Transcripts For CNBC Squawk Box 20160729

Also we have some earnings. Chevron, exxon mobile, murk. U. S. Equity futures at this hour, little bit of a mixed picture. More the most part down. S p 500 down 2. 5 points. Nasdaq is looking up. Were going to talk about some of the tech earnings last night. Markets had trouble all week. Remember the herald ham remember during that convention. Right. Just about the trump rally. Just about seems like every day we went up. The more that comes out of phil philly, the more the market is running. Maybe its coincidence. There were earnings. They were good except for ford. Other real things that happened in the world. The greatest thing about the market. The dacaterpillar. You can come up with any explanation you like. Just not for nothing, but i dont know. What its worth, its raining out today. Maybe thats it. I dont want this tournament to get rained out today. Hate that when they have to play 36 holes on a saturday. Maybe not. Its early. People arent teeing off yet. Youre talking about the pga. Yes. Baltusrol. The tournament. Thats where were going to go for breakfast. Thats the perfect or is quinn slip. For people who dont know, the trendiest restaurant in soho. The tournament is at baltusrol. Thats a guys name who got murdered a long time ago. And you called it its whats on the brain. One of the kids is named dal fa sar. Have you ever been there . Yes, many times. Im trendy. Youre cool. I used to be i much less elite now. Im not sure why. Ive been trending down. Meanwhile we have other news moving the markets. The bank of japan easing Monetary Policy doubling purchases of etfs. That was seen as perhaps less of a passage than investors were expecting. They appear to bel disappointed. Many were looking for a little bit more stimulus in a post decision News Conference at the boj kovgovernor crow da told its meant to address uncertainties. Argues quantitative easing has not reached the limit and the boj has room to move Interest Rates even more negative if needed. Take a look what that has done to the yen. Currently surging at the bank of japan disappoints, but on the flip side with the yen, against the dollar, i guess its up about 1. 6 . The nikkei has now come into positive territory. It where i happ it went deep into negative territory. It is now up about half a percent. After the bell results from alphabet and amazon sending those shares higher for both companies. Lets start with amazon. The Worlds Largest only retailer reporting fifth straight quarterly profit. Results beating estimates on both the top and bottom line. The company seeing strong growth in Cloud Business and an increase for subscriptions for prime program. Here is cfo talking about prime day. Record day for amazon devices. It was a great day for Small Businesses and sellers. We saw great year improvement in their sales and more importantly a great day for customers. Globally say saved over double what they had saved in prime day 2015. The moving of the stock makes him the third richest person on that forbes list. Passing warren buffett. It collects precipitation. Will you explain not to me. I know this pretty well. The expert on the set though, squall alley over here. Squak alley. No pointing at me. As the expert. Dropbox, you can get a video on a dropbox. Think of any business that needs server space somewhere and Processing Power somewhere. So if you with a Dollar Shave Club and you have a website and youre processing off o this material, that would happen on aws so its an amazon service. So this has nothing to do with buying something and sending to the person from a warehouse. Amazon built the cloud for its own business. Was processing so much business it needed all these servers to store Customer Data and run it. Anybody who wants to use it can use it. They sell it as a service. You know who also does this, alibaba also offers cloud services. He does . It does. All good. Now lets talk about joes other favorite company. A misnamed company. Ac alphabet. People still say google. Yes. Mobile products came from cla 2 increase in revenues. Bottom lines easily beating estimates. Once again the primary driver was the increased use of mobile search by consumers. Benefitting from our ongoing efforts to enhance the mobile search experience. We also benefitted from solid growth and desk top and tab lets search as well continued strength in youtube and advertising. Were going to be breaking down all of these results from amazon and alphabet in just a couple of minutes. If you didnt stay up for last nights Democratic National convention in philadelphia, heres what you missed. Hillary clinton the first woman to lead a major Party President ial ticket accepted the nomination. During the acceptance speech she made a point to contrast with republican nominee, donald trump. Thats how were going to make sure this economy works for everyone, not just those at the top. Now, you didnt hear any of this, did you, from donald trump at his convention. He spoke for 70odd minutes, and i do mean odd. And he offered zero solutions, but we already know, he doesnt believe these things. No wonder he doesnt like talking about his plans. You might have noticed i love talking about mine. Well have more on the highlights from last night with john harwood coming up in just a few moments. Lets check on the markets this morning. They are indicated with a little bit of downward pressure today, the dow. Not the nasdaq though. This wroub the fourth straight day of gains for the nasdaq, which that is die verging from what weve seen in the major averages. Not a lot. In europe, not bad. You have some Bank Earnings pretty good over there. I think people were surprised by that. Suppress test come out later tonight. Not Deutsche Bank so much. No. That wasnt so good. Oil is getting closer and closer to a three handle. At least it was when i checked this morning. Its got. 86 cents to go. Then theyll roll it and it will get back above 40. The 10year treasury, were they hawkish comments. No. They were dumbish comments gwen. Ive decided from here on out, i will make a deal with the fed. Lets just not talk about it at all. When it happens, ill deal with it. When you finally do a quarter point, i think we can hanl it. Well be back at 1 . Most of ive been around a long time. Usually were 5, 6; 7 . The world is fine. Lets never ask again when theyre going to raise. Go ahead and surprise me some day. I dont even want to know youre meeting that day. Just go ahead and raise it. Ill deal with it. I dont need to adjust any positions. Im not out over my skis. Just do it. Lets never talk about it again. Do you think he will be here at 8 30 for you to tell him. Do you think i should tell him . Lets not even ever conjecture again. No more fed speak. No jackson hole. Just surprise me. Add on top o that. Once we get a 1 or above, then lets start an earnest debate. So important. Got to get out of our lives. Would you please. Back to top earning story. Google and amazon both trading higher. Join us now to break down the results. One of the monsters, gene monster. Senior Research Analyst at piper jeffrey. How many little monsters running around with mrs. Monster. Just one little one and her name is anya. Thats nine. How would. Six weeks old. Oh, gene. This we did not know. Congrats. No wonder you look, he does seem more. That apple thing probably didnt make you too happy, but having a baby, who cares at this point. So coming on tv at 5 00 a. M. Is nothing. Youve probably been up all night. No one told me about those first six weeks. You had no idea. You thought they came out in kinder garden. Thats what i was hoping in hindsight. If you want the give us a highlights of both report, you know, why dont we you know what, lets start alphabetically. How does that sound. Alphabet. Sounds great. So it was really acceleration i think from revenue was up 22 versus 18 last quarter. They had a disappointing march quarter so it was nice to see things rebounding here in the june quarter. I think one of the concerns investors are going to have is theyre starting to get difficult comps coming up here in the September Quarter. Theyve changed some add units. Increased the size of techs and i think that combination is going to be able to power them through. Talked a little bit about that. The take away here is search is doing well for google and got some reason to be optimistic about new ad formats. Should be positive for Revenue Growth. One other quick point for google thats worth mentioning is they mentioned 13 times Machine Learning, the term Machine Learning and i think thats something thats an overused term, but ultimately, i think this is going to have a profound impact in terms of how we use a lot of services and its pretty clear google is heavy on the gas when it comes to Machine Learning. The New York Times headline says google silences doubters. Have they given us enough of a runway to not be having the conversation about doubting them come next quarter. They i think they have. Ive covered google for a long time and theres always going be some doubters, but i think that at least for the next quarter they silenced the doubters. The other piece too is theres some room for them to increase their buy back or dividend after the report the September Quarter and so i think thats Something Else that should keep investors engaged here over the next three months. When you think about the advertising dollars that have moved, not just to google, but talked about facebook and video they picked up with this last week and Earnings Report. We keep thinking all this money is going to be coming out of tv, traditional tv. Do you think thats happened yet. It hasnt. If you look at the tv budgets, theyve been growing. Its a huge pool. I think google ultimately will benefit from that. It really hasnt started. Okay. Lets move on to amazon. T i felt was next in the alphabet. So the big take away here is that unit growth accelerated. It was 28 year for year. 27 in the march quarter. 22 a year ago. So small increases, but when you think of the magnitude about how big amazon its hard to move the needle at all. All those kmaents you had played about the prime day, that positive stuff impacts the September Quarter. It wasnt the june quarter. I think the equity take away leer is they are just putting a death grip on traditional retail. They have taken their same day prime now, same hour, same day service to 22 cities at the beginning of the year to 41. Thats taking away instrant gratification. And its starting to impact their numbers. So i think is a positive. One other just quick side point, the disappointment on the amazon call was their profitability guidance. They outlined that was going to be significantly blow where the street is. I would just mention in 18 of the last 20 kwaertds theyve beat their target. It may end up being in line. Second is they dramatically accelerated the opening of Fulfillment Centers in the Second Quarter. Theyre going to open 18 this year. Opened six a year ago. I think youre going to see this big investment phase. It doesnt change the broader Margin Expansion opportunity, but theyre kind of compressing into the September Quarter which is a good thing. Youve seen the dating game. You remember those old dating game. New dating game. Yes. Okay. Youve got amazon, google, and app apple. Who gets to a trillion dollars first as far as market cap . Still betting on apple. I would say apple is the best pick for the next 6 to 12 months. As far as a trillion, its probably amazon is unstoppable. Just to be clear, we dont do multiyear price targets, compliance just want to be clear on that. If you just look at where most positive on apple of those three, right now. If you look at a decade or two decade down the road, amazon is unstoppable. This is like what the people faced with who to pick. You just really made a case for all three. Apple near term. You didnt make a case for google, but ann did when she had a chance. I think i said apple or google and she said google. Apple and then second amazon. You dont think alphabet gets there. You would pick amazon if youre going to go that longterm road. Thats the one now. Theyve got the most to move. Okay, gene, thank you. You dont have a son. Are you going to have more . Its none of my business, but where did he go . He didnt want to answer the question. Dont name your kid eddy, i was going to say. Then it would be eddy monster. He probably has heard that from people before. I dont think so. I dont think other people would bring that up with him. Unless he was in like junior high. Then they mooigt haight have. Blake is a great name. Its a great name. Maybe scott. Those are perfect names. Really good names. Were going to talk about Hillary Clintons big night last evening. She was obviousf course the nom giving her acceptance speech. Now the real race beginning. The highlights well talk about next. Plus well check the leaderboard of the pga championship as the rain threatens the second round. Squawk returns on this rainy friday morning. Check out this day in history. