraordinary stuff, carl, and i do have to say, we were there saturday night, i wish you had stayed one more night we watched phelps last race on saturday night, about 11 00, 11 30 at night, and it was pretty incredible. I was going to say, andrew, theres a great piece in si about just trying to measure phelpss influence not just on swimming but the Olympic Movement overall. There are athletes in rio, as you know, who have not known an olympics without phelps as a competitor. Its astounding. Well you know, we talked to a number of the athletes yesterday and one of the questions we asked, who is your favorite athletic hero and you would often think they would tell you about an athlete from 10, 20, 30, 40 years ago when growing up but so pane of them talked about Michael Phelps. Yeah. And carl showed us that picture of young Katie Ledecky meeting Michael Phelps when he was already an olympic athlete. Its interesting, you talked about the mckenzie job. We think of these olympians not as real people sometimes because they dont have normal skills of real people and i saw you were talking about to Katie Ledecky about going pro, trying to push her on this. Right. It just seemed to me, given what Michael Phelps has done and the moment, people talk here about the moment and being able to use this moment, shes somebody who is perhaps taking the next step in terms of thinking about sort of taking the mantle from phelps to the extent you dont think hes coming back. He did say he was going to retire but we talked to a number of teammates who were not so sure. If thats the case you have to think about alls the money thats sitting there. But i do imagine she will ultimately go pro and do great. That is a big part of it for sure. Thank you, andrew. Well see you in a bit in rio, doing great even though carl totally bailed on you at the games. When we come back, airfares are expected to decline in the fall. Well look at some of the pros and kr andcons and the reason why. The dow up 74 points. Announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. A dollar sign looks like an s. When you send financial info through a website, look for a url beginning with https. The s is the difference between an encrypted site and one thats not. S equals secure. [light instrumental music] the forecasts are calling for lower air fares in the fall. Phil lebeau in chicago with details. Why now, phil . Primarily because we have lower jet fuel costs and the airlines have excess capacity. You put those two together and you will have a heck of a fare sale this fall. This data comes to us from hopper, which is a Research Firm which tracks airline data prices and basically their forecast calls for airfares to drop about 8 all the way through october. By the way, in july the average airfare, 232, thats down 19 since 2013. In fact, when you take a look at air fares over the last three years they have been trending lower. Fall is traditionally a slower period for domestic air travel and thats why were going to see airfares falling. Jet fuel it has fallen since june and it is expected to continue falling and thats driving the airlines to say look, weve got to bring down the prices here in order to put people in the seats. Passenger revenue the problem for the airlines is expected to drop 3 to 6 in the Third Quarter and guys, this is the reason the Airline Stocks have been under pressure. People are very skeptical that the airlines have seen the bottom when it comes to passenger revenue and certainly lower fares will not help that part of the equation. Phil, how is your weekend . You want to show this picture, go ahead. Yes. I just tweeted, our aviation reporter so good he jumps out of planes. This is not your first time, is it . It is my first time. And we jumped at 14,000 feet. The freefall is the best part. You are looking around going, oh, please, please parachute come open. In the meantime a great feeling with the rush of air. I have to tell you, guys, before we went out i went there, skydiving with my daughter, she looked at me, she went first and she said, this is it, old man. Cant turn back now. You do not look like such an old man in that picture. She went down. Our hats off to you. It really is. Everybody should do it at least once. And i my guess is you might get addicted like george bush. I will do it again. Yeah. Yeah. Youve done it . Ive done it two times. Wow. I dont know. Young kids you start to second guess yourself. Unless you chased them out of the plane like phil did. All systems go. No, thank you. When we come back more on another recordsetting day for stocks, dow is up 70 points. Dont go away. Sgroods monday morning. Welcome to squawk on the street. Im carl with sara eisen, mike santoli at the new york stock exchange. The string of record highs continues today on the dow, the s p and nasdaq. Were up to 2189. Oil is helping out. Busy week ahead with retail earnings. Some fed data and inflation data too. Weve got Economic Data right now hitting the tape. Diana olick joins us from d. C. With that. Diana . Well, sara Home Builders sentiment in august rose 2 points to 60 on the National Association of Home Builders monthly sentiment survey, right along with expectations, but julys number was revised down 1 point. We were at 61 in august of 2015. 