Germany is happy they are buying anyway. Road map like this, markets looking to recover as stocks stumble, cautions sprepds and earnings begin. Speaking of earnings, a beef for alcor, returning to profitability, and shares rise in the premarket. Skies clear, American Airlines raise a forecast for shares growth margins, up sharply after a rough week for the other carriers. Another day, another inverted dollar, a brpd new motivated tax merger this morning. Marching overseas ending up in dublin. Stocks hope to bounce back from a rough tuesday, nasdaq falling more than 1 for the worst session in two months. Stocks like facebook and netflix take a hit. Small caps slide. The russell 2,000, biggest two day drop since political and dow closed below 17,000. Dow and s p still positive for july, jim, but dows in danger again of having the first threeday losing streak since april. I think that this airline news, american air, is going to bail out a lot momentum stocks. We dont think of them as momentum because they are inexpensive on earnings basis. Thats unusual. Youll see a turn in the industrial portion of the market very much linked to aerospace, alcoa, didnt hurt that at all talking a lot of positive things. Can it turn around the yelps, i dont know . Those have really had what i regarded as being the kind of selling that happens on thin days. Couple big etf sellers, couple baskets we dont know about, but i think the momentum decline began when delta missed its passenger revenues for june. For seat miles . Yeah, and extrapolated to american, and that extrapolation was faulty. You know, hearing again resemblance from the latest selloff from earlier this year to the momentum names or wellknown names in the Hedge Fund Community where cries of pain seem to be a lot sharper than for the general market. Im not sure why that happens, whether they are just not well owned or under permi inperformi dont want to lose money so they get out of there if anything turns around, but it seems to be a lot of same names. Its interesting to watch ye yelp go from high 70s to 60. Yelp emblematic of the company that could be taken over and have good earnings momentum. When i say earnings, could be showing earnings. All revenue based companies took a hit. Cornerstone concurs. Twitter. Excuse me . Twitter. Yes, people say, you know what, these are going down, the shorts come back. The etf had a story theres not a lot of short selling, which would also explain the big vacuum down, but the shorts come back quickly. Yeah. Lets drill down on a lrk coa kicking off earnings season, reporting earnings of 18 cents beat above by 6 cents, and all the Business Segments were profitable in q2, and last night on closing bell. They spoke about how the company is looking to capitalize on aerospace demand. There are two factors driving aerospace demand. One is the growth of the middle class in all of asia and the emerging countries. Second is the efficiency of the new types of engines and planes, and thats exactly where we are investing. Interestingly, they do reaffirm on the aerospace outlook, and with the rickson deal, aerospace 20 of the sales up from 17. I joked with the company saying, is this the new precision cast parts . Going to be the aerospace play . There is 4 million worth of alcoa in a 787 even though its a composite thats not aluminum. 787 have a faster business, i think they are literally transforming the company into a precision company. Theres a couple misleading notes out there today, one saying the reason why the company beat the quarter was because of the price of aluminum. The price has not changed year over year, and another is because they just saycut. I think whats driving this is they are becoming a better manufacturer closing higher cost facilities like australia, brazil, hard to close plants in these places, and because of the desire to be much higher in the food chain, its not just aerospace nineyear demand for planes, important to see boeing off that a huge order. Cummings downgraded, that will be huge, biggest swing factor, and dont forget the ford f150 going from having aluminum. The davenport facility sold out, and if they go to the lightweighting, part of the story for this, precision instruments, you raise numbers for alcoa for quite a long time. Not that there was not quite a move to begin with, though, roughly doubled in a relatively short amount of time. One of the things bad in the last quarter, they had some inventory bulge in aerospace that was short lived as they said it would be, and dont forget, the aluminum deficit is growing in the world. People always had this image that chinas exporting aluminum. Forget that. Thats wrong. What you need, by the way is cheap energy to make aluminum. Take china out of the equation, focus on this is a company thats tim con steel, but they went to more higher and higher fashioned extrusions. Great engineered products, thats what alcoa is doing, and that looks different than that of three years ago. Interesting, all the good things they say about the auto market, the Container Store says people are buying cars, buying furniture, but after they missed they say this is more than weather, more than calendar, in a retail funk. Surprisingly tepid environment. They did a funkadelic thing. They are funking out. Theres the quote. Helped them with their funk. Thought it was a George Clinton funkadelic. Heres very multitalented. One of the things that bothered me about the Container Store is the analysts will not stop. They love it because thats only 66 stores, keep expanding, a much loved figure, but since its public, its been bad. Lets own that. Ever since. They went public at 18 37. Its not a good day. Including the ipo, by the way, which i believe was day one im not sure about that didnt take long. People love products, but i think theres other companies nipping at the heels, rubbermaid, people dont think is cool at all, but i hated the idea, well, we thought it was weather, but turns out the consumer companies, go to restoration hardware, they are not blaming the consumer because they blew out the numbers. Williamssonoma blew out the numbers. No funkadelic situation across the street in a lot of the other high ends. Credit street takes it from 45 to 42. I was surprised. Didnt feel like he would lower the boom, but they have to return to growth. They came out as a growth company. I dont like to see this. I do like the management, they are good guys. My executive producer, maybe shes in a funk because, boy, does she spend a lot, the mad money producer, maybe shes been staying away, and that explains the funk. All right. You mentioned american. Americans up sharply in the premarket, carrier raising outlook for passenger revenue per available seat mile seating 55 to 65, up from 4 to 6 growth, boosing the margin forecast as well, and as you said, on the heels of klm, air france, and deltas weak numbers for june. Whats going on . July 2nd, delta took numbers from 6 this past year to 4. 5 . Analysts joined. Why . Delta said it was latin america and aal is bigger. I felt delta was a good company, but american air is really doing well. I think that we are now into this moment in time where not all airlines are going to go up in lock step like they have. The numbers here are really quite good for americans. Someone might seize on june load factor down, but past the revenue number is what you need, and that was a nice guide up, and remember they have 10 billion in cash. Those of us who are ancient, the wright brothers, never had 10 billion. You were upgraded on that flight. It was an upgrade, but the food was still bad. Dont get mad rk, but i hope fo single malt up front. We talked about consolidation in the industry and the allowing that to happen and what it meant, but aa is operating well. Doug parker, not to forget, of course, under bankruptcy, return to equity holders was stunning. One of the great trades of all time. And to the debt holders, david thanks you very much, a great position for them, but they performed since then and continue to. When they came on mad money level of confidence was such because i liked the stock, it was chilly in the sense that thats where i thought maybe they can earn six bucks. I think that six bucks is in the cards now and that make s it inexpensive. Theres emirates, option for 50 more, that deal would be 75 billion, even with the talk of challenges in cargo, worst performer in the first half of the year. Best last year, but, yeah, the margin of those planes is terrific. The big thing thats been bugging boeing is ever since look at the chart since cancer, a big xm supporter and republicans may be splitting, theres a critical article reauthorizing the export im on record saying in one form or another the article, not criticizing too much, but said 30 of the financing is xm, but its 18 . Thats not a current number of they used in the piece. Huge relative to other companies. Air bus is subsidizes, so boeing said xm, give us a break. Most of xm goes to Small Business meaning republicans con pitch late. David, as you know, Small Business is the job creator. That is what they said. The republicans never go against jobs. Jobs created by the Big Companies that Small Business win. You heard it first. All right. Well see if that happens. When we come back, another u. S. Company getting into the tax inversion game. Well have the latest chapter in that trend for mna, and after being governor of new mexico and libertarian president ial candidate, Larry Johnson is the ceo of a company developing marijuanabased products. Well talk to him about the business of pot. Look at the premark, and more squawk on the street live from the floor of the nyse when we return. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. In india we have 400 Million People who dont have electricity and i just figured that its time i do something about it. What were doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. I think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when its needed by the consumer. A smarter Energy System is made with the ibm cloud. 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Sales X Pharmaceuticals merging with the irish subsidiary, and american lawmakers expressed worries about u. S. Firms shifting tax domiciles abroad, and that trend, guys, put into perspective. The service has statistics since 2003, twice as Many Companies shifted their Tax Obligations than they did in the 20 years prior to that. At least 12 more companies have plans to do so. Including medtronic, and abbvie, fourth one yesterday, another inversion. This is not a huge deal, but important. Keep any on it. Why . Well, its not just an inversion buying a company thats already domiciled or in a lower tax jurisdictio jurisdictions. They are actually buying assets, really, asset drop down or carve out from an Italian Company, s cosmo contributing assets, and salix issues shares to cosmo, and by the way, the shares are looking down as you see because of the concern about the delusion from the deal in terms of what price they pay, and salix will reincooperate with the subsidiary from the Italian Company in ireland. Why not . 12. 5 tax rate. As we said many times, you still pay u. S. Taxes on whatever earnings are derived in the u. S. What happens with the inversions is that over time, when you do inversion, the earnings stream will tend to increase more and more from the redomiciled company, from where it is redomiciled, and there are Different Things companies can do in terms of the use of inner company notice, for example, that move earnings around in an effective way to continue to reduce your earnings in the u. S. , and its less paying of taxes here and, of course, as i mentioned many times, the key being that any of the earnings that are overseas can come back, the cash thats accruing overseas can come back to this country, if you want, without having to pay taxes on it or the u. S. Tax rate on it. Watch this one because, again, what it will do in a way potentially is make the subsidiaries of some European Companies more valuable because they can be used potentially for future inversions for u. S. Companies if you follow. Oh, how about what they do . I mean who cares what they do. Shire, four times up for abbvie. Looking at shire, attention Deficit Disorder they have aderol, right. You want to see some about wander drugs, right . You would, you would remember, if your competitor inverted, they have access to a lower tax rate they are dealing with, and cash, were they to bring it back to the u. S. , they dont have to pay taxes on. Youre at a competitive disadvantage. You really are, i know. Thats what drives pharmaceuticals where other companies did did already, thats driving the next deal and the next deal and potentially the next one. Size can matter here. Look for a company that you can acquire thats 20 of the overall okay. With the carveouts, you can try to customize your inversion. I see that company, a nice subsidiary i want to merge with, and thats the right size, and well end up wherever we want to be. Lets heres what i dont see happying. Celgene, why dont they say, listen, from now on, were a swiss company, and then they are a buy. How does it i mean, are companies reincorporating in europe or just done by inversion . Largely inversion. Shut down the idea that you can move . Im not sure what the requirement is for consolidating, i dont know what it is. Tyco did it many, many years ago. Right. Seems like, to me, this is so fatuous, and i see that the president s proposing this and that for billions and citi group 7 billion. No. You want to save money for the taxpayers, stop this, but the republicans call for comprehensive tax reform. I know jack lew says, listen, do this one off, so we have a stalemate, and this stuff keeps happening. You buy a new home, what are property taxes like . The Companies Act like households, just like them. Absolutely. I cant blame them. Just cant. Im in a very competitive disadvantage with david because your property taxes are down so if i want to do something im going to invert actually. You are . A personal inversion. Im working on it. Unidentified subsidiary in a low tax area i can merge with. Four grandparents from ireland, and you can convert right now. When we come back, the mad dash and more premarket. More from the nyse straight head. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab at every ford dealership, youll find the works its a complete checkup of the services your vehicle needs. So prepare your car for any road trip by taking it to an expert ford technician. Because no matter your destination good maintenance helps you save at the pump. Get our multipoint inspection with a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup only at your ford dealer. Welcome back to cnbc, im michelle carusocabrera, and the Mexican Congress has final approval working all night on their Telecom Reform bill affecting two publicly traded stocks, amx and the Big Tv Company in mexico as well, and when we see amx open today, where the the reason the stock is going to trade actively is because in anticipation of the announcement or decision by congress, the Company Announced last night they are going to do a breakup. They are going to change their structure completely in order to have less than 50 market share in mexico in order to avoid the worst of the possible regulations. Expect amx active and televisa as well. Thank you. Lets get to the mad dash on wednesday. Talking amazon. All right. I had the great privilege, celebrated my fathers 92nd birthday, today is the day, and the documentary was riveting and great thing to talk with father, something not political, and i loved it. At the end, you talked about this fight, and im still trying to understand, david, now they approach authors directly. I mean, amazon in the piece is not necessarily presented as anything other than thee most powerful force wherever it is. Publishing without a doubt. This is es calating . Seems to be. They say to authors, we give you 100 of the revenues on ebooks, 100 . Forget the publisher. Just, you know, and or pressure the publisher. There are contracts. There are contracts. Nobody should be crying. Its an enormous company. Not with the power that amazon has, though, but its on a good job here, i argue, in positioning itself as the party that is being hurt. Authors came out in favor, and James P Patterson in the piece saying, hey, books are different, amazon, books are different. Its not just about driving prices into the grown and driving the business out of business. Right. One of the great moments in what i think is the best documentary is a paint ball gun company, and amazon is your partner, that reminded me of the godfather, and who is your partner, its odd to me amazon wants to partner with writers who have been the most damaged. I dont want them as my friend. Happy birthday, pop, 92. Jim, thank you. Thank you. Well watch amazon shares as well. Stay with us, were back on squawk on the street after this. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. So why are we so,000 obsessed with turbo . Card with a new volkswagen turbo. Because theres nothing more exhilarating than a powerful ride. And you can get that in places you might not expect. Like the passat. And also in the funtodrive jetta. In fact, volkswagen has sold more turbos than any other brand over the last ten years. That is a lot of turbo. Hurry in and you can get a 1,000 turbocharged reward card when you lease a new 2014 passat s for 219 a month. Became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Youre watching cnbcs squawk on the street live from the Financial Capital of the world, opening bell in 45 seconds coming on the heels of the 47point drop in the dow, the first 1 move in the dow since may 15th. S p still has not had one since april 16, thats 57 days without a 1 move in the 500. Incredible. That russell was just a total con pitchlation like the buyers walked away. This is a slow week in terms of people working. Maybe not in terms of the numbers that come out, but i think theres a vacuum. You see the other side how it went up. It can go down. Yeah. Theres the opening bell, s p at the top of the screen, and at the big boards, medical Device Company celebrating the recent listing and the nasdaq, stack pro group, provider portfolio analytics to the investment community. With that, we have our first s p company having posted earnings with alcoa last night, and you generally like to watch the guys for the playbook they give you about the quarter. Yeah, i mean, you know, itst funny. They also agreed countries, and chie n china, they are upbeat and u. S. They are more and more upbeat. Theres residential construction, not just trucking, a huge employer in the country, and overall, this notion that you cant get a plane for nine years, even regional jets better, not a huge business, but a ton of aerospace on the Conference Call this is the great growth industry in the world, and start recognizing it is the driver of alcoa and they, with this acquisition, is not what you think it is. The acquisition being of this rickson, and one of the things in talking about growing at a percent, they have a new factory, and when you look at the sum total of who is in air on the plane, theres honeywell, precision cast parts, and now you have to say its alcoa. Alcoa is a way ancillary way to play the aerospace growth. Talking about a significant trons far mags overtaken over the last, whats it been . A couple years. A play on the london metals exchange, how aluminum price, thats totally untrue, a play on china, yes or no, thats untrue. The deficit in aluminum is growing. It is about making it so they have products that are proprietary because aluminum happens to be one of the worst commodities to be in. They are moving down the curve of aluminum by closing these plants, but when you close a plant, its a huge number of people laid off. Its political in the countries. Oh, absolutely. Replacing plants in saudi arabia where costs are low. The plants there were problems, but back online, and they are building plants in the united states. I wish they see they choose to use our low energy and work force to make the products here because and talk about it more, too, its a nice theme. Carl . They raised the forecast for commercial trucking in north america. That was amazing. If they had not downgraded them by conviction, last night, it was up in anticipation of a 25 dividend boost, not what i was looking for, but a buyback, and the trend its a thin stock, but goldman is knocking it down today, and listen to they are the big orderer of aluminum, and the downgrading is poorly timed. Took it from conviction from time to buy, not sell the stock. Talking about infinite multiple names, little earnings down sharply yesterday. Twitter is up today. Carl, any number of different stories going around about iuse growth and where numbers are focused and what numbers look like. It was down over 7 throughout the day. At one point, i saw 7plus, eight, i think in the middle of the session. People say the upgrades recently, at least, based on the idea that user growth will reaccelerate in q2 after a weak q1, largely on world cup, which is now brazilgermany, thee most tweeted about sports event in the history of twitter. This is episodic. They dont want it levered to events. Twitter talks about it with events, but when theres no events, no twitter etwitter. People tweet every time theres a goal. One of the reasons why alcoa is up not just because clause is german, but goals scored that people turned into the Conference Call otherwise it would have been a waste of time, just talking in thin air. Well watch twitter for sure. Yeah. Hurts. Would have help, maybe. A few red cards, ref let the game get out of the control. It was 50. The previous game was out of control. Right. The worst loss by a host country in the world. How is valet doing . Should be down no, valet is up. Earnings driving sentiment. Not just a flunk. Container store should open stores in brazil to keep the funk thing going. You know, we talk about Consumer Spending and what the Container Store says about spending. Go goognehein upped mastercard and visa thinking this summer is an inflexion point in spending growth and patterns. Is that only a high end play . If you think its the best way to go and loyalty camp saying oh, stock is moving up nicely, an inexpensive stock. American express is doing everything right ever since the great recession, no reasons not to own the stock. Mastercard lagged, but a wellrun companiment there were concerns about russia. Russia is coming back into the fold. I like all three stocks, and i think discovers very inexpensive. Dont forget the embedded chip going to be 2015s business. One name not mentioned this morning is citi group. Another huge potential penalty. Dont believe its announced yet, 7 billion the number that a number of publications go with this morning. Stocks up. Never thought of citi had a lot of problems, but not a huge mortgage play. Mortgage securities talking about here in terms of penalties and goods if you will. Well hear from wells fargo at the end of the week. Is this the beginning of the end . No, its the end. Theres one big player out there, bank of america. Theyll report, its terrible they have not settled, but apparently bank of america feels they paid a lot, and this these keep ratcheting up. Im sure they. Ed more from bank of america, and bank of america cit ii thought it would be less, and, guys, listen, after what we did, theres a separate case, but in as a bank telling you what youre going to do, and youre bank of america, you push back, guys, we did the most. Give us a break. Theres no breaks beggiven by t Justice Department. Or the fed. Crippling growth like the republicans say . I dont know. Its not about the latest find but complexity of the organization. Yeah, emerging growth too. A great franchise, but problems there, obviously, mr. Corbit, what he was doing in south korea at that time when they get the word. That will be a theme, is it too complex or not . Its followup unny, america is the company i regard as being the international, when youre in another country, the offices everywhere. An incredible consumer franchise around the world. It does. Just all of other stuff not helping it. Citi group is difficult to manage because it was unwieldy, and i think they are doing the best, but theres many different places, a lot of homes under management. They have to rid those. Housing prices are starting to come down, and still a lot of work toot at citi, and its not been a good stock, period, just not good. Apple today, the iwatch will hurt garmin, and costco carrying the brand again. First one, i dont know, garmin has nine lives. Everyone thought the Global Positioning in your car, dont need it, and those of us who fish, we know garmin has a franchise there, not a bad business. You know, i think that i dont know. A shorting garmin, a time honored mistake. I remember the retired jim was always saying to apple, unless you are willing to let us sell your stuff for a little less than everybody else, youll never get in. Notice the weakness in hard goods in costco, its been the big lag guard, reporting numbers tomorrow, stock was good, up nicely yesterday. This is very good news because the hard goods has been the big hole in the kosco lineup. Interesting to see yesterdays action, southwest and delta, two of the worst on s p, and today, two of the best, American Airlines forecast increase. Worked magic. Delta had bad latin america, and went to American Airlines. That was a mistake. Appears it was. Yeah. Dont forget these companies are in a position to buy back a huge amount of stock, very little competition, those of us who have flown recently know that you just cant look at the bill. Its too crazy, right . Its too crazy unless spirit airs there, and they dont compete directly. Its just a fortune to fly because they said, hey, listen, heres they are like railroads. Have you noticed the railroads are never head to head, they carved up the country. The fact were having a conversation about capital returns from the airlines shows how much things changed. That is not a conversation that ever took place prior to last year. How many people lost on u. S. Air . Buffets famous for saying no airline will be a wonderful business. Said tech was bad and then fell in love with ibm. Ibm, i dont know. Its the fence. I think old tech was doing well, but old tech kind of all the old tech stocks were doing well opposed to new tech, gigemon, now pokemon, a miserable second. I liked that. It occurred to me. The second bad quarter in a row for pokemon, and in the end, it was eclipsed by other and gigamon is posted by others. Something is eclipsing it. Pokemon, i mean, i dont know, call of duty, what happened there . Take 2 is doing well, ea is doing well. Pokemon, they feel like the alaska bull worm one in crabby patty, you know, alaska, you know, sponge bob . Yes. These guys are now patrick who was never known for iq. I dont know if you remember patrick. No. Scoobydoo was smarter. Moments of great insight. Broken clocks twice a day. I never thought patrick, but mostly of sar because they play the snail and the enemy. Okay. Im going to toss it now, dows up 50 points. We had a reversal here, a lot of concern about small caps, russells up today, biotech stocks up, media names up, and its been a rough week. Look where the major indexes are for the week, but repairing that today. Damage in the first two days here so the russell is down 2. 