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Friday morning. New jersey meanwhile, which is a state next to new york, is getting the same type of weather thats going to impact play at the pga championship at baltusrol a golf club where it may be raining down there too. I have to tell you a story about who i was with ten, 12 years ago. Before the Martha Stuart ipo with her and sam. Together. Yes. After the first round, jimmy walker is in the lead after five under. Hes ahead of martin kaymer, ross fisher, mill yan know and grill low. I would try to b european. And hend rick citizenson. People were surprised he shot 65 yesterday. He was just looked like the same guy yesterday. Baltusrol held up really well against these guys. Wind picked up in the afternoon and things good even drier and nobody i think 68 might have been the best round, which would be two under. I told you yesterday, my daughter, shes got blisters and everything. They had these pairings before it started. Yesterday she had jimmy walker was her thing today. He hasnt been playing well at all and hes leading the tournament. Does she know golf well enough. She is exciting. She was throwing some terms around last night. It was cute. They were sort of mixed metaphor talking about being even par or under. We made sure when you put things up, red, was the number that means under. Its usually a bad thing if youre under red. Its a good thing here and you put up the black numbers when youre over par. She goes, i know that, but jimmy walker. Can you believe that. Its fun. Its going be much drier. The scoring might be better. Weather could get a little better. Pretty bad weather for philadelphia where Hillary Clinton had a big night last night. Chef gave her sepds speech at the dnc. John harwood joins us from philly. Pretty subdued introduction from her daughter chelsea. It was a subdued introduction. Look, she had a very difficult task last night. Shes not a natural public speak speaker. She went after her objectives in a workman like fashion. She sland hermotivations. She saluted her rival, Bernie Sanders. She reached beyond her own party. I will be a president for the republicans, the democrats, the striving, the successful, for those who vote for me and those who dont. For all americans together. Reporter now, one bottom line of this convention was trying to disqualify donald trump as a reasonable choice for president. She got some help earlier in the convention from people like former new york city mayor, mike bloombe bloomberg. Heres how she sought to discredit him. Imagine if you dare imagine, imagine him in the oval Office Facing a real crisis. A man you can bait with a tweet is not a man we can trust with nuclear weapons. Now, perhaps the most powerful single moment of the entire night or even the entire week came from this father of a fallen muslim soldier with the righteous anger of a parent. He ripped Donald Trumps proposal to ban the entry of muslims into the United States. Donald trump youre asking americans to trust you with their future. Let me ask you, have you even red the United States constitution . I will gladly lend you my copy. Reporter now, this was a brilliantly executed convention from start to finish. The question is how much does it or the previous convention in philadelphia, chexcuse me in cleveland, how does that affect the race. We have a very particularized country. Wall street journal poll before the convention, Hillary Clinton with a 5 lead. The lead we find in the next couple of weeks will tell us a lot about where we head going into the debates this fall. Thank you. Were going to continue the conversation this morning. Hillary clinton and tim kaine will hit the road today. Pennsylvania and ohio. Donald trump heads for california. For more on all this, lets bring in alexis johnson, democratic strategist, ron christ christie. Thank you both for being was. The question i wanted to start with is this. On the economy, they are going to hit the road and Start Talking about the economy. Hillary clinton saying last night in the first 100 days she plans to pend more money, what sounds like a massive stimulus passage. Unclear how shes going to do it. Do you have any details or sense of what shes planning to do . Reporter no. I think the big word last night was infrastructure. I think thats something that democrats have been trying to push now or should be pushing now for the last eight years. I think that is the real challenge of putting america back to work. So i think that her point getting at things like income inequality, talking about word like infrastructure, i think were signals to a lot of the democratic activists and the movement base that this is where her energy the going to be and thats going to help get support come september and october. One other question before i get to ron, really about Bernie Sanders. A number of times last night both in the introduction of Hillary Clinton by her daughter and by her herself, she used the word progressive a couple of times and then in another point thanked Bernie Sanders and tried to bring Bernie Sanderss people with her and said we hear you. Your issues are our issues. Is that lip service or real because thats one of the big issues that a number of independent voters are trying to understand. No, i think its absolutely very real. I think that what she communicated last night, i think it was a very solid speech. What she did was kind of map on or mirror kind of the way she will approach a presidency, the way she will govern r govern and it was i hear you. I will bring you in. We will figure out a way to merge this fogt. As opposed to i can do it alone which i think was coming out of the Republican Convention and i think then it really will kind of give her a sense that the movement is holding her accountable in so many different ways. Actually multiple movements that are going to be holding her accountable. She understands she doesnt have that flexibility to move forward without cultivating that base in a strong way. Am i crazy to think and i know youre on the other side of this, but cultivating the Bernie Sanders crowd makes it harder, not easier for her to win because that independent crowd looks at him and says that too far. No question about it. If you look at where the electorate is right now and independents and those folks who are sitting on the fence. They dont want to see the country pulled left. Its the whole progressive bit. Weve had nearly a trillion dollars of stimulus. What have we got for that . About 2 gdp growth. We had an increase in taxes and what have we got . Unemployment. Shes very, very scars if the specifics, but says trust me, put me in there without specifics. Is it easier for trump to cater to that voter because its perceived as a move to the center or is it seen more wildly off base from where his core is. A lot of people have their minds made up against clinton. One of my favorite cartoons when i was a kid was spy versus spy. Do people trust the old clinton that weve seen on the scene for 35 years or do they trust the new clinton weve seen versus donald trump. I dont know at this point with all the baggage weve seen and broken promises over the last 7 and a half years. Whether or not we should give her the keys to to car, and, in fact, lets have somebody else even if it is donald trump drive the car for the next four years. Are you surprised at the embrace, not just of obama and some of the social policies, but on the economy. She praised him on the economy. And then suggested that she wanted to continue that. Sort of curious where you come out on that. Look, with all due respect to ron. Im not sure what hes talking about in terms of unemployment, were at record lows here and i think that its about getting to kind of core issues around income and equality. The fact the great gains have gone to the top 1 . 90 of gains have dwoen to the 1 . That is the core trends shes trying to get at. This is not sustainable to build a economy for an entire america. We have to do better there. Thats part of the issue that shes kind of bringing along with bernie, but affirming the fact that under the obama administration, he did stabilize the banks. He did stabilize the economy and brought down unemployment in a very strong way. Painting a portrait that america is actually on the right path, theres no question about it. I think thats exactly right. Its a portrait. Its a portrait of where america is and a portrait of how people feel. Were at the worst point weve been in nearly 40 years f. You look at the socalled recession recovery weve been in for the last 85 months most of the folks are doing parttime job. If you look at obamacare the promises made there and look at the millions of people who are losing their coverage from the of course United Healthcare anthem. People arent feeling this portrait of what were hearing from the democrats. What comes next in terms of its always hard to say with donald what comes next. In terms of the next inflection point. The next couple of weeks theyre going to hit the road and then we get to the debates. This is going to be fascinating. The next couple of weeks its going to be brutal. Theyre going be beating the daylights out of each other. I think the American People want to hear what are you going to do. What is your vision . What is your change that this country is going to bring about by putting you in the oval office. Okay. Alexis, thank you. Ron, thank you. Thank you. Great to see both of you. Appreciate it. Coming up, two weeks vacation no, no. Thats for you joe. Starts tomorrow. For me personally. For you, you can, you know what, ti what. The market is getting ready for the gdp data. And even more. Of the 21st ce, the earth needed to find a new way to keep up with the data from over 30 billion connected devices. Just 30 billion . A bold group of researchers and computer scientists in silicon valley, had a breakthrough they called. The machine. It changed computing forever. And its been part of every new technology for the last 250 years. Everything . Everything this year, Hewlett Packard enterprise will preview the machine and accelerate the future. See star trek beyond. Welcome back to squawk box. Were joined now by joe. Hes a principle at besmer trust. You know or friend, rebecca. Yes, i do. What do you think of this latest move . I wouldnt say she thought the market was definitely staying with it is or going down, but i dont know if shes been buying it with both hands. No. What about you. Were neutral equities. We look at the markets and the rally weve had. We think theres certainly some support factors. We talk about a come daytive Monetary Policy around the world. We can talk about okay stabilizing economic data. The earning season hasnt been too bad. You look at valuations and you are to ask yourself how much further can this rally go. Who youre saying there are support and resistance factors. Thats novel. That would be different mhow i think ultimately you think about your weights, your overweights and underweights and reach some conclusion based on where you think the data is pointing. That sounds like a ben franklin close. Thats what i do when i cant make a decision. Then i count them up. I try to weight them. If one is tries as important. You have to count them twice. I dont think you get more negatives than positive. Impactly tied. Depends where you look around the world. Within the United States theres clearly room to move higher. You have to temper expectations. You have to recognize the bull lk of the earning moving forward has to come from earnings growth. We havent had any advance in the market in two years. Thats not true. You take a look at the markets to date. 6 in two years. We have been churning. You include dividend though. It looks a little bit better than that, but wheres the alternative. We look at assets around the world and this is how were left. If question stay at zero longer we dont worry about multiples contracts as Interest Rates go up. This is the only place really best house in a bad neighborhood. You have the strength of u. S. Companies plus dividend yields. I dont know if the its fine if you want to be either neutral or negative, but i dont know. It seems like maybe ben franklin will put you in buying stock. I think it depends where you are in the Business Cycle. If you think about how long this economic has lasted and you compare to the average cycle. You have to realize were nearing the end. We need to decide whether Business Cycles, do they end of old age or policy mistakes . I think its difficult to say what is going to make the Business Cycle end, but were seeing signs of stress. Were seeing Profit Margins start to roll over. Thats an early indicator. Is it because companies are reinvesting in their business and hiring people. They are hiring people, but wages rising is again one of the many signs that suggest we were told its not rising quickly enough. Were told that all the time. And, certainly, input costs dont see to be rising in terms of commodities. Oil is