Transcripts For CNBC Squawk On The Street 20160721

A slightly lower open. European markets have, well, weve been hearing from the ecb although not much action, there it is, at least the equity markets at this point lower, though fractionally so you have to say. How is the 10year note yield doing and crude oil, theres a look. 1. 6, 1. 6. Wow. Things are getting crazy there. Crazy. Wti you can see is right around 45, 50 or so this morning. Lets get to our road map. It starts with day four of the Republican National convention in cleveland. Ted cruz was booed, mike pence delivered his speech, and they are gearing up for trumps speech tonight. We will go there live. Elon musk is revealing his master plan for tesla. Part two, by the way. How realistic are his bigtime ambitions for this company . Qualcomm, intel, ebay, southwest, and more, all are on the move this morning after earnings. In fact, i mean it goes on and on biogen, travelers, american express. We will try to get to all of them or as many as we can, give you the numbers you need to know. First to carl at that rnc in cleveland. Good morning, carl. Hey, david, good morning to you guys. Fireworks is absolutely right. Last night was intended to be mike pences introduction to voters, but obviously its ted cruz who is getting the headlines today. He entered here last night to a standing ovation led largely by the delegation of texas where me won, only to be booed off the stage when it became increasingly clear he was not going to endorse the man he once called a snivling coward. Take a listen. If you love our country, and love your children as much as i know that you do, stand and speak and vote your conscience, vote for candidates up and down the ticket, who you trust to defend our freedom and to be faithful to the constitution. Hard to describe what it was like here in the arena to hear the boos of that magnitude. Chris christie called it an angry and selfish speech and ann coulter a few moments ago said it was political suicide. Newt gingrich had to say to cover and to vote your conviction is to vote for donald trump and largely overshadowed was wa was a very effective, strong, funny and selfdeprecating speech by mike pence. Hillary clinton wants a better title and i would too if i was already americas secretary of the status quo. When donald trump becomes president of the United States of america, the change will be, huge. Reporter guys, its often said that at a convention the only speech that matters is the one by the nominee and thats exactly what were going to get tonight. Donald trump in prime time introduced by ivanka trump. Weve heard discussion about what peter thiel may say when he speaks. Once again on day four, were talking about things like ted cruz, like this rather awkward air kiss between pence and trump last night. Thats overshadowing any discussion of what kind of revisions were going to get to trumps tax policy, this discussion about whether he would really defend a nato ally if it wasnt clear they were cog enough to defend themselves. Well see if day four can bring stability to this convention in the final day. Yeah, karl, no shortage of drama but whether it was Melania Trump or cruz last night, what are the expectations in terms of trump and specific policy positions, if any, that he will give us a little more meat on during his speech . Yeah. I dont think expectations for that are very high. Obviously what the convention hopes and what the Trump Campaign hopes is that people will see his speech tonight and say, there is the next president of the United States. So theres a narrative actually being built, jim and david, that amidst the chaos as people call it this week, trump comes in tonight and essentially saves the convention with a speech that exceeds expectations. Earlier this morning, joe was equating it to wwe. You need sort of bad guys, you need a final act, you need tension going into what we call the eblock, that final stage, maybe thats something that trump can deliver. But its going to be very, very important tonight that speech does well. Carl, two Business People speaking tonight. Tomba rack, straight guy, been on our show many, many times and then peter thiel. Peter thiel, very controversial figure. Can we expect fireworks from that man . He speaks his mind and his mind is not in sync with anyone other than peter thiel. Yeah. I think, jim, maybe you agree, if you had said six months ago who would be speaking on night four, along with ivanka and donald trump, you probably wouldnt expect peter thiel. Its an extremely highly valuable piece of real estate that thiel is getting tonight. We know about the news hes been in this year, but i dont i wouldnt venture a guess on what thiel would say. He could come from all sorts of different directions. Its funny. The Business People speaking. Its not like we have the heads of major fortune 500 companies, but i got to tell you, i think tonight is fireworks night. Too bad so many earnings because i would like to train myself entirely on this. What are earnings . Yeah, i know. Ill tell you what they are, man, a pile of them right here, carl, well be checking in with you very shortly. Okay. As we said the watch is on to see if the dow and s p make more history one day after hitting record intraday and closing highs, the dow aiming to extend its winning streak, ten in a row. In year, ecb rates after holding the first meeting since the brexit vote, ecb president mario draghi says growth risks remain tilted to the downside with brexit among the headwinds. Draghi adds the ecb will be in a better position to reassess the situation in the coming months. I am anxious to get to earnings, jim, but any thoughts on draghi . No. Look i mean this is usual for him. Ive seen so many good numbers come out of europe its almost as if its like theres two different universes. What the companies are saying, which is that europe gets better and better and then what the central bankers say, listen, germany, step up to the plate, start expanding the economy, do something fiscal, but the actual companies i deal with are all highlighting europe as a strong part of the business. Still im looking at german 10years, negative, 0. 010 up three basis points on the day. I just never get i mean, japan, negative Interest Rates still to me are just but the companies themselves are fascination. Not saying theyre joyous but joy, joy global gets taken out in a big premium, by the way. Look, stuck with the four walls of the canvas, europe is a bright spot in almost every quarter. Lets talk automobiles and talk first about gm and chrysler. Gm moving higher after posting Second Quarter earnings 1. 86 a share, well above street estimates. The automaker also reporting its first quarterly profit in europe in five years. Im telling you raising full year guidance as well. Teslas ceo elon musk unveiled his master plan, what is it called, part two, he is french, master plan part two, that includes expanding into electric trucks and busses, car sharing, solar energy systems, nothing in here about the hyperloop. I guess that was he gave that to people to develop on their own. But lets get to gm first because they were very strong numbers, jim, from im still hearing are you hearing the press conference in your ear . I am. Turn that off, please. 2. 9 billion, up 157 in terms of net income which was well above last year, although they did have a lot of special items last year. Generate a lot of cash flow. It was back in march of 15 where they said were going to keep our cash position at roughly 20 billion, after that well start returning, they returned 5 billion to shareholders by the end of 16 then but things seem to be going well. They have a lot of cash and do something so its not a value trap. I dont know why you need this much cash. Youre going to get that, remember that about the hedge fund i mean automotive cash Market Securities 21. 1 billion, back in march they had said once we get above 20 billion, well start well return but they want to keep a large cash cushion. Can you blame them . Its gm. No. I thought it was funny one of the great things about the masterful master plan, elon musk mentioned two Auto Companies that havent gone bankrupt, ford and tesla, the funniest line in the whole thing. That was a good line. A comedic aspect to the whole thing. Gm, youve given up on a while back. I had to because in the end, i, like you, am trapped with the notion of the secular decline of the auto. We have cyclical upswing, but the secular decline has to do with the fact that kids dont get buy cars like they used to, uber, the selfdrive, which in the tesla call by the way, tesla, the master plan, theres just basically saying listen, bus drivers will not exist. That group of people it was interesting in his master plan, kind of gives us a sense, this was all how i planned it all along, first well start small with the small low volume automobile that will cost a lot, medium, then large, add in solar, and, of course, well get to autonomy, partial at first, now and then eventually full autonomy as they rack up more and more miles to test these cars and then sharing. True selfdriving is approved will mean you will be able to summon your tesla from pretty much anywhere, writings mr. Musk. Once it picks you up, sleep, read or do anything else in route to your destination. He does point out and you will be able to add your car to the tesla shared fleet just by tapping a but on the tesla phone app. By the way, that that all seems realistic to me and do it ahead of everybody else. My assumption has been uber would be a fleet of selfdriving taxis. We all know humans are flawed drivers. The problem is, i went to see fords selfdriving their place, their near stanford and this involves a level of semiconductor work where youre just flashing 2 million light blips every second. Every second to try to figure out whether thats a human being walking across the street, a car. I mean theres a remarkable amount of Just Technology thats involved, internet of things mentioned in very defensive way by brian last night on the intel call, how many semis you need, and very defensive. Why was he defensive . Because the internet of things and the Data Center Business disappointed. Right. Meaning whereas qualcomm, banking on the internet of things eventually as a growth driver had a good quarter. Theyve been saying listen to us, china is coming back and were going to do the numbers and no one believed and then whoa, they did it. Intel was a very tough call. One of those calls where i said were actually getting ahead of ourselves. Really . Going to go over qualcomm and intel. Finish with tesla before we hit a break. This guy i have to give him credit. He puts it out there. Somebody, we need somebody with big, bold vision. Part two, create stunning solar roofs with seamlessly integrated battery storage, expand the vehicle line to address all major segments develop selfdriving capability thats ten times safer, and enable your car to make money for you when youre not using it. What can i say when i read it im not joking around, i said all of this is what i want, maybe he can pull it off. At least its refreshing to see somebody say it. Hes making the car. Hes sending rockets to space. What jay leno said, [ inaudible ]. I dont like his financials, okay. And you dont like it when he says youre a simulation, but buy yonts beyond that give him some credit. Theres music in my ear, does that mean he is in control of my ear too. Means we have to go to break. Only 50 chance that im a simulation. Does did not say 100 . Theres steve mollen cough. Thats an exclusive. We were talking qualcomm. An exclusive interview coming up. Futures. There it is. We got a lot more squawk on the street right after this. