Transcripts For CNBC Squawk Box 20160815

Higher. Slightly. Call it almost flat. France is higher by 2 points. Oil prices have been moving higher on a report suggesting that russia is in talks with saudi arabia. Others about achieving market stability. Crude had a strong were falling a developing story out jfk airport. Multiple agencies responding to the airport after a report that shots had been fired. After arriving on the scene, authorities said there was no gunfire. The nypd declaring on twitter that all terminals were searched and cleared and no shots fired. They believe the woman who reported it misinterpreted clapping and banging from people watching the Olympic Games. Incident in the mall where people had fireworks. They were watching usain bolt last night. It was amazing. I did get to see a lot of it last week. Its all been really great. The swimming. Katie ledecky, wasnt she amazing . Shes that solo swimmer. I tuned into the end of that. Golf turned out great. I think some of the guys that didnt go were like oh, man watching kuchar who won a bronze. He says his chest was bursting with pride. Never felt anything like that. Justin rose and andy murray, wilfred, golf and tennis, the brits do very well with golf and tennis. When is cricket. Hes going to join us at 7 00. Looking forward to that. Knows what hes up against. Did you read this article in the journal about why theyre breaking so many records in swimming . Partially go pro. Because you can put the camera underwater and immediately correct your stroke after your one lane. Change your stroke. Interesting. And the pools have gotten faster. Theres new technology for pools that changes the rate of displacement so you get a more still pool as you swim. Like a speedboat goes faster in stillwater versus choppy water. Ditto to pool. Here to foredepending on which lane you were in mattered. Were going to get down to my buddy. Andrew ross sorkin. The intrepid global in brazil. Were going to talk olympic. Andrew, what did we have search straight weeks, who has been saying the market is going higher. Maybe she wont come on here anymore. Am i right or am i right . Did the markets go up after brexit or not, sorks . The markets have gone up after brexit. When joe is right, hes right. Welcome back from vacation joseph. Thank you. We missed you. I get back and youre gone. Is that by design . Thats the way it goes. Ill be back. In the meantime, let me tell you whats going on. You guys were talking about swimming and making a lot of headlines for two very different reasons. This morning, lets get right to it. Over the weekend, as you mentioned, four members of the mens Team Including ryan lochte were held at gun point after the taxi they were riding in by a group posing at police. Billy bush spoke with lochte not long after the incident. Who were you with . What time of night . Who pulled you over . I was with a couple swimmers coming back from we got pulled over in our taxi. These guys came out with a badge, a police badge. No lights. No nothing. Just a police badge. They pulled us over. They pulled out their guns. They told the other swimmers to get down on the ground. They got down on the ground. I refused. I was like we didnt do anything wrong. So im not getting down on the ground. The guy pulled out his gun. He cocked it. Put it to my forehead and said i put my hands up. I was like whatever. He took our money, he took my wallet and then and that investigation is continuing, guys. We interviewed a number of his teammates just yesterday. And i asked him over the next couple of days that youre here, are you going to change the security protocols, how people are operating around here. Everybody said no. Seems to imply an suggestion that he wasnt. Meaning that he wasnt following whatever those protocols were. Were going to be hearing a lot more about that story over the next couple of days. In the meantime, the other this is a feel good headline from the u. S. Swimming team. More gold dominating. First with the winning winning the gold. Saturday evening it was quite extraordinary for team usa and olympic history taking the top spot in the 4x100 medley relay. We had no idea until we did post race interviews and they told us that we were the 1,000th gold medal. Doing it in relay fashion is something that team usa culture is all about. Doing everything as a team. I think that was the greatest honor to win the 1,000th gold for usa on a relay. Hanging with simone was pretty cool. Well show you more tape from that interview in a little bit. Including joe, something youll find fun. Well show you what were doing now. Michael phelps marking what he says is end of his olympic career by helping the men bring home the gold in the relay. That was fantastic. It was pretty great. It was pretty great to be there in person. . The meantime, look at the current medal standings. Usa on top followed by china. And great britain. When willf comesn you can give him that. In the meantime, i should tell you in the next hour, well talk olympic spending, how much visitors are bringing to brazil, how much theyre spending and what theyre buying. Heres a hint. I am wearing one of them on my feet. Well show you that in just a little bit. I was going to say. Thats the tease. Part of the tease, guys. Plus, later on squawk, got a oneonone interview with u. S. Womens swimming superstar Katie Ledecky which was a great and cool thing to do as well, guys. Yeah. That was all justin rose . Just for you joseph, im going to go see justin later today and try to bring you that interview tomorrow. Sniel. Cool. He was on a couple weeks ago. So many highlights, andrew, that i dont know where to start. Usain bolt was amazing. Getting back to you. By the way, i know youre feeling the same type of angst about the disparity, the wealth disparity in the medals. As a globalist, im not sure how to deal with that . There should be redistribution. Should giveaway too much nationalism. Way too much of that. Too much with the rich cup tris getting too many medals. Im sure the president is looking at this. Whats amazing, joe, its almost all government supported teams. Were all private supported teams. Compared tolet say davos, how are your similar, joseph. The size of soap is similar. Do you remember how type i that little soap is in davos . Yeah. This one might be smaller. The room itself weve been eating our way through the city. Weve done more interviews with more gold medal winners. I got some of gold to hang on myself. We might have shots of that. Talking about that inequality. And we have all sorts of tape well be rolling out the rest of the week from some pretty fun stuff we did over the weekend. You know what else has gotten me, andrew. I have loved every minute. Ive been able to watch. I could stay up and watch this stuff. I dont know if ive enjoyed the olympics more. The media loves to down from its either heres what it is. Its either people are watching different ways with streaming or its the stupid millennials, maybe they dont even all their people are the ones winning all these things. Are they not watching, andrew . Joseph, theyre watching. 1. 5 billion streams. Thats all you need to know. Thats the number to focus on. I have to say, just coming down here and kudos to nbc. Its such an logistically, whats going on here is an amazing operation. Its sort of a remarkable thing. You did not have to say that about nbc. Far be it for you i legitimately say that as just a newbie down here at the olympics. Theres so many people who have been up early this morning. Amazing. Record revenue and record profits from all of us. The revenues people oh, no no no. I think theyre watching online. Youve been reading the scuttlebutt in the press. Panic, panic. The ratings are down. The media, andrew lets not talk about the media. Media bashing is getting old. Thank you, andrew. More from you later. See you in a bit, my friend. In a little while. I want to see that Katie Ledecky interview. Awesome. Were going to do that in the 7 00. Excellent. Andrew, you were like facetious about me. You heard me with the markets. Were going to talk about them now. You finally decided whatever youre feeling, youre going to just do the unconventional thing. Do the opposite. Correct. Ive been telling you that for five years. Whatever the opposite. Im unwilling to call it the trump rally. Given the polls, though. Can i say that . Touche. Were not moving up as quickly with the close. Lets take a look at whats going on. Did you see the peso . Its getting stronger because Hillary Clinton is in the lead. Thats great. I hope everybody is that true . Everybodys wealth in mexico is going up because of hillary. Great for us. Lets look at the markets. Head of Merrill Lynchs strategy. Steve whiting, citis private bank, chief investment strategist. The last few times youve been on, you were you didnt argue with me that maybe stocks are going to be okay. No. I did not. Heres the thing. The markets won a gold medal. Youve got a triple crush. Youve got the s p, the nasdaq and the dow all hitting record alltime highs. You had that ready to go at like 4 00 a. M. This morning. Do you want to know the markets won a gold medal. The markets want to fight for a gold. Is that in one of your pieces . No. I didnt. You just talked about the olympics. Will they continue to perform well on the balance beam . Heres the thing, joe. Obviously the trend in the markets is up. But you have the volatility incompetent decks sta index to get to weve been talking about episodic volatility. Youve had it in spades this year. Although we do see markets trending higher, we do think that you can get pullbacks from time to time and they can be violent. Its really about how to position cliept portfolios over the next five years. A lot of uncertainty. I love. Thats the new buzzword for the strategists. Do they ever need i was going to say do they cover their all the time. Sometimes a certainty goes down and we feel exuberant. This is maybe a little bit one of those times. Weve come so far from 08, 09. Maybe we should be worried about whats going on. Convergence with zero Interest Rates, all these markets outside the United States, yield 2, 3 basis points out for ten years. We have all this income producing assets in the United States and europe which you saw was up nicely. Government bond yields across all maturities around zero. These incomes want to rise in value. So thats one. Reasons why there are so many skeptics of the rally, right . Dont see it as fundamentals. Low volatility. To your point, it gets people worried. Its not growth. Its not sort of this notion that we have this massive runway which we can take off on with lots and lots of years of strong growth and high eps growth and were depressed now. We can get to some better place. This is valuing the same income stream of fairly static income stream from here on at a higher level. Yes, we will have a little how long can that go on for . Thats a very good question. Or how long can that go on . It can go on a pretty long time. The divergences across markets are so great. We went from depressed markets with a long, long way back and have big diverges of cross markets. Look at brazilian bond yields, why should they these different markets can diverge and converge again. Thats a big new trend for a while. Heres the thing. You have the world essentially at zero. 30 of global sovereign bond have that allows investors to take risk. Bonds and equities have flipped. Bonds are really being priced for price return not income. Were going more and more to the stock market for income for our clients. Theres been literally a flip. That doesnt make you nervous . When you say that allows investors, it pushes investors. It forces investors. Right . It doesnt make you nervous that that flip has happened and that people are reaching for yield in places that normally would seem very risky and crazy . It doesnt make me nervous. When we look under the umbrella of a transforming world and look at the longterm things, looking at the baby boomers, how theyre going to drive our economy, drive health care, they have a 15 trillion economy. Theyre spending. Theyre spending on hospitality and leisure. You also have innovation. And innovation in the digital era where things are progressing at a faster and faster pace. Then you have the millennials. Whatever joe wants to say about them, theyre still a very large demographic. All great things. Why isnt gdp why do we ratchet it down every quarter . Are we missing something that absolutely not. This is why the world is so confused. We just lowered our gdp numbers again. We think this year we can be about 1. 