going back down. Commodities, but the you think about running a company youre biggest cost is going to be wages. People are seeing wage gains. Were finally seeing wage gains. Is that a 12 month . I mean, when you say next recession is coming. Typically as you start to see wages rise, in is one factor. A lot of things you have to consider. Im not saying the next le session is around the corner. It limits your upside. Limits your gains. As we look at the world today we see some further upside in the equity market. Then what do you . Leave nit in cash . Thats an option. Equity markets relying on earnings, relies on earningsing to drive the bulk of that. And clients who can afford the liquidity offers a bit of options. Private assets like art, boats. Private equity in particular. Have you looked at this this is a Ground Breaking idea. This thing call comcast stock. Its been called a safe port and global storm. Are you familiar with that concept. Ive heard of it. Hit another new high yesterday. Are you familiar with that . Its defensive in growth. Were joke reasonable degring. Its the only stock were atoo loud buy. That was a joke. In a world held back by compromise, businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Well have to wait until monday to see if universal pulls off the Box Office Win when the aforementioned, we were just talking about comcast reported this week. It was pointed out last year for universal was the biggest year for any movie studio. The first one to hit. I think they had a minnons last year. It was a big number and its tough to repeat that so the comps are harder. Usually youll see things go down, but pets was good and well see whether born. Were also going to be talking about rio. Date night tonight. Were going to see jason born. Date night. Im taking the wife. Were going to the movie. I havent heard of that, date night. That was blind date. Tina fa and steve car rel was date night. Chocolate raisin. Were that family. I shouldnt say this. Maybe well get busted by security. We often walk into like duane read and load up on the candy, stick it in the pockets because the candy is. Why am i not surprised. Anyway, were going to talk a little more rio in a little bit. And quickly just, merck is out. Merck revenue beat the bottom line beat as well so well quickly tell you that before we head to break. Giving credit where its due, shares of equifax shading at an alltime high. Ceo will join us after a quick break. Were creating the operating system for industry. Its called predix. Its gonna change the way the world works. Ok, im telling my brain to tell the drone to get you a copy of my resume. Umm, maybe keep your hands on the controller. Look out ohhhhhhhhhh. You know what, im just gonna email it to you. Yeah thats probably safer. Ok, cool. Quickly americaed merck making 92 cents a share, and receive Beat Estimates 9. 4 versus 9. 7 billion what the street was looking for. The company also affirmed its guidance for the rest of the year and well break down the report in the next half hour of squawk. Equifax trading on all time high, on track for its eighth positive year. Joining us is rick smith, ceo. The stock is trading up because you reported earnings this week largely better than expected, 20 Revenue Growth. What would you acredit that to . Its great to share the story. I would say its largely driven by transformation of a company. As you know us as a Credit Reporting Agency and go back ten years ago, 85 of all revenue was selling credit reports in america. Today that number is less than 35 of our revenue. Weve globalized the business and built unique data assets and invested heavily in analytics. 1 to 2 kind of growth to what you saw this year of 20 growth. Not only do i know youre a Credit Reporting Agency but i grew up down the street from you guys on your peach tree street headquarters so i drove by that sign fairly often. One would think the conventional wisdom is credit reporting does better in a down turn because more are worried about the credit and trying to see what it is but your stock is up 300 in the last five years. How did you do that . Thank you. Its a result of what we just talked about, unique data assets and the fact were global now and we have the World Class Technology and analytic platforms allows us to innovate at levels we never could before. Weve been building, 50 to 75 new products every single year that we never built before, solving problems for customers that we couldnt solve before. What thats done is added about four points of incremental organic growth to our company each and every year. Second thing weve done, our margins, our margins have expanded dramatically over the last five or six years as you just alluded to in the Earnings Report yesterday. Margins were up 160 basis points over a year ago. The big contract that you won recently is from the uk government, which i think very few companies would be able to say in this most recent quarter given the volatility there. Is that a sure thing . Yeah, it is, its a great contract. Its a contract weve been working on for about a year and a half, an analytics platform, equivalent to our irs, where they have obligations owed to them. We can analyze the debt owed to them and help them improve the collectability of those obligati obligations. We dont collect it. The brexit has had no impact on that. Where do you see volatility as you become more of a global business, rick . Latin america right now is going through some tough times, brazil, argentina, going through tough times, were still growing nicely down there but there is volatility. You saw in our Earnings Report yesterday, latin American Business once again on constant currently growth, some 13 . Solid growth but volatility across that part of the world. What about here in the u. S. . You have a big business advising companies on how to comply with the Affordable Care act which has been in the crosshairs of this years election. What are your views on the election cycle here in the u. S. And how that can affect your business . Two great questions. Were so proud and something you dont typically think of when you think of our businesses. We built a sas platform to help hundreds of customers around the u. S. Become compliant with the Affordable Care act and said in our earnings call, business was up 200 over a year ago. As far as the elections go, were nonpartisan here, its an interesting time for our country. He we watch your show every day and cant ignore that element of the point of our history right now as a country. Our hope my hope is leader of a business, we have a congress that can work with the president and adjust regulation, overregulation, address unemployment, get this country growing again. A lot of ceos would share that baseline view. We appreciate you joining us on squawk box this morning. Rick smith of equifax of atlantic. Tech giants surging. Which is the best buy . Well jump into that discussion when we return then a squawk exclusive, the first on cnbc, results from mike jackson, hell join us at the 7 30 a. M. Eastern time. Were back after the short break. The race for the white house, Hillary Clinton accepts the democrat partys nomination for president. I accept your nomination for president of the United States now the focus turns to donald trump and the campaign trail, the latest from philadelphia is coming up. Alphabet and amazon beating the street, both on the most and jeff bezos surpassing warren buffett. More on both of those companies and tech earnings straight ahead. And its National Chicken wing day. Find out where you can score free wings today as squawk box continues right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back. First in business worldwide tackling the biggest business question, do boneless wings count in a chicken wing eating contest. It would be too easy. But i like them better. Less work, yeah. We had some, wasnt that this week . Just yesterday. Two days ago. Two or three days. Cant remember day to day its friday. Thats one day we do know and kayla, the futures have been down most of the morning, well take a quick look. We did have a merck report now down 31. Its been a tough week during the dnc, kind of week where markets took notice if we do do all of this additional stuff, grow government, that in stark contrast to the trump rally we saw last week, right . Making it political, as somebody said i waited a whole hour i think you also mentioned it in the 6 00 hour. Did i mention it in a serious way or not . Im highlighting that everybody has their reason harold hamm started this and came out and said its a trump rally and you brought up ten different times in a sar donic way. Other comment ators said the rally started post brexit but can you nigel rally. Well be watching shares of cigna, reporting profit of 1. 98 per share, well below estimates of 239. The company is cutting the full year forecasting, worst than expected results in the Group Disability and Life Insurance business and right now, you cant see it there but we will see where that stock ends or begins the day. The new york fed asking the Philippine Central Bank to recover 81 million stolen by hackers in february. That 81 million belonged to the bank of bangladesh which has an account held at the fed. Reuters reporting it was mostly launderred through the philippines casino industry. The government set to release First Quarter take a first look at Second Quarter gdp, 2. 6 annual growth rate, up from 1. 1 that gets confusing. First look at Second Quarter. A second look at the First Quarter, right . I mean, it matters. The atlanta fed cut its estimate yesterday. I saw that. Atlanta fed, if in the last couple of gdp quarters it was higher, and got it down to almost zero. We watched the atlanta fed. They seem to be ahead of everybody else on forecasting weakness. Why does it take so long for everyone else . Do you know . No. Maybe they have aulse on a different part of the economy big airport. Earnings arent you from atlanta . I am, just told the last ceo, i grew up down the street from his house. Today that was . I heard that. What day is today . Earnings out this morning from dow component maerk, raised the lower end of the full year guidance, expected 2016 profit of 367 to 377 per shape compared to estimates at 3. 72. A developing story to tell you about, two Police Officers have been shot in a san diego neighborhood. A suspect is in custody. There was no immediate word on what touched off the violence. Police searched the area for suspects and urged residents to stay indoors. The shooting comes with law officers around the country on alert following the killings of officers in dallas and louisiana and baton rouge. If we get details well bring them to you. John harwood joins us now with highlights from philly. John . Reporter andrew, Hillary Clinton at her Convention Last night outlined an ambitious domestic agenda, including things like expanded social security, affordable child care for all and said she was going to pay for it by taxing wall street and the super rich because thats where the money is. I believe american corporations that have gotten so much from our country should be just as patriotic in return. Many of them are but too many arent. Its wrong to take tax breaks with one hand and give out pink slips with the other. And i believe wall street can never ever be allowed to wreck main street again. Reporter she also emphasized her credentials on National Security as a former senator and secretary of state and Donald Trumps absence of experience. Donald trump says and this is a quote, i know more about isis than the generals do. No, donald, you dont. Reporter just like president obama Hillary Clinton went after donald trump for his statement that i alone can fix our problems. She made the point as president obama did that this is a american enterprise, something drawing in average neighborhoods and average people all across the country. And thats a stronger together message shes going to try to sell over the next three months, guys. Thanks, john harwood in philly. Alphabet and amazon out with Second Quarter earnings after the bell yesterday, both Companies Beating big on the top and bottom lines, joining us to break down the nubds and all things tech, michael graham, Senior Analyst and patel, the editor in chief. Good morning. Which company do you want to talk about first . I want to start with alphabet. Im not used to calling it alphabet, its still google in my mind. Eventually well get it. A great brand name, you can change it just randomly. But i think theres two sides to the alphabet story, its hard to look at earnings without looking at samsung which did incredible this quarter. Primarily on the strength of mobile in the 6 s7. And then if you think the platform wars are kind of shaken out and kind of over, then you look at whats happening in terms of distributing content on the screens and there google has two of the most important icons on your phone, right . You open the browser, youll do mobile search, google doing a great job of owner