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. Theres only one place where real and amazing live. Book a seaworld vacation package and eat free. Man, are we awash in earnings. Awash in paper, so much cut myself. We have a bleeder over here. Hes going to be okay. Theres so many earnings. So many. Lets get to the chip makers and they are moving in opposite directions. We hit it moments ago. Intel down in the premarket, Quarterly Earnings were ahead of estimates but revenues were not. Slower than expected growth in the Data Center Business. Qualcomm results exceeding consensus. The company did sell more licenses in china where it had such a tough time for so long. Also Strong Demand for its mobile chips and by the way we will have that interview with qualcomm Ceo Steve Mollenkopf on squawk alley a couple hours from them. Got to hand it to them. Imagine he will still be smiling. He should be. Over the intel, thank you eric johnson from the street. Intels Data Center Groups i have to read this, which supplies server cpus, among other things has long been trumpeted as the Growth Engine because pc sales have been weak. Rev growth 5 annually, at 4 billion. Last quarter was 9 . 15 comp at annual growth what theyre looking for. They will not be able to do it. Remarkable slowdown. Whats going on . Two businesses. They give you the units for the cloud. Okay. So say an amazon web service, microsoft. But they make the on premise boxes which you dont which are not cloud and this whole shift to the cloud that we were talking about yesterday, it leaves intel behind on the boxes in your own building, and but puts them in the cloud. Right. But the cloud isnt being adopted fast enough versus what i think theyre losing on the premises. What i felt was the bright spot on the quarter. Tell me. Other than altera, that pcs, remember, pcs yesterday you mentioned it in the microsoft call. They mentioned pcs have not been doing that poorly and again, with intel, one would expect then hp ink maybe is a beneficiary. It would be, i would think so. I dont know. Notebooks so good dell is private, not that far from concluding its enormous deal to acquire emc. Let me give intel the benefit of the doubt, they did say listen all of this is transitory, but its a slowdown. You didnt see that slowdown from plfts. Right. Intel, and microsoft will diverge here. Right. I think thats important. I did want to mention, jim, something we brought up on was it monday or tuesday . Umana, aetna, anthem, cigna. You killed humana. Attorney general Loretta Lynch and bill bear, the antitrust deputy, are having a press conference at 11 00. Oh, boy. To announce a significant antitrust matter. We fully expect that it will be potentially opposition to both. Aetna humana and anthem cigna although we dont know with absolute certainty that is the expectation, and well certainly be monitoring those. Can i ask you to kill something. The spread in aetna humana is obviously signaling 18 chance. By the way even if they do block there are many people who believe they will sue and they will win. Got to get the right judge. They will win. Anthem cigna well see what their choice is. They will be suing. Will they have a tougher case. I like you to kill something every day. Given the spread im being facetious, you didnt kill it but signaling it and people got a chance to get out. Rite aid and walgreens the spread here is so big. You keep asking me. What i have to do, i have to make calls. Come on. The other outlet dont do that. I have to make calls on rite aid. Just kill it. Why do you let the facts get in the way of a good story. A larger context here is deals, large deals, particularly ones that cross borders or at least have international exposure, they are tough to do. Youre talking about dupont dow. Are you going dupont no. When you speak to bankers the difficulty is not getting them to sign and agreeing on the social issues and, of course, the price, but its after, its the idea that whats our road map look like for actually getting approval. Its tough out there. Wow. And not just here in the United States but whether its the eu or china, and youre not even dealing as you said, yesterday, with just antitrust. Sometimes it can be the treasury deciding that theyre going to let me ask you on the dupont dow the merger was approv approved, there the issue is seed concentration. How much of the blockages because somebody complained behind the scenes this is bad. If the farmers went on mass to the Justice Department on dow dupont i think the Justice Department its about customers but for us about consumers right. Not necessarily that not solely raise prices. Your point is a good one, monsanto still yet to sign an mda with bayer. Thats a concern. Da knonone whitewave, bingo. Softbank, on hold. Nothing there. They dont own anything. Excellent. When you pay are you killing rite aid . I dont know. Can i just say i dont know sp. Thats absolutely fine. We got a lot more earnings to get to around the bell. This morning, we mentioned qualcomm and intel, ebay, we got dish, american express, biogen, a joy global deal, and a mad dash. I dont know what you will do here. I was going to do joy. Do it. Do joy coming up. Were back after this. Was just a bottle. That no one would ever notice me. But i knew i could be more. That one day, i would make people smile. [woman speaking indistinctly] all right. Were a few minutes from the opening bell. Time for a mad dash. Want to talk about a deal we got today, joy global getting bought. Joy to the world. Get up at 3 30, think its going to be a bad day. I have someone sleep for me during earnings season. I have them sleep for me. I cant afford to take the time. I was shocked, ka not, so buys this. Look, 8, 8. 90 here. Do you mean to tell me with calls so bad, thank you Union Pacific, giving me the coal numbers, this thing kind of levitated on its own self. Hey, guys, who bought the calls here and here. Jim, 28. 30 a share, of course, was a premium of 48 to the 90day weighted average price. 41 to 60 days. I mean, lets see where the multiples are who here. 11. 7 times ebitda. For a company that makes coal Mining Equipment and copper. The reason why this company exists, is theyve got maintenance contracts an its a fabulous book of business for maintenance and that is supported them for a long time and well run. Remember theyre a competitor at the absolute height of the coal boom during the coal super cycle ucyrus was bought for 7 billion by caterpillar, still trying to work that off. How much did they write down on that one . Cat reports next week. That stock a hot stock of late. This is a remarkable deal. Commodixhod comat, so will be able to sell its over other tractors, but whats important is now you have two big deals from the japanese in one week. The arm Holdings Deal from softbank. Isnt that incredible. It is interesting, particularly near the end. We have the opening bell a few minutes away and as we said many times a lot of other earnings to fill you in on, movement and nxpi huge secondary last night, not moving the stock, so is stay with us, back in a few minutes. 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. You can fly across welcome town in minutes16, or across the globe in under an hour. Whole communities are living on mars and solar satellites provide earth with unlimited clean power. In less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. And if you thought that was amazing, you just wait. Youre watching cnbc, squawk on the street. Were live from the Financial Capital of the world. The opening bell will ring right about now. Ring that bell. [ applause ] here at the big board, that is a provider of farm suitcle Development Manufacturing services celebrating its ipo today. At the nasdaq, unifor freedom, fighting for human trafficking, campaigns, workshops and fundraising. We havent talked Broader Market this morning. Start off there, jim. Given i mean the earnings parade. Up for nine straight dow days. Yeah. I will say, i was out with a buddy of mine known 30 years in the business, used to do quite well covering retail and we were both saying the same thing since weve been in business so long, david, the volume is insanely low. Its insanely there are stocks i dont want to talk about that are up because theres so little volume it simply is wasting peoples time. Right. I look at stocks like 3m and the first few minutes theres like no volume whatsoever. These are companies that david, i would have done when i was at my hedge fund, i would be buying more in the first hour than is trading for some of these major companies. Changing nature of the market run by algorithms with etf buyers on the end of things. Capitulation monday after brexit that was it. The last heavy day. I am astonished, yesterday the second lightest day. I am astonished how few players there are, how few i want people to understand this market has gone up on some of the lightest vols i have seen. That doesnt mean that the bid isnt for real, that the joy bid isnt for real or the arm holdings, but the bids are the only thing really for real. Unless you have a company like a valeant trading millions of shares, be you just dont have the interest and its important to point out, even a stock like amazon, its run on very little volume. I just want to point that out. If you get another shock, youll find that these buyers disappear. Theyre only in there like every day and buy a little bit and then when they and they move stocks. You mentioned amazon which i was going to go to on the goldman report. Start with ebay. Theres amazon. Do amazon first and then ebay. Ebay is up a lot. Amazon, a goldman report this morning that says we expect further revenue acceleration, margin expansion, well get the results on the 28th after the close by the way. Theyre looking for 29. 