7, but the midcap, s p down, and utilities on the upside. I was concern the about financials at the end of the day yesterday because the big cap names like bank of america and suntrust down 3 . They are up today. Theres been damage here, and if i have seen a third day down, i would have screamed loudly. That is not happening, still, there is damage here. Watch that. Im not so concerned about the other big market leader, and thats energy. Thats held up well this week. Thats why i say theres not been broad market damage, and exxon is up, anadarco, modest climbs. You mentioned the Container Store, it is at a new low here, and they went public back in november at 18, and the retail funk comment is famous claiming were not alone in this. I think the problem is this is a growth story, a comp store growth store. 34 was the guide, and now the bulls say, heavens, the main argument, consistent comps, taken from us. You know how important consistent comps are in retail, think costco, it really helps. They dont have that argument right now. Thats why the stock is sitting to the downside. You mentioned stocks here, bob evans came out with sales short of estimates, but not damaging that stock very much. Airlines on the upside today after American Made positive comments, ugly week for airlines, reversed today, and finally, and interesting story that short selling is at the lowest levels in years. This is interesting. I have concerns about whether those numbers are important as they used to be given the rise of funds. There is ways to support the market esthetically without buying a lot of stocks including etfs and Exchange Traded notes as well. We have concerns about the value of the vix or volatility index measuring the fear in the market, short term puts and falls in the s p 500, but there are dozens of ways to buy protection in the market today without buying short term puts and falls, and thats Exchange Traded funds and other options not measured by this vix. The point is, we need broader measures of fear as well as short selling right now because the old ones, i dont think work as well as they used to. Guys, back to you. Thank you so much, bob. Lets go to rick santelli. Good morning. Morning, carl. Intraday chart of tens, covering this at 1 00 eastern, wow, yields are up a little, a base point and a half, and the true trading truth, yes, yes up today, but the readjustment to the downside of rates and upside of price. Open up to june 1st should we sell off pushing rates up, there is a boat load of wood as you see on the chart from 266 to 272 which means until we close above 266, 267 most traders are going to look at that as very tough resistant to get through and close above. Look overseas. Remember the comments . Everybodys 2014 look aheads of last year, the stabilization dance. The fact that the Central Banks of portugal, greece, spain, ireland, they all basically own and bought their own paper and everything was great as yields plummeted. Portugal missed payments, world thrives on overnight funding, boom, rates pop up. Look at the twoday chart, going to challenge 4 . To give you a better context, this is not like its back at 5 or 7 , but its something to Pay Attention to. Open the chart on may 1st, and you see the rate ngz. How did that affect the better quality sovereign . I can show you that they moved lower, and they are trading at 122, but when you look at the chart back to may, march of 2013, you see how close 12 2 is, and the last chart, when that goes on in a world of economics and fx trading, one thinks whats going on with portugal might have some type of negative effect on the currency of the eurozone. If you look at the chart starting march 1st, its pretty much business as usual in the euro versus the dollar. Back to you. Thank you so much, rick santelli. A plan to reinvigorate itself, an act of tedesperation and see what eatery we are talking about. Also, a major announcement from adidas. Well be right back. Adidas. Okay. Earnings uni rememberly underway with alcoa, sun valley, and dow trying to reclaim the 1 17 points it lost yesterday. Theres a look at the dow 30. When we come back, stock trading with jim and more squawk on the street continues in a moment. [ both ] when we arrived at our hotel in new york, the porter was so incredibly. Careful. Careless. With our bags. And the room they gave us it was. Beautiful. A broom closet. But the best part but the worst part was the shower. My wife drying herself with the. Egyptian cotton towels. Shower curtain. Defined that whole vacation for her. Dont just visit new york. Visit tripadvisor new york. [ male announcer ] with millions of reviews, a visit to tripadvisor makes any destination better. Thats why i always choose the fastest intern. R slow. [ male announcer ] with millions of reviews, the fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Time for cramer in stock trading. Protesting today, why are they downgrading . Bountiful harest, worried about inflation, but whats going on in the commodities process, soy getting killed, wheat going down, natural gas sixmonth low. We have an amazing belief by a lot of people that gasoline has already peaked for the summer. Lets keep in mind that a lot of people we have the fed minutes coming out today, and a lot of people have been saying the fed is behind the curve, inflation, the really, the basic materials that determine a lot of the proteins that we eat the fuel, the feed of animals are going down dramatically. Lets not panic on inflation and stay away from pot and mosaic. Interesting. Theres a comment about fast food, various Fast Food Companies that are most exposed to beef increased prices. Wendys is the most just reintroduced the pretzel burger, top of the earnings last year. Thats an important interview, wendys the darling, the rightaid of fast food. Powell sitting here yesterday, see costs in terms of assuming inflation whats going into the various products, will always make that assumption. General mills goes from 54 to 51, and the meeting, it goes back up, and theres a terrific dividends, returns cash, and you looked at the sandel release, bob evans farms, that is the stock thats undervalued. How come a bob ef varns farms reports a bad number and its to the down . The company remits hillshire and a restaurant chain under valued. All right. Whats on mad tonight . All right, we have unum and allergan talking about the proposed ed acquisition, here t the pipeline and defense and why pyott is cutting costs. A big interview. Thank you very much. And also, the view of the drug, seems to figure prominently in the defense that we talked about so often. Right. They compare a lot, but they do not to ilea, much more powerful drug, so lets hear exactly how good allergans pipeline is. Good to have you back. Happy birthday, pop. See you later on. Mad money tonight, at 6 00 p. M. Eastern. When we come back, adam parker explains his bullish call for the second half of the year, and dow is up only 16. Back in a minute. I make a lot of purchases for my business. And i get a lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. He cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. 