5 . Which is the lowest since the 08, 09 period. The problem is the zero Interest Rate. Each though were still growing, albeit extremely slow. When you look at the rest of the world, were one of the most attractive places to be, especially when looking at our banging system. Europe is trying to recover, but they have issues with their banking system. Emerging markets, if theres value within the marketplace on the equity side, theres value. Keep your money in the u. S. Stock market. Its going up from here . We still think episodic volatility. Trends are higher. It doesnt mean that well be at new highs by the end of the year. But theres no other place. Tina does exist. There is no alternative. Four years now of emerging markets. Being since 2011, weve had a deep underperformance. There are spots that havent had a massive rally. This includes the sector where we are 65 off. Where investment is down 60 . Youre suggesting this is a scenario to put money in . We think so. That is a recovery place. The only big industry in the world that is in recession. That has come off substantially and there are trillions of dollars of asset highly correlated to this. Some of the places where yields are high. That will move some money. Episodic volatility. What youre saying is were going higher but it wont be straight up . Correct. Its going to joey never use an adjective in front of volatility in my life. Volatility was volatility. This is the first year were using a term called episodic. Who is we . Our firm. You guys came up with this . Bank of america, merrill lynch. I love that. In a meeting . Youre all talking and someone said lets call it episodic volatility, uhhuh. Wow. Yes and no. Some of the technological incompetent ovations has changed. Is this merrill. Bank of america, merrill lynch. Merger, correct. Were all one family now, joe. Youre not really more merrill than bank of america. Were both and u. S. Trust. Im merrill lynch. Im merrill lynch. Im very proud of that. Definitely the thundering herd. You worked at merrill. I did. Thats what im saying. Mother merrill. Thank you. Were going to talk about your nails during the break. Nail polish. Shimmery. All the olympians have cool nail polish. New polls show Hillary Clinton holding lead over donald trump in key battle states. Trump is stepping up coverage of media put it on afterwards . The first stock index musicwas createdughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Welcome back. Now to politics. If trump doesnt change his act by labor day, the gop should write off the nominee as hopeless an focus on salvaging the senate and house and other down ballot races. John harwood joins us from new mexico with more. John . Reporter michelle, that editorial captures the mood among republicans right now, which increasingly is what do we do about donald trump . Hes trailing nationally, hes trailing in the battleground states and he keeps behaving in ways that cause other republicans, like his running mate mike pence to act to limit the damage. Are you the cleanup crew . I couldnt be more honored to be campaigning shoulder to shoulder with a man i believe will be the next president of the United States. You do have to clean up and explain some of the things he says. We have different styles. But as i told that little boy, we have exactly the same convictions. Donald trump says its the medias fault, that he stays on message but the media distorts his words. Other republicans arent looking at it that way. Theyre increasingly concerned about the prospects for holding on to the majority in the senate. Heres Jeff Sessions a close ally of trump. Its going to be a battle. Were so exposed. We have three Times Republican incumbent up as democrats. Its going to be a battle. Reporter and the question is that wall street journal editorial posed is, do the republicans, the national committee, the big donors, do they steer money away from trump on the theory that hes a lost cause and put it into senate race toss hold the senate. House races to hold the rye app House Majority and do they members on the campaign trail go out and explicitly cast themselves as running to be a check on Hillary Clinton, which of course would presume that donald trump is not going to win, guys. John, the down ballot races and stuff, a lot of the stuff, when youre haeg it from certain people hearing it from certain people, its not new. Four months ago we had frato in here. There was no way he was getting on board with trump and im worried about the senate and down ballot races. The wall street journal, the Editorial Board had the same tune all along. Never been on the trump train either. I understand thats why you have to separate out, are these people that used to be fully on board that are now saying this this or people saying it all along . Theres a large contingent of mainstream Establishment Republicans that going back a year and a half have been sort of saying the same tune. Whether its actually being away for two weeks, john, it does it really is sort of energizing and refreshing. I could look at a twitter feed if i wanted to but i didnt necessarily have to and i didnt have to watch cable. You know what i mean . Except for cnbc. I know what you mean. I only tweeted a couple things. One thing that i did tweet was, the eighth wonder of the modern world. This is a quote that i tweeted. The laser focus coverage of what trump says versus what the clintons do. You think thats an unfair characterization . Reporter well, i think that donald trump is helping to make that a reality by his behavior. People are covering issues involving Hillary Clinton but donald trump draws so much attention to himself, whether its by design or accidentally. Its not what hes doing. Its what hes saying. Weve got really good stuff to look at for what hillary and bill have done. But its like that cartoon where theres a media scrum around this molehill all these trump comments and behind him theres three mountains, the clinton global initiative, the emails and benghazi. The entire immediamedia is look down. That was my point. Is that unfair . Reporter look, everybody has a different perspective. If you are inclined to think that the Clinton Foundation and the behavior of bill and Hillary Clinton has been shot through with corruption and selfdealing, then yes, youre saying why isnt this a bigger story . Why isnt this disqualifying her . But not enough people feel that way right now to put donald trump in a better position. One thing that i would say about whats different you were talking about tony fratto and wall street journals and others not being on the trump train, what were seeing is the battleground poll numbers have widened in Hillary Clintons favor that some republican senators are falling behind who shouldnt be behind by as much as theyre behind. Kelly ayotte has a deficit in new hampshire. Pat toomey is losing at the moment to a democrat who has never run for a major office before. Thats a problem. Even in North Carolina last week, Hillary Clinton had a ninepoint lead. Richard burr was down by one point. I think few people expect him to lose that race. But its a cautionary sign that republicans have to be careful about how bad this gets at the top. Theres at least watching from afar, theres a perception that when there is an opening for the media to get trump on the run, theyre very excited about it. Almost a giddy necessary. The journal points it out in its editorial too. That the media didnt want georgew bush, Ronald Reagan to win. You sort of see t the journals point is that the other guys didnt make it quite so easy for the media to find blood and get blood. Sort of go hes easy to needle, right . They didnt want Ronald Reagan to be president , they did a really bad job of. How about bush . How about w. . Twice he slipped through somehow. I dont know how that happened. The refrps to although, trump is more visceral in terms of antitrump sent mimt meant is worse which i didnt think was possible. Donald trump, the media hated those guys. Theyre going to hate a republican candidate. You got to relax and focus on the campaign instead. All right, john. You cant take off any time, can you . Everybody needs to take off some time. After november 8th. Where did you go . I was at an undisclosed location south of new jersey. Actually, to be honest with you, matt kuchar, did you see what he did with the bronze. Theres a place down in georgia, frederick as where he was playing golf down that. Sea island. Its the greatest place. Always hot. Whats the best round you shot . I never its complicated. Because i got no. I got the family. We only played kind much lame. But we play nine holes. The kids take a lesson. My wife and i play nine holes and the kids get done and we leave. Its not a full 18hole thing. So i broke 90. Reporter good. I hope you had fun. I only played nine holes. Anyway, thanks. Shot my age a couple of times. Really . Nine holes. Coming up, a busy week for retail reports. Well tell you what to expect from lowes, home depot, walmart and more. First, though, before carl left rio, he gave andrew a few tips on covering the olympics. Okay. So tell me everything i need to know. Get as much sleep as you can. Youre going to be going full throttle all day. When you think your work is done, you want to see events. Thats half the point of being here. Any tips or tricks, special tv things to know. Dont lose your security lanyard. Youve got yours. Youve got your comfortable shoes and enjoy it. Its really a once in a lifetime experience. Listen, im going to go. Nothing else . Im going to see have fun. Youre leaving me here . Ive never done this before. W demands of todays Digital Economy . The fact is some believe they wont need a Traditional 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. Weve been hearing so much about how youre a digital company, so you can see our confusion. Ge is an Industrial Company that actually builds worldchanging machines. Machines that can also communicate digitally. Like robots. Did you build that robot . Thats not a robot, thats my coworker earl. He builds jet engines with his human hands. What about that robot . That is a vending machine, ricky. John, give him a dollar. Welcome back to squawk box on cnbc. First in business worldwide. U. S. Equity futures are finding buyers early on in the morning. Not up a lot. Well see as the session progresses up 28 on the dow. Up another three on the s p. Where is the s p. 2184. We had a lot of my friends that come in here that had that 2100 target. Just arguing about that 2100 year end. What are they going to do now. It was 2130 and i was saying well, you know, its 2130 now. Theyre saying theyre tending to the market. They have a 2100 target. You know it is below 2130 now . Yeah, yeah. Were bullish. Were in a bull market. Are you going to raise it . Now were 2185. Well see whether anyone changes that. Because i maybe it will be 21 by the end of the year. Episodic volatility. Episodic volatility, it could. Im going to start using that sniel i know. Its like the new normal now. Its a catch phrase. You got to go around corners. A lot of the economies, theres multispeed economies around the world theres so much uncertainty. Moamong the stories were watching, google is considering the rollout not as easy as you thought, was it . Cable. Taking up the ground. Were going to going from town to town. Put comcast out of business. Okay. Alphabet google fiber unit needs to rethink its delivery after initial rollouts in los angeles, chicago and dallas prove more tie consuming and expensive than originally anticipated. We werent joking. Digging up the ground and laying cable. Its a pain in the tush. You play it well. Time now for your executive edge. Big names in retail reporting. Home depot, lowes, target, walmart among them. Heres a look at what to expect. Matt mcclintock. Good to have you here. We talked whats up with target . Target has trouble, right . I was reading that they cant sell meat anymore. Women show up, they dont buy the combustibles or whatever theyre called. I think some of the problems are more related to amazon and ecommerce and getting traffic to the store. People dont have a reason to go into a big box location to have to find parking, to have to go into the back of the store and have to walk to the front of the store and check out and stand in the line. Its not convenient, right . As the consumer shifts more online and focuses more on amazon, theres fewer and fewer trips target is getting. Why would i buy any major retailer . There are some that have a natural traffic driver. Thats grocery. If you need to go and buy grocery, you need to stock up every week, every two weeks, you have to go to a walmart, right . Thats where walmart can actually then take that trip and convert you into general merchandise sales, too. Target doesnt have that. Its not a destination for grocery. They do sell grocery it is a large part of their revenue. But theres weakness there. Why is that . Roughly 20 of the store is grocery. But they dont have the full grocery assortment that you will get at a kroger or walmart. Its a i happen to be in target, im buying a basketball. I need eggs, ill pick them up at target. To convert that and hak them a loyal stockup shopper in grocery, target has to steal that business from kroger or walmart. Thats a really tough task. Theyre making efforts and buying more perishables. So is walmart and costco. You have it weighted underweight and a target of 65. Joe, that works. Right . You think its going to 65. I do. The only overweight you have is home depot. Home depot is in what i would call a sweet spot right now. Housing prices are accelerating. People are paying more. Theyre selling their houses. Housing is worth more. As a result, theyre happy to invest in their home. As a result, theyre going and hiring pros to fix up their home to sell it for a higher price. Why do you have a neutral and i would think they would both benefit from all the trends you talked about. They both do. Historically, home depot is in a better position with the pro. They made a change six months where they extended more credit to pro customers. The pro who shops there does not have to pay home depot back 60 days after they purchase something. Thats working capital. Free working capital that people who dont have that money to sit on their credit card can then go and do more and more work. Thats a very unique competitive advantage. Financing itself in a key driver. This is the year, though, right, that retail has it finally happened, right . We thought this time was coming that the retail paradigm has completely changed and its never coming back the way it was, does it . I think that the death of retail is generally overstated. Retailers dont die quickly, right . I think thats what weve seen last week with the Department Stores and the response. The market going up. Macys was up. Kohls up 17 on earnings. I think a lot of people overstate the downside. These retailers are still relevant. Its not like people wake up tomorrow and say im only going to shop at amazon. The consumer doesnt change happens quickly. It takes time on the margin. The retailers that are able to create compelling reasons to come into their store such as walmart with grocery and other retailers. Theyre noft out of the game. Its the other retailers who have a steal Business Model from the 90s. Youre probably going to see worse and worst results over time. Matt mcclintock. Thanks for joining us. Well go to andrew in rio. Well find out. Okay, guys. The u. S. Swim team seemingly unstoppable. I sat down with Katie Ledecky to ask her that question. Well show you that in a little bit. First, they flip and they flop. They go off the shelves here in olympic park. Thats when we come back in a moment. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Mapping the oceans. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the Global Economy. And you thought we just made the gas. Energy lives here. Its week it of the Olympic Games and Andrew Ross Sorkin made his way to rio. Andrew. Reporter thanks. Big business with more than half a million visitors coming to rio. You may ask how much theyre spending and how many are here . Whats going on, its probably no surprise. According to visa, the majority of travelers are coming from the caribbean and latin america. 30 from europe. If you can believe this one, 15 from north america. Visa says that tourists during the Olympic Games have spent twice as much per visit than regular tourists during the london summer games. U. S. Visitors spent nearly 175 million, joseph, talking about inequality. The french 125 million. The australians nearly 50 million. You might be asking yourself what theyre buying here. A lot of half ana flipflops. They may be trading in Running Shoes forefoot wear made here. The brand synonymous with them was born right here in brazil. Halfiaanss. The brand has grown to a global footwear powerhouse. They dont say im wearing flipflops. The north american director for the flipflops. For the past decade, got to learn the brand and took a pair home. We grew organically, internationally. Since 1962, 3. 5 billion pairs of the flipflops have been sold around the world in a combination of 500 Company Owned and licensed stores. Thats 220 million pairs a year. We produce about eight pairs per second. Thats an olympic pace which may continue as the rio games bring more attention to the made in brazil brand. Guys, in a little footnote, get the noek, these are my feet right now. If you want, i can bring you guys here. A pair, if you want. These are the official ones guys. They have olympic ones in the mega store here. Send me your shoe size. If they havent sold out, i can pick up one or you can get flipflops for politicians given the flipflopping. Sore skin, sorkin. Im trying. I know you watch the night of. Seeing your feet, do i need to see your feet after seeing john turturros feet . Look at these pretty feet. There are people who like feet. I know. Thats why you shouldnt do that. Whats the problem . My feet have been massaged on television. I remember unfortunately. That ceo went bankrupt unfortunately for him. The thing is, heres the thing, andrew. With every fetish, theres like two to tango, theres people that like to look at feet and people that like to show off your feet. You are like weird. Youre the other side of the sick fetish. Do not want me to show the feet. I said this is a visual medium. Jublia. Some swimmers very olympic. Whats your size, joseph . Depends on whether they run big or small. Like an 11. All right. You got bigger feet than me, fine. Will has bigger feet than me. Hes a strapper. Come in here bragging about your feet. I know what it means. It means you wear big socks, big deal. Ive been on for ten minutes, got a free pair of shoes. Ionic security is a startup for companies protecting itself against hackers. Amazon, the founder of that company and the ceo, he joins us next. [announcer] is it a force of nature . Or a sales event . The summer of audi sales event is here. Get up to a 5,000 bonus on select audi models. 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. Welcome back to squawk box. Amazon and Goldman Sachs putting big money behind startup that aim to protect companies from snoops. Cyber Security Platform ionic security raising capital funding. The company also striking a deal to integrate Data Protection into Amazon Web Services cloud framework. Joining us now the founder and ceo. Thanks for joining us. Good morning. This the headline of this. Instead of securing devices, you aim to secure the data itself. What does that mean . What that means basically is that when your device is secure, thats great, so long as all the information stays on the device. I dont know how many apps you have on your phone but i have a lot. They take that and send it somewhere else. Once the data leaves, they have no future role in the security of that data. Ionic makes it secure regardless of where it goes. A company missing a trick if not securing data themselves. Absolutely. We are living in a world thats never been more connected, distributed. If youre focused on the infrastructure you control youre behind the times. At Goldman Sachs mentioned recent investors. They were one of your clients. They are now one of your investors. Is that a sort of trend youre saying, that kind of thing . A lot of longtime customers have been bullish on the concept of Data Centric Security and they decided to put the money behind that not just use the product to help the company be secure. Whats your relationship with the u. S. Government if they would come to apple and demand information. What do you do . Best case scenario, we can tell them where the keys are but we have no access to them our selves. I dont understand what that means. To protect data you use encryption. Theres been a lot of talk about encryption. We help companies that protect data with our platform generate those keys but we never are in possession of those keys. When the government comes to us i can say Goldman Sachs has keys to that data youre looking for, you should go talk to them fl theres nothing we can technically do to give access to keys. You dont know how to unlock those keys. Thats correct and we can prove that. In the past youve been critical of facebook saying its too open with the way it uses peoples data. Is that true . Still a point of view you have . Im critical of any application that takes my data and does things with it that are not transparent. Facebook over the years that been kind of in the position of taking information and distributing it much further than you are kind of aware of at the moment you initially share it. Oftentimes youll upload a for the oor the photo and a friend of a friend of a friend comments. Thats worth a lot of money thats worth something to me that im not being compensated for on facebook. They dont pay anything for that they garner all that without expenses. They have expenses. I dont see the person the information is about doesnt see recompen recompense. Something has to be done or stay off facebook. It started as individual technology i built for myself and friends. It was designed to disintermediate ability of facebook to do things with my data unless i specifically say yes. We do it today for companies. Farm fresh ingredients, stepbystep recipes, delivered to your door for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. A good car has to maneuver quickly. Thats also true of a good car company. People have always bought cars. But we saw an opportunity in sharing cars. So we moved fast and launched car2go in 29 cities, all around the world. Doing that required dozens of data centers, designed for speed and performance. We built our business on the ibm cloud. Because thats what the ibm cloud is built for. Summertime surge. Markets hitting record highs and crude rallying on speculation of a supply freeze. Well get you ready for the week ahead on wall street. The great trade debate. Companies gearing up for deal that could affect global business. David will join us on his take. First on cnbc. Andrew taking carls place at the olympics in rio. Have fun. Carl, you cant leave me here. Its only day are you out there . Carl . Come on, carl . Anyone know where carl is . Carl carl live from rio, squawk box begins right now. Announcer live from beating heart of business, new york city, this is squawk box. Welcome back to squawk box on cnbc first in business worldwide. Im joe kernen with Michelle Carusocabrera and wilford frost. You were embarrassed what i said, it was snarky. Im not saying i agreed but i laughed. What did you say . Just a moment. Talking about the futures this hour. They have improved with the presence of mr. Frost here. Up 31, 3153, s p up 360, nasdaq over 10. Oil prices strong in some perverse way support equity prices. In recent months hasnt been that way. I really dont see why it should. We didnt welcome you. You came early. I kind of just slipped in. The viewers might have been confused. You were supposed to be here at 7 00. I congratulated you earlier on justin rose. Andy murray. He wanted to win that. He said he wanted to win that even before he went. It was so great watching. You see the chip on 18 . I did. Ended up winning by two shots. But simpson had to try and make that put. Kuchar almost could have gotten there. He was very emotional. It is the olympics. So andy murray. Those two great things. Farrah. Brexit. Youre on a roll. Youre doing great. Youre on a roll. These are all great things. Joe, brexit was in june. Starting the momentum towards this. Yes. Im not sure if thats quite the link but well take it. Well certainly take the perform arena ance. Double gold. Cycling. Others in olympics besides United States. There are. Shes upset that cricket is not in it. The brits wanted tennis and golf but got to be wearing white and be ougn the lawn outside the summer house. Why not cricket . Why not cricket. Its definitely a sport but should not be an olympic sport. Neither should soccer. I dont think tennis or golf should be but well take what we got. In the headlines this morning, a multibillion dollar real estate deal has been struck this morning. Maa, this is Real Estate Investment truck specializing in apartments. Its buying rival apartment reit. Focused in sunbelt states. Post shareholders will get 0. 10 of maa share for each share they own now. Heavy trading in apartment deal. Pentagon cleared boeings kc46 for production. Key mile tonight for boeing program which experienced a series of delays. Thats an understatement. Were talking decades. It was originally expected to be approved last year. Suicide squad topped box office, 45. 