4 billion. And, of course, we expect 58 year over year growth in Amazon Web Services in the Second Quarter. Compared to 64 . Its slowing. Growth is slowing. There are some comps, some data the other day that showed that it was only about 11 . I think that i said last night on mad money listen, this is not necessarily the when you come in and buy amazon after a big run. But amazon is doing well. David, on that xpi secondary you fly, my travel trust owns it, the private equity guys are down to 2 . Nothing. And xpi its worth doing it. 10 million shares, goldman did it overnight. Talked to a couple guys who bought it. Whats interesting on the deals that were a private equity deals originally the overhang from p e is essentially been eliminated. Cpg and blackstone gone. Im glad you brought it up. Nxpi is the company that is the most auto semi and when youreliening to youre listening to elon musk you have to understand because they bought free scale they are the semiconductor for autos and the internet of things is in the auto. That is the feel, i know youve emphasized it. I dont know if people realize how big this is. The auto market not pc market, the auto market is whats driving other than data centers and their intel i said data center not that strong. Auto is everything. And i think that people are underestimating the power of what could be a multiyear secular trend to have more tech in your auto. So many chips, of course, as you say. So many. That will underpin to a certain extent the thesis of masa son when they spent 33 years of ebitda to buy arm holdings this week. Not auto, necessarily, but the internet of things and the fact that chips are simply going to proliferate in our life, that being in the way that were connected to everything and everything is connected to the internet. So stay in when it comes to longer term trends i like, the humanization of pets and the auto makes of autos automation of autos. What was the first one . Humanization of pets . Q. Strongest es theme. You got to ive never heard you say that. The number of pets who sleep within your bed versus not, is up dramatically in the last few years. This is from one of the greatest stocks of our time. What are the implications of the humanization of pets . Treat them like human, have health care, thats the labs, they report next week, feed them better which is this blue buffalo and smuckers, you they need more equipment at the veterinary, thats henry shine, this is a remarkable great secular trend for baby boomers. David, the number, brazil is insane, one pet per person down there. Keep in mind im looking for secular trends that are not going to bag you. Thats the strongest in this entire market. The humanization of pets. Thank you john ayers from the labs to explain that to me. Thats a first. Im sure ill hear it again. I want to look at ebay because actually the stock had been it had been weak because a couple bad quarters. Strong over the last month and kind of moving up into this Earnings Report and it was a good one. There seems to be the hope for a dividend. Perhaps as soon as october. Look at ebay, up over 9 this morning. They repurchased half a billion worth of stock, they approved additional repurchases, but its this idea also that youll get a dividend. I think is he joining us . Is the ceo coming on the show . He is coming up. Yeah. Hes coming up . Thats what it said on the graphic. It did. I just read the graphic. Got it. But it was a Strong Quarter for them. It was. Lets talk im going to match you with that Strong Quarter and give you a weak quarter, Union Pacific. Agriculture down 3. Chemicals down 5 , auto down 13 , Industrial Projects 13 , intermode al 16 , coal down 27 . The stock had been red hot from the 60s to the 90s. Hes going to join us as well the ceo of Union Pacific. Hes terrific. By the way, biogen, big change there. Biogen, do it. Big buyback. Scangoes is out. That matters. I have to tell you thats a company that had been cut in half, stock has been cut in half. Theres something to follow. Biotech has been on the sell list through much of this year. It has been and maybe this deal we havent mentioned yet, got a bid last night thats a company that has potassium regulator a lot of Retail Investors were in and thats good news. United rentals making a comeback here. It is. Looks like the orders are better for the rental company for caterpillar. Moving through them here. Just mentioned the ceo of biogen stepping down and move on from there. If i dont do it like this i have the best one 6 of all, dominos, patty doyle on last night, dominos completed its ramp from 140 to 120 when people lost face, and patty doyle blows it away with a comp number versus 6. 4 . The Technology Pizza company. You can order it through your apple watch and your twitter and order it through facebook. Im aware. Its darn good. It is darn good. People dont believe that but i order hold the cheese. Its unbelievable. A look on mad tonight. Denise morrison. Campbells. You got a great lineup tonight. David, i work my butt off to get you do. You work it hard. Success, just all like my wife being angry with me. Its not ephemeral. Its been long running for you. Appreciate it. Speaking of success or lack thereof, dish did not have a particularly good quarter. No. Match your whatever that was and raise you a dish. That was down about 3. 5 . The problem here is subgrowth dropping to new lows. Its interesting, though, because when they have lower subscription numbers their acquisition cost for getting new subscribers goes down and higher cash flows. Yes. But you cant keep losing subscribers. This is a spectrum play as we know. They allow to be in that spectrum talking about it so long in terms of the spectrum. Charlie ergen, waiting for you to tell us what youre going to do with it all. Ive given up asking. Although i love talking to him. If you go disappointment, southwest air, you match my dish and raise me a southwest. Revenue per passenger very bad. Down almost 10 . Increasing the capacity 5. 6. That is not good news, going to send the Airline Group down. A key group in this rally. Focus on that. What i want to stop you for a second dunkin brand wait wait wait. Southwest. What was the key problem . Fares were down. Fares were down. Yeah. Is that competition . I think so. Theyve decided to come in underneath a bunch of airlines, particularly in texas, and succeeded in doing that. These are fare wars, david. Remember the old days of fare wars theyre back. They are. Not that on any plane ive been on. Bad sign for the overall industry. They are always the leaders. Overcapacity which is a negative read for boeing. Honeywell announced quietly announced layoffs the other day. Wide body is doing it. Southwest air is domestic. Now the thesis is listen you cant just say its terrorism overseas making people travel. This is having people reevaluate and rerate the group on the fly. And its being a negative rerating. Honeywell tomorrow. Tomorrow end on pulte, elliott and pulte settled, three directors, although they still have the feud going on with the family. That feud is very about a new ceo and when that will happen. Williams. Have you seen the Pipeline Companies come back. Kendrick morgan did not report a good number and indicated the dividend is not going up. Stock is barely down. The area very good performer this year. Yeah. People love the oils. Chevron and exxon report next week in the mid teens. Mid teens. Great years. Yes. Unbelievable. Core labs on last night the scientist for oil, saying its a vshaped recovery, oil will be at 60 bucks. I bet limb a steak dinner, he bet me a steak dinner. I dont know. I dont know, what he thinks. Where would you go . Sparks . For steak. I thought you were asking me my view on oil. I have no idea. The steak. Thats my job. I dont know if i would go to sparks. Im going to sparks. Really . The old standby still in brooklyn there. Really . Dont you think . Still got to thats still the best. I love brooklyn. You know what im talking about. Yeah. Williamsburg. Yeah. Williamsburg. We dont need to give advertising. To bob pisani. Talk about a man that knows restaurants in new york city, right here. Right there. There he is. Ive had a few at sparks steakhouse as well. Great place to go and real institution here. Whats a bit of a problem today much more mixed earnings picture, yesterday unequivocally positive, a little more on the mixed side today. The misses and i think jim is right about southwest, the problem with southwest is the challenging fare environment. They specifically cited that and they had a miss and revenue guidance in q3 is below expectations. Sherwin williams complicated, a small miss, guidance lower, because of the valspar acquisition complication things. Not getting a pass for that, but that certainly was one problem. I think the earnings beats overshadow the earnings misses. Intel did have a beat, bear that in mind, they are lower because of the data center revenue, gm the story of the day, 1. 86 and 1. 52 in estimate, an enormous beat and the guidance is higher as well. Thats a big story overall. Qualcomm did well. Ebay did well. They beat and raised their full year Sales Forecast and United Rentals was a fantastic number overall. More in a moment. Gm beat may help move the dial on earnings. Were still down on earnings for the Second Quarter. 3. 