search and everyone is moving towards video and google has a ton of challengers around youtube but theres still youtube. Theyve got two major icons on the phone. Big kpeter, facebook. Google maps isnt bad either. They own i use google maps and ways has taken me where i dont know where it is. They are letting it die and fold into google maps but thats the next big battle for a Consumer Services company, how do you get more icons to the mobile screen and battle facebook . And their Enterprise Business is doing better. Michael, when the company is trying to make money through mobile through software on mobile, the hole that people like to poke in the stock, they still make the majority of the search revenue from desk top even in 2016. Thats changing rapidly. The big story from earnings in terms of financials was that the mobile search business did really well. They effectively increased the ad load on mobile. And that resulted in a lot of extra revenue for them. The key for the stock last night and this morning was that core search Revenue Growth accelerated to 26 . It was 20 last quarter. And early last year slowed down to 10 or 12 . That accelerated growth they cant keep adding. No, they cant. You know they cant. Not indefinitely. Well, they are constantly tweaking. They understand search really well. They understand the behavior of their users really well, so they are constantly tweaking and pricing is still going up, which is a good thing for them. But i think really its that core websites Revenue Growth helping the stock and getting investors more comfortable. The other thing about the stock, the valuation is pretty reasonable. Most of these tech titans when they slow down from 20 top line growth to the low double digits, they tend to retain a pe multiple. If you put that on google earnings, you get 900 stock Something Like that, still a pretty reasonable valuation as well. Nilay, the metric that people value amazon on has been free cash flow. They havent been a Profitable Company and its been so hard to predict and compare quarter over quarter. We have five quarters of profit, well be profitable this year. Everyone is wonder when bezos will flip the switch, it just happened. Its kind of interesting, that revenue is coming from aws, the Software Business is still really good. We dont think about it being a great business but they add sales force and get incremental revenue, every other part of the business we have to invent a drone that will fly stuff around and reinvent logistics and delivery trucks. The physical side of amazon that we think is being amazon, obviously theres a lot of opportunity there but it is their Software Business thats now defining them as a business. And it is that Software Side that is contributing to the profits and to the margins . Aws will be half of amazons earnings by 2020, which is an amazing statistic when you consider they just started it a few years ago. How much cover is it giving them for all of the other investments . Actually the ecommerce margin story is firming up. The domestic ecommerce margins were almost 6 in q2. The International Margins are still quite low and they guided margins down for q3 which kept a lid on stock. Do you think theres going to be pressure on them to split the company in two . I imagine if it ever gets to the point, you know what Retail Business is a great business, lets just but they dont need to be together. Theres one person in charge of amazon and its mr. Besos and he may want to split the company up one day. One of the things thats driving this high valuation for amazon is that theyve demonstrated they can do scale based incubation of huge businesses. Aws was born out of nothing and became a big business. The next thing that everyone is focused on is logistics, are they going to create another ups or fedex . I think they will. That helps have faith that the long term growth can be extended for a long time. Is it possible he says im going to flip the switch back the other day . He has a Rocket Company to worry about. If he flips the switch and throws amazon into that type of turmoil, he wont be able to fight elon musk to see who goes to mars yet. Hes going to keep plowing those profits back into the big moon shotty stuff like drones and new businesses, i dont think they are going to kill the revenue. Both stocks up sharply. We appreciate your time this morning. Thanks. When we return, were going to run through mercks numbers, out with results just minutes ago, barbara ryan will join us after the break. Check out the futures quickly and they are down about 30, dow down and up again on the nasdaq, three straight days. Every year, the amount of data your enterprise uses goes up. Smart devices are up. Cloud is up. Analytics is up. Seems like everything is up except your budget. Introducing comcast Business Enterprise solutions. With a different kind of network that delivers the bandwidth you need without the high cost. Because you cant build the business of tomorrow on the network of yesterday. [rock music playing] [music stops] [whistle] [rock music playing] [record scratch] announcer dont let e. Coli mosh with your food. An estimated 3,000 americans die from a foodborne illness each year. You cant see these microbes, but they might be there. So, always separate raw meat from vegetables. Keep your family safe at foodsafety. Gov. Mer. Merck just out with Second Quarter results. Barbara ryan of ryan adviser. Barbara, we talked about merck for an awfully long time. There was a time when it got cheap after the vioxx problem. Buy it for yield. It still has a great yield. Its already moved pretty well from 48 up to almost 60. Is it a Capital Gains stock now or still a yield stock . I think merck is transitioning to a Capital Gains stock. Obvious obviously, all of farmers generate a lot of cash and pay out 75 of that in the form of dividends and share of purchase. I think youll always have that benefit. But i think whats really important to note here, number one, merck beat the quarter modestly on revenues and 2 cents on earning, bumped up the low end of the Guidance Range in the quarter. Theyve been consistently doing that. Why are they doing that . One of the drivers of that is new products. More great news for their pd 1 inhibiter and i am mun no oncology driving a lot, whether it be merck or bristol. Beat estimates for kaytruda, the results this morning small cell lung cancer, people expect it could exceed 6 billion by 2020. They also launched a new hcv drug which did 112 million in the quarter. More than double the previous quarter. Theyve been active in Business Development, they have an mba filing for new diabetes drug for the end of the year and interesting new mechanism in alzheimers disease in development as well. The company has emphasized they are focused on Business Development and have been doing transactio transactions. Beyond the yield there is a driver of value here, although these are Big Companies so youre not going to get the kind of growth you would get in the small more leveraged biotech. We know about the aging population and we know about how quickly Health Care Costs go up, theres hospitalization, theres doctors, all kinds of things that go into it but there is pricing pressure and will be. Weve got an election coming up. Who knows how everything plays out with drug prices. But does the opportunity for Drug Companies to maybe be the best deal in town in dealing with chronic diseases like alzheimers or diabetes bless you or influenza or allergies. Or looking into a bright light. That causes a histamine response. These demographic things, does that offset the pricing pressure were going to see . It would be nice if we could handle a lot of these chronic diseases without hospital stays, just by using a pill. Yeah, absolutely, i mean, were always going to have political pressure on this industry. Its an industry that has done so much good but its also as a result of its productivity and investments in r and d been relatively successful. We have to remember, this is a long tail business, its very, very risky. And returns have to be over time commence rat with that. People talked about the same things in 1982. And was really evolved is the head room for new innovation and returns on innovation and pricing for products has really come from genericization of the older drugs and that happens in the form of patents expire but also happens over time as you get markets crowded with a lot of drugs that are similar and managed care has the opportunity to use one against the other. Even hcv, we see a lot of competition in merck coming in, pricing has been coming down as theres been more competition. I think that really has been the key driver and i really dont see around the world that changing all that much. If you look at europe where youve got a one payer system in the government which everyone is fearful of would occur here, these drugs like the immunooncology agents are priced competitively around the world. I think the market will determine value and you point to the critical issue. If these drugs save lives, reduce hospitalizations, and improve Health Care Outcomes whether it be metrics of pure outcome for patients or costs, then thats the basis on which the industry is going to have to price its products. Im worried were running out of names for drugs though, barbara, one of the things you said a couple of them, they are so ridiculous. Do they use a scrabble thing where they put the letters on and throw it out there and then i think youll be amazed at what a difficult process it is i know it is. Do they have a Vice President of new drug names that comes i think there are companies and agencies and all kinds of things that go into that. You point to the point that theres so many drugs too that these Companies Just from a regulatory standpoint have to have drug names that are somewhat unique and specific and not like others because then people get confused and a patient could get prescribed the wrong drug or change one letter on the prescription and it comes out very different. Its complicated. Some of them are not so good. Others ones there would be money to be made for making drug names that sound kind of cool i think thats always the goal. Like hep asaj is good. Or remember all of the dwarfs he had to come up with all of those, aragorn, how cool is he . Morguen sen. Barbara, thank you. Thanks for having me. Have a great weekend. When we come back, getting ready in rio, an update on preparations for the olympics in brazil. At the bottom of the hour, mike jackson of autonation will talk results and race for the white house. Which country has won the most fifa world cup titles . The answer when cnbcs squawk box continues. Now to the answer to the trivia question. Which country has won the most fifa world cup titles . The answer, brazil. Fireworks lit up the sky over rio over the big stadium last night, part of a rehearsal for the olympics Opening Ceremony, one week from today. Details are still secret but one volunteer said that preparations were going well and you can catch all of the olympic action on the nbc family of networks, starting next week. Its going to be big. You werent around when this happened when there was a delay got to go. But carl was there and they werent allowed to show it and it happened while he was talking and they were unable to reference what was going on. We wont have that problem this year no, we wont. Thats going to be quite an opening. You know whos supposed to be there, gis sell. The largest auto retailer in just a moment. 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. Were now about an hour away from the governments look at Second Quarter economic growth. Economists expecting an annual growth rate of 2. 6 , that would be up from the First Quarter of 1. 1 . Facebook could owe 3 to 5 billion in additional taxes, facebook disagrees with the irss view on this issue. This was previously known but the amount of Tax Liability was not. Earnings reports from two oil giants ahead next hour. Well get exxonmobil and chevron, both said to report, exxon is up first at the top of the hour followed by chevron 30 minutes later. Autonation Second Quarter results missing on the top line but on the second line. Now joining us in an exclusive interview is mike jackson, chairman and ceo of autonation. Typically autonation executes pretty well. But you are obviously working in an environment that everyone else works in. We talk about both things. We assume that you executed pretty well. Thank you, especially since our 25,000 associates efforts resulted in an all time record eps 1. 