8 billion in ticket sales. Box office did see prices drop twothirds since debut weekend but still enough to keep number one spot. Animated Sausage Party came in second. Jane wells did stories about Sausage Party last week. Who else. Lets head back to rio. Andrew sorkin there covering the break we got to see what he was wearing on his feet. Now, which item of clothing. Im done on clothing today, guys. If you want to go back to the feet, we can show you feet a little bit later. There are serb viewers w certain viewers into that. Well show you tape. A number of remarkable races. The biggest one last night. Usain bolt still the fastest man in the world. He won the 100 meter for Third Straight olympics edging out the american by just. 08 seconds. Beating his chest before the race was over and going into the signature pose where he goes into the archer thing like hes shooting a bolt of lightning in the sky like it was all over. Then we should talk a little basketball. Team usa basketball closed preliminary round undefeated thanks to win over france. It wasnt so easy. Carmelo anthony spoke after the game. I think defensively we just got back to our principles, stuck to our principles, talk and communicating, trusting one another on the defensive end. Offense, were not worried about that. We got to trusting one another and playing fun, having fun on the basketball court. Went 10097. Check this out. This is from will, andy murray winning gold for second straight games. Hes the first person to win two olympic gold medals in singles. Happily well be seeing him in new york at the u. S. Open which begins in a couple weeks. Theres the medal count, u. S. At 26 gold medals, china and britain both tied viewing at 15 together guys. Well have a lot more including an interview with Katie Ledecky later this hour. Joe. All right, andrew. Are you going to be there . When is your flight back . You want me back that soon . You miss me that much . Its two weeks. Werent you gone i know. We have not ill be okay but i miss you a little bit. When are you going to be back . Ill see you in a week but ill see you a lot more over the next couple of days. Its like were together. We can email. Call. That kind of thing. Carl blew you off. Where did he have to go so quickly. On his way to the airport. Okay. All right. A lot of traffic around there. Okay. Because there was a camera he treated you that way with the camera on him. What if the camera hadnt been on him . Very brusk. I know. Our attempt at humor. Is that what it was. It was supposed to be funny. Supposed to be funny. Totally misinterpret thad. Thanks, andrew. See you in a little bit. Among todays top political stories wall street journal says if donald trump doesnt change his act by labor day, the gop should, in the journals words, write off the nominee as hopeless and focus on salvaging a senate and house and other down ballot races. Donald trump campaigned in ohio while Hillary Clinton will appear in pennsylvania with Vice President joe biden. Now to the markets, nasdaq on its longest weekly streak since 2012. With us chief market analyst and cnbc contributor, good to have you here. Thanks, michelle. I know youre a big skeptic of stimulus in the world and Central Banks of the world and all their intervention but in the face of that, what else do you do but buy u. S. Stocks . That means to be the answer considering where yields are. Economic fundamentals in Rearview Mirror in terms of stock funnel fundamentals and interest. Bond and jgb. Japanese government bonds. Theres signs over the past couple of weeks that people realizing negative interest rays and the amount of bonds they can buy. There is a story in this review that the bank of japan is doing that maybe they might even backtrack from negative Interest Rates. So when people go to sleep at night and wake up, they should be looking at jgb yields. Thats a potential canary. If those go up, all the others could go up as well which could make stocks less compelling in terms of gdp strength in the United States. Clear every Equity Investor staring at Interest Rates. Not looking at Economic Data, five quarters in a row of earnings declines, looking at Interest Rates and using that as an excuse to buy stocks. Therefore everyone should be focused on Interest Rates. Japanese bond market from what weve seen over the last couple of weeks is the most important Global Market we should be watching. More than gobble rates. They have brought down global rates in the last few weeks. Post brexit plunge in Interest Rates then obviously facilitated by what bank of england did. Just over the past month weve seen japanese Interest Rates go up. Weve seen Central Banks who want to depress their currency, seen the reverse new zealand, reserve bank cut Interest Rates, going up. Continued signs of Central Banks losing control of things they want to direct. I think thats what we should be focused on. If they in theory throw up their hands and cry uncle and stop this what has been monumental policy experiment, that could be weve been asking for years, how does this all end and what makes it turn. When does the moment come . In theory were getting there in your opinion. After japanese went to negative Interest Rates. I know exactly what you were going to say. When they went to negative Interest Rates, the currency went up. It was crazy. Japanese banks are getting killed. European banks, that index is down 50 . How do you have a healthy economy when banks are under stress. Japan getting worse . That has a big effect on u. S. Our buy market correlated to european buy market correlated to jgb. Even when tenyear japanese jgb went from minus 29 basis points to 5 basis points in just a week, we saw uptick in european Interest Rates. Were all in the same bed together. Were going to let you go but everybody look at your screen. Peter saying that move, which is pretty substantial in the righthand side of the screen could be the harbinger of the turn that happens in Interest Rates, which would be meaningful for stock based on the idea there is no alternative. Thanks, peter. Might be a good idea to wait until its a positive Interest Rate. Got to get to zero first. Its we went from minus 29 to minus 5 in three trading days. All right. Im just saying we have to keep our eye on it, thats all. Still to come on squawk box, donald trump laying out his plan for the economy. Well talk to one of the members of his leadership council. Youre watching cnbc first in business worldwide. Where we explore. Protecting biodiversity. Everywhere we work. Defeating malaria. Improving energy efficiency. Developing more clean burning natural gas. My job . My job at exxonmobil . Turning algae into biofuels. Reducing Energy Poverty in the developing world. Making cars go further with less. Fueling the Global Economy. And you thought we just made the gas. Energy lives here. Futures pointing high. Dow caught up by 30 points. A trifecta of new record highs last week on thursday. For the week as a whole, performance relatively muted. Flat for dow and s p up a quarter of a percent. Donald trump and Hillary Clinton laying out their respective economic plans with fierce criticism of each others ideas. Joining us now john mcnabb, a member of Trump Leadership Council of business advisers and director of independent oil Company Continental resources. Good to see you. Its a little bit strange. I was reading, looked at the summary, a behrens piece, confer piece. Hillarys world. The markets are comfortable with hillary because shes such a moderate the way shes going to eventually lead. I recounted a commercial that i see that shes running on how shes going to create jobs. Shes going to take everybody at the top, including corporations and individuals at a certain level that have not been it says on the commercials they have not been paying their fair share. So shes doing to make them pay their fair share and take all that money that she raises and shes going to create millions of jobs. So shes going to take the money from corporations, then the government is going to create millions of jobs and everything is going to be great. I dont know why people cant point to how fallacious that entire argument is and why trump, he should not be talking about the media maybe, not be talking about some of this other stuff and ought to be pointing directly to that. Absolutely, joe. First of all, shovel ready jobs we know about those. It didnt work. A trillion dollars. Exactly. The way you do that, and if you think about what hillary is going to do, shes going to raise taxes. We already have the highest corporate taxes in the world. And about a trillion dollars worth of regulations right now saw 740 billion thats probably low, 20 per family in the u. S. You think about the obama record and what im hearing from dnc, more of the same. I guess their point is dont really believe what shes saying, shes going to govern like her husband. Thats what people are saying. Even republicans raising the white flag saying i give up here, its inevitable here, they think shes going to be a centrist i saw progressives are worried now they are going to be betrayed. They are worried according to republicans how dare she. Shes going to actually govern from the center. But i dont theres no evidence of that at this point new york city. I think what you think is in centralized planning like the soviet union, and actually with china today, they do create jobs because the party runs the country in china. So they actually do that. In this country we dont governments dont create jobs. A government can create more beaurocracy. Thats the only way they create jobs. Dont you need to pay for the salary of the people that the government creates . Dont you need private sector jobs . Then you need taxes they need to pay taxes on what they earn in the private sector to support government jobs. Absolutely. So what i think about that is its kind of funny, the job creation engine in america has always been small business. It always has been. Right now thats not happening. I ran a bunch of small businesses, started a bunch of companies. And so with dodd frank, i dont want to get into that, but i will talk about dodd frank and regulations because both of those create a negative impact on small business. You advise donald trump, right . Sure do. Do you think that he could be talking about i mean, supreme court, thats in the back of everybodys mind, republican as well. Youve already got that. Dont you think if he would stick i think people want to secure southern borders. I dont think you have to be considered antiimmigration to want to secure our border. Absolutely. If he was just focusing on that and cutting corporate taxes and getting rid of a lot of regulations and stifling small business, do you think that would help . Absolutely. Tell them to do that . We have done that. Are you frustrated . We read in the paper close supporters are frustrated about his inability to stay on message. People like you have told him this and he doesnt listen. Hes talking to people that we dont talk to all the time. I think hes waking up america. I actually believe that. I think hes waking up america. The people who arent getting polled, i was in percentage where i grew up, and the state is not in very good shape because of whats happened with coal. Peel are scared. People are worried. A way to harness that plain speaking, hes very blunt about things, theres a way to harness that to show what we need to do to get america back to work in terms of all these reforms for the last eight years, in terms of the private sector. If he was just as outspoken, maybe some of these going after individual entities that hes mad about for some reason. The media. The media, hes running against hillary in the media. He told the show he wasnt concerned about the polls. Do you think he should be concerned that . I think he should. Im not sure how valid the polls are. Look at brexit, seven points up, not going to happen, lead by three, a tenpoint switch. L. A. Times poll in july Hillary Clinton was ahead for one day. One day. So now what is it august whats the date, august 15th. A long way to go. Things change very quickly. But hillary is such a flawed candidate in so many different ways. Absolutely. Its his to lose. I agree with that. Not now. Hers to lose. Originally as a candidate before we knew who the republican gop nominee was going to be, it was that persons to lose because she was so vulnerable. Done studies youve had eight years of one party, 0 think its the wrong direction, for anyone who has a a 66 chance to win. They are each others perfect opposition. If you think about donald trump hes not a political speak kind of person. Hes a business guy, business guy or gal, whatever, but everybody speaks that language. I do. Im a little sarcastic. I can get that way. I know. Thats part of who he is. Hes not trained in political speak like the other candidate is. Right. That appealed in the primary. Thats right. John, thank you. Coming up, an 800,000 piece of graffiti for your wrist. Uhhuh. Were going to show it to you next. First on cnbc interview with ceo david abney, great trade debate. Squawk box will be right back. Luxury watch spri slowdown in sales, one company seeing record sales. Robert frank jones us with this story. Thats not a luxury watch. Awful looking thing on her that is not why. The englishman is wearing the luxury watch of course. The reason why its largely china and swiss watch sales down 16 in june largely weakness in asia but maker of worlds most expensive watches they cant keep up with demand including for its piece of graffiti watch. Makes the most expensive watches in the world with average sale price of 185,000. The newest model marks a new extrema piece of graffiti for your wrist for 800,000. Called rm6801, a collaboration with french street artist. Instead of tagging trains and walls with spray cans, he used tiny air brushes to cover each part of the watch. He goes around the streets, hits advance, bridges, big illegal art. Exactly. Hes making only 30 of the watches and they are already sold out. While the luxury watch industry is slowing, he cant keep up with demand. We cant satisfy everybody. The watch business is very much turned into volume. People are obsessed by volume. Im not. They make only 3200 watches a year. That compares with rolex and some of these other companies that are making hundreds of thousands. So this big question for luxury companies, whether its ferrari, do you go exclusive or mass this. Company is showing the smaller the production, the higher the qal, the more successful youll be. But they are really only a couple of companies in the highend of the watch business that are growing. When you increase the price and demand goes up. Yes. A lot of these companies, the big question is do you go small and toward the high or mass. This just shows i dont understand why some make the mistake of being more ubiquitous. The minute youre more ubiquitous nobody wants you anymore. The temptation is to monetize. You do make a lot of money an a lot of volume for a short period of time and then its over. Then youre in the discount rack of t. J. Maxx. You see my members only jacket i still wear. Pierre cardin edition. What i love, hes a french entrepreneur. Not france, thats what happens he lives in france but his company in switzerland. Thank you, robert. Thank you, guys. The great trade debate. Ceos in high alert. A new agreement could impact local businesses. David abney is going to make the case for free trade next. First lets head back to rio for a look at what andrew has coming up on squawk box. Andrew. Thank you, michelle. Olympic Gold Medalist Katie Ledecky on fire in the pool in rio. I sat down with stanford bound swimmer. We have that interview coming up right here on squawk box when we return. 