50 is the line between positive and negative sentiment. So we are solidly in the positive on builder sentiment. Low rates, affirming labor market and increase formation all cited by the builders as the reason for the strong sentiment numbers. Of the three components of the index, current Sales Conditions up 2 points to 65, sales expectations over the next six months up 1 point to 67, however buyer traffic fell 1 point to 44. The last one mired in negative territory. That may be due to continuing rising prices and weakening affordability. Regionally speaking confidence higher in the west, lowest in the northeast. We get the read on monthly Housing Starts tomorrow at 8 30. The builders have been putting up more homes recently, but still well below historical norms and all that pent up demand still out there. But again, confidence up two points to 60 on the index. Back to you. Well see what home depot has to say in its earnings tomorrow. Thank you. Keeping an eye on the major averages, records all around intraday here with the dow up 72 points. The s p 500 is up about 6 points. Doesnt take much this morning to get us into record territory. Lets talk about it. Daryl kronk Wells Fargo Investment Institute president and wealth Investment Management cio and art hogan, with us, wonder lick market strategist. Daryl, your target for the s p this year was 2240 and you said you were getting a lot of grief it was too high. That looks achievable. Early in the year we had a lot of things that the market was concerned about. U. S. Recession, china, dollar, oil. And yet we still think the markets in certain seng tors have powerful d sectors have powerful earnings to deliver in q3 and q4. You industrials will do well, health care and technology, they all four were some of the strongest earners in q2 and we would expect that trend to continue in q3. Sounds like art, you agree. Youve been advising clients to get out of defensive stocks because theyre too expensive and into growth. Feels like thats whats going on here . It sure does. We talked about that in the First Quarter. Its just coming to fruition now, just starting to see some people, you know, peel out of utilities at 22 times and staples trading at 21 times and telecoms at 23 times and get into some of those sectors that havent been performing up until the last four weeks or so. Whether its technology, industrials, consumer discretionary, health care has done better, a nice bounce off the 240 level, were starting to see a healthy rotation and thats what we need to move the market forward. You know, the market has kind of trudged in the last few weeks, how calm its been and slijs a lack of sellers. If youve been in you have no real interest at these levels in selling. Not much has changed. What would bring out the sellers, do you think . I think you would have to have some kind of an economic shock in the data. Right now were in that sweet spot where the fed is off the table, right, youre getting improving relative data, both economically and in an earnings standpoint, thats a sweet spot for the equities. One thing i would say, mike, with the twoyear low on volatility, volatility insures is cheap right now. We had a ferocious rally since the february lows. Its a good time for investors to be thinking about how do i put a back stop in some of these strong gains weve seen over the last six months. Just tactically how do you do that . Thats been a trap, people buying the etfs linked to futures and if you dont time it right the value erodes quickly. If you a professional adviser i would look at things like put contracts that are cheap right now that you can underlay the portfolio with some insurance, right. Again it doesnt cap you on the upside so you can still participate as the market moves higher but just saying look, weve had if you look at emerging markets up 19 , em debt up 12 , commodities 18 , high yield up 17 , since the february lows those are big moves and you want to make sure those dont get away if it gets more volatile in the fall, with a twoyear low on volatility. Speaking of competing Asset Classes around the globe, i wonder, everyone likes to argue that u. S. Is the only safe sailing vessel on the waters. I see jpmorgan upgraded the uk, they called them an accidental hero. Who, if anyone, gives us a run for our money in terms of attractive assets . Well i can tell you, if we get the dollar to sort of, you know, steadily move higher and not much more from here, Commodity Prices hang in here, carl, you will see emerging markets do better. Weve seen that over the last four weeks in the market and in the counterintuitive way you want the dollar to stabilize and Energy Prices and other commodities to do well and emerging markets have been the shining star. Nobody is talking about that right now. If you exbrazilian, emerging markets, theres great value there and that seems to have played out. The ruble has been on fire, the russian currency no one thought could go up. You mentioned an economic shock could sort of ruin this rally. Im just wondering, are you talking about in a good way, that is, vastly better Economic Data because that would put the fed back on the table or bad news in that everyone would be worried about recession . No. I would welcome the idea of vastly better data. I think the one concern we would have is certainly we know the manufacturing and to a large extent Corporate America capex spending has been anemic. If you see a heavy rollover of the consumer, 75 of the u. S. Economy, thats where you would have to be concerned about growth decelerating and slowing. We dont expect that but i think thats what you have to keep your eyes on. The retail sales number last week, Consumer Confidence last week was weaker, not with standing a strong Second Quarter but eyes forward on those elements. What will you be looking for in terms of signals and clues on the Overall Health of the consumer . We have home depot tomorrow, walmart later this week, target, love the big box retailers, after better Department Stores last week . Yeah. Its interesting the