08 for the company and that took expense control, managing inventories and we had a Great Customer care business and we had a Share Repurchase opportunity early in the year that we took full advantage of and repurchased 9 million shares this year our share count was over 100 million shares but the environment was tough. Retail sales for the Auto Industry were 2 down, early january it would, that the Auto Industry is plateauing at the high level. Some are managing it better than others. The incentive issues you talked about at ford yesterday. The average for the industry is an increase in 13 incentives. In order to achieve a 2 decline in volume. If you had increased incentives, the volume decline would have been larger. Ford Motor Company raised incentives 28 year over year and others are below the 13 level. Different companies are managing it differently, but the industry is gradually getting its head around the idea that it plateaued at a high level. You can still make a lot of money particularly with the mix so heavy towards trucks, almost 60 of the business is trucks now, were all very high profits but you have to manage the business differently. Were better positioned whole industry is in a better position than six months ago, our inventories are down 77 days down to 70 days late last year you raised the first warning. First week of january when i was on here with our year end sales report. A few warning flags that people have been raising about the credit that consumers are using to buy cars, jamie dimon has chimed in. Are you seeing any cracks in auto lending . No, the availability of lending is terrific, default rates are mins xul compared to historic levels ticking up slightly. There are some players in the subprime overly aggressires who pay the price for that. At our business, only 10 is subprime and we work with very lenders in the business for the long term and disciplined. But if you take the total Auto Industry all the way from pay day places to people with Credit Scores over 700, its in good shape. This was jamies point, there are individual players who are being overly aggressive in subprime and will pay the price. Im not here to name names on that this morning. Systemically theres no risk in auto lending. And wouldnt be any contagion. Thats correct. Totally different but it is a regulatory question, we saw each other recently and talking about autononous vehicles, whats the possibility you start seeing state regulators or federal regulators try to step in, not necessarily on tesla but new features we keep hearing about where Car Manufacturers are starting a semiougautonomous level. We hope its a comprehensive approach its coming. I think its going to be good. They are very forward looking and very progressive and understand these new technologies can save thousands and thousands of lives if done correctly. They are not trying to stop it but they see after the tesla accident as a for instance ks you need a regulatory frame. The debate in the industry, its ironic, you have google on one end of the spectrum saying use professional drivers and dont put it in consumers hands until its fully proven out and they have the most comprehensive sensors that are very expensive but it is on road to autonomous and tesla says lets put it in consumers and call it autopilot, even though its not, it overpromises and under delivers and there you have accidents waiting to happen. Most other manufacturers are somewhere in between. Its premature to call itself driving autonomous autopilot. Its coming youll have different capabilities. Will it be set at the speed limit . You look at the tesla accident, for instance, the computer knew it was on an unsafe road, by unsafe i mean oncoming traffic was allowed to turn in front yet allowed the system to activate. Thats a programming issue. Not want to drive . I love to drive. I love to drive driving i have seven speeds and a clutch. Do they have things that you dont have to shift that automatically people that buy sevenspeed cars dont want someone else driving for them. Joe yes, mike. One of the joys of life along with food, is driving, im a passionate dynamic driver. But there are moments if i need to do Something Else if i want to do Something Else and stuck can i use that line next time i get pulled over. I didnt intend to speed is what im going to use. It wasnt my intention. You cant be convicted. Stop and go traffic where youre coming in and maybe want to make a phone call, autonomous will be very beneficial. Are you of the vie that 20 or 30 years from illegal to drive on roads . You mean illegal . I wonder to the extent we get the vehicles it would make it difficult. Its a great Business Opportunity to create driving clubs where part of the america character, character is freedom, freedom of choice to go where you want to go, when you want to go and how you want to do it. Any freedom any way so freedom in america will remain 16ounce drink. The joy of driving no, no, freedom is overrated, believe me. Both of us would like to see whether 40 years from now whats happening on the roads, right . I hope to be there. So gm, better in europe and big suvs because they blew out numbers and ford missed them. Gm, its how you manage this market. Gm is taking a very disciplined approach. They are not overproducing. They are not jamming vehicles into fleet. They are not overincentive advising for a market thats not there, where the incremental doesnt bring you anything. I tip my hat to gm, theyve adjusted to the market the fastest and quickest and running it the right way. You see it in the results. All right. Is that used, action jackson. Thats used. You can call me mike. Under promise and overdeliver good way to go through life. Ceo over 15 years. Thats one of the secrets. Great seeing everybody this morning. Thank you. When we return sluggish cable business could be holding the stock back. Well run through the results and talk media trends after the break. Its National Chicken wing day. Tasty bites mean big business for many restaurants around the country. A list of deals and where you can score free wings in a moment. Welcome back, cbs beating the top and bottom lines on shares this morning. You can see where things stand right now. In the meantime, lets go over to julia borsten in los angeles. Youre seeing the stock there, 54. 19. The best Second Quarter earnings ever were bolstered by big jump in fees from star trek licensing and pay tv providers and even though advertising revenue declined in face of tough comparisons to last years big sports events. Ceo was extremely bullish about advertising increasing in the second half of the year as higher up front ad prices kick in and on Stronger Political advertising. Saying its impossible to replicate the reach of Old Fashioned tv ads. Significant dollars flow back to broadcast television. They realize what weve been saying for a long time, digital buys are more powerful when they compliment television buys, not when they replace them. Moonves revealed the showtime and cbs all access apps have 2 million subscribers, equally split between them saying this is ahead of schedule. Also made a pod shot at hbo now, which reported 800,000 subscribers in february. Showtime has more major hits and moonves would not comment on the drama surrounding the Controlling Shareholder redstone or on a possible recombination with via come, saying cbs is complete as it is. Can you stick with us for a little bit . Sure. Well continue this conversation right here and well talk media buzz and a lot more. Brett harris is Research Analyst, are you happy with those earnings . Absolutely. The earnings were great, a big part of it as julia mentioned was from the star trek as i understand indication deal. And the over the top products was a very good surprise. As an owner of this company, how much of the bet is on cbs proper versus what could happen or not happen with cbs and potentially viacom, the conversation that didnt happen on that call. There is speculation and potential for some sort of catalyst beyond earnings growth. That being said we own the stock because we think its the best positioned Media Company for the existing ecosystem. You talk to investors in both of these companies, a lot of people dont want them to get together but sort of expect ult natal matly they may. When they split up everyone thought viacome would be the Faster Growing Company and cbs had more traditional assets, they have so vastly outperformed that it really is in many ways a testament to the leadership of les moonves, there are a couple of comments that the strategic flexibility and impressive about cbs, the fact that the traditional ad business is doing very well and direct to consumer businesses which moonves referenced when he revealed new subscriber numbers for the showtime products. I think there are a lot of people who think that moonves would be a great leader for the two companies combined but at the same time, viacoms business is struggling so much it would be a mess for cbs investors to have to have those assets as well. Do you agree with that . Absolutely, yeah if there was an announcement tomorrow there was a deal, would you sell the company . It depends on the price, right . At some price any deal is a good deal. Is that the right deal though for cbs . Arguably the deal for cbs has always been time warner . Yes, from an industrial logic perspective that combination makes more sense. Time warner doesnt have a major broadcast network, cbs does has the number one broadcast network. We thought that combination makes perhaps more sense. Less moonves talked on the call about the political season coming up and the ad load they are pushing through affiliates is already incredibly strong into the fall. Coupleing that with how theyve been able to compliment the coverage of the political season, how much could that add to bottom line . I think generally rough numbers, the political cycle for cbs is probably 200 million of revenue, just roughly speaking over the course of the year which probably falls to the bottom line. Theres not a lot of incremental costs associated with that and cbs all access, its an ad supported over the top service. They know whos watching and its a younger demo and advertisers do like the targeting aspect of online video as we heard on the facebook and google call, online video is the next big part next big step up for online advertising. So cbs with the all access platform could be in a very advantageous position coming into this political cycle in addition to just its core stations. You mentioned the idea and it was really less talking about the idea of it as long as these things compliment but dont replace. Isnt there a moment when were talking about ott, which they have to they will replace . Absolutely. So they talked on the call about how so far they believe subscribers are only coming from broadband only households, the 15 Million People who just have broadband connection. Eventually the ecosystem will migrate from traditional paid tv to pure over the top but that will take a long time. We expect pay tv declines of 1 to 2 per year because at the end of the day the pay tv product gives a lot of value, 200 channels, lots of content, its a question of getting the use interface into the xfinity platform. What weve heard moonves and others talk about a lot over the past three months since the last quarterly earnings, the fact they are seeing tv dollars migrate away from traditional tv to digital are migrating back because they say advertisers feel like they can really only get the reach of television from Television Ads and they feel like theres stilg a long ways to go before Digital Advertising really catches up. They are pretty bullish that tv will remain a position of strength for some time. Okay. Julia borsten in l. A. , not eveneven 5 00 in the morning. Do one of you two xfinity. I live in new york city. Greatest city in the world all of the other things, all of the other drawbacks from living here, that might be one of the biggest ones to xfinity and beyond. Have you been to paris . Did you try to go back to the farm after youve been to paris . Once ive seen it you cant do it . Xfinity, i would love to get xfinity its a Time Warner Cable deal had gone through. What was the deal i wanted to happen . I live in future. Comcast buying time warner im not even going to mention the ice picks and subway in your eye that can happen. You have to have who wants to get a place in new york . Where are you right now . Beating heart of business. National chicken wing day. Well tell you where to find great deals on chicken wings. Theres what i think right there. The numbers and street reaction straight ahead. Bear market territory yesterday, take a look where it is now, crude down just about 37 cents a barrel. Squawk box will be right back. One stock well be watching this morning if you will appreciate and the animals i think i just did. You see they can play anything. They are so good. Anything. They take requests. Every time im here they seem to be playing the same song. That background music goes with just about anything, any occasion, or its like a wine, goes with anything. Summer water what they call it. One stock well be watching, the Company Formerly known as rubbermaid. Six cents above estimates and revenue beating forecasts, new we wills results, ones it acquired when it bought jargon corporation. You normally think of it as they own tup per wear but they also own sharpie. Attention chicken wing fans. Every day its something. Today its National Chicken wing day. Whether you like your wings hot or covered in barbecue sauce, youre in luck, plenty of deals available. 