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. Welcome back to squawk box. Stories front and center a fresh read on the housing market. National association out with august read 10 00 a. M. Eastern time. Expect it to increase slightly from july. Twitter said to be speaking with apple about bringing twitter app to apple tv. It would allow nfl games to be streamed by twitter. In a market where speed is usually the essence, nasdaq seeking to slow things down, plans to seek s. E. C. Approval of new option of function that says would give traders better chance of having trade fulfilled. Users would have orders prioritized if they agree to not cancel for approximately one second. The idea to let investors avoid highspeed trader who often cancel dozens of orders for every trade they actually make. There we go. Ive gotten you to speak american before. You have. You can do it. He can. This is all he can, just like he wont do it. But twitter was meant to be said american. Say it to me one more time. English . Twitter. As opposed to. Twitter. What i got the whole time was water, a glass of water. Got a laugh for me. Thats why youre in good shape. Just to enunciate like that, i think your core, its unbelievab unbelievable. Anyway, what do you buy for your car in case you get in a wreck. Insurance. Insurance. What did i say. Insurance. Be accurate. Talk like me. Great. I say soccer now which i get a lot of grief for. What did you use to say. Football obviously. Yeah. You have received pronunciation, right . Rp. I dont know what that is, no. I just speak how i speak. Mom is spelled with a u. Exactly. Im learning a lot. A lot is rubbish what were talking about. Garbage. The great. Waiting so patiently, arent you . Its fun, though. Isnt he classic . The great trade debates heating up on the campaign trail. Transpacific partnership could impact the way Global Companies do global business. Morgan brennan joins us now with more. She speaks pretty good darn good american. So do you all. We all do. Is that an accomplishment . Yes. Okay. Im american. All right. This is one issue that both president ial candidates agree pob. This is trans parveg partnership. Both donald trump and Hillary Clinton, despite helping negotiate it oppose tpp. The massive trade agreement which still needs to clear congress has become a lightning rod owned trade and globalization has eroded jobs and manufacturing in general. One company is urging lawmakers to pass this, ups, the 12 country pact would reduce 18,000 taxes and tariffs and establish needed guidelines for crossborder ecommerce and quote, unquote, digital trade. Open borders means more business for companies shipping more goods across them. Ups argues historically with past trade agreements that has boosted u. S. Exports within its shipping network and led to stateside hires. Last Quarter International segment grew fastest. Operating profit up 11 in that division. Sixth straight quarter of double digit gains and daily volumes jumped 4 . Ups has a lot to say. It does, indeed. Stick around joining us now david abney, ceo of ups. Ups is sponsoring a trade event in atlanta today. David, thanks very much for joining us. Very good morning to you. We just heard from morgan you expect tpp to increase exports specifically by how much . We expect exports to be increased by tpp similar to what weve seen in previous agreements. In those agreements weve seen exports increase by 20 on average and theres nothing to make us believe that this would be any different. David, whats the main driver for that, particularly for ups. Its related to red tape of customs until we get these types of agreement in place . Its a combination of things. It reduces tariffs. It certainly cuts out a lot of red tape, delays in customs borders, which no one wins when you have those delays and it opens up markets to u. S. Companies, especially those small and Midsized Companies that have a great difficulty exporting under todays complicated process. David, its morgan. Its great to speak with you again. Hi, morgan. Hi. The way this election cycle is shaking out, it looks like tpp has the best chance Clearing Congress lame duck section after election. If that doesnt happen, what does that mean for upss business moving forward. How much have you factored in passing of tpp for your business and in future quarters. We have not factored in additional volume due specifically to tpp but we see we have a real opportunity right now. The administration is pushing this. Its made it a priority. They, in fact, gave the 30day notice of intent to act just last week. So now we believe theres a Good Opportunity between now and the end of the year. Theres a lot of support for tpp, a lot of support for trade. It may not be just as vocal as what you hear from some other sources. David, its michelle here. The election has made clear while everyone agrees free trade can be very beneficial and may ultimately add at the macrolevel to jobs in the United States, weve discovered through the election that there are losers from free trade who have not seen wages rise in morne a decade. Some key jobs left the country. Compared to past situations they havent been able to find new jobs or better jobs. Some are making the same amount of money they have inflation adjusted debates that they were 20 years ago. How do we solve that . What do we do about that . That is why free trade is in the crosshairs. Well, let me make two points about that. First, theres a lot of reasons why jobs have gone away and income has been tempered down a little bit. Trade is one of the sources that gets blamed but you have automation. You have all kinds of process improvements, productivity improvements. I think trade just gets thrown in the middle. All of our research, and we think we have a pretty good perspective, and when you look at other sources of information such as pew center of research, it also shows that trade is good for the American Worker and we believe that. We believe it will create more jobs. But that being said, we know some people do get displaced. We do not take that lightly. Were in full support of Training Program both public and private to help these employees be prepared for 21st century jobs, which are a little different than the jobs prior to this Global Economy were living in today. The focus for you today is tpp. Theres been a lot of criticism about nafta as well with both candidates saying they could potentially revise that agreement. Obviously we have the brexit situation and new trade paths that can get renegotiated on that continent. How much of an impact could some of these other agreements have on ups as a business as well in light of the fact were seeing such overall criticism and changes in the global trade perspective . Well, trade is working well for us. Nafta has certainly worked well. Its increased trade between us and canada and mexico. I think the key point for tpp, though, it was designed for 21st century trading, and there is a chapter thats devoted just to small and midsized businesses thats never been in any other trade agreement. Theres a chapter that focuses on ecommerce. Ecommerce was really not the force it is today when nafta and others were created. Theres more labor productions, more health and safety protections. This is a much improved agreement that would like to really give my recognition to the u. S. Tr and their group, because they have negotiated with 11 other countries a good agreement here. We think well benefit both employees and companies. David, i want to switch gears here for a moment. Theres been a lot of focus on amazon. Weve talked about this before building out its transportation and logistics infrastructure. There was the article in the New York Times just last week noting that amazon is looking to do that to supplement its Package Delivery as volumes increase, continue to work with Companies Like yours, like ups and others. But drone delivery has been a big focus. Amazon has been getting all the attention there but youre looking into drone delivery as well. Yes, we are. First ill just talk about amazon. Very good customer of ours. We think we have a mutually beneficial relationship and we continue to build upon that. Talking about drones, drones autonomous vehicles, automation, any of the Technology Changes that are just rapidly being developed, we have a team. Were focused on making sure that we take advantage of those opportunities. Here with drones we are right in the middle of a test with the Vaccine Alliance and zip line, a california company. Were actually going to be deploying drones to deliver in remote areas in rwanda and were in the middle of starting that process right now. So were very excited, and we think it has a lot of potential for us. David, thank you very much for joining us this morning. Much appreciated. Morgan, also, many thanks. Coming up, another big night at olympics. Andrew ross sorkin with all the action in rio. Andrew, what have you got coming up . When we come back, we caught up with world record holder Katie Ledecky. Shes going to join us after this break. In the 8 00 hour, you dont want to miss this, official timekeeper is omega, since 19 2. The ceo will join us talk about brexit, europe, fancy and expensive watches and a lot more when we come back from rio in just a moment. Welcome back to squawk box live here in rio. The men and womens u. S. Swim team they have taken on combined 33 medals in rio, 16 of them gold, dominating across the board. One of the very key players Katie Ledecky who will soon be headed to stanford. Its been an incredible journey. You know, its every day hard work and dedication that has paid off for this week of competing at the olympics. What is it about u. S. Swimmer that have allowed this team, and you specifically, to excel in ways that are clearly so far above and far beyond everybody else . I think we all have a unique bond with each other. No other team has that same type of bond. We are all supporting each other. We are all having fun together and feeding off of each others energy. Do you ever say to your self in the past 24 hours, maybe i should go pro . No. I havent thought about it at all because im really excited to go to stanford and compete on a really elite College Swim Team and have those teammates to also be my classmates. I think thats doing to be a special couple of years at stanford. Have you gotten calls from agents, sponsors, managers, an email from anybody . No, because i cant and i dont want to talk to them. Under ncaa rules thats not really allowed. Its understood this is what im doing and im enjoying what im doing. Do you have to now think about your self as a brand . No. Im not professional right now. Ive been amateur. Even longterm. Im not talking about a brand in terms of being a professional today but when you look at Michael Phelps and the iconic status you are now at globally people are talking about you, its unbelievable, do you have to think about your self different than you did 24 hours ago . No, im katie. I dont have to be anyone different than myself. How do you set a goal . Take time off, refocus, get that excitement back. Do you think you say to your self were going to go after this thing next . Sure. Im going to set some really big goals again. Im not going to stop until i reach those. Ive got to tell you guys, she says shes an amateur but she is a pro. Not only does she know the rules, when i asked that question she was down and knew exactly what to say. She has become a brand whether she likes it or not. Ill tell you when she walked into the studio, guys, i dont know if weve had him on the air her uncle is john ledecky. He brought American Apparel public. I dont know if you remember him, u. S. Postal service owns the islanders now, bought it from charles wang if you remember him from ca years and years ago. So a terrific time. Also founder of u. S. Office products. He used to be on cnbc all the time back then, john ledecky. Exactly. It was pretty extraordinary to spend some time with a world champion. We have some music coming on so i dont know if you can hear that . Andrew, was there an element of star struckness there, her meeting you. I cant hear what youre saying honestly. Her meeting you. Did she even know who he was. No. Though we did have a couple athletes who claimed to be billions fans. I did walk into a couple of rooms and either the athletes themselves or the managers came over and had questions about bobby axelrod, which was kind of fun. I was going to ask questions about her, watching that, when you meet in person, watching her domination and meeting her in person, i think theres a bit of star struckness. Yes, shes amazing. The other thing, andrew is, in addition to obviously being innately having something different, they have to get up in the morning and jump in that cold pool and swim for like six hours. Ive tried to swim in the past, a mile or something, to get up and do that every morning to get to that level takes a lot of commitment