consumer certainly put in a better reading for us on the publicly traded companies than in the conference boards reading of the Consumer Confidence and things of that. I would like to listen to the companies. You nailed it with thinking like lowes and home depot are certainly in a position to do well, walmart doing a good job. Everybody is out there competing against amazon but starting to do things right. Macys sheds 100 stores and righting their ship. Kohls doing a good job last woke. The death of the American Consumer has been exaggerated over the last couple months and this week would be a great reading on the ways that the consumer is showing up in the marketplace. I wonder also, daryl, be how much this rally has oil to thank for having another 6 move up last week, its higher again this morning, and whether thats something investors may be taking for granted because oil has been all over the place . It has been all over the place and i think we got a big move in oil early in the summer. Lately its just been range bound. What will be interesting, though, is when you look at q3 earnings reports, its the First Quarter where the comps year over year comparables start to actually trend favorably for energy again. Energy went from a 15 sector weighting down to 6 to 7 at the bottom. So it halved in its influence on a market cap basis on the index. So its to have a big move up to drive earnings into q3 and q4. Dollar should be easier too. It should be. That one is hard to time. Daryl, thank you. Daryl kronk and art hogan, thanks to you as well. Good to see you. When we come back which president ial candidate will be better for stocks . Baron took on that question over the weekend. Well ask our political experts for their take. Big box stores in the spotlight. Home de pot and lowes get ready to report. Straight ahead. Tokyostyle ramen noodles. Fresh ingredients, stepbystep recipies, delivered to your door for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. Im morgan brennan. Welcome back to stock on the street. Shares of time inc up 6 in trading and its quarterly filings. A new 5 million stake in the magazine publisher. Today is the day for those forms to be due and well be watching the filings throughout the day. Carl, back to you. Morgan, thank you so much for that. Barons cover story over the weekend, which candidate would be best for u. S. Stocks. Their answer is Hillary Clinton. Clinton is campaigning in pennsylvania with Vice President joe biden today. Meantime trump is speaking in ohio. Lets bring in ed rogers the chairman, and former white house aide keith, joins us here at post nine. Good morning to you both. Good morning. Im not going to ask you to weigh in on the stock implications, but keith, the journal today, and their oped, basically says given until labor day, trump, to change his act and if to the, have pence take over the nomination, is that possible or doable . Never heard this before. I dont think its possible do Something Like that. I read the journal piece today. I think whats more troubling Establishment Republicans are abandoning trump in droves and the journal oped is a reflection of that. I saw a piece in the l. A. Times this morning a few minutes ago before i walked on the air that trump is lashing out at the wall street journal this morning because of that. Hes already attacked over the weekend he attacked the new york times, attacked the crooked media, joe scarborough, don lemon, attacked every person in the media. He forgets hes not running against the media but Hillary Clinton. He has to stay focused. Hes incapable of staying on message. Whats behind that strategy . Well, i think whats behind that strategy is no strategy. Trump is proving himself to be undisciplined and on borderline now lets face it, borderline is generous, unworthy to be a president of the united states. And unless theres some epiphany, some 180 degree change, then we could be headed for a debacle. What the wall street journal calls for while its not plausible, its desirable, theres no reason to think trump would quit, theres no reason to thing he would step aside but its clear, hes not moving into the realm of the credible. Hes not performing or behaving in such a way that makes people think he ought to be president of the united states. Republicans or democrats. Were lacking a voice here that would back up the attempts that Trumps Campaign is trying to make. He is going to carry a lot of states, so how much of this is intentional and working . Well, the republican nominee does have a floor in trumps case we may find out exactly what that floor is going to be, but youre right, i mean hes going to carry a lot of states, everybody kind of knows who they are, but this heads back to the battlegrounds and if you want to win you have to comport yourself to win in the middle places like ohio, iowa, pennsylvania, the states we all know, trumps not getting there. His campaign is out of business by the way. Any notion its anything other than a sinking ship is inaccurate. So thats happening. I think ed is right about that. And the disturbing thing for the Republican Party if you look at the nonswing states, look at south carolina, georgia, you see the battleground poll there, georgia, utah, arizona, these are republican red states that are in danger of going to Hillary Clinton. This should not be happening in this election. The only thing trump has going for him at this point is its august. Its early during a quiet time. Number two, its a bad sign, but conventional wisdom is now locked in. Conventional wisdom is that trump is a loser when conventional wisdom gets this set and this far before an election day its often wrong. He does have a case to make on the economy, that is, clinton would just be a continuation of obama. No question. Obama 1. 