8 . That was last night. Gm is so big, that we could get close to 3 today. I still think its a small chance of being positive for the Second Quarter, very small, 20, 25 , gm is helping things overall, looking positive for q3 and 4 here. Big industrial company, very big in oil drilling and refrigeration, were at 52week high yesterday. The guidance is light but i want to focus on the comments on the oil business. Halliburton, came out, talking about something similar. Oil q2 the low point for oil, stabilization, recount, higher oil, will improve their results in the second half. So theyre coming out and saying things better too and jimmy was referencing core labs there yesterday. The other company i want to mention United Rentals, huge beat, and affirm their full year guidance. The largest Equipment Rental equipment in the world that theyre particularly big in construction, utilities, and lesser extent the Energy Business overall they were very positive on all their activity and theyre mostly a u. S. Focused company. They came out and said Solid Customer activity on both the east and west coast of the u. S. At the same time emphasis on specialty rentals continuing to pay dividends. This is a comment on the overall construction and utility and lesser extent Energy Business in the United States. Finally the ipo business continuing to do well. I was hoping path thee yon would open but were waiting for indications on that. Pat theon the Worlds Largest contract drug manufacturer. All the biotechnology stocks we talk about the ipos generally are not making the drugs, they contract them out to path thee yon who makes the drug for people. The price talk was 21, 20 to 22, it priced right in the middle at 21. The key point is the ipo business has been doing great recently. All the big names that have come out, twilo, bats, line, u. S. Foods, advanced pierre food holdings, trading above their initial ipo price a signal sort of green light, if you will, to the rest of the Ipo Companies out there, that things are holding up, ipo business is open. The dow down 24. David . Thank you very much, bob. Lets lead to the bond pits and check in with Rick Santelli at the cme group in chicago. Rick . Hi, david. Of course mario draghi really didnt put forth much new. Really anything new to put forth . Hes going to have to print more paper in he wants to buy more paper. On the corporate side hes buying, but boy, the supply really is an issue and everybody is highly aware of that. Our own peter bookfar, a contributor has been writing about core rhoda, maybe helicopter money isnt coming either. No matter how you slice it its slow motion. Starting to see a reversal of some of the risk on moves but not big. Look at intraday of 10s, you can see rates climbing a little bit. I think thats directly correlated with the press conference and lack of any new information. Yes, jobless claims were down but they didnt move much and philly was weak. One week chart of 10s is important. Testing the top of the range. We havent closed above 160 yield since the 23rd of june. You know what that was all about. Bunds, right in their backyard a bit of different picture. Lot of action but ended up about exactly where it started and the same is really highlighted in the euro versus the dollar. Good volatility right back where it started. The dollar yen after mentioning core rhoda and the notion that helicopters may be grounded look at the dollar yen on an intraday there is some movement. Not what im after is the july 1st chart. The dollar is crawling back, look at how small those moves are. Weve really crushed volatility in some of the currency trades and maybe thats the area to pay most attention to if theres any surprises, especially from the u. S. Central bank which the next meeting everybody is going to be focusing on. David, back to you. Thank you very much. Rick santelli. Point out that the joy global bid is putting a bid under everything, caterpillar, deere, any one of these big machinery companies. Thats why the market is not down big. Cat has really the star here. The joy global bid helping them. Wanted to point that out. Up next, were going to have the heated comments from ted cruz and go line to cleveland as well where carl will have the latest. And tomorrow on squawk on the street, exclusive with lulu lemon ceo, laurent potdevin. Starting to go up a little high. I liked the stock. I want to be careful. One trick pony. When i spoke to sara, lets be sure. Thats 9 00 a. M. Tomorrow. Thank you for the pronunciation helper, mr. Cramer. Whatever. We got a lot more coming. Stay with us. speaking japanese oh watson, your japanese is very good. Thank you. speaking japanese exactly. I can understand nuance, context and idiom in seven languages to help companies all over the world with everything from retail solutions, to banking, to cyber security. speaking japanese helper, mr. Cramer. Welcome back to cleveland and the Republican National convention. Were getting our first sound from senator ted cruz this morning after that speech last night at the convention in which he decided not to fully endorse donald trump. At a breakfast this morning talking to some of his delegates he said, i did not say a single negative word about donald trump. I dont intend to say negative things about him in the future and went on to say although the media, he argued, would love him to. Some of the delegates did ask him to support the party and trump saying we need to stand with you, you need to stand with us, but in the words of cruz, im not in the habit of supporting people who attack my wife and attack my father. He went on to say, im not a puppy dog. One last note he did go on to say he will play close attention to what the Campaign Says every day from now until november. This, of course, once again in a series of events that overshadowed the intended effect of the convention overnight. On a side note, david, actually we have a piece of the sound from ted cruz thats coming in. Take a listen. Im not going to get into criticizing or attacking donald trump but ill give you this response. I am not in the habit of supporting people who attack my wife and attack my father. Youll recall in march, donald trump said he would, quote, spill the beans on ted cruzs wife heidi and even went so far jim and david to suggest that cruzs father might have been involved in the assassination of john f. Kennedy. Paul manafort for the Trump Campaign said tonight will be more upbeat, more personal, and certainly that is the overall intent of conventions to provide positive energy. See if we get that when ivanka and donald trump speak later tonight. Yeah. Quite something, carl. Thank you. It is quite something. It is. Yeah. Carl, i got to just ask you point blank, i mean, is there an unreal sense in that place . I mean is there a sense that anything can happen . I mean it feels like its the least scripted convention ive seen since 68. You know what occurs to me, jim, i think it lays bear the pageantry and almost fake nature of conventions in modern political history. This is a real convention. I mean what were seeing is people react organically to events as they happen. Its like weve been unplugged from the matrix, the conventions were used to have been complete lack of spontaneity, prepared, this is it sort of made for television. This is the room where it happens literally in the sense weve come to know it. Great way to put it. Theyre all coronations where all you did was figure out what song they would play. You have we are the champions. I wish i was there. I was not there in 68. I covered a lot of conventions. This one is worth covering. Most of them are like okay, lets gin up a story. This produces a story every three minutes. And i think it does put pressure, perhaps, on democrats next week to provide something other than a coronation from the president to Hillary Clinton. There remains speculation we could get a vp pick from Hillary Clinton as early as tomorrow. Or next week. But already were beginning to hear about what kind of tone theyre going to try to set for philadelphia after, obviously, an eventful week in cleveland. Yeah. Rocky. Carl, thank you. Rocky theme. I caught the hamilton reference from mr. Quintanilla. You have to see the musical still. Through december. Im trying to move up in the cue there. Carl will be joining us again in the next hour. I did want to update our viewers, anthem cigna, we dont know humana aetna but the paperwork has been filed by the doj to block the merger. Not a surprise in any way, shape, or form, of course. The deal announced back last july, so lets call it almost a year ago to the day, and it called for 103. 40 a share in cash and 5. 512 shares of anthem. The spread enormous. Both stocks trading as though they were independent companies without the prospect that they would get together in many ways, jim. But it is the anticipation certainly that people ive spoken to they will go to court to fight this. Theyve also been having issues of their own, anthem and cigna, being on the same page. David cordoneny, ceo of cigna wanting Different Things than joe swedish the ceo of anthem. I know that the i want to know how they feel about at Affordable Care act. It was losing money on the ones. Didnt apply to all of them. 11 00 is when Loretta Lynch and mr. Baer are scheduled to speak, so about an hour from now. And again, looking, humana shares the anticipation is that also will be but at this point doesnt appear that has been filed as of yet. Well let you know. That one, you know, many people say, jim, is going to be interesting. He if they do, that they have a very decent chance of succeeding and in fact when companies actually fight, in court, often times you get blocked, you walk away, youre done. Thats the typical response. But when you fight, you would be surprised theres a much higher percent of success of the deal closing than you plight anticipate. Can you give me antitrust experts told me 70 of the time when companies do fight which is infrequent because typically they dont but when they do, they succeed very often. Justice can sometimes overreach or the ftc. P. Ive already seen what you have coming up on mad but worth mentioning again. Dominos is expleading higher, denise gave a Denise Morrison gave a presentation which showed slowing. The company has been a horse. Nick pinchuck, the credit not just the tool side. The credit side. Questions raised about whether they have too much credit theyre giving in jim grant. Give jim krefds credit. He does rigorous work. Raises similar question on credit. Cigna jewelers sells jewelry. Right. All right. Im looking forward to watching. Campbells soup especially. Theyve done good natural organic. Stocks that are popping like United Rentals. Wrong stocks are popping, the transports, no. Yeah. Jim, thank you. Thank you. All right. See you later. Coming up an exclusive with ebay ceo devin whenning, giving a nice boost to that stock this morning up over 9 . Were back after this. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Good morning. Welcome to squawk on the street. Im sara eisen with simon hobbs and david faber at post nine at the new york stock exchange. Carl quintanilla with us from the Republican National convention in cleveland, ohio. We will get to him shortly. First a look at the markets. That nineday winning streak for the Dow Jones Industrial average coming to a halt. Or at least a pause for now with the dow down 37 points. S p 500 under a little pressure as well along with oil. Technology, though, continues to lead. Breaking economic data, leading indicators are out. Rick santelli has that in chicago. Good morning, rick. Good morning. The june read for lei leading Economic Indicators up 0. 3 . Arguably a little bit better than we were expecting. Its the second best read of the year, april 0. 6. Thats the high water mark. No revision on last month, sequentially following a down 0. 2. For the june read on existing home sales were going to head east to diana olick. Diana . Rick, existing home sales in june, up 1. 1 to a seasonally adjusted annual rate of 5. 57 Million Units. Thats slightly ahead of expectations, but mays numbers were revised down so it comes out in the wash. Still this is the strongest level since february of 2007 according to the realtors but add this could be the high point for the year because theyre starting to see the foot traffic slow down. Sales are up 3 year over year. The problem here, though, is sales could be stronger if inventories were not so weak. Inventories in june down 5. 8 year over year to 2. 12 million homes for sale. That is just a 4. 6 month supply. This is the 13th straight month of year over year declines in inventory. Homes are flying off the market. Days on market 34 days and that is pushing prices i r higher, 247,000 is the median price, up year over year but a big divide, seeing sales of homes on the low end, that is 100,000 and below, very weak. Falling 9 . But the top end of the market, 1 million plus, coming back strongly up 13 . And the realtors say that is thanks to the stock market gains. Now distressed sales falling 6 of all sales. The first time buyer, though, stepping back into the park at 33 of june home sales the highest in four years. Thats a good sign. Again, sales up 1. 1 in june. Back to you guys. All right. Diana, thank you very much for that. Diana olick. It is day four at the Republican National convention in cleveland, ohio. With me at the quicken loans arena our own john harwood on day four of aftershocks here. We will get to some of the policy discussions that are happening, but first, we just heard from ted cruz a few moments ago regarding his speech last night. Whats meaningful here and whats not . Political conventions need to show the country, the broad electorate as you head towards november, they can manage themselves, theyre coherent, that theyre united, theyve got a plan, and the images of chaos and disunity here go against that. Well see what polling shows. You dont know. Its an unpredictable year. Many of the reactions weve predicted to things that happened to donald trump have not materialized but this goes against what every political strategist hopes to have from a National Party convention. If you just missed it, ted cruz this morning at a breakfast explaining his refusal to endorse donald trump last night. Take a quick listen. Im not going to get into criticizing or attacking donald trump, but ill give you this response. I am not in the habit of supporting people who attack my wife and attack my father. Now that goes back to a controversy about 17 weeks ago, an eternity in politics, but some sense not that long ago, in which donald trump said he would spill the beans on heidi cruz in his words, talked about cruzs father. Was it is this revenge . How hard is it for cruz to have held this for so long . Couple things. First of all politicians are human beings and ted cruz reacted the way he did to some pretty strong stuff that came from donald trump. Politicians are always contemplating about their futures. Ted cruz wants to run for president again. He does not expect donald trump to win this election. And so hes trying to position himself for republicans who are opposed to trump that he was the guy who stood up to him. The other factor is, things that cruz has already said make it difficult to endorse. Ted cruz at the end of his primary campaign, said that donald trump was utterly immoral, a pathological liar, a serial philanderer, those are things that put you pretty far out there on your assessment of a human being. Now he didnt repeat any of those things last night. But everyone knew what he was saying when he said vote your conscience, vote for someone who stands with the partys principles. Ted cruz thinks of himself as someone who is the guaranteor of conservative principles and values and that donald trump is not. Things were not talking about, mike pence and his speech and the interview with the New York Times that trump gave regarding support for nato allies. The latter is much more important. Mike pence gave a solid performance last night, he showed why he was picked as Donald Trumps running mate. Hes a conservative that is broadly liked within the Republican Party. But donald trump called in to question, as he had earlier done on u. S. Debt, the full faith and credit of the United States in national security. He did not say or he declined to say that he would automatically come to the defense of nato allies against russian aggression. That has been a principle of u. S. Foreign policy, unbroken, since world war ii. And that is a pretty dramatic break that has everyone basically with experience in the Foreign Policy world, shaking their heads today. So tonight, what does trump need to say and can he provide a relative sense of stability that makes him look good after this crazy week . Its going to be a hard job. The good news for donald trump is that most of what matters in a Convention Comes in that speech in the 10 00 hour tonight accepting the nomination. Donald trump will have a text. Does he stick with the text . Does he go off and respond to the various criticisms on the melania controversial, on ted cruz, on the nato issue he raised until New York Times interview. That was a major thing stepping op his message here. But hes got the opportunity, if he has a good text and can convey a sense of command, competence, stability, to try to persuade more americans that hes capable of serving as president of the United States. Our coverage begins at 10 00 p. M. Eastern time tonight. You will be there. You bet. Simon, david, sara, back to you. Come back to you in due course. Thank you very much. The European Central banks policy meeting since the uk voted to leave the European Union, everyone forecasted they would leave Interest Rates unchanged and probably their existing plans for qe. Steve, this sounded to me like a remarkably undovish draghi today. Pouring cold water to the ext t extent hold on. You said undovish. Didnt see it as hawkish but not dovish. He didnt sound ready i mean that is the way i see it. Plays out the possibility he didnt do that today. When you look, for example, at yields what you see, simon, is yields ticked up a little bit. They didnt really get they left policy unchanged in the wake of the brexit vote and basically said the European Union will reassess the situation in september when its got more data, new forecasts on the impact of britain leaving the European Union. Draghi said brexit is a headwind to the eu economy and said the ecb will watch the postbrexit economy very carefully, and use all available tools if warranted and said the growth tilted to the downside. But he added that markets have showed, quote, encouraging resilience in the wake of brexit. Take a look at yields here. Up just a couple basis points as the market may be expected a bit more panic or concern in draghis voice over brexit, but you can see its only a couple basis points. Its on my left. I keep looking in the wrong place there. Like the bank of england the ecb is content to wait until theres real evidence of a need to provide further stimulus. Simon . Okay. Steve, thank you very much. All right. Were also keeping an eye on the stock market right now. Just show you where we are on things. The dow is down 46 points. A loss is accelerating breaking the nineday winning streak. Ebay going the other way up 10 at a record high. Reporting last night earnings that beat the streets expectations, posting its Second Straight Quarter of sales gains. Our josh lipton at ebay headquarters and joins us with a special guest. Josh . Thank you, sara. And devin wenig thank you for joining us today. Welcome to ebay. Devin, about a year now since that split with paypal. Sara mentioned a reaction in the stock this morning. Investors like what they heard. You guys raised guidance, so confident about the rest of the year. Has ebay, with this report, devin, turned officially some kind of corner here . I try not to get too hung up or hot or cold on shortterm market reactions. A year ago, this was a Basketball Court and this facility were sitting in is sort of evidence of the plan we laid out to say, we want to run ebay for the next decade. We want to be an Enduring Technology leader and a disrupter and we would focus on building the foundation and differentiating what we do. And a year on, were starting to accelerate growth in the business. That plan is starting to take route. I wouldnt say weve turned a corner. Weve made progress. We have a lot more work to do. But im please at where we are. Let me ask you aside from the fundamentals, investors liked what they heard with capital return. The board approving the additional 2. 