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Morgan stanley, adam parker with us live to figure out where to go from here. Social stocks seeing big declines this week. Is that a sign to buy . First, the markets here, broader markets that is. U. S. Stocks turning around barely after yesterdays pull back, and the next guest does not expect more than a 10 correction in the second half. Thats adam parker, chief u. S. Strategist with morgan stanley. Good to see you. Good to see you. Unfortunate timing saying you like Growth Stocks in the second half. They have been shilacked, do you like them . I dont have a twoday investment horizon. For us, what we are saying we think its a Slower Growth world than people think, that the economys recovering, but slowly, that Earnings Growth will be mediocre, 6 in the base case, and then a slow growth world, what happens is people end up paying premiums for the areas of the market that show growth. I think we show also that you look at the Growth Stocks, newly growth or growth of the regional price stocks and value stocks, those cheapest against their own history are the growth at a reasonable price stocks. You are pointing to the high flying nasdaq stocks that fly off, and we are growth at a reasonable price. Thats not exactly to say a cohort of names. We feel optimistic that growth at a reasonable price is a place investorsment to be in over the next several months. A lot of evaluations. What is the potential heading into earnings to see multiple expansions at this point given stocks ran up to high levels . Well, look, i mean, im no longer betting multiple expansion in the base case, but i think to get it, its a little bit what weve had, you know, bullish over the last 18 months. Bullishness because we think the base case is mediocre, but the bear case not likely. Thats probably the case for more. I mean, if youre being very simple, you can say, look, yeah, the economys improving. Yes, the feds going to be there. No, the bear case is not going to form. Market melts up. Thats been the market weve been in in the last 18 months, hard to see what changes that. I think there are risks looming, so, you know, part of the monday was, hey, were not just, you know, incredibly bullish now, but more balanced, and i think the reason is because you have, you know, the fed tapering. You typically get negative revisions during september when people realize, oh, your numbers are too high. You have regulatory issues, so i think that its getting a little bit more riskreward balanced here than it was just flat out bullish. Thats what we were signaling in the note this week. Adam, is the alternative then utilities . I mean, yielding equities or straight cash . What do you do instead . Well, i think for us, within the equity market, you have asking a great question, how you get defensive if you want to be more defensive because the classically defensive sectors, utilities are expensive, and i dont think that necessarily is a good place. Work shows you want dividend growth, not level, and i think thats important. You Want Companies that are showing growth across their pnl so i dont necessarily thinkout want high yielding names. Our phrase forward is the expensive defensives are offensive. We dont want to pile on that part of the market, yeah. You mentioned the federal reser reserve. We have minutes today. Im wondering how much confusion is there about the feds policy path from here . Theres rising inflation in food in certain pockets of the economy, the jobs market has significantly improved and consistently improved, and yet the Federal Reserve does not seem to be in a hurry. Do you see anxiety that the fed is getting behind the curve . Yeah, you know, theres certainly a thesis out there in the front ends moving lately, but whats changed and why i signal several more balance than bullish, we said, all right, good Economic News, good for the market because people will be surprised its good. Bad Economic News is good for the market because the fed is accommodative. The reason its balanced now is the only Economic News good for the market is mediocre. Good news make the fed act earlier and bad news, wait a minute, we tapered, what now . I need a mediocre growth and belief the fed is there to create a big bull case. I think thats probably more riskreward neutral than any time in the last 18 months. Adam, are you worried you are too wimpy . Using your words, by the way, too wimpy with the assumption of no further multiple expansion . Always. We want to be contraryian bulls and be right, but i think to the case of more mull. Expansion is a steeper curve without the fed acting. In other words, if 12 months from now its three, 3. 25, highest real yield, higher yields and a dream of approving growth, the multiple comet continues to expand, and im too conservative in the approach. Theres serious political concerns in israel, rocket attacks and air strikes. How, as a market participant, do you deal with that . Does that show up anywhere . We signalled in the note the world is a risky place and risk was rising in a number of places. I think in practice, people i talk to dont really position their portfolio for that in a pro active way. Its more reactive because its very hard to, you know i think it impacts the multiple, not earnings. What happens is people say, all right, if the market sells off on geopolitical risk, you know, ultimately, i have to think about does that impact corporate earnings . If nothing introduces volatility in the earnings, what we learned is buy those difs. I think thats how the consensus mind set is on geopolitics. Thank you, adam, adam parker, morgan stanley. Have a good one. You too. Social and tech stocks taking a hit over the past week. Buying opportunity or a sign to steer clear . Well talk about that when squawk on the street comes right back. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. We created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Veggies youre cool. Reworking the menu. Mayo, corn dogs. You are so out of here ahh. The complete balanced nutrition of great tasting ensure. 24 vitamins and minerals. 9 grams of protein. With 30 less sugars than before. Ensure, your 1 dr. Recommended brand now introduces ensure active. Muscle health. Clear protein drink and high protein. Targeted nutrition to feed your active life. Ensure. Take life in. Welcome back to squawk on the street, sales of saliX Pharmaceuticals, moving lower on news its going to buy Cosmo Technologies as its the latest u. S. Company to incorporate overseas to lower taxes. Now jp securities is suggesting salix will likely no longer look to sell itself near term, and as a result, the stock is down 4 in the trade. The stock, though, still, carl, up nearly 50 year to date. Over to you thank you, billionaires descending to the conference kicking off today, and we are there live with a look at who is attending and whats on the agenda. Morning. Reporter good morning, to you, carl, and, yeah, weakness in tech and media stocks and moguls here living easy. Look at the scene behind me, its Little Wonder that the biggest names in tech, media and Asset Management descend here in oids during high season with their entire families in tow to mix and mingle and talk shop. This year, we have some familiar names attending. Were talking top brass from facebook, from 21st century fox and news corp. , apple, social media names like twitter and linkedin, and you wont be seeing mark, the venture capitalist, you wont see travis, ceo of uber or alibaba who has a few balls in the air as the company guns towards its ipo later on this summer. The agenda, though, packed, talking everything from politics to philanthropy to education, but the buzzy topics for industry conference goers here, of course, net neutrality, privacy in government surveillance, talk about drones and word there may be drones flying overhead here at sun valley, but they are buzzing about a panel saturday, a joint interview with buffet and thats what he is most excited about. Well be your eyes and ears on the ground all week, carl. There is deal talk, cable consolidation front of mind at the bar last night, where all the moguls and reporters and everyone talks and rubs elbows after dinner. There were some executives who were talking and talking about potential deals. Tell you next hour in squawk alley who they were and whether some come to fruition, but its a busy week. Conference kicks off today. A lot on the docket today. He pulled up in his own car. Was he driving hipgs . We reached out to subaru, and warren buffet was in the passenger seat, and the company says he recognizes a good investment when he sees them. We dont know whether thats his car or a rental. A lot of rentals. Reporter fun to see the businessmen so serious in their day jobs, dressed down a little, more casual, disarmed, and a fun time had by all. All right, kayla, looking for more. It can be a setting for having discussions, strategic discussions as we like to say, a and, yes, deals have been born there because theres a shareholder like buffet there while eisener is there and cap city way back in 1996, but hence, it happens. No doubt. Particularly as kayla said with cable consolidation front and center, content providers are talking. Low Interest Rates, better economy. In the middle of a flurry. After all this time, this conference has not lost, its the place to go every year. Why wouldnt you . Its beautiful. Were jealous. Up next, politics to pot, former governor and libertarian nominee, Larry Johnson the ceo of a medical marijuana company, and he wants it to be the microsoft of marijuana. No joke. Hes joining us live after the break. So, your site gave me this Credit Report card thing. Can i get my actual Credit Report. Like, the one the bank sees . [ male voice ] sheesh, i feel like im being interrogated over here. [ male voice ] shes onto us. Dump her. [ pay phone rings ] hello . Oh, man. That never gets old. No, it does not. [ female announcer ] not all Credit Report sites are equal. Experian. Com members get personalized help and a real Credit Report. Join now at experian. Com with enrollment in experian credit tracker. Tech stocks recovering after high flying social and internet names bore the bankrupt of the selloff yesterday, but does trouble lay ahead for