5. Im just wondering, though, if you think this is enough time to talk about the economy, talk about lower taxes, something americans can relate to. Yeah. To talk about how trade deals have not been fair, to stay on his message, that Hillary Clinton is not the person needed for the economy and by the way theres going to be a vacancy on the Supreme Court so republicans like you are going to want your say. Yeah. Theres a compelling case to make here that economy needs a jolt. Hillary is nothing but more of the same. The republican candidate ought to have a tailwind on the economy everything from growth to business investment, business startups, trade agreements, trade deficits, the federal budget deficit, op it goes, by any measure the economy is not where it needs to be, and no case to make that hillary offers a credible alternative or serious shock to the economy that would be there for any republican nominee to pick it up. Where is trump . Distracted, chasing around the media, hes attacking this person and that person and blabbering a crazed collage of whats on his mind. Its unfortunate. Ed i disagree with you about the economy part. But the most important point trump doesnt have a consistent message about the economy. Been on all sides of the fence. Hes not articulating traditional republican talking points. He wants to cut taxes but also talking about raising taxes and particularly taxes on hedge fund managers, even though his policy doesnt add up to that. Message discipline has been lacking thus far. Until trump can stay on message hes giving a speech on isis today, for example. Gave a speech on the economy. Gives a speech and reads a teleprompter and good for 16, 24 hours and then goes off script again. This is not a consistent candidate for the future. I wrote for the Washington Post what if trum trump got halaryngitis and the flu he cou take the lead. He could still tweet. Well see what happens later today, of course, and in the coming weeks. In the meantime were following this developing story the devastating floods in louisiana. Gabe gutierrez is live in baton rouge with the latest. Gabe . Hi, sara. Good morning. President obama has declared several parishes in louisiana federal disaster areas. Five people have been confirmed dead as a result of the flooding. Live images from a drone flying here in the eastern portion of baton rouge, residents say this is unlike anything theyve seen. Thankfully the waters are receding a bit here in this area. Many rivers throughout louisiana have crested. Others are expected to do so over the coming days. It is sunny out here. That is a welcome respite from the rain. Louisiana expecting anywhere from 1 to 3 inches more of rain throughout the next several days. Flooding from this particular system is now a threat in other states, like missouri and illinois. But the governor here is calling this unprecedented more than 20,000 people rescued so far. 10,000 or so spent part of the weekend in emergency shelters. The governor calling this an unprecedented disaster. In parts of his state. Sara, back to you. The water so high behind you, gabe gutierrez, thank you rofrpg live from baton rouge for us. Macys and kohls among others shutting storefronts as customers turn to ecommerce. Well break down whats ahead for the retailers next. As we head to break, take a look at where stocks are trading. They are at record highs. The dow, the nasdaq and the s p 500. The dow is up 75 points. And weve got much more ahead on this when squawk on the street comes right back. Can an established bank move like a startup . Its a question we get from some of our largest banking clients. The face of their business was tellers. Then atms. Today its their mobile app running on the ibm cloud. Across every transaction, the hybrid cloud helps their data move quickly and securely. Our clients are building out features and pushing updates faster, on five continents. With the ibm cloud, they can move at the speed of any startup. With the ibm cloud, this car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Retail giants like macys, kohls and others announcing theyre shrinking their store fleets, terminating leases and selling off assets. Courtney joins us now with more on the knock on effect this will have. Thats right. So even macys Ceo Terry Lundgren agrees the u. S. Has way too many stores and investors see the shrinking store fleets as prudent choices. The malls arent that upset. Occupancy remains steady and new tenants bring in higher rents for square foot. Retail days, the malls top choice was to have a sears and jc penny as anchor tenants and used to draw traffic, strong rents and tenants. Clauses are sometimes writ noon other smaller retail tenant leases allowing an Early Release from an anchor retailer like macys leaves. It doesnt mean the death of the mall. The mix has been changing with consumer preferences. Less about selling physical goods, more about experiences. With an increase in fitness, education, medical, food and beverage and religious tenants. In fact, ten years ago, food and beverage made up 5 of the retail mix of the mall. Now its 30 . According to jll. Many working with the pals say the new mix is good for the reits, new tenants come in with new leases often garnering higher rents. Department stores could be paying single digit represents per square foot. A nonDepartment Store tenant could be paying double digits for the same space. The lease length preference has also completely flipped. For leases and Shopping Centers with over 50,000 square feet. In favor