5 billion stock repurchase authorization. How do you think about capital return looking ahead and is a dividend next . Were disciplined about the way we allocate capital. One of the great strengths of this business is its got high free cash flow, high return on equity and thats a great lever to have. Its one of the ways that we can create value for our shareholders. If we have excess capital we said we will return it to shareholders. But its part of the way we allocate capital. We also are quistive when we can accelerate our strategy which buy companies. We did several of those in the last quarter. We buy our stock back when we think its at attractive prices. We will keep doing that. And how we allocate that capital and how we return it to shareholders, well constantly evaluate that. Right now, we like where we are. And the fact that we were able to reduce the share count at attractive prices and now step in to better earnings in a better share price, thats a way that we reward our long shareholders. Im pleased with that. Let me ask you heading into that report i know there was some analysts who high looitsds brexit as a possible concern given your exposure to europe, to the uk, so far youve seen impact from that . Stew its a few weeks. Its early. Whats interesting is most of the impact is through the weakening pound. And as the pound has weakened, weve actually seen exports in our uk business go up. Thats been slightly offset by exports in our u. S. Business going a bit down because the uk is a big trading partner of the u. S. But theres been very little impact on the domestic economy in the uk and, in fact, theres been any impact its been marginally positive. When we talk about trends, technology trends, i thought it was interesting on the call last night you talked about Artificial Intelligence software. When you think about ai software, whats the impact of that going to be on your industry and how is ebay sort of positioning itself to capitalize on that. When i think of ebays 20year success run, i think that what we were good at is understanding these big platform revolutions, the first the internet itself, the second was mobile, and ebay was early and really took advantage of those platforms. There are few more coming. Artificial intelligence is the next platform revolution as is virtual and assisted reality. And we are planting the seeds right now to ensure that ebay is not only relevant, but a leader, disrupter, in Artificial Intelligence. Some of the acquisitions weve done are worldclass teams of both data analysts and engineering capability that are going to allow us to use this incredible data set we have. We know exactly what hundreds of millions of people are shopping and browsing and buying. And the ability to target and personalize that, and build an incrediblebly personal commerce experience, i think is the future of commerce. And because of that, theyre going to be a few winners that can take advantage of that Technology Revolution and we will be one of them. Hey, devin, its sara eisen at the new york stock exchange. You had a question. Yeah. Yes, good morning. Devin, wanted to get your take on something we heard from warren buffet this morning, Berkshire Hathaway chairman and ceo, came on to squawk box to talk about his message, his common practice principles, the common sense excuse me principles hes presenting in conjunction with other highprofile ceos. Listen to what buffet said about his recommendation on guidance. I think that guidance could lead to a lot of malpractice. It doesnt have to. But i think if the ceo goes out and says were going to earn 1. 06 the next quarter, i think if they if theyre going to come in at 1. 04 theres a lot of attempts to find a couple extra pennies some places. It doesnt necessarily have to be the ceo. Sometimes subordinates want their chief to look good and there are ways that you can move earnings toward the end of a quarter, sometimes even after the end of a quarter, and i think that guidance, guidance is ive seen guidance produce some bad results. So devin, im wondering if you agree with that, if you think that the pressure of shortterm forecasts should be eliminated and whether you would be on board with that . I mean, i think probably two things implicit in his comment. One is, whether or not you manipulate earnings to hit guidance. Obviously thats a governance matter and i think what we care about is transparency. I think guidance can be a good thing because were trying to provide transparency to our shareholders. But the other important point that i think hes making is that companies can be too shortterm oriented and i completely agree with that. I took over as ceo of ebay a year ago, and one of the things that i said to our investors, our employees and our customers is commerce doesnt move in 90 day increments. This is a technology company. And were going to run this company for the next decade. And i dont hesitate to make decisions i think are in the best interest of our stakeholders even if theyre not friendly in a 90day period. I think we can be transparent and issue guidance but also run businesses for the long run. Im not afraid to do that at ebay. Simon, i think you had a question. Yes. If i may. Devin, you will have seen, of course, where we are with the election and weve got the rnc playing this week and the dems next week. What do you make of the election . Whats at stake for you and for your company for the business for the work forces from what you see on the stage . You know, we try to stay out of politics. Were trying to run a technology company. We would like certainty. I think that thats probably what you would hear from a lot of ceos. A period of instability or uncertainty through the fall probably isnt good for consumers and were a consumer business. We would like clarity. Political clarity. Certainty on pols. We would love to see progressive pols for technology. We would love to see policies that recognize that businesses like ours are fueled on immigration, and that sensible trade policies are great for u. S. Companies that are multinationals trying to export goods and ebay is a big one like that. So we stay out of republicans or democrats. Thats not our business. But we do think that protrade policies and proimmigration policies are great for Technology Companies and were going to deliver that message and we hope both parties adopt it. Devin wenig, thank you for your time. We appreciate it. Thank you. Back to you guys in new york. Thank you very much. Josh lipton in san jose. A big show, well sit down with the ceos of bbt and excel services and Union Pacific within the next 40 minutes. Talking earnings, state of the economy, politics and more. Its a beat for qualcomm. The ceo of qualcomm will join squawk alley at 11 30 eastern. Stay with us. Youre watching squawk on the street on cnbc. Want to update everyone on the objections of the doj to the two large hmo mergers that have been in the works now for over a year, humana and aetna. Aetnas plan to purchase humana for 125 a share and 0. 8375 of its shares. The doj filed the lawsuits against that deal to block it and also has filed to block anthems plan to buy cigna announced back in july of last year, july 24th of last year, called for 103. 40 a share in cash and 0. 512. You will see if you do the math, that neither one of the acquired companies is trading anywhere near the potential takeout price because, of course, the expectation has been for some time that the doj was likely to block anthem and cigna and probably likely to block humana and aetna. It has done so. Now the question is, will both companies, will they all go to court and try to fight and see if they can actually get a court to agree with them these deals should go ahead . I would point out as well that cigna has come out with some comments, interestingly, not a joint release with its partner anthem, but a separate release, doesnt read particularly well for its hopes in light of the dojs decision we dont believe the transaction will close in 2016 and the earliest it could close is 2017. If at all, cigna says. They also go on to say theyre evaluating their options consistent with their obligations under the agreement. The agreement does call for them to fight in with anthem should anthem choose to do so. Well see what anthem says. But the expectation that ive been left with from all these companies is they will go to court and fight the doj. Simon . Okay. General motors up 3 reporting earnings this morning. Profit more than doubling. Phil lebeau is digging through those and joins us live from chicago. Phil . Simon, the question whether or not we see gm shares getting close to or perhaps once again getting back above that ipo price of 33 a share. A blowout quarter any way you look at the quarter for General Motors beat the street by 34 cents. Revenue coming in much stronger than expected at 42. 4 billion. Why was revenue so strong and why did they beat earnings . Relative to what analysts were expecting. Look at north america, the strongest market for General Motors turned in great sales in the Second Quarter and those were retail sales, where they are pushing a higher transaction price. By the way, secondquarter profit margin of 9. 3 , almost 2 better than in the Second Quarter of last year. You dont see that very often in the auto industry. Cfo Chuck Stevens talking about why the Second Quarter was so strong. A 3. 6 billion of profit and 12. 1 margins and a profitability in europe, we made money in europe for the First Time Since the Second Quarter of 2011, those were the two biggest drivers of at least my assessment of the beat versus consensus. Broadly speaking we had Strong Performance around the world. And gm is expecting that performance to continue for the remainder of this year. In fact raising its full year Earnings Guidance by a quarter of a share to a range between 5. 50 and 6 a share. Point out simon, most Analysts Expect gm for the year prior to raising the guidance at 565. We will see analyst notes after the Conference Call which is going on right now show t show higher guidance from the analysts as well. Back to you. Okay. Thanks, phil. When we return, on the show, it is a big beat for bb t Bank Reporting record revenue up 18 . Well speak with the chairman and ceo kelly king next on the show. Bend me shape me, any way you want me as long as you love me, its alright bend me shape me, any way you want me. Shape the best sleep of your life. Sleep number beds with Sleepiq Technology adjust any way you want it. The bed that moves you. Only at a sleep number store. Youve wished upon it all year, and now its finally here. The mercedesbenz summer event is back, with incredible offers on the mercedesbenz youve always longed for. But hurry, these shooting stars fly by fast. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Regional bank bb t reporting a quarterly profit of 66 cents, beating estimates by a penny. Joining us now to discuss the results, bb t chairman and ceo, kelly king. Welcome back, kelly. Good to see you. Thanks. Glad to be back. So plenty of doom and gloom around the banking stocks this year and you post 18 Revenue Growth for the quarter. What drove it . Well, we were very fortunate to conclude one of our major Bank Acquisitions during the quarter, a Company Called national pen in pennsylvania, we also closed on april 1st a significant property and casualty wholesale Insurance Business called sweat and crawford. Two acquisitions which helped propel growth during the quarter and good organic growth. It was a good quarter. And yet, net interest margin, i mean we saw it rise year over year, a theme in the back earnings, but down from last quarter. And this is the big worry, those lower for longer Interest Rates. Whats your expectation at this point . I think were all trying to settle in to the reality that we may well be in, you know, lower for longer, were planning for that. Were operating our business that way. Now personal observation, though, is that it probably wont be as low as long as most people think. I recognize that theres a lot of global kind of negative sentiment now about brexit and many other factors i think some of that is a good bit overstated. You know, the underlying strength of our economy in the United States is very good. Were still operating at 2, 2. 5 real gdp growth, really good job growth, good strong consumer sentiment, Housing Market good, auto market good. I personally think by the end of the year the fed will probably raise at least one more time. Barring any major unforeseen negative circumstances. That will begin to improve margins. I think were at the bottom. We can operate okay if we stay at the bottom but were planning for that but expecting and thinking that probably will get a bit better. The other pocket of the economy where you do business is, of course, in mortgages with housing. Now that Mortgage Rates are back to historic lows again what are your expectations for that business for the rest of the year . Its going to be very strong. As you know, the 10year is at almost an alltime low. That drives a huge amount of refinancing. So refinancings are up substantially and frankly, the purchase market for new families buying new homes is up substantially over the last few years. So combination of strong refinance and strong purchase market, both very well for a strong Mortgage Market for this year and frankly into next year. Mr. King, as you know, there are investors who believe that there will be money to be made some of the Smaller Banks as we move through the cycle because of the lower for longer and the lack of profitability and need to consolidate. As an acquirer already, would you agree with that sentiment and where do you think people are likely to be able to make money on that m a if, indeed, it is to occur . Well were out of the m a business for right now, to be clear. Weve done a lot in the past and long term its an important part of our strategy but were out right now. An awful lot of pressure on smaller institutions today, lot of pressure on companies our size, and so i know that the companies in the smaller tier are really struggling. Certainly some will be able to make it and some will choose to make it. But i do believe an awful lot will choose to consolidate, to try to gain the scale advantage necessary to deal with huge increases in regulatory costs, technological cost and a slow economy. So i suspect that long Term Investment in small institutions could be very good. On that note ahead of the elections are you doing anything differently in terms of planning or Decision Making ahead of what looks to be a heightened period of Political Uncertainty in this country . Well i think it is unfortunately a heightened period of uncertainty and that wont likely go away until after we have the final election. You know, were not running our business any differently. We try to do the right things every day to support our clients and communities and shareholders so we try not to overreact to the shortterm phenomenon. I do think, though, as we go forward, a bit of the uncertainty will begin to subside. Its already a bit more certain today than it was a few months ago in that we know who the two candidates are. As we get closer to november, i think the certainty will begin to subside. And then frankly, after the election, i believe that a lot of the uncertainty will subside, a lot of Business Confidence will return, and you will see a lot more investments which is what weve needed over the last seven or eight years in our economy. All right. Kelly king, thank you very much. We will see. The chairman and ceo of bb t. And when we return we will be at the fourth day of the rnc. Donald trump taking center stage in cleveland tonight with the keynote address. Well talk to his Energy Adviser, president and ceo of excel services, next, on cnbc. Announcer when they test you, stand firm and move only when you hear the seatbelt click that says theyre buckled in for the drive. Never give up till they buckle up. Your Business Needs Better Technology to drive better performance. So you need it to be reliable and fast. Really fast. Introducing the comcast business Summer Savings event. Fast Internet Speed to drive performance, plus cutting edge wifi for your employees and customers, and voice mobility so your calls find you wherever you are. Get some of our most advanced products at a great price with over 500 in savings. Call today and ask how to get these savings plus a 250 prepaid card. Comcast business. Built for business. Good morning. Im sue herera, your cnbc news update at this hour. Southwest Airlines Says it has fixed computer problems that caused hundreds of flights to be delayed and canceled. Long lines around the country this morning as the Company Spokesman said it will take some time before the airline resumes normal operations. Libya says isis has been broken and benghazi is close to being liberated. A Libyan Army Commander says an islamist militia had been hiding out in the outskirts of the city but forced to retreat. A florida fugitive back behind bars. Murder suspect deanne ta resiles was arrested at a motel in west palm beach. Six days escaped while in custody at a Broward County courthouse. Russia last its appeal against an olympic ban on its track and field athletes. The decision announced by the court of arbitration in switzerland. 68 russian athletes seeking to overturn that ban. Thats the cnbc fuse update this hour. Back to you in cleveland. Thank you very much. Welcome back to squawk on the street. Were coming to you live from the Republican National convention here in cleveland. Tonight, its Donald Trumps big moment and a chance to make his case to the american people. Last night running mate mike pence accepted his nomination for vice president. A moment which has largely been overshadowed by former trump rival ted cruz. Joining us is trump supporterer and Energy Adviser donald hoffman, founder president and ceo of excel services. Good morning, carl. Pleasure to be here. Lets talk policy to start. Youre on the trump leadership council. Advising on energy. Weve heard some comments this week from harold hamm, mike pence last night about coal. How do you define Trumps Energy policy and where is it going. Were current establishing a sensible Energy Policy with mr. Trump that values all of the Different Energy assets in the portfolio of energy capability. What were doing is measuring the strengths and weaknesses of each of the assets because theyre not all created equal and working out ways to develop a policy which is senseble to ensure that the citizenry of this country has a policy that relates to the sources of energy which allows for affordable, available, reliable, and environmentally friendly energy. Where are we strong and weak . Well, none of the assets are created equal. You have certain strengths and weaknesses of coal, oil, nuclear, which i am a Nuclear Engineer and, of course, i have a passion for that, but also for wind and solar, biodegradables and gas. We have to acknowledge and recognize as a result of that, we need to be able to evaluate each of the consequences of including them in certain aspects of the Energy Policy and others that were not. Pence last night his line was donald trump digs coal. So what would happen to volumes o do you think, traffic volumes, rail traffic, production . I believe that mr. Trump is wanting to utilize coal to the extent practical but he recognizes the environment could be effective. Were looking at ways to acknowledge while coal is an important asset in our Energy Portfolio we must be aware of what it does to the environment. Neck nisms to make the mechanisms to make the coal cleaner and ensure were establishing policies that recognize how we can do that. A lot of this is getting overshadowed by what cruz didnt say last night and trying to say again this morning at this delegate breakfast. What do you make of ted cruz . What would you say to him if he were here right now . I would say mr. Cruz, its my understanding you like the other candidates beginning to go through the nomination process agreed to support which ever candidate was nominated and you did not do so and its disturbing to see he was not willing to support donald trump. Had he been nominated he would have fully expected mr. Trump and every other former candidates support. His argument that pledge was adbri gaited by the attack on his wife and father, said he didnt say anything negative about trump last night. Is that legitimate . Well, it is legitimate in the sense he didnt say anything negative about trump. He was vanilla related to his comments. I believe he did somewhat a disservice to the Republican National convention and party because he did cruz has established or inconsistent of those with the Republican Party and mr. Trump. So it would seem more appropriate for him to have endorsed and rallied around and had the opportunity to continue to influence the policies and the