and drive and everything else. Pretty extraordinary. And giving up millions of dollars. If you think of what Michael Phelps has gone on to do professionally, by going to school she is giving that up. I do imagine we will see her in tokyo in 2020 and beyond. She will be a pro if she isnt already. Great stuff, andrew. Thank you. See you next hour. Coming up, todays top stories including update on deadly floods in louisiana. Squawk box will be right back. Were following developing story out of jfk airport. Multiple emergency agencies in response to a report around 9 30 last night that shots were fired. I dont know if its developing at this point. I think we know at this point there were no shots fired. That was determined by authorities after they arrived on the scene. Nypd declaring on twitter all terminals searched and cleared, no shots fired according to reports. Officials now believe the woman who initially reported the shooting misinterpreted clapping and banging from people watching Olympic Games as shots being fired. That was usain bolt, im sure, about 9 30. About right. Protest over Police Shooting in milwaukee turning violent overnight one fire started not far from bp gas station set ablaze in the first night of protest. Demonstrators gathered several times over the course of the weekend. This comes after officers killed 23yearold who fled a Police Traffic stop on foot. Last night protesters threw objects at police. Milwaukee Police Reported several rounds of gunfire. At least one person shot. National guard had been activated earlier yesterday but they were not called in to engage protesters overnight. In other National News deadly flooding in louisiana this weekend. The federal government has declared a major disaster for the state. Officials more than 20,000 people have been rescued from their homes or vehicles. More than 10,000 people are staying in emergency shelters. Four deaths are being blamed on the flooding. Officials are warning people to stay inside and not to go sightseeing. When we return, we get you ready for a new week of trading on wall street. Citis global head of managed investments will join us for the full hour. Squawk box will be right back. Xxxx going for gold. Andrew in rio with action. Live from rio. The final hour of squawk box begins right now. First in business worldwide im joe kernen, Michelle Carusocabrera. Andrew sorkin will join us from rio. Futures this hour up for most of the morning, 34 points above fair values. You can see implied open at least. S p up 4 and nasdaq indicated up 10. A rally last week in oil. That helped give positive sentiment to equity markets globally and oil while its down today it is just under 45. Lets get to rio. No loss of steam there. Andrew sorkin covering that for us. Andrew. Reporter what a weekend its been. Some background music. The people from rio pumped that in. Thats nice to sort of lay a bed under what were talking about. Of course it was an amazing weekend. Usain bolt winning last night. We got to see Michael Phelps in person, quite extraordinary as well. His last race winning as well, obviously Katie Ledecky before. Ill tell you what was really fun, talking to some of these athletes and talking to them specifically about what they plan to do afterwards. We caught up with Gold Medalist Michelle Carter track and field star, won for shot put. Her father in 1984 won a silver. She has some pretty ambitious plans for life after the olympics. Take a listen. I always thought about having my own product line. I always thought about having a salon. I have a great salon idea im thinking about Going Forward with. I think this will definitely help moving forward some ideas i have. Another entrepreneur there. Some other careers after the olympics. We decided to see what sport olympic athletes would play if they didnt compete in their current. Part of a segment ask the athlete. I think golf. It just looks its a very skilled sport, i guess coming from swimming, it doesnt look too physically challenging to us. I think as a swimmer thats very appealing. To rugby. After watching rugby the last couple of days id like to try it. Id like to try it now even though i am an olympian in wrestling. Not too many people have gone to olympics in two sports in the same games. Maybe i can do it in 2020. If i wasnt swimming id love to play baseball. I played hoops grog up, big bulls fan. Ive never played tennis in my life but i think i would be a good tennis player. Id like to play tennis. If i wasnt a fencer, id like to play soccer or tennis. Also, the uniforms are cool. I claim a little tae kwon do myself this afternoon. If i wasnt doing this, maybe thats what id be doing. Andrew, they have a commercial with lindsay vonn talking about this exactly, where shes trying to do summer olympics. Shes no better than the rest of us doing these summer olympic things, but shes such a great i took this a step further thinking about the balance beam, because most of the great gymnasts are not that tall like simone. It seems id like to be shorter if i was trying to do that. Think if the volleyball people were on the balance beam, it would be a disaster. Some of those ladies on the chinese team, they are like 65. On the balance beam it would be like disaster. I thought about it, and it just i got nervous thinking about the number of broken boebs. There are certain body types for certain sports for sure. Me on the balance beam would be disaster. Yes, you on the balance beam. Uneven bars you could reach. Where it hits other people in the waist. Anything gymnastics related would be the end for me i think. Not even the rings. Youve got to be pretty strong for that. Thats why you get the gold medal. The things they can do. Golf. No, not golf. Golf. No, psychologically pingpong. I cant believe people can run fourminute miles. I also cant understand why we cant tell how fast they are going watching the ladies yesterday in the 1500 meter, whatever it was. They look like they are just sort of cruising. You could not possibly go 100 yards. The track for me is the most exciting to watch. Its all great. Its all great but you have to have a favorite. I like winter and summer. I cant pickets. I guess i like it all. You like it all. Great to work at cnbc with the olympics. We have it until 2040. Also primarily soccer. Youre a big fan. Really . I hadnt noticed. Ive got some ideas for soccer. I know but we havent got time for that. We have to move on. Back with andrew. Use your hands. Goalkeeperk only goalkeeper. Apartment reit post properties being bought by rival maa in a 4 billion stock swap. The two companies with apartments in sunbelt states. That stock up nicely 12 . Water Treatment Company holding scene us for 1. 7 billion in cash. Census start meters Data Analytic Services for various utility industries. Food distributor cisco reported quarter profit of 0. 64 per share, 0. 0 above, revenue in line, around about 5 . Stocks trading near alltime highs. Mike santoli joining us with whats happening beyond headlines. Hi, mike. Stocks have gone to this record level on some of the lowest volatility ever. Taking a closer look on how calm these markets have been. By some measures in the last four weeks, calmest in 5 years based on daily range. Whats going on here . Obviously you had that huge rebound post brexit overreaction to downside. People got very defensive. Just as Economic Data got better, oil firms up, earnings besh expected. This has all basically fed into the idea that markets are stable and fed outlook remains stable. Vix below 12. Have you people coming out saying is it too quiet, calm, investors complacent, expect shock. Evidence not clear we ought to expect things bad because things have been so calm. The future returns over the next few months once vix gets below 12 as its been lately are not different than when its a good deal higher. Volatility on expectations of how much the market is going to move. We should expect some kind of jumpyness into late august, september, but i dont think that really means it disturbs the trend all that much. A lot of people pointing to jackson hole speech by janet yellin late next week that might be one of those times everyone comes together and says do we have to rethink. Calm markets surprising, everyone geared up for higher volatility, everyone buying low volatility stocks because they were afraid of Broader Market erratic behavior that hasnt happen. Thats always the way it is, right . As soon as were expecting nasty stuff it doesnt happen. I dont think, though, it means you have to run away for the rest of the summer. Mike, weve had a lot of discussions, and you were around for a lot of them. People two years ago people were more bullish than they are now, like three, four months ago. I kept saying if youve had 18 months of a rolling direction, where youve been able to sort of build a base, why are you less bullish now after treading water for two years . They talk uncertainty and this and that and valuation. There you go, valuation. All the sale side people are wrong when they are in the same camp. You could almost feel this was going to go higher. I dont think you could say everyone is bearish. Everyone expects more upside. Official targets around level were trading at or lower. I do agree with you here is the linchpin treasury yields at 1. 5 . You would executive when Economic Outlook brightens and a little higher risk appetite, you would expect rates to go up in stocks contingent on low rates to maybe sell off a little bit. That hasnt happened. Kind of everything has worked and that is allowed the market to have a gentle rise to new highs. We have people saying 1 1 4. In the global bond market where we are, if half is negative, were not going up from 1 1 2. Im not saying you have to but thats clearly an important ingredient to what youve seen. You want to look to maybe does the fed outlook start to look slightly more hawkish than basically universal opinion nothing is going to move this year. Im glad you got the hell out of barrons. Hillary great for raising taxes on corporations, raising taxes on individuals, more regulation, climate its like the market is going to go up based on all that. I appreciate your concern about my association with barons. Good move. Joe, whats the market saying since polls have gone up. Huh . Whats the markets saying since her polls have gone up. Its been a sevenweek rally. For all of july trump was up. I dont know. Whose do you okay. Thats the current tracking poll . Okay. One thing i do know thats up is the peso doing really well now since barrons candidate is doing well. Anyway, thank you. Rat leaving sinking ship. I dont know why im laughing, its not funny. Totally in the tank for hillary. Does sound like bail out. He is at citigroup, private bank, global head. You like that intro better than i do like him now. Head of managed investments. Thats my favorite, head of managed investments. I want the head of unmanaged investments. We dont have that job. Bailout overseas sorry, balin overseas, over 60 billion in client assets. You heard mike santoli talk about this. Does the market ever do what people are expecting . It sort of confound. Confound consensus. Everyone saying theres doing to be disaster on the horizon. There are these sort of disasters but they turn out not to be big enough catalysts. Thats exactly what happened. You said about this bear market, almost a rolling consolidation over the last 15 minutes starting last summer. Retailers down 50 and 60 . People more bullish. About 40 of stocks gone down 20 . Look at low volatility and think to your self, what is really going on. Whats going on, lower rates for longer. You are going to have stability in the u. S. With modern amounts of growth. Youve seen Employment Statistics come in pretty well. It looks to me like youve got relatively slow growing but clearly growing economy. So you talked about consensus and how consensus always confound people. Suddenly lower for longer is consensus. You heard mike santoli talk about jackson hole. We had peter on highlighting big enough in the japanese tenyear yield, still negative but away from the bottom. Thats right. Once the consensus is i mean, for years we have decades, Interest Rates are going to go up. Done nothing but go down. Now everybody agrees, yeah, Interest Rates staying lower for longer. Is that the new consensus to risk . I dont know but it is the reason. This is a longterm policy in place for a long time on the part of Central Banks. Putting aside japan. They are always wrong, not even right medium term. They have driven the policy, created the trading environment we have. There is really no data to suggest they are doing to change their policy of keeping rates where they are. Even if rates do stay low, should there be a different implication for what it means for stocks in the u. S. If the reason rates are low here is whats going on with Central Banks around the rest of the world, not here. The fed might not hike but certainly not actively easing, rates are low. Is that less supportive or should it be less supportive than the last five years, for example . Clearly u. S. Had policy decisions mitigated by whats taking place overseas, lower growth and shocks to foreign markets. The best case rates rising in the event emerging markets did very well and had oil prices raising 15, 20 from here and had an overheated economy. Again, thats possible. That would indicate higher rates