social media stocks like facebook and other names . Bringing in the managing director, Senior Research analyst specializing in the internet. Gene, good to see you again. Goods morning. Morning. Explain to us yesterday. Was that just standard nervousness ahead of earnings or Something Else going on . I think theres Something Different going on, and its twofold. Typically, stocks are higher beta stocks, higher valuation. When the market gets tense, they get hit harder. Second, there is an era of our part of unknowing related to how some of the stocks are going to make money longer term, and so i think that combination of the high beta plus a little uncertainty from investors about the future result in these big impacts. What individual name crystallizes the world you mentioned . I think the biggest one is linkdin, they have been hit hart in the last six months. They have a new offering called sales solutions, a light crm. Its going ton impactful next year, and investors i talked to, a great story to own, but a lot just are not on board, that this is going to be impactful due to the business, and thats an example. Facebooks case, they are monetizing instagram and video. Theres uncertainty how that plays out. Those are examples of social learning to monetize, but investers still taking a little of a waitandsee approach. So it feels like deja vu. We saw this earlier in the year where we saw small cap momentum, technology, social stocks, but it paid to wait it out and stay in. Does it pay this time to stay in the names . I think it absolutely does. I think theres a couple names in particular that are going to do well. As i mentioned, linkdn, one you clearly wait out here. Another one is china ticker wb, one thats largely forgotten. Everyone focuses on facebook and twitter, but linkedin and way bow are good opportunities. Were in a period where the whales of the space, right, apples iphone, if its coming, months away, and alababa an august story, nothing sooner, if even then, and so were in a holing pattern where you go on faith. What do you do until then . Well, i think theres a dog days of summer impact. A lot of stocks, and so i dont think thats different. Just take the approach that these tech stocks do well in the back half of the year. You need to own before the rest of the investers show up for that, so you need to own them mid to late summer in anticipation of the fall run before the holidays. Do you think this is the beginning of what we call a tradeable direction . I mean, something in the 10 to 15 range . Yeah, i think so. I think that well, let me take a step back. Theyve had a 10 pullback, its the opportunity to own Higher Quality names like i mentioned, and so i think, you know, are we at the bottom . Hard it say. If you have patience to wait out three to six months, it will pay off. I was going to say what if the economy underperforms . Arent the stocks more attractive looking for growth where value struggles for revenue . Probably near term it may because of the sensitivity from investers and near term, if the economy pulls back, they can get hit harter. I think longer term, think about just secular themes, an important take away is these are true growth stories over the next five years, and so i think that you can rest well knowing even if the economy pulls back. Well, its flying in the face of, like, just thinking of facebook where everything we heard for the past three or four months is pricing is stable to stro strong. Cpms rise as they incorporate video. Worries collide with that notion weve weve began given over the last few months. Things change quickly. Amazing how a few bad days in the tape and pullback get investors nervous, especially stock like facebook with a run over the past year. I attribute that to nervousness and still some very close memories of what happened in 2008 through 2009. Good to talk to you. Well see what the next few days bring. Thanks again. Thank you. Gary johnson former governor of new mexico and former president ial nominee shifted from politics to pot. A long time supporter of marijuana legalization, named ceo of cannabis ceteva. He joins us this morning on the cnbc news line. Good morning to you. Caller great to be with you, carl, thank you for having me on. Quite a week. Im from colorado and seeing whats happening in that state, but now washington. Are we at an Inflection Point with the National Mood or not. Caller i do. I think within ten years most states will have legalized marijuana. I think alabama, mississippi may be the two hold outs, but then as the u. S. Goes so goes the world, so were really looking at this longer term and the fact that this will be a worldwide legalized environment here, i think, over the fairly short term. Im curious about how you got into it from governor to president ial candidate to pot entrepreneur. Caller well, you know, there are a couple sides to marijuana. First of all, i have advocated legalizing marijuana since 1999 believing that marijuana is a lot safer than alcohol, and thats been my own experience. I realize its an oxy mormon, but im a 61yearold competitive athlete to this day. I have an aversion to smoking marijuana, so what we have to offer is not smoking it. Its edible. Its a la losange form. Theres the recreational side and medical side. On the medical side, you reported it on it, you have kids with epilepsy that the oil absolutely positively affects their lives meaning they can now live lives where the current medications available have no affect whatsoever. There needs to be research and develop that goes along with the fact that this stuff works. Because its still a schedule 1 nargt in many states because of the minute microscopic thc, its a class 1 narcotic. Moving forward, theres issues about the kids with epilepsy. Families move to colorado right now because their kids might actually live going to colorado and make the oil available. Mix the cbd oil with thc and now youre a direct competitor with ox si codeine. I really thought this was a ruse to smoke marijuana. Come to find out that theres really benefit on the medical side. The argument you make, governor, is a far cry from pure recreational use, you wake up and buy some because its fun. Where do you stand on that . Caller well i absolutely support it. Lets shift to the recreational side. I really believe that marijuana is a much safer alternative of an alcohol. I really believe that legalizing marijuana will lead to less overall Substance Abuse because people find it as a safer alternative than what currently exists. We should say, governor, that your company that youre working for is a microcap, very small, but how do you find the business overall . The nascent industry with regulations, financing, and other things that wellestablished businesses already have going smoothly . Caller oh, these are the issues moving forward. Every state that has medical marijuana, half the states, can only sell products that are produced in their own states, so right there, right off the top, you know, thats not the most conducive environment to growing a business. Fact that it still is a schedule 1 narcotic kooring to the federal government, being able to bank, raise money, yes, these are the issues. Its a mind mine field of issues moving forward, but i think i bring a lot of expertise and potentially dealing with the issues, and the whole notion overarching notion here is the world becomes a better place because of it. Half law enforcement, half the courts, half the prisons are dealing with drugrelated crime. Half of owl of those statistics mentioned are marijuanarelated, and that comntinues to this day. Do you think being president , ceo of a Cannabis Company preclude you from running for Public Office again . Caller i hope people say this is the smartest guy we ever had. Oh, i hope it would not be the case at all. I hope theres focus on other things im saying, like, hey, lets abolish corporate taxes. You know, democrats and republicans arguing over whether tax should be 28 or 31 . You know, what about abolishing it . Abolish the irs. Abolish income tax. We can look at, of course, the cuts that go along with what would need to take place to do that or replace it with a consumption tax that would be more fair. Just another issue of, gee, this is what gary said in 1999, look what happened. Well, what else is this guy saying . Governor, well watch your effort very closely, and thank you for coming to the phone. Good to talk to you. Caller well, i always watch your show. Great to be on, thank you. Governor gary johnson, former governor of new mexico, ceo of cannab cannabis, extremely small market cap and stocks are vulnerable. A warning there. Tensions high in the middle east as israel launches gaza. We have a live report from telaviv, and the president of the counsel of Foreign Relations weighs in. Were back after a quick break. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Welcome back, im jackie deang liz reporting, and we have a drawdown of 2. 