28 billion additional bonein chicken wings are expected to be e eaten in 2016. How does that feel for chickens . There must be a better way to do this. I talked about that about, in a genetically modified way why couldnt they have six wings. Theres no reason they couldnt, six wings for each chicken. Theres someone working on that in a lab somewhere. First thing i want to do, according to the National Chicken council, 1. 3 billion are eaten during the super bowl sunday alone and heres a roundup of where to snag free or discounted wings, Buffalo Wild Wings half priced wings and hooters is offering all you can eat traditional wings and bone less wings for 14. 99 and 12. 99 respecti respectively. Wing stop five free classic wings and east coast wings a coupon for five free wings. My question is hooters. Here are the producers. Here we go. Im afraid to say anything. In reference to chicken wings or chicken breasts or anything, im afraid to even go there. Theres a hooters just down the street from here. My question is the two kinds of chicken wings, the kind drum stuck or other kind, which do i prefer . Which do you reach for more frequently . I go for the drum stick. I go to the other one. I think they are better. I think the drum stick is tougher drum stick you can do with one hand and napkin you can do it more cleanly. To get between the two little bones but its better than the gristle you get with the ill also get rid of gristle if i do the gm o thing. This is where you can trust the weatherman, when it is raining and they forecast a rainy day, thats when you can but well see whether they get this round in today but it is the pga. Trade is a hot button issue. Well talk to john engleer, about the race for the white house and trade deals and exxonmobil, earnings are expected any minute. The numbers straight ahead. Bend me shape me, any way you want me as long as you love me, its alright bend me shape me, any way you want me. Shape the best sleep of your life. Sleep number beds with Sleepiq Technology adjust any way you want it. The bed that moves you. Only at a sleep number store. [chains dragging] [eerie music playing] [crickets chirping] [owl hoots] announcer if you dont fix them, sparks from dragging tow chains can cause a wildfire. And that could be scary. Bye, smokey only you can prevent wildfires. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Earnings alert, results from oex on and chevron hitting the tape. Numbers and what they tell us about the Global Energy markets coming up. Politics and the economy. Thats how were going to make sure this economy works for everyone not just those at the top. Hillary clinton versus donald trump, which candidate is better for the economy and Corporate America . Were going to ask business round table president john engler. Grubhub drifrs could competition from amazon and uber eat into the companys profits, the ceo joins us as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Exxon coming up. Welcome back to squawk box. Exxon just hitting as we thought it would. I see one number, hopefully theres no charges or extraordinary items, 41 cents a share is what im seeing as the bottom line number. That would be below the 64 cent estimate. I dont know whether theres something that is in there that we need to add back in at this point. They have a miss of that size, revenue in the current period is 57. 7 billion. That also looks like it might be shy of expectations and the company says that the reduced earnings reflect sharply lower Commodity Prices and as we heard from one of the other Big Oil Companies we recently reported, both lower Commodity Prices and weaker refining margins. If you want to think back to the glory days, the company do you remember sorkin what they used to earn in a quarter . I tried to make this point when we talked about apple and you were mad and said i was full of beans and things. But exxon used to earn 10 billion in a quarter. And it seems like a pretty stable business, the earnings quarter 1. 7 billion, you cant amortooiz it looks like a miss, 41 cents. If i look quickly, because i want to go back a couple years. The management commentary what youre looking at that say it is a volatile Industry Environment but they are focused on business fundamentals and cost discipline and advancing selective new investments across the value chain for long term shareholder value. They used to earn well over 2 a quarter and they are earning 40 cents and they used to have even the revenue number was much larger. For exxon you have to see replacing reserves and production and all of that kind of stuff goes into it and times like this, you do the other stuff, youre not obviously trying for to have the same level of profitability. Recalibrating. And hibernating of sorts. Exxon, do we look at the oneyear chart . The time to buy it was long before oil recovered. It was how far down . Got down to 50s, got down to whats the low for the year . Got to 66 though. 66 and its recovered all the way back where it was well above 90. Its already made its move back up even though oil looks like it could go back below 40 again. Well keep watching that and you have other earnings as well. Among the other top stories, amazon shares rising after the Company Posted better than expected results. Seeing strong growth in the Cloud Business and increase in subscriptions for its prime programs, stock is up better than 2 in premarket trading. Alphabet looks to be a winner today. Beating street on a 20 increase in revenues, driven by a strong video market for youtube. That stock up more than 4 . And Facebook Says it may owe 3 to 5 billion in additional taxes. This is a result of an irs investigation into how the social network transferred its assets overseas, that stock is down fractionally in the premarket. Another stock to watch today is barclays and the story behind a big jump, wilfred. Stronger than expected earnings mainly due to lower costs, heres jess staley earlier. In about the Second Quarter, our core business of the trans atlantic consumer Corporate Bank generated a return on equity of 11 . Thats one of the best returns i think of any bank in the world. Our core business did quite well. The second part of our strategy for this year, to accelerate the closure of noncore. So that we go into 2017 and well begin to have clean air to prosecute the strategy of barclays which we feel very good about. Shares up sharply today despite earnings falling by one third. Highlighting how low expectations were following poor European Bank results elsewhere this week. Barclay shares had been down sharply year to date as well. The focus today switches to the spotlight on Deutsche Bank and italian banks which rallied from low levels on talk of a private bailout for bmps. Here is staley talking about the health of European Banks more widely. The European Banker sector is challenged. If you look at the top 12 banks across europe, thats not healthy for the financial system, thats not healthy for the european economy. Overall European Banks are getting some surprise reprieve today ahead of stress test results, they are due at 4 00 p. M. Eastern time. Guys . All right, wilfred, thanks. Other stocks to watch back here that were looking at, in line quarter for ups, earning 1. 43, matching revenue slightly above forecast. Company says one significant drag on Revenue Growth came from lower surcharge rates on fuel. Abbvie, 6 cents above wall street revenue and raised its full year guidance, results driven by 17 jump in sales of humira Rheumatoid Arthritis drug. Lets talk a little politics. The political events are now behind us and debates are a few weeks away as we begin to ask which candidate is best for the u. S. Economy. The business round table warns ceo members are concerned that neerng candidate shares views on trade. John engler, good morning to you. Good morning. You heard Hillary Clinton last night, just want your First Impressions on comments she made both around business, talked about tax inversions and talked about a big stimulus plan she wants to pursue in the first 100 days. I think the good news is the inf infrastructure agenda that mrs. Clinton and mr. Trump talked about is timed right. Interest rates have been at historic lows for a decade. We ought to get busy on fixing america. Thats good. Along with that, we think will be the largest Workforce Training Program in history perhaps. We dont have a workforce prepared to do this work today. Thats one of the ways that you help workers get back to work and come back off the sidelines into the workforce is have something for them to do. And thats necessary because weve had a slow economy. And one of the reasons we are advocates for trade, we think that also helps to pick up the economy so theres bits and pieces to find but its been slim pickings in some of the policy positions in the two platforms. I was going to ask both sides against tpp, something youre for. There are questions whether there are cracks in those views, meaning we heard earlier this morning that maybe Hillary Clinton would ultimately be for tpp later. I dont know where you think you are, or if you think donald trump would ultimately switch his view. Do you think one is more persuadable than the other . Im not sure. Ive said that being from michigan, im sort of used to people running against trade issues but the reality is after elections are over, generally people recognize that trade is an important aspect of American Economic growth. The trade the transpacific partners got 500 million customers we can access by dropping 18,000 tariffs and intellectual property and tech sector is a big winner in the last couple of weeks and Financial Services sector has come out in support of this. We think theres a lot of reasons to be for this. But were also sensitive to the idea that not only does competition from around the world but also the deployment of Technology Mean that people in jobs find those jobs changing and some places disappearing and they need to be retrained and allowed to do Something Else. What would that Something Else be . Part of it ought to be doing the work in america that needs to be done, fix our infrastructure. Theres a lot so just reading notes here, youre xrup you housely, not just nonpartisan, but scrupulously nonpartisan. It is hard given my background. Lets talk bernie and all of the platform all of the things in the plank in the democratic platform that were from a socialist. Right. So the business round table has no preference whether it supports a socialist plank noncapitalist plank, a different Economic System thats an aj ma to capitalism. Maybe the next pope can be an atheist, john . Its catholic, i dont think thats going to happen i dont understand, seriously. Would you support a socialist candidate . Can you say you like progrowth strategy or is crony capitalism so part of business now that youll it doesnt matter where youre getting your joe, the difference is and the chamber is a good example of somebody that their strategy and their structure is their active in politics. Ive got 200 ceo members, each of those ceos with their companies have their own Political Action efforts and they get involved as an organization speaking for them collectively, we let them do the politics we dont do it. That sort of is my those are my marching orders, when im hired to head the roundtable. Should not have accepted the position. Well, look, i love the policy aspect. Thats why im very comfortable getting out and talking about the importance of trade. Were all in on immigration reform. Its not just trade. We need a different tax system in terms of territorial we need a lower tax rate. We need less regulations, we dont want to grow sub2 . Weve been very critical of the administration and the tepid underperformance of the economic socalled recovery. Were limping along at barely 2 gdp growth. Additional 1 is 3 trillion in revenue. You have a chance to double down on all of the same policies we give them the facts and let the voters decide. I think theres a im from the midwest, the midwest is going to be a critical region in this election. I can tell you there is a deep sentiment for change. I think thats the challenge that secretary clinton has is thats not much change coming there. And you i dont know. Were going to see a very tight election. Im happy to take a break and go to the olympics and well see what the fall looks like. I like putting you on the spot, john xbl. No, no i know how you feel, it would be hard for you to be scrupulously nonpartisan. It is and when i see people like my successor ms. Granholm because we had eight years of it with jennifer granhom. We appreciate it. The demand for on demand delivery, online food ordering site grub hub feeling the heat as amazon and uber start to deliver. Well talk to the ceo matt maloney after the break. Squawk box will be right back. Keeping the