of shorter, rather than longterm lease. Particularly just in the last year. Look at this divergence. According to jll leases under a year in length have surged in popularity making up more than 18 of all lease with those long leases dropping to a low of 8 each showing a very big reversal from recent trends. Very interesting. Courtney, thank you. For more on the big rooemts retail push joining us is jan, Worldwide Enterprises and dan, senior retail analyst at jefferies who downgraded best buy to get today. Before we get to that call on best buy, to courtneys point its hard for retailers to see into the future but theyre making some big shortterm moves here, closing stories buying jet. Com, for instance, walmart doing. Its really hard for the Mall Developers to look at the future too. When they make that investment, they would like to get 30 to 50 years out of the mall. So would a guy making an investment in a Department Store. Leases of less than year becoming common. Thats very frightening if you dont think youre going to be there a year, right. Were seeing people looking at malls and theres 1100 malls in america but only about 700 good ones. The other 400 may or may not be Going Forward and i want to consolidate my business down to the very best, strongest, aplus, a, amy nous malls. Macys is going to wind up before its done with about 550 stores instead of the 720 theyve got now, and theyre going to be in the best malls in the country and pour all the money into those 550 and make them great experiences, theyll have restaurants, theyll have starbucks, theyll have all sorts of stuff going on inside as far as events and that happening with everybody pels. Whats walmart doing . Walmart is saying, gee, jan is right, 50 of sales will be online by 2030, we need to own jet. Com, weve got to be with amazon compete with amazon, not growing fast enough and we will pay 3. 3 billion to get there. I wonder if your vision matches with jans on the math how over stored we are and what happens to the malls once the anchor Department Stores start closing . This industry has been over stored as long as ive covered it, a good 25 years or so. That said, the pain of it feels to be a bigger issue today, perhaps, with dotcom penetrating more every year. I agree with jan. You will see more and more stores close over time. Tend os come in buckets. Look at some of the early ones that had big store closings like the offices product retailers, a commoditized area. Close 400 stores, you wait year, close another 400 stores. This is a friend that will play out over the next five years. Dan sorry. Jan, what got us to this point . There was the element of not knowing the internet existed yesterday. But what was the engine that got us to this level of storedom. It wasnt the internet. The internet is the final straw, the last nail. Weve been over stored 25 years. When i came in the business there were 100 Department Stores, by the 80, 58 Department Store names, now count them on one hand. The change really was walmart. Walmart destroyed retailing. Walmart went from one store in 1962 and zero dollars of sales, to half a trillion dollars in sales, 3,000 stores just in the states, and they wrecked every other form of retailing because it was a race to the lowest price. And they were the guy with the lowest price. They didnt just put the Department Stores out of business, all the other Discount Stores out of business, gold circle, theyre all gone, so this over storing has been problem for a long time because of the Creative Destruction that goes on. Worse than that, weve never been more over stored than now. More capita footage in the country than in history and thats not whats counting whats going on in the internet. 10, 11, 12 even higher. Were over stored but never been this over stored before and never had a threat bigger than amazon even walmart wasnt a bigger threat than amazon. On that point, dan, does walmart actually have an answer to this, to being walmarted by amazon right now and is jet a percent of that answer . I think so. I think walmart has been playing catch up the last few years, Building Infrastructure and i think with this latest acquisition, theyve also acquired talent, technology, and in dotcom, scale creates more leverage. I think that Doug Mcmillon is doing a great job here in trying to position the company for the next 50 years, rather than just the next quarter. I think hes on the right track too early to tell on jet. Com how that will turn out. In a few years time we may look back and say it was brilliant. Dan, well see what earnings hold on thursday but on your call today we were talking about it earlier, downgrading best buy, to hold, talked a lot about 4 k tvs and the peak of that cycle. How much of it was that and how much are all these other retail challenges going on right now, that are hurting best buy . Yeah. We had two downgrades this morning. Best buy and Dollar General. To focus on best buy for a moment, a lot was around the 4 k tv cycle and the maturation of that cycle. When we upgraded walmart just through our store visits we started noticing more 4 k skews showing up in the assortment and a month later wept back and more were there and then went to target and they went from probably about five skews last year to 15. Go online its more and were only in the summer. You will see a full assortment of 4 k tv, has been a major product category for best buy, helped drive comp sales for them, when they didnt have stiff competition from walmart and target. As a category thats getting more commoditized youre going to have stiffer competition this year and a call was about that. And about the second half sales being