4 million barrels, a little less of a draw than expected, and were watching the prices here right now, 102. 64 for west texas interimmediate. A little lower. Crude prices coming off the last few days, not only just wti, but brent crude as well, spread tightening to 6 as concerns about geopolitics come off the table. Of course, geopolitical issues a concern, watching israel closely, but not an oil supplying region. Were not seeing inflated prices so even an inventory number like this not impacts things so much. I will tell you is dont expect prices at the pump to come down soon because what numbers tell us is that we have inventory concerns there and demand for products right now is high. Look at gasoline as well. We got a build actually of 600,000 barrels. We expected a draw down there that may impact gas prices a little, slight decline in the futures, but takes time to come down in terms of the futures price. Guys barks over to you. Jackie, thank you for that covering the energy come plexz. The Israeli Military launching the offensive today in the gaza strip striking and mobilizing troops for a possible ground invasion, we are live in telaviv with the latest. Good morning. Reporter good morning. Seems the strategy now by the military is to target homes belonging to the militants, the seen Senior Leaders of the military wings of hamas and jihad. In the first 24 hours of the operations, about 400 targets hit that include concealed rocket launches sites, fact try site, and other locations they say are used in the facilitation of flying rockets in southern israel. At least 41 palestinians killed and nine women and six children in those air strikes. In addition to that, more than 350 have been injured. Now, here in israel in telaviv as well as in jerusalem, the sirens have been going on throughout the course of the day, an indication that those palestinian rockets fired from gaza reach deeper into israel than seen in the past. In fact, by one account, one rocket reached north of telaviv, having officials concerned. Now, they have been relying on the iron dome system, the Missile Defense system that was developed with u. S. Help, and theyve been intercepts rockets, but there is still tremendous amount of concern there, not able to stop every single one of them, and thats why officials put the country on high alert, open bomb shelters, hospitals are on high level of preparedness and cancelled the Summer School programs in the south of the country to give you a sense of how much concern they have about these rockets, and the countrys Prime Minister toll the country last night in the televised address, this would be a long and tough fight. They have no mistake about it, it is a country very much on edge as a result of this ongoing operation. Thank you very much for the setting the scene for us, ayman. Good to see you. Talk more about whats going on in the middle east. Here to provide perspective on the deteriorating situation there, richard haas, president of the counsel of Foreign Relations. Good to see you, unfortunately we bring you in on crisis moments. Put this in perspective for us. The last clash was in 2012, in terms of where tensions are now. As you said, this is one of the all too many fault lines in a turbulent middle east. This is perhaps, in some wayings, the most familiar. Its been overshadowed by iraq, syria, what have you. What were seeing here, though, is the breakdown, as you say, of the 2012 egyptian brokered cease fire. It shows in some ways israels physical vulnerability to the longer range rockets hamas acquired from syria and other places. The question is what is illinois real israels goals going to be . Will it be com for com . Essentially a cease fire, or will they try to go beyond and to reduce significantly the inventory of rockets and try to show that hamas is powerless to defend itself and the people who live in gaza. Richard, based on the rhetoric from Benjamin Netanyahu so far, whats the prediction next . Looks to me the israelis are not going to reoccupy gaza, but probably looking at sustained air campaigns and ground force incursions going after specific targets, but something less, if you will, rather than a large, prolonged occupation, the problem of that is not only costly, but what happens after then you pull out . Theres no guarantee you make anything stick. One of the cabinet ministers quoted saying this will not end in a day or two days, but takes time. Is the objective still, richard, to stop the rocket fire, and houpg do you think, from our perspective, the market needs to deal with this. At a minimum, stop the rocket firing, and i dont know whether the israelis are satisfied with that. They might decide they need to degrade the invenn story and humiliate hamas. The question is where the rockets start falling in israel. For example, if a rocket falls out of the airport, thats widespread economic consequences for israel. If rockets start falling in telaviv, thats the major, as you know, commercial center of modern israel, so the stakes are enormous for the israelis who have a mar for advanced developed economy. Its to the simply the hamas and palestinians with a lot to lose here. To put this in perspective for me, this latest crisis began with the kidnapping of the three israeli teenagers and gone from there. At the same time, were dealing with isis in iraq wanting to institute, and jordan taking in the syrians that fled fighting there. In a way, this is connected or not connected at all to the larger regional issues . Oh, it is connected in many ways. You cant compartmentalize. The analogy i use, not making anyone happy or uncomfortable, this is the equivalent of what we saw in europe when we had a political religious war that lasted for 30 years between catholics and protestants. My fear is we are seeing a modern day version of that in the greater middle east. Youve been inside the state department during those episodes, president obama is quiet. There was an oned published in the newspaper in israel of peace between israelis and palestinians. Whats going on behind the scenes in the white house . More hand ringing than anything else. We can appeal for peace and restraint, but this takes the two sides, israel and hamas to deescalate. Appeal until the cows come home, but cant impose it. In retrospegt, do the efforts look like a pipe dream now . Im afraid so. You dont have leadership on the two sides that meets the necessary preconditions of being ready and able to make serious compromises for peace. You have a divided palestinian leadership thats many ways neither ready or able and Israeli Government with no consensus on policy towards the palestinians so despite secretary kerrys nonstop efforts, the prerequisites, pieces were not there. Richard haass, good to hear from you, president of the counsel on Foreign Relations. When we come back, at a time an analyst calls the golden era of food, three companies next in line for a takeover. More on that when squawk on the street continues. Or 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line anytime for 15 bucks a month. Low dues. Great terms. Lets close. Introducing at t mobile share value plans. With our bestever pricing for business. Welcome back, and one of the movers is the Container Store, the special retailer went public in november, remember, and lowered the earnings outlook after posting the first same store sales decline in four years. The companys ceo saying the Retail Consumer is in a funk where demand shifts to high ticket items like housing and automobiles. The shares off the session lows, but still in a sign of the consumer, stock down 9 on the day. Back to you. All right, dom. Retail to food, bidding war for hillshire, tree house, private label snack company, flagstone foods, and thats just july. More m a is on the way. I spoke to a number of investors, and here is where they find themselves in thoor center of a deal. Theres macn cheese, both category leading brands, and m a stock hammered lately, down 20 this year on weak earnings per share and weak guidance, but analysts say annis is seeing growth, but its the high of commodities and new products weighing down earnings, and an analyst says its the perfect bolt on for those looking for growth and helped margins to be taken over by a bigger manufacturer. Another company a lot of analysts pointed to was light wave foods, ogranic space, and whitewave on a 52week high, makes horizon dairy. It bought earthbound last year, but they say it could find itself in the center of a deal. Finally, food, everybody speculates always on who will be the next target for warren buffet and 3g, sequel to heinz. Front runners now is kellogg, of course k talked about challenged by cereal consumption declines and consumption declines and packaged foods overall, but it could benefit from sharp cost cults from increased spending on market and innovation. Has strong brands. The other interesting one is mondelez. Its attractive for buffet and 3g. They get 80 of the sales outside of north america. Upshot is Big Companies