power lines clear,my job to protect public safety, while also protecting the environment. The Natural World is a beautiful thing, the work that we do helps us protect it. Public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. We want to keep the power on for our customers. We want to keep our community safe. This is our community, this is where we live. We need to make sure that we have a beautiful place for our children to live. Together, were building a better california. Welcome back. Were one week away from the opening ceremonies in rio. Team usa will be decked out in ralph lauren sportswear, navy blazers and red and white and blue striped boat shoes. Ralph lauren partnered with 40 u. S. Manufacturers to make the outfits. The sportswear marks a change from the london summer games in 2012, layered athletes in ties and dress shoes. So little revolutionary. Yes. What was it that one year where people didnt like it, had the that one year . Silly berets. Was that ralph lauren that year . Roots was the Canadian Company that did in and of itself, Canadian Company. One of the highlights of watching the Opening Ceremony. For the u. S. It was a Canadian Company, right . It might have been. Thats not going to happen any more with President Trump either. Kidding, kidding. Fireworks lit up the sky over rios stadium last night. Part of a rehearsal for the olympics Opening Ceremony one week from today. Details of the ceremony are still secret but one volunteer said preparations were going well. You can catch all of the olympic action on the nbc family of networks starting next week and cnbc coverage begins on august 8th and seriously, think about it, you never really i dont know if you need a director to decide what to show because you can show everything if you have all of these different channels, youll never have to select, do we go to Beach Volleyball or well show it out. And some of that im sure will be on cnbc too. Some of it will be on cnbc but you can nbc can use all of its platforms to deliver more olympic coverage than ever before. Than anybody else . Than ever before and anybody else. If only you had xfinity and you dont. And you pump your own gas too . I do, unless i go to jersey. Ill leave the lights on for you. The ceo of grub hub joins us, the growing competition to eat his lunch. Stay tuned. Youre watching squawk box on cnbc, first in business worldwide. Americans are buying more and more of everything online. And so many businesses rely on the United States Postal Service to get it there. Because when you ship with us, your business becomes our business. Thats why we make more ecommerce deliveries to homes than anyone else in the country. The United States Postal Service. Priority you with usaa is awesome. Homeowners insurance Life Insurance automobile insurance i spent 20 years active duty they still refer to me as Gunnery Sergeant when i call being a usaa member because of my service in the military to pass that on to my kids something that makes me happy my name is roger zapata and im a usaa member for life. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Grubhub reporting a record amount of ordering on its site but facing competition from the likes of uber and even amazon. Recently launching its own Restaurant Delivery service. Joining us now is matt maloney, ceo of grubhub. Today its down a little bit and well get to that in a second but normally we think of the best quarters for food delivery being the snowstorm system. What was it about the Second Quarter that hubgrub did so well . Absolutely, typically we see our biggest growth in the Fourth Quarter and First Quarter but we just posted our best quarter in a year with seasonal head winds as well as you just mentioned accelerating competition. I think weve been making the right investments over the past two years and rebuilding our Technical Foundation and its really yielding tangible results in terms of 37 year over year Revenue Growth. Its not just people are getti getting lazier and netflix rolled out new shows were delivering for hundreds if not thousands of restaurants across the country and seeing restaurants we deliver for produce more orders per restaurant than the restaurants that do delivery themselves. That in itself is incremental orders its been building and weve been doing continuous product improvement, making the product better and easy to order and putting the right features in front of the right people at the right time. Weve done a lot of effective marketing. A big rebrand in the First Quarter. Spend spent a lot of money, done that strategically and its all paying off right now as you said in the Second Quarter that is typically down sequentially from the First Quarter. You added about 24 growth for your users and added a ton of new restaurants. What was it about the pitch in the quarter that caused the growth to be so high . I think again, it was getting more people to be aware they can order online from their favorite restaurants, thats the marketing, its capturing eyeballs and transitioning those to orders, thats the product itself. The fact that we have so many more restaurants, its because restaurants dont really want to do delivery. We can come into communities across the country and say, look us do that for you. Well do that for a cost thats less than what it will cost you to do it yourself. I think they all Work Together and we just blew out the quarter. In the big cities, a lot of the restaurants are going to some of the newer platforms like caviar and well known chefs are start ig their own apps like maple and like muncherie. Will you have to change your economics to keep people on the grubhub platform instead of going somewhere like caviar . We havent. We just posted our strongest quarter in a year with as you say all of this increasing competition. We think were going to win because of our sing you lar focus on connecting hungry diners to their favorite restaurants. We have the most competencive network, the two you mention are single restaurants, you dont have the opportunity to order from all of your favorite restaurants from those two platforms, we have 44,000 restaurants and nobody can compete with that for the next five years. Its extraordinarily hard to sign up that many individual mom and Pop Restaurants on a contract where we fulfill a meaningful part of the service for them. We have the lowest diner facing fees and we have the singular focus on this experience on this purpose and we support it all with our incredible customer service. I just dont see anyone else can catch up. You merged with seamless a couple of years ago to tackle competition and the question always comes up whether youll have to do another deal, buy one of these competitors. A couple of years ago people were saying maybe when yelp was for sale, that merger would have been a good fit. Any deelsz in the pipe line . No, we have no material deals. Were very confident in our ability to compete and win in the current eco system. Weve been buying smaller rds, Restaurant Delivery services because they have v1 technology, we can take assets and restaurants and diners and drivers and drop them on state of the art logistics and see hyper efficiency out of those assets. Thats the kind of deal we like to do, something thats extraordinarily creative for shareholders and extraordinarily creative for logistics and scale and continue Going Forward as fast as we can. Were doing this better than anyone else at the scale unmatched in the industry. Thats where we are. Stock giving back a little gains and a couple downgrades, but strong quarter, up 25 . Matt maloney, we appreciate you joining us today. Thank you for having me on the show. You should buy stub hub, its a more than solar city and tesla, more of a no brainer, isnt it . Chicago groupon, i could come up with a great list. Stephen king, the master of suspense and the macabre. I enjoy keeping people up at night. My Analysis Shows your stories are actually about human connection, even love. Great storytelling needs drama and empathy. My cognitive apis can help any business Better Connect with its audience. You should try writing a book. Find a remote hotel. Bring the family. I do not think that is a good idea. Welcome back to squawk box breaking news, Second Quarter, exactly as expected up. 6, sequentially it was up. 6 the last look. Drum roll, please, remember, everybody was looking for over 2 except for atlanta and they were closer. 1. 2. Half what the street was looking at. I could never figure this out. Atlanta gdp now pretty much puts all of the parts why many would disagree with their view, they are looking at 1. 8, even they were on high side. Our last look on First Quarter gdp which was 1. 1, we lost the big handle, now only up. 8. 8. Now lets look at the internals, if we look at consumption, that was 4. 2, a little light but thats based on expectation. Its definitely a little heavier than the 1. 6 we ended up with our last look. If we look at whats going on with the personal consumption expenditure, quarter over quarter, thats 1. 7, lighter than the 2. 1 in the last look and 2. 2 on the general price index. Cut through all the numbers there, it really is light. Whats fascinating is, if you look at this was supposed to be the quarter that averaged out with all of those anomalies and it is an averaging out week. Third quarter hasnt been the best quarter. In the last 11 years i just quickly looked pay close attention to growth and lack of productivity. Back to you. Thank you rickster. Steve is here. 4. 2 , thats worth about 3 percentage points, im doing back to the envelope when it comes to positive growth, Everything Else was worth minus 2. Im seeing a bigger decline in Housing Investment down 6. 1 from being up 8 on the prior quarter. Im seeing Business Investment overall down 2. 2 , that must have been worse than expected. The trade gap, lets see, little better, government purchases down 0. 9 after having been positive in First Quarter. You have the consumer in this economy on this side and Everything Else. This is a much weaker number than expected. Its a disappointment. Along with todays data on the Second Quarter, the government reporting regular annual revisions to data that go back three years. Not much change overall but the government confirming our research that the First Quarter has been understated. Take a look, the Economic Analysis for first time acknowledged the broad finding of cnbcs work, the problem with First Quarter seasonality goes back three decades. The associate director for National Economic accounts telling reporters theyll review the long history of gdp because theres some evidence going back as 30 years for residual seasonality. Thats the term the bea uses that shows seasonal patterns still exist even after the data has been season aly adjusted. Heres one chart to show you what they are talking about. Focusing on the past years, bea making several improvements how it calculates the number. The result you can see revising some of the weakness. The average over the past three years, 1. 2 before the most recent data up from 0. 5 . You can see what was gained in the First Quarter taken away in the second. Why does it matter . A big change to the First Quarter 2015. You remember that was a time where the negative gdp number creating worries about recession and fed holding off hiking because of weakness. Heres what the numbers look like. Minus. 2. Thats been revised up to perfectly pedestrian precisely average growth of 2 . The Second Quarter revised and First Quarter 2014 also revised up as well for 2 swing. The changes an revisions they were warning about this number and all of the numbers, you cant take any single quarterly number by itself. You have to average growth and it provides greater accurately. Up or down on this number today, plus or minus 1. 