Transcripts For CNBC Squawk Box 20240622

Those blasts sent massive fire balls into the nights sky. The initial blast erupted at a warehouse for Hazardous Materials and triggered other explosions at nearby businesses. Those explosions could be felt miles away. The cause at this point not immediately clear. Lets take a look at some live pictures this morning from tianjin china. You can still see the smoke cloud billowing. We heard from hyundai. Well take more of a look at whats happening with china in a bit. About 4,000 imported vehicles were destroyed by that blast. Heres the big stories today, China Central bank holding a News Conference in beijing overnight arguing theres no basis for continued currency depreciation. Earlier in the day they set the rate below yesterdays close. Well have a live report in a moment. Athens wants to see a vote before a euro zone identifinanc meeting tomorrow. It argued it lacked clarity on the direction of policies. Here in the u. S. A busy day on the data front. We get jobless claims, july retail sales and the consumer remaining front and center before the bell. Well hear from kohls, nordstrom, king digital and party city. Lets talk about some stocks to watch including cisco. Shares were up on this news. Heres what chuck robins told jim cramer on mad money last night. We think that security is a tremendous play for us and well build out that architecture and innovate and drive our own internal rnd and well look at investments and do codevelopment with customers. That stock is up 3. 9 this morning. Well be talking to an analyst in about 15 minutes. Also shares of the developer getting a boost in late trading. Announcing a joint venture to develop a new Solar Project in utah. Diamondback Energy Falling a bit. Launching a Public Offering of 2 million shares in common stock that stock is up by 2. 25 . This move should help expand products for fighting socalled super bugs. Plus we should check out shares of news corp. Posting better than expected quarterly earnings. Cost cuts that includes dow jones and the wall street journal. The company also announcing it is revealing Strategic Options for amply identify. Thats the Digital Education brand. That stock is up by 4. 8 . Other media news going on, Nbc Universal investing 200 million in vox media. It owns tech blog recode and espy nation. It hopes to build a partnership that involves collaborating on editorial content and advertising technology. A yununit of nbc. Nbc a unit of comcast. We should also tell you there is speculation around an additional investment in buzz feed that would value that company around 4. 5 billion. Well talk about that in the next hour. But the other big buzz stories, u. S. Authorities launching an investigation into the former chairman of dean foods. Tom davis is now suspected of leaking confidential information about a corporate spin off to professional gambler Billy Walters who is believed to have tipped off Phil Mickelson. Just a week ago he abruptly resigned as chairman of dean foods last week ahead of the companys earnings. There was no great explanation as to what was going on. This may be that explanation. A long wait s. About a year. A year ago there were clorox and dean foods if i remember. Right. They were somehow trying to connect. The gambler and Phil Mickelson. They thought carl icahn tipped off Phil Mickelson and traded ahead of his investment in clorox which was the original theory. That piece of it is not. I remember icahn saying i heard of Phil Mickelson but i never met him. Like hi barely knew who he was at that point. Well get more details over the next day or two of what really transpired but pretty interesting. No doubt. Handing that information to the fwofler. Take a look at where futures are following the huge come back late yesterday and you can see that the dow would open higher by shy of 50 points. The nasdaq could get a bump as would the s p 500. Look at europe where the dax has been a big focus because of china. Its been in direction mode and getting a nice bump today as are all of the european markets across the board. Asia, have to take a look there given whats been going on in the markets and the shanghai composite up. Virtually across the board in Global Markets today. Take a hook at oil and wti crude is rebounding up sharply. The dollar today as we take a look at how currencies are shaping up, theres the ten year note yield at 216. Thats been on investors radar of late giving the Federal Reserve expectations and what it could mean when they try to figure out the best time to raise Interest Rates. So the euro giving some back after a pretty descent size yesterday and gold after being dormant for so many months caught it yesterday. Now to asia, we want to get to sri from singapore with more on the overnight sessions and comments from chinas central bank. Hi, andrew. Weve seen the relief rally in asian markets today after two days of very heavy losses. Quite a sizable risk off move in the markets. Hiking fears that china fired off a currency war in this region but the pboc coming out and offering an olive branch and trying to calm the anxiety in the market by saying, look, its not today but depreciate the country sy by as much as 10 so tried to send the message that were encouraging more twoway volatility. The longest in the currency. So thats the message from the bpoc and the markets send to be taking that at face value and taking that this is not the beginning of the depreciation cycle and more in the regional currencies as a result. So relief on the outside and also helping with that late session rally overnight in your neck of the woods. Thats helped confidence as well. Lets look at the currency and that helped