processes and the goals of the Republican Party. This isolates him you think effectively. To some extent will isolate. Its sad to see that. Im disturbed he chose this path. One last question on the nato discussion. You travel to russia a lot. Thats right. Trumps discussion his words to the times have some arguing that its telegraphing to russia and bad actors that nato is vulnerable. Why is that not true . There are some aspects of nato that are vulnerable. It wouldnt be appropriate for me to answer all those questions. What mr. Trump is trying to say a number of things that need to be fixed. I dont believe he wants to expose any kind of vulnerabilities as much as he wants to ensure that our allies understand we are going to work with them to enhance and improve the mechanisms they have providing for their defense. Really appreciate your time. A rare tv appearance by you. Thank you for coming in. Its a pleasure. Thank you for having me. Catch our live coverage beginning tonight at 10 00 p. M. Eastern time with ivanka and donald trump taking the stage. Simon, over to you. See you shortly, carl. Coming up on the program, a big warning from buffet. What the sage of omaha has to say about the state of affairs of Public Companies and ahead the ceo of Union Pacific the largest railroad in the country will join us in the wake of their results. Remember these stocks have been flying on the idea that we may be bottoming out on the declines. Legendary investor byron buying stocks at record highs. Find out in a wide ranging interview at trading nation. Cnbc. Com. More squawk on the street coming up. Their results. More squawk on the street their results. More squawk on the street tomorrow on the show dont miss our exclusive interview with the ceo of lulu lemon trying to edge out the competition from nike and under armour. This is his First Television interview and we will have it for you tomorrow 9 00 a. M. Eastern time. One not to miss. Meantime some of the worlds biggest ceos including warren buffet, met in secret to find ways to improve Corporate Governance and talk about the sorry state of Public Companies. Well, today they published an open letter of their recommendations on a range of issues from stock classes to board practices saying companies shouldnt feel they have to offer shortterm Earnings Guidance, for instance. Heres what warren buffet had to say about the meeting that was recorded by our own Andrew Ross Sorkin earlier on squawk box. We didnt necessarily come to euna nimty on every point and point that at the beginning of our statement. That there are a variety of companies that may have different constituencies, that may operate under different pressures, may have different beliefs about it, so that this is not saying that if you dont do this youre dead wrong or anything of the sort. It was it was to give encouragement to companies that really felt uneasy about giving guidance to perhaps have a little more backbone about it. I personally think thats a very good recommendation. But i dont think it should be mandatory. Part of the goal is to encourage companies to go public. Buffet did suggest he does understand the appeal of private companies wanting to stay private longer these days. Have a listen. I originally would have preferred Berkshire Hathaway to be a private company and over the years, my view on that has changed 180 degrees. I enjoy having berkshire being a public company. I enjoy having i dont know if we have a million shareholders or even more, but i like the fact that people put their trust in us and that we treat them like partners and they feel like partners. Buffet one of the highprofile names, guys, that signed the letter that has been published in a series of newspapers. Larry fink, who is a longtime for a long time talked about how Companies Need to stop the shortterm thinking, think long term, there was actually an activist investor on the list as well, jeffrey from value gen. Cocacola gave up guidance a long time ago, being a key holding of buffet, i believe they did. They give forecasts. But i dont think they give published guidance. Independence of board rooms and away from the ceos and as soon as you go through the bank discussions with jamie dimon or moynihan no, they can become chairman as well. Secret meetings, really . Well, i think the point was they wanted to start a conversation and a debate. This has been going on for decades this type of conversation hasnt it . Yeah. I mean to a certain extent the idea of all the things, yeah, but im surprised they didnt focus more on adjusted numbers, which weve seen more and more of and i know buffet has had issues with. Doesnt seem to be something they came out with a conclusion on. Just these constant adjustments that make it very difficult to really understand what the underlying is and being judged on things when actually your earnings are not what they appear to be. Coming up on the program well speak with Union Pacific ceo lance fritz. They came through with earnings today. Qualcomms Ceo Steve Mollenkopf will be on cnbc exclusively. Thats all ahead this morning on this network. In a world held back by compromise, businesses need the agility aboutto only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. Man youre beautiful [click] im coming back to you [click] this is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. You 0. Union pacific reporting mixed results today saying the stock was hurt by freight revenue. The stock has hurt in a lot of Railroad Companies in anticipation that the stock could be bought out. We welcome fritz. Welcome to the program. Thank you, simon. Youre clearly beaten by earnings by a penny from last year. Are the freight earnings beg beginning to bottom out in your view . We are still facing some of the same headwinds we faced in the last four or five quarters. Natural gas pricing, replacing coal for licht,elect. A strong u. S. Dollar. Shale energy and we are seeing improvement. Thats encouraging it. Seeing it in grain and Construction Products and Industrial Chemicals and lpg. Those are optimistic signs. We were hearing 10 minutes ago on the fromprogram how dona trump is increasingly surrou surrounding himself with Energy Policy peoples and word that hamm could be the next energy secretary. And the aim seems to be coal in what theyre saying. What would that mean for you as an industry and your business . Let me start by saying in this president ial cycle, were not picking sides. When we look at president ial candidates, one thing we care deeply about how they position the American Economy and embedded in that is what they do for electricity weights. Our perspective is coal has a place in electricity longterm. It is clean and getting cleaner and an abundant source of energy for the United States. Were pretty bullish on coal aside from the fact natural gas is replacing it for a generation. What about the price of oil . How does that feed through . For us, participating in the she shale energy revolution, fra fracking, our original shipment is declining but theyre a very small portion of our overall shipme shipments. We think an active robust shale Energy Economy is a good thing for the United States. It diversefies our Energy Resources and it creates jobs. Can i ask you about the clearly, with the falling volumes, your main aim has been in part to cut costs and youre beaten by a penny as a result today in your attempt to absorb that and move on. We also have the derailment in oregon last month. They got a lot of headlines. Derailments i understand are relatively rare. However, there is now a conversation with some of the authorities about raising the guard levels and obviously increasing the costs and making new braking systems for the industry. Can you talk us through what the implications are for you with that . Let me start by saying there is no connectivity between our efforts of connectivity and world class safety operation. We are pursuing world class safety and making great efforts towards that. You mentioned the oregon dera derailing and we regret the impact we had on the local community. Having said that the Emergency Response was exceptional. The equipment all reacted the way congress intended in their most recent legislation. As a result, the impact on the environment was controlled ti t tightly and we Union Pacific stayed with the community until all issues were addressed. We have a firm amount of work in front of us to rebuild trust bonds with the communities in the gorge. We run a safe efficient operation and were making Great Strides yearoveryear towards an incidentfree environment. I just wanted to ask about one piece of the economy you touched on freight shipments of autos and trucks. What do you think for the rest of the year . Is this slow down going to pick up speed . I think the most recent numbers ive seen is Something Like 17 1 2 Million Units for the year. What were seeing is our auto parts penetration, that is our growth in shipment of auto parts for Union Pacific is pretty substantial. Its growing in the Second Quarter. We grew that by 9 . In terms of the impact on finished vehicles, were seeing growth from mexico, but in total, were seeing a mixed impact on us and its very specific by the plan. We leave it at that. Weve run out of time. Good to see you. Lance fritz joining us there, the ceo of Union Pacific. We send it to john fortt with a look at whats next on squawk alley. Good morning. Carl is in cleveland at the Republican National convention and we will pick up there to see what to look forward to today. Tesla has announced a new plan but is it too big . The stock is down. Indices might be flat but chips are not. In t inte intel is down and we will have exclusively on squawk, the ceo coming up. Im Bertha Coombs life at the Justice Department in washington. Attorney general loretta lynn set to give a press conference filing suit against both the aetna humana deal and sigma merger saying these four fomps would provide too much concentrationen the Insurance Industry bringing the five largest insurers effectively to three and giving them tremendous power. Deputy attorney general says theres no reason to put the dynamic in the market at risk by having this concentration. I will speaking with him following this press Conference Live and be sure to tune in on the Halftime Report when we will speak exclusively to ceo mark bertie lin