3 in terms of subsequent revisions. Joe . I was talking about you earlier and didnt know you were going to be on the show and andrew reminded me. I have an offer for you. Which is what . Sort of an addendum to what weve been talking about the next rate increase. I want you and the fed to agree lets do it this way, were not going to mention it ever again until it happens and when they finally do it, i dont care when it is, i will take the consequences okay. Hold on. I dont even have to do it on a scheduled day. Lets just agree to never say another word about when they are going to hike and whenever they finally decide to do it, go ahead and do it, tell me after its done and ill deal with it. Let me ask you a question. On day when fed governor x speaks they cant speakmore. I cant get them not to talk. This is a big agreement all parties involved. The dome of silence around the parties involved. When you finally do it just do it. You want to go back to the old day where we imputed fed movements from the movements in the monetary aggregates and divine oracles. When it mattered if we were at 6 , 7, 12, were at zero. Ill deal with 1 . Tell them. Thank you. No more. If shell agree not to talk. Dont you think we can handle it . Whats the worst if someone is on the wrong side of trade ill cover it. Youre in the camp of hear no evil see no hear. If we dont talk about it it doesnt exist as an issue . No, the next quarter point you go to the terminal pricing. It doesnt matter. Just do it or not do it but dont talk about it. I will ask. If they agree, ill agree. Steve, thank you. Diane is not going to agree with me. You wouldnt have anything to talk about if we just wait for them to just do it. You love all of this fed speak, you love no, i actually you were hanging on every word of liesmans six minute report i always hang on every words of steves. Were still on tepid growth and that is an issue. Youre right, i actually have some sympathy for you, joe, because were tired about talking about rate hikes when its not going to happen for a while. I think the fed is sidelined until the end of the year. Theres a lot of reasons for that. I think the domestic economy has checked the boxes but the reality is they are still hedging Downside Risks and this report suggests maybe we should. Consumer is doing well, they snap back into the Second Quarter but wheres business . And at the end of the day, youve got to have both of them coming together. They are worried about productivity growth and talking about business and investment falling short and transit tri problem. The research ive done, this goes back to before the crisis. Weve fallen short on profit share relative to investment as a share of gdp since 2006. We really not been putting much into our future for a long time now. Diane, as far as the regional feds go, what makes the atlanta fed such a soothe sayer on gdp . They are adding numbers up really well when they are coming in. I was getting 2 , worried about 1. 9. This is a weak number and we all translate the data, its pretty straight forward what you miss on, what are the revisions to the Previous Data which now look like they were down. The trade is a headwind, thats not going to go away. With Lower Oil Prices a plus to the u. S. Consumer but how does it hit us on the other side on investment. Thats where the weakness has been since oil prices have come down. That was one of the Silver Linings to the oil price boom, the boom in the oil industry in the u. S. And thats just not there. We used to wait year after year for us to start going into that next like second gear or third gear. Now, i thought this next quarter because atlanta did it a couple times last quarter, kept going down and down. I thought it was all going to be front end loaded to this quarter and were going down again. Now were downgrading quarter by quarter. Ness really worrysome. The downdraft in growth. The break between business sector and consumer sector, you have to narrow and hope its in favor of growth instead of not in favor of growth. Inventories are weaker. That does set us up for better but manufacturers are not having an easy time out there. This is not the most conducive business environment, but at the end of the day the World Economy is not very hospitalable to us as well. Part of the ten years havent had a rate one rate increase, i guess we were going up for part of that but there has been a good five or six years where weve talked a lot diane, a lot of hot air. We could have been i could have learned french. I could have i could have been reading doing Something Else. Reading classics. Could be an expert bridge player instead of being worrying about fed speak. The reality is, think about it even in a more global context, the bank of japan disappointed some. Im not really sure bank of japan wants to go that much further negative. I think that was a bad call. Think rer rethey are reluctant and they are close to helicopter money. Youre talking about the fed trying to raise context and rest of the world trying to ease further and Monetary Policy has run out of ammunition. Thats not something the Federal Reserve would say but its up to fiscal policy now. And we need both reforms and we need a change in fiscal policy. We need to break the gridlock in washington. Piano lessons, i could probably be pretty good over five years instead of if he said that, donnelly said this, i dont know, maybe now were at 70 for october or 30 for all of that time, theres so much things that we could have done. You know who i blame . Liesman . You still got good ratings, right . Its fine. Maybe it didnt hurt so bad. Its a good life. Think of every friday when were jobs friday when its like the end of the world on whats going to happen. Not one increase, one diane. Keep your focus on the horizon and youll do better. What other things would you prefer to talk about in that time . Ill do things, ill read the classics. Have you read the classics, do you speak french . Do you do that onset . Instead of worrying about the fed. When we come up, oil giants exxonmobil and chevron with quarterly results. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. 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. Welcome back. Chevron just out with quarterly numbers but they are a bit muddy, they lost 78 Cents Per Share for the Second Quarter but its unclear at least so far what number to compare to the consensus estimate of 32 Cents Per Share profit. We do now that chevrons loss was its largest since 2001. While were on subject of energy, exxonmobil reported a profit of 41 Cents Per Share, well below estimates of 69 cents. Revenue was also below forecast. Crude prices and refining margins hitting exxons results. Chevron took a 2. 1 billion worth writedown, saying i am pavement was based on assets where expected oil and Gas Production expected to be insufficient to recover costs, base irkally money losing investments. And nearing 40 a barrel. You know what . You said this. Just thought about this, this after surprise builds in crude and gasoline. The you im referring to, a cnbc contributor saying that 45 to 50 was just a midway point on the move back to 60, 70, whatever it is going to be. You said we may go back down below 40. They are making too much of this stuff, too much gasoline and pumping out too much crude oil. Interesting on the chevron earnings, in a down turn they are going through like this, youll see them through everything in the kitchen sink in terms of writing stuff off to get Balance Sheets levered for an upturn in the next year or so. For now, were heading back down. Well go as low as 35 is there anyone who barely hung on last time who wont be able to hang on this time . Or the weak players have been sort of i think the next tier up is what youll see in terms of more bankruptcies. I do think this downturn, im not a permanent bear on oil prices but this will be the knockout blow. Youll see a series of bankruptcies. What didnt lahappen last ti, they are still vulnerable. Youre seeing the rig count go back up and hedges go on in the market. Even if they can keep the creditors at bay, thats what theyve done a lot of these companies. But the creditors for now for the past few months have seemed to be at bay and Bank Executives said fact that oil prices were in the 40s an Capital Markets were relatively friendly kept a lot of these companies in business . No doubt about it. It was a very hopeful analysis. I was in the minority saying it was going to go back down. Everyone thought it was behind us and market was balancing and things were clearing, i couldnt come up with the numbers everyone else was coming up with in terms of overproduction. Whatever we lost in the United States, the iranians came racing back to the market. The chinese are in the process of doing to the refining industry what theyve done to the steel industry. They are about to double their exports again of refined fuels and they are going to flood the market. This is a jobs program for them and they dont seem to take the real economic consequences of this into account. So demand has been static or not . Demand in the United States has been terrific. We had record gasoline demand how about over in china . China demand has just been okay. Theres a falseness to it, if i can say that. A lot of the crude oil theyve been buying on the open market is going into their Strategic Reserve which is just about full. The other red herring that you hear about is indian demand from india. Its not a big enough number to move the needle really on the Global Supply demand equation. I think theres been way too much emphasis on india being in the asendancy, being a demand center like china is. They are a decade or more away from that. You feel were going in the 30s again . I do. We dont take that not 20s, do we . I think were entering a vicious cycle now. The refining margins are starting to get hit. They are going to dial back operations. They are going to reduce runs at the refineries and maybe close longer than they would have and that will cause the crude oil back up again and oversupply globally to build up. So you extrapolating that we have another that takes everybody else down, a huge leg in the Broader Market . If its not demand i think this is mostly an oversupply situation. I dont think this is any kind of indicator makes no sense when stocks are correlated to oil, it really doesnt . Even though it has been. Unless you saw the Global Economy cratering cheaper input should be better like having a bumper corn crop. You can only make so much of it into stuff. Same thing going on in the energy space. This time around maybe it will be good for you wont sell stocks every time it goes down. If its not demand related hopefully theyll see lower gasoline prices stimulative to the economy. The dnc is over, right . Anyone can find their own reason. We return, jim cramer joins us from the stock exchange. As we head to break, look at where futures are. The nasdaq has been the lone ranger in the green. Thats still the case. Youre watching cnbc, first in business, worldwide. On my front porch swing those new glasses . They are. Do i look smarter . Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. Welcome back. Lets get to the fork stock exchange. Jim cramer joins us now. Jim, we could talk, mobile, exxon, chevron. Or alphabet, amazon. I got to tell you, its a tale of two sticities. I cant believe how much exxon used to make versus what they made. Chevron, the charges are bad. The alphabet call last night by ruth was very, very strong. It said, look, were going to cut back on expenses. On capital expepd churs. She didnt say that, but the number one very big. They make a lot of money. A lot more than people realize. Its selling at the same price as the average stock. Much less than a clorox or a colgate. You just had the guest talk about oil being down. Its putting a damper on the market. Europe seems to be doing better. Lets go back to alphabet for a second. Sure. What is going to change that is going to give it a difficult multiple . To the extent youre right, when are investors going to wake up and do something about snit. It was a mid teens grower. Now its a 20plus grower. Youtube has to start monetizing. Both companies dont give you the transparency we would like. Amazon says, were a fly wheel. Take it or leave it. The fly wheel thing. When you see the Machine Learning coming through. And the search being better. When they start monetizing youtube, this stock will go up a couple hundred bucks. Okay. Jim cramer. Great to see you. See you in a couple minutes. Coming up, well talk about the mornings biggest stock movers. Check our european trading right now. Stay tuned, youre watching sq squack box. Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. 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I dont know if i mentioned that if john oliver is watching. But i have a trainer. Its not your first rodeo. No. Not my first rodeo. You met him. Trainer. Yeah. Oil take a quick look. Are we below . Chevron and some of the big movers. I want a rematch on the pushups. You have a trainer now, though you never cop to it. He has a whole health regimen. He does. You had your body fat tested. It was like, 6 , right . We should talk about it over at the equinox. Whats the ams to ams comparison . You were like a 14 or something. Yeah. If you can get under 10 , thats like, the holy grail. I think jim fix died running a marathon. You can overdo this, right . This is true. This is true. Dangerously overmuscled. I dont know about that. Stocks to watch. Sorry. We looked at chevron. Exxon. Made some money. Made 1. 7 billion. Theyll get their other stuff in order for the next time. Eventually, it does go back up. A good weekend to everybody. A good week end to everybody. Thank you for hanging with us. I wont see you for calm a c of weeks. Enjoy your vacation. Simulcast it on ms while im gone. Well talk a lot about donald. Join us on monday. Squawk on the street begins right now. Good friday morning. Welcome to squawk on the street. Were going wrap up the month of july today with two shockers. Second quarter gdp, a big miss of 1. 2. Only half the estimate. And bank of japan leaves kiwi and banks unchanged. Flattish action in europe. Oil down six straight