but that does not look like whats on the horizon now. S p 500 at the end of the year . Probably 4 or 5 higher than it is here. Citis view is that were not at our peak view. Markets up 9 since brexit took place. By s p 500 or stuck within it going to outperform. We would tell you to buy the market. There are certain sectors that might do better but in general buy the markets. You said market up 9 since brexit. Have things been underestimated in terms of that . Certain not uk, bond yields low. But everything recovered as if nothing happened. Is that an underestimation . Certainly chief economist, strategist for citi took a look at the data, when you have a regional event, in this case a subregional event you typically do not see giant contagion take place. We have not seen a country leave eurozone before. That economy uk is going to have to readjust and it is, weve heard time line for integration departure from European Union and our feeling is it will be managed well by British Union as well. Subregion. I didnt mean to call them your own region. No recession . None on the horizon. Goldman kind of said something last week about that . Right. They are all hinting at this idea that something very bad will go wrong in china and they are trying to figure out what it was and what that would trigger. Thats going to be commodity related and export related. Thats what the current worry is but mitigated over the last six months. Talking about japan if thats canary in the coal mine, if thats positive, yields in japan. Wouldnt that be a relief for us after 20 years of watching sort of the intractable deflation problem japan had . What japan has are so many structural issues demographically in terms of what their economy is and relationship with china in terms of where its exports go, its very hard to see the scenario where japan rallies. Peters point earlier was because of structural issues they give up on Monetary Policy experiment because that doesnt fix what ails them and that leads to rise in Interest Rates. Which could definitely happen. The question whether they coin and do massive stimulus. They talk about helicopter money idea but what they are really talking about massive spending at very little cost to the government that spurs the consumer and they simply havent done that yet. I see. Youre with us for the whole hour . Whole hour. Manages products. Im supposed to unmanage. Coming up good news for flyers, bad news for airlines. The new report says it will get cheaper to take to the skies. A new report on which companies will get hit the hardest. That story next. What if a company that didnt make cars made plastics that make them lighter . The lubricants that improved fuel economy. Even technology to make engines more efficient. What company does all this . Exxonmobil, thats who. Were working on all these things to make cars better and use less fuel. Helping you save money and reduce emissions. And you thought we just made the gas. Energy lives here. Good news for flyers, bad news for airlines. Predicting airfares will drop more. Phil lebeau joins us with details. Phil. If youre looking to take a flight this fall, now is the time to do it. Youre going to see lower airfares if you havent booked your flight. What weve seen over the last years a steady decline in airfares. This comes to us from airfare analysis website hopper. Basically what youre looking at july, 232, guess what, its going to go down 8 for the fall. Thats good news for those of us flying, not good news for airline hurt passenger per seat mile. Third quarter most airlines, depending on the carrier, they are expecting passenger revenue to be down year over year between 3 and 6 of the part of this you can blame on continuing decline in jet fuel prices. This biggest cost they face, good news they have to pay as much. Jet fuel costs keep coming down. As it comes down it also means more carriers, look, weve got empty seats. We can drop the prices further and thats whats weighing on passenger per available seat mile of thats why when you look at Airline Miles a lot of skeptical airlines have seen a bottom in revenue. Thats why stocks continue to trend lower. The expectation, by the way, is that we would see bottom in passenger revenue in the third quarter. Now im starting to talk with more analysts saying not so sure thats going to happen. Its always a weak quarter. Maybe we see that bottom in the fourth quarter. Guys, back to you. Phil, that you showed at the top was for domestic fares, u. S. Flights or global phenomenon . Youre noticing on the International Side as well. They are comparing on International Side. Notice internationally obviously flights to europe, nor flights there than they are to asia. Starting to see carriers saying, you know what, pulling back object frequency to europe. So youre still going to see lower prices. Perhaps decline may not be as great domestically. Well take that, phil. Thanks very much. Coming up adele with a chance to perform at one of the biggest events of the year. Well tell you why. First a look at rio and what andrew has coming up on squawk box. Andrew. Joe, as you guys were watching swimming you probably see there was a time keeper keeping track of this. Its omeetingo since 1932. We have the ceo joining us live from rio after the break. 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. Bad news for adele fans, the singer saying she was asked to perform at the 2017 super bowl. She declined the offer. Pepsi said they never invited her. At a concert adele explained saying the show is really not about music and i dont dance or anything like that. Fans were upset about the news, booing after they heard she was saying no. They are denying an official invitation was ever put on the table for adele. Saying in joint statement weve had conversation with several artists about halftime show. However, we have not at this point extended a formal offer to adele or anyone else. Ic i think she said she said maybe after my next stop. I dont think she took it off the table forever. Reminds me of when the Vice President , these guys saying id never be Vice President. The other said you werent asked to be. Shes not that upbeat halftime atmosphere. Everybody is crying. Thats true. Some of her songs more uplifting. The next story . You know what i cant find about american socialists, they love owning property. Bernie sanders just bought his third home. Hes got some nice ones. Latest purchase blowing up twitter verse, sanders closing on 575,000 lake side home in vermont complete with pebble beach and views of the green mountains. It is sanders, did i mention, third home. Social media quickly taking to twitter with allegations about how sanders may have gotten funds to buy the house. Wow, i dont think weve ever seen a socialist or progressive do what i say not what i do, have we . This is unheard of. But he started the revolution. During financial crisis, prior to it. I didnt hear the question . Who was great house flipper before housing crisis. Pinocchio Elizabeth Warren . You used pinocchio, really going to do that . Coming up, hillary and bail out. Hillary clinton making her pitch for the economy. Youre going to wish i said it. One democrat says the party isnt doing enough. Hell join us after the break. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back to squawk box. Here is whats making headlines. Ibm won a sevenyear deal to provide Cloud Services for Business Software company workday. The deal follows two recent Analyst Reports which questions ibms ability to compete with the big players in the Cloud Services market. Japan company stalled raising questions about abenomics. Gross domestic products expanded at barely acceptable. 2 , well under forecast. It was a big week. I was wondering, how do you know when the japanese economy is stalling . Its been there forever. Dont you need to be somewhere else. No recession, on the upside. To stall. They are 0. 2. Latest this morning 10 00 person eastern housing, tomorrow july Housing Starts and building permits. Income equality and social justice big themes at the democratic convention. Next guess argues they have turned their back on the issues and middle class past. Tom frank author of listen, liberal or whatever happened to the party of the people. Contributing editor with harpers magazine. Good to see you. I need to be educated what system we need to try to aspire to. Ive got wilford frost here. Hes from the uk, hes from london. Whenever i talk about american exceptionalism, i talk about americaotracy. Whatever your father did, become a landowner. You shouldnt hate rich, they are selfmade. Now im finding from your notes america otocracy. Its a way in excusing income inequality. You look at the top, this is a criticism i would level at democrats as well as republicans but these days im mainly talkitalk talking about democrats. Democrats look at people on top and say people doing so well, thats because they deserve to do so well because they have you know, they went to school. Went to the right school, got all as, graduate school. Its a way of rationalizing a system that has left a lot of people behind. I dont have any problem with people doing well, of course. My problem is always in the other direction. But i saw where you kind of make the point that maybe its because people work harder that they get ahead. Maybe its just because they are smart. If its just because they are smart, that doesnt mean or lucky. But that doesnt mean its okay for people who arent smart. Exactly. But then i think of the whole way that, you know, in a world where there is scarcity and where, you know, there is competition for limited amount of resources, the way you allocate capital to where its treated the best, so that everybody eventually gets lifted up is for it to go where its actually productive. I cant imagine competing i cant imagine Global Companies competing with a bunch of people who dont know what they are doing and dont want to work hard. There would be no competition and no one would do well. That is a very nice way of looking at the world and i remember learning that, too. If you look back at, say, the record of the obama years when you have one of the most liberal a man who is the most liberal of all possible president s and you see that the labor share of gnp has declined and declined and declined while hes been president , this is not really because the workers are less productive now than they were before, they dont deserve it, they are not as well educated as they used to be before, its just the way power works. Im confused. We just had the most liberal president for eight years going as far to the left as weve seen and it hasnt resulted in the outcomes you wanted. Exactly. So the failure there is what . Why did that fail . You have to look at the its liberalism of the rich. The problem is this is not franklin d. Roosevelt liberalism, not Lyndon Johnson liberalism. Barack obama and bill clinton and i would suggest Hillary Clintons liberalism is a very different species. This is liberalism of the rich, Marthas Vineyard liberalism. Thats where he is right now. Let me ask you another question, when it comes to dividing the nations resources to do the most good for the most people, the market or the government. Whats better . There is no you dont have a pure system either way. Im not saying but lets go we live in a complicated world in which the market the answer in your world, what would be the best way . Well, i think one thing we should do differently right now is enforce antitrust law. Just give you an example off the top of my head. We have these laws in this country. Its not in order to create a market system, not to create a system where people have to play fair, markets have rules, right . If you dont enforce the rules, all sorts of crazy things happen. Have you monopolies popping audiotape all over the place, people using market power over one another. You have lots of unfair competition out there. Is the market good or bad . It just is. Look, thats just a sociological fact. Is it good, evil, necessary . The market just is. We have to have rules. You cant just allow people to do whatever they want. Markets have rules. You can get rid of markets. Soviet union got rid of markets, venezuela got rid of mark, cuba got rid of markets. Should we get rid of markets. That would be crazy. That would be what policy do you think obama should have pursued given what was going on with congress that would have created the outcome that youre interested in . Well, i think when obama was first elected, he had a historic chance to do to be a transformative president. As he said so many times on the campaign trail back in 2008. He had the public behind him. You remember the enormous rallies. All those people who showed up for his inauguration. He was massively popular figure with winds of history at his back. He chose instead on the main issue facing the country at the time, which is what to do about wall street. You remember in 2008 the bailouts, that sort of thing, financial crisis. He chose to essentially on that issue continue doing what Bush Administration was doing, you know, to just continue going along the same path. No transformation, no real change at all for a number of years. I think that was a mistake that were doing to be paying for for a long time. Thomas, even if the view you outline is the correct path to deliver the best future for the United States, are