look for growth in food in a low Interest Rate and recovering economy environment where the Consumer Habits are changing, which puts them at a disadvantage when it comes to those fast growing ogranic natural, healthy frui n free. It is the split of kraft, essentially as you point out, a 65 billion market cap company. Talking buffet, you are talking about a levered transaction. This is not a this is not a one Company Buying another. Its not pepsi buying mondelez. I have a hard time working the numbers to get to. Kellogg certainly you didnt mention campbell. That was the ormgal one, but they had such a declining business with soup sales that that one has been pushed aside. A lot of people think campbell and heinz would be an interesting combination. Kellogg and they still have it. Not as much as camp bell. There is a family component in kellogg, i believe, to keep in mind. Will be interesting to watch. Speculation is high because of the activity is strong, food deals. Watch that. From food challenges to restaurants, tgi fridays trying to change it up with endless appetizer promotion for 10. The next guest sees it as an act of desperation. Given the conversation we had, is this tgi fridays move one in which they lose touch with the consumer because of trends or something macroeconomic . I think its a little bit of both, frankly. You know, go back to the recession, casual diners have consistently see share losses with, you know, negative transaction trends in the low to mid, Single Digits for five years, and it doesnt seem to be changing any time soon. I think its a move to recapture some of the lost sales, and its easier for them because they are not traders, but its one of the things where, you know, once the market goes off the table, its hard, and so yeah, noisier here in the exchange, nick, but with the restaurant exchange, you see the publicly traded companies, the Olive Gardens of the world. What is their future . Begin the fast growth and fast casual . The main street casual diners successful in the past are currently facing the negative transaction trends, and, you know, at least in my opinion, the quick casual restaurants, the snacks, some extent, the higher average names perform well relative to the guys, so i mean, the way i think about this is ten years ago, the customer paying 15 at olive garden, for example, is now wealthier so they afford 25 average check or prefers to spend less at panera bread with similar food quality close to 10. Weve seen this biforcation over ten years. Based on your assumption, food, quality, restaurants, how much ebb and flow . What is hot . Gluten free, all natural, protein, that here to stay or do they come in waves . I think its hear to stay five to seven years. These things, when they happen, they take multiyear, even if you call them trend, they are multiyear generational trends. They have been here five to seven years already with the add vent of the quick casual catego category, and as long as the leaders, trailblazers in the category, snacks like starbucks market themselves and brand themselves as these lifestyle companies, you know, quoteonquote, i think those trends continue to be topical and drivers of transactions, frankly. They have been successful, so why change . Broken. I like the potato skins at fridays, nick. Thank you for joining us on the restaurant industry. Big changes ahead. Thank you for having me. Next, adidas with a tech announcement made here. You dont want to miss it. Were back after a quick break. , and youre talking to your rheumatologist about a biologic. This is humira. This is humira helping to relieve my pain. This is humira helping me lay the groundwork. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. Humira is proven to help relieve pain and stop further joint damage in many adults. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Take the next step. Talk to your doctor. This is humira at work. With the top speedou compare of comcast the top speed of business dsl from the internet. Phone company well, theres really no comparison. Why pay more for less . Call today for a low price on speeds up to 150mbps. And find out more about our twoyear price guarantee. Comcast business. Built for business. Welcome back. Dows up 38 points. Hop over to the cme. Rick san telly. Good morning. Good morning, carl. Back in the e 30s things were dicey maybe in a similar fashion to today, and the sec was created, an excerpt from one mp the original, their own Website Mission statement. Put it on the screen. The mission of the u. S. Security es and Exchange Commission protect investors maintain fair orderly and efficient markets and facilitate capital formation. How did it turn out many decades later . Well, i want to reference an oped piece. Its called refusing to buckle to sec intimidation. 12 years, 12 million and the m and the man who wants to tell us in his own words. Thank you. I want to make it clear, this is an ongoing effort on our part. The campaign so to speak. We have a website, win cap, wynne. Com. And a box there to follow this campaign against regulatory overreach. I have a market memly that goes back a long way, because my father was in this business, and clearly there were regulatory issues that needed to be looked after. But i believe the sec has really gone beyond rational. Give us a couple of examples, as you did in your piece, as to exactly what they put you through and how lack of fairness is just hugely obvious, at least in this case and in this instance. Well, i believe it was it was something that should have been looked at, because of our purchase of the block of stock, but once the details became clear to them, the case went away, and at that point, i firmly believe what was the case about, for viewers and listeners that didnt read the piece . Well we owned a lot of stock in a company and a block came our way, and we bought it and shortly after unbeknownst to us the company got a bid from a private equity firm. So the question was, were we tipped earlier . And certainly that was not the case, and it became very, very clear, i believe, to everybody but the enforcement arm of the sec. And this behavior hurts industry, hurts our economy. Certainly hurts Small Businesses. Ive got eight people working for me. Ive got, i think, 14 children involved. This is a very, very chilling type of outcome for Small Business where a lot of the jobs are created, and, you know, we need to find a way of distinguishing. The strategy is, basically, nelson, put huge pressure to get you to settle, andioobviously w seen other type cases. What have they put you through, emotionally and financially . When they didnt have a case they referred to do the Justice Department which would have been jail, obstruction of justice. The pressures are inherent in the process, because if you dont essentially admit youre guilty you lose your business. Either you dont have the money to defend yourself or your limited partners leave you. We just had a very unique situation. People knew me. We had the resources, but they know and i know that its almost impossible to say no. They couldnt believe we were willing to fight them. At one point they made up a story about having evidence that they didnt have. To try to get plea to settle. I hope everybody visits your website. My final point is back when they used to witchhunt in boston, they would dump you in the water. If you actually died from drown, you werent a witch. Seems there some kind of a connection to that kind of thinking at the sec. Thank you, nelson for taking the time. Squawk on the street gang, back to you. Thank you, rick santelli, as always, in chicago. Coming up, squawk alley is live in sun valley at the allen and company conference. What deals are on deck . 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We are luging at a rebound on the major add, indices from yesterdays selloff. The dow up a about 37 points. Nasdaq in the lead up half a percent. Rebound i mentioned, alcoa, highest level since july 2011 after that beat yesterday and, carl, all eyes on the fed, 2 00 p. M. , what they said at the last meeting. Over to you, squawk alley. Looking for clues what they think of inflation, sara. See you later parn sara eisen on the floor. Good morning, almost 9 00 a. M. In sun valley, idaho. 11 00 a. M. On wall street. Squawk alley is live. And welcome to squawk alley on this wednesday morning. Joining me for the entire hour today, jon steinberg, ceo of the daily mail north america and cnbc contributor, good morning. Busy day. Were going to start in sun valley today. Some of the top names in media and technology are meeting right now. Our Kayla Tausche is live. Raise the curtain for us. I apologize in advance for the bees and flies that are swarming around me. We are in the wilderness, even though it doesnt look like were roughing it, carl. Talking deals, talking moguls. 200 of the biggest names in tech, media and Asset Management. So shareholders in a lot of those companies have converged in what aol ceo told me he