at risk as a result. We have deep respect for the management team. I think theyve done a fantastic job turning this business around in the last three years. But this is really about product cycles. Well leave it there for now. Well have you back on to talk about the optimism and back to school. But for now, thank you. When we come back, oil up this morning, holding above 45 a barrel as Russias Energy minister says hes consulting with saudi arabia and other producers to stabilize the market. The latest on that next. At ally bank, no branches equals great rates. Its a fact. Kind of like bill splitting equals nitpicking. But i only had a salad. It was a buffalo chicken salad. Salad. Announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. Hi, everybody. Im sue herera. Heres your cnbc news update at this hour. Two terminals at john frjs Kennedy Airport are resuming normal operations after a reports of shots fired prompted a lockdown and grounded flights overnight. The reports which led to frightening moments for flyers were determined to be unfounded. The death toll from the flooding in louisiana rising to 5. Rivers in the baton rouge area are starting to recede but they remain above flood stage and there is a flood watch until mid afternoon. Some 7,000 people have been rescued so far. At least one person was shot in milwaukee as protests over a Fatal Police Shooting turned violent for a second night. At least one fire was started not far from the bp gas station that was set ablaze in the first night of protests. And as part of president obamas every kid in a park initiative, all incoming fourth graders and their families will be granted free admission to National Parks and other federal lands for a full year. To get the pass, visit the website every kid in a park. Gov. I just missed it. My kid is going into sixth. Thats the news update at this hour. Carl, back to you. You can still go alone, sue. Thats right. I could. Welcome back, by the way. Great to have you back. Thank you, sue. Oil getting a boost on news that Russias Energy minister is working with other Oil Producers to stabilize the market. Lets get to Sharon Epperson at the nymex for the latest on that. No surprise that were looking at oil prices above 45 a barrel when you look at the producer action that may perhaps take place. The word that Russias Energy minister talking to a saudi newspaper said that they are talking to the saudis and owe other producers trying to stabilize the market, one of the factors helping to boost the price of wti crude. Look at the Technical Levels the fact that we broke above the 45 mark, traders say is supportive of oil prices at this level. We may see oil continue to run. Its been on a run all month long, above 10 gained so far in the month of august. A lot of that has to do with what we are seeing here in terms of all the chatter about what plow deucers will do. What is happening in the gasoline market, another factor that is important to consumers as we are looking at gasoline demand. Not as strong as you might expect in the summer months. Plenty of supply of gasoline and, therefore, were looking at prices at the pump that are about 10 cents lower than they were just a month ago. And were talking about 55 cents lower than they were a year ago at 2. 12 a gallon for the average price for retail gasoline here across the country. Taking a look at the gold market another market that has kind of stabilized here a bit today after rising last week on some disappointing retail sales data, we are looking at gold in a range traders say between 1330 and 1360. Dont look for Much Movement in the gold market. Speculators cutting their long position in gold over the last week might keep gold prices around these levels. Back to you. Thank you for that. Sharon epperson. For more on what it will take to reduce the oil market volatility, lets bring in the Energy Director with Nasdaq Advisory Services and jan stewart head of Global Energy research at credit suisse. Good morning. Here we are trying to read these opec headline tea leaves. Weve been disappointed before, but you think we actually should pay more attention this time . I do. This time, i ran as closer iran is closer to full production. Saush is already at maximum production. There really wouldnt be that much for them to lose if they were to agree to freeze production at current levels. And that being said, i dont really think there will be any Material Impact from this meeting. Saudi arabia has been consistent with their policy of pursuing market share over price since the infamous opec meeting back in november of 2014. And ever since then, theres been a lot of rhetoric to the contrary, but theres been no action. Theyve continued to pump at record levels and touchdown to offer price discounts to their customers in asia to get longterm customers. At the end of the day its not going to mean anything, but there is always that risk factor. Yeah. Jan, is that your read, going into september, and is that whats behind this action, the price action the past week . Well, you see me squirm a little bit. Im a fundamentalist about these things. I like looking at supply and demand. Its important in the Third Quarter weve begun to draw inventories on a global level around the world. For the first time in two years. I think that really matters. I think thats one of the reasons why curves, futures curves, actually are fascinating now and it tells you fundamentally things have become to shift. If you have a short seller of crude of which there were record numbers, right, as recently as two weeks or so ago then it matters that suddenly sovereign Oil Producers are beginning to chatter a little