you being realistic in because Bernie Sanders has just been defeated in a vote amongst just left side of political debate anyway. Jeremy corbin leading to serious issues for just the labor party. Thats not opening things up to the right what youre outlining is not realistic, never going to lead to someone being in office. One of the issues ive been working on my entire life is opposition to nafta and to a lot of trade agreements weve been signing over the years. For once, all the candidates out there opposing them. Truth be told, our president barack obama also opposed these trade deals back in 2008 but immediately reversed himself upon taking office. This year theres overwhelming outrage against these things. Theres all sorts of outrage out there in the country. The problem is, of course, channeling it and defining it in a way thats doing to have a positive result. Thomas, i dont know, i think maybe people think the banks should have been nationalized or broken up or something but i think he used his the wind at his back to sort of take 17 of the economy spot government coffers with health care. He squandered all that good will on obama care which we now see theres not i dont know what events are going to happen if they have no insurers left in any of the exchanges. That was redistribution. That was something i thought you would have applauded because it leveled the Playing Field for people in terms of health care but i think he squandered all his Political Capital and turned it into something were going to have to fix or change and also poisoned the water. You wonder why congress didnt do anything the next eight years, the way that was handled completely poisoned the political atmosphere. Look, im not going to disagree with you on that. I think emphasizing obama care what the president did rather than continue to work on the financial situation, i think that was probably a mistake. Im not as im pretty negative about obama care, liberal. I dont know if im as negative as you are. I do think it was poorly done and it is something were going to be paying for for a long time. It did distract us from the really important and essential the far left of the world would have the government taking over the banks, running the banks. Is that something you would support . No. Youre asking what i think he should have done back in 2008, i think a lot of these banks i think he should have unwound some of the bailouts, i think some banks should have been forced to difficuvest, put in receivership. This happens all the time, Smaller Banks constantly putting into receivership. Those standards should be enforced. You cant let your ivy league buddies, classmates off the hook. You have laws against various things, have you to enforce them on wall street as well. If you have laws in this country they have to be enforced regardless whether the people who get punished are your friends or not or went through the revolving door with you. Thomas, i wasnt sure about the interview, but i liked it, i like you. We got obama from both sides over here and over there. You were a conservative in college. Did you do it in reverse. I think you could be more successful like arianna, she made 300 million with Huffington Post or something. Is that why you did it, to sell more books . Do you really believe this stuff . I havent become a conservative. In college. That was a long time ago, believe me. You actually knew what was right and correct at one point, and then you went over here to this other side. Was it for money, like arianna . Was it more expedient . Going to the left for money . Is that what you just said. Wait, thats an interesting idea. Anyone ever rising up again. Im going to put my money in taxfrees and not worry about anything like limousine liberals. It was fun. We appreciate you coming on. Hope to see you again. My pleasure. See you later. Still to come on squawk box. This mornings biggest movers plus much more from andrew in rio. Like arianna. One official time keeper at the olympics where every tenth of a second counts. The ceo of omega joining us on squawk live from rio after the break. Magz magz omega omega. What i love most about tempurpedic mattresses is that they contour to your body. It keeps us comfortable and asleep at night. Change your sleep, change your life, change to tempurpedic. Learn how you can change your sleep by requesting a free sample of tempur material. Call or click today. What is freedom . Yes, its riding a horse across fields and stuff. But its mostly getting to watch your directv with unlimited data from at t. Were setting families free. So they can stream away and not squabble over whos using how much. So go, family. Watch. Freedom. Ha seize the data get our best unlimited plan ever so you can stream and surf all you want. With unlimited data from at t box. Right here live from rio. Were talking watches right now. Its everywhere, the pool, track, omega seem to be omnipresent. Were marking 25th time omega has served as official time keeper of the olympics back in 1932. The question is why is olympic sponsorship important and does it pay off. We have the new president and ceo of omega. This is his tenth visit now to the Olympic Games as ceo. We thank you for being here. Good morning, andrew. What is it about the olympics for omega. Why do this . You just mentioned it. First of all, our role as official time keeper, we have dna at omega of being best in time keeping. Already 16 world record, more than 40 olympic record. Timing all the time for all these athletes. So its very important for us. It is expensive to do this, to put this on for omega and for all the sponsors paying something in the order of 100 million. I have to say we love to sponsor. Were the only one that has a key role to play. Were at the service of athletes, more than 600 tons of material. This is also something that makes omega special. Obviously the partnership with ioc and Olympic Games is something we cherish. This whole spirit about positive, about achieving things we share also with our values. Speak to the economics of it. You come here. The brand is everywhere. You have your own olympic watch thats now released. How much disblg cooes this cost . 4900. We did it just for this. How much olympic watches ku look and say peg it to here. Limited addition, 3,016. A brand that does more than 650,000, the whole inspiration of the Olympic Games it will pay off. Having seen that on television or real life, people will remember the watch. Whenever they buy it, they remember about this tremendous company that was the witness of all these successes. Last olympics, though, if i remember, the marketing dollars were put on reasoned in terms of a loss. That was one of the explanations. You have to think about the Bigger Picture for us. Its really something that is part of our dna and that were investing. From that point of view, theres no loss. How do you think about the smart watch business right now . Even tag is getting into the action. I dont compare smart instrument i call them with beautiful swiss made Omega Watches were producing. Were wellknown for beauty, precision and some kind of a soul. Theres not one omega with no soul. Smart instruments have no soul. They are like phones. You think that will never happen from omega. You should never say never. For the time being we prefer to have swiss watches rather than instruments with a swiss name. Impact of brexit on your company. We are selling everywhere in the world. We have more than 30 affiliates in the world, here, brazil, the impact of brexit is quite positive for us in terms of we havent changed the price in london. We have a lot of tourists visiting london and buying our watches because they want to buy it for the rest of the time. We continue to sell very well our James Bond Limited Edition on cmaster in uk. Quite positive. Buzz aldrin was here. Came here and was thrilled. We were with him in the stadium. He was so amazed about seeing his fellow american winning like in swimming and meeting with the champion. Hes a big fan of the olympic. Between having brand here at the olympics and james bond, which is more important . I think the olympics in our dna since 1932, you mentioned it, only one time keeper. James bond shares exactly the same value of achieving things, of being some kind of a hero and also being a universal champion. So both of them somewhere have a lot in common. One thing is at least very sure, thats omega. Congratulations. My pleasure. Thank you. Guys, when we come back after the break, business at the box office. Well talk about it from new york sony targeted adults in a raunchy r rated theme. Did it pay off . Well tell you about it next. Announcer theyll test you. Try to break your will. But however loud the loudness gets. However many cheese puffs may fly. Youre the driver. The one in control. Stand firm. Just wait. [click] and move only when you hear the click that says theyre buckled in for the drive. Never give up till they buckle up. Welcome back to squawk box. Suicide squad topped the box office followed by newcomer Sausage Party. A raunchy rrated comedy from sony. Julia boorstin joins us with more with a straight face. Julia . Trying to keep a straight face. Sausage party had the best ever debut for an rrated animated movie and the biggest august opening ever for an animated film. The a run chi comedy about Food Products trying to avoid being eaten written and starring seth rogen grossed 34 million. Thats about twice what was expected. And the film reportedly cost just 19 million to produce. Sonys columbia pictures sharing the costs, but even sharing the profits this gives a muchneeded boost to sony which is lagging with 7 studio market share so far this year. Now the studio scoring such a big win by allocating nearly half of its Marketing Spending online. Compared to just 12 on average. This is sonys largest dijal marketing ever, buzzfeed, snapchat and youtube to drive buzz. Sausage party came in second to suicide squad the u. S. Box Office Performance dropped by nearly 70 in the weekend on negative reviews and word of mouth but Sausage Party should hold up better. It has an 82 critics rating on Rotten Tomatoes compared to 27 rating for suicide squad. Thank you very much. What julia, what is it about . Sausage party . Yeah. I did not see it. I would like to see it because im hearing such great things about it from my friends. Its an animated movie about Food Products from the Grocery Store that are brought home to someones house like for a barbecue and its about them trying to avoid being eaten. They realize theyre going to be eaten and sort of a moment where they try to escape. Sounds so bad its unbelievable. No way im going to see this movie. People seem to like it. I think it sounds great. Sausages actually have okay. I got that. Because theyre made from the animals so the animals arent trying to survive. Theyre dead and theyve been put into the sausage. This is not about animals, but the Food Products. The animal is dead and put into the sausages and the sausages dont want to get eaten. Way too deep. Cartoon. Didnt look like a cartoon exactly. Animated. Right. There we go. Julia, thank you very muchp. There we go. Okay. Still to come the biggest movers. Squawk box will be back in a couple minutes. At ally bank, no branches equals great rates. Its a fact. Kind of like grandkids equals free tech support. Oh, look at you, so great to see you none of this works. Come on in. Welcome back. Final thoughts with david, still with us. David, we spoke earlier about the fact that you think stocks can hedge higher the rest of the year. What about protection in portfolio. Still worth buying bonds . We like bonds and if you think rates will stay low, we like munis, we like preferreds, things to get real income in low Interest Rate environment. The most important thing that investors have to do is sort of stick with their Asset Allocation and not sort of try to time this market. Thats what this last 15 months has shown. You follow the plan. All right. Thanks, david. Good to have you here. Thank you so much. Before we go, Andrew Ross Sorkin, live in rio, what do you have for us tomorrow . Thank you, michele. As the second week of the olympics here in rio get under way, ive got a little pingpong to show you, officially called table tennis, but i actually went oneonone with a u. S. Olympic table tennis player. Youre seeing a little bit of our action there. It gets worse. Your form is great. Look. Right there shes giving me an opportunity to sort of, you know being very kind to you. Back and forth. Very kind. It gets much worse, but look she even you will see. Were you betting on that . Just well no no. We got the whole thing tomorrow. Well show you the full on. It gets a lot more intense than that. Every one of her shots back to you hit on the center line exactly in the same place every time with just so you could hit it. Yeah. She was being nice. Tune in tomorrow and see more of that and a lot more here from rio. Be safe. See you tomorrow. Join us tomorrow. Thank you. I will be here. Squawk on the street is next. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with sara eisen and mike santoli at the new york stock exchange. Jim and david out. Futures are up as we kick off a week that will keep those of us not on vacation becausy. Retail earnings, fed minutes, and inflation data and more. Stocks off the record highs of last week. Europe stey