bit about maybe they can do something as well as the fundamentals to maybe accelerate the stock draw in the second half of the year or into 2017. So i think that risk reward of short selling crude, which was a little bit of a summer fashion, or fad if you will, right, i think that risk reward has begun to change from a fundamental perspective but also because now in the there is noise about sovereign producers banding together to perhaps maybe do something later the is year. And jan, on that note, just to carls point here, it does feel like its always changing, saudi arabia. Is it fighting for market share and ramping up production or do you think its willing to compromise with other producers to cut production and stabilize the market . It changes every week. Well, actually, im sorry, but there are two i have to disagree with. The saudis have been terribly consistent. They have said all along in the last two years plus that they need the market to correct the supply surplus. They need the cost curve to come to play. They need for high cost producers and that isnt just some second tier, but also an entire country or an entire sector, they need for the higher cost producers to throttle back their investments and thats being done. The saudis have said eventually maybe they will be interested in helping to stabilize the market. Thats what they began to say back in january. First they need for the heavy lifting to be done by Market Forces and the cost curve and that has been done painfully over the last two years. If we get some confirmation of supply discipline and we have the technical rally ensuing for a while here, do you think the recent highs will cap the market for wti or do we have the ability to go higher . I think its capped around 50, 55. Weve seen that become that magic number where rigs start to accelerate higher. Last year that magic number was 60. So every year the number seems to come down showing how shale and the u. S. Is really resilient. I think that production really upside in prices is really capped. Finally, we have viewers say, even if they froze, they would be freezing at these record levels. Why are people getting so excited . Does a it seem over done to you . I think theyre getting more fearful rather than excited. Getting fearful that the short strategies may not work if the sovereign doing something. Its more about short positions unwinding than people getting excited and betting on the long price. That makes sense. Tamar and jan, thank you. Fascinating. Will be fascinating to watch for the next several weeks. When we come back im back in new york city from the olympics in rio. Where Andrew Ross Sorkin is there now, though. Wonder how hes holding up without me . Carl, you cant leave me here. Its only day one. Are you out there . Carl. Come on, carl. Anyone know where carl is. Carl across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov sdwroo strategist tom lee picked out a sector he thinks will surge. What hes doing and direct ideas at tradingnation. Cnbc. Com. More squawk on the street coming up. Experience breathtaking lexus performance in streetlegal form. Get great offers at the lexus golden opportunity sales event. Get up to 5,000 customer cash on select 2016 models. Ends september 5th. See your lexus dealer. Big weekend at the olympics as you know. Andrew ross sorkin is in rio and joins us with highlights. Hey, andrew. Hey, carl. We talk abe the sports but, of course, this is also a big business and with more than half a million visitors coming to rio for the Olympic Games, just who are they and how much are they spending is a reasonable question. Probably no surprise but according to visa, the majority of travelers are from latin america and the caribbean. 30 from europe and only 15 come from north america. Visa says the tourists during the Olympic Games spend twice as much per visit than regular tourists during the london summer games u. S. Visitors spent nearly 175 million, then the french coming in second place or silver if you will, spent about 125 million. The australians spent 50 million. So you might be asking what are they buying here in rio. A lot of flip flops. As athletes and tourists explore rio, they may be trading in their Running Shoes for foot wear made famous here. Its just two straps and a piece of rubber. Theyre flip flops. And the brand that has become synonymous with them was born right here in brazil. Havianas. Everywhere you look in rio, created in brazil in 1962 the brand has grown to a global foot wear power house. They dont say im wearing flip flops im wearing havaianas. The director of marketing. Tourists went to brazil in the past decade and got to learn the brand and took a pair home, we grew internationally. 3. 5 billion pairs of these flip flops have been sold around the world in a combination of 500 Company Owned and licensed stores. Thats 220 million pairs a year. We produce about eight pairs per second. An olympic pace which may continue as the rio games bring even more attention to the made in brazil brand. And carl, you know, you didnt tell me how warm it is here and one of the tips i have tried to take away, i am doing, when in brazil do as the brazilians do, im doing a high step, trying get up there. Get the foot, is that enough . Right here, we have the olympic branded h vashgs ianas. We will take those home with us. Trying to stay cool. Ticker safe sfo i meanings when i was there, it was chillier, but i know it was going to get warm this week. I trust they set you up with a fan so your hair can blow. The fan blowing beyonce style right now and i have no shoes on, you can get the fullon effect right here. This is, yes, youre seeing the fullon thing. Hi, stan. You are on the beach. Its appropriate. I should tell you, by the way, actually about an hour away from the beach which is just that way. The one thing i was going to say to you, carl, you said the music was loud right here with the speaker behind us. Im wearing two ifbs because its so loud. A viper. Yes. A viper ifb. Not just one ear but both. Oh, my gosh. Our producer sam. The welcome to show business, right. This is the glamour of cable tv news. The glitz. The athletes have a lot to deal with. You bet. Andrew, thanks. We cant wait for a busy week and fascinating being which is a phenomenon around the world. I was shocked they go back to the early 60s. It was like a new thing. 220 million pairs a year. Three or four percent of the World Population buys a pair every year. I have four pairs. You can get them for 20 bucks. Reasonably priced. Its hard to find a comfortable flip flop. They do it. As we head to break, the sixth annual delivering alpha conference, preeminent investor summit produced by cnbc and Institutional Investors getting ready to kick off here. A huge lineup this year. Treasury secretary jack lew, paul singer, ray dalio, carl icahn, Don Fitz Patrick and many more heavy hitters, names you know, coming up september 13th here in new york city and for more, on details and tickets, head to deliveringalpha. Com. Much more squawk on the street ahead. Weve got record highs on the dow, s p and nasdaq. Well be back. Nasdaq looking to slow things town. The exchange is seeking approval for a new optional function to give traders a better chance for having an order fulfilled and avoid high speed traders. Bob joins us with more. And a response to a new exchange coming out soon there. Theyre planning to introduce a new order type that would reward those willing to commit liquidity for a minimal amount of time. They say this extended life order type would receive priority over other orders at the same price. It would, nasdaq says favor longterm investors by allowing them to be at the front of the cue and it would make it harder for High Frequency traders to get their orders filled. Now those that use this new order type cannot amend or cancel the order while its active this is likely a response to the any iex exchange thats planning to use a speed bump to prevent High Frequency traders from jumping the order queue. They objected to this device and the sec argues that it didnt violate any of its rules. Now nasdaq says this is not forcing everyone. They say theyre just prioritizing trades in a slightly different way. Is it going to make any difference at all . Maybe. It sounds good for mutual funds but in the real world of routing it routes orders where they can make the most money. Mostly if rebates. If they lower the rebates it might make the business less attractive. They have no plans to implemented a single border type so part of this is the effort to deemphasize speed. Part of this is okay we have a new exchange coming in september likely and we have a serious competitor and we have to have a response and we cant be copying for example. Some very large investors have been critics of some Management Practices and high speed trading. Would they be candidates to essentially carve out their business for this type of order . I think so. The problem is this. Firms that say we dont want High Frequency firms to bid and cancel orders excessively and we feel that its messing the markets up to want to get ahead of that to use this. The problem is will the people that implemented it go ahead and do that. Not all buy side people control how their orders are implemented. If they want to get more money from rebates and they can order it, as long as that price time priority is met, theyre fine. And most likely that stuff is going to go out to the market. They dont control that. My question is who would actually control it . If we went back two years and i said we would be having this conversation, would you be surprised . No and credit to them iex is planning to open fairly soon likely in september so i think all of this is good. My attitude is let the market decide. If theres room for these orders and people can be told they would like their orders routed in these directions im this favor of it as long as it doesnt violate the principle that best price rules and everyone should have access to it relatively fast. We are looking at the markets hitting record highs again what are you hearing about the longevity and sustainability. This is the most hated market ever is it new record highs . Strils as well as text particularly. Theres no particular evidence that anybody is out selling in any great quantities at all. Theres nothing out there that indicates the market might be weak. The one concern is that the u. S. Consumer is showing signs of a slow down and we havent seen that. Well see what the earnings show. Thank you. Now over to john fort on the floor with a look at whats coming up next on squawk alley. Good morning. Good morning. Apple is opening up again tim cook talking about policy and technology and culture. Whats behind it . Well dig into that and google, is it the beginning of the end . And finally apple in the work day and a cloud uber structure deal but is there less to this than meets the eye . All that and more coming up on squawk alley. When a moment spontaneously turns romantic, 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. Good morning its 8 00 a. M. At apple head kwartds aquaters 11 00 a. M. On wall street and squawk alley is live. Good monday morning and welcome to squawk alley. Kayla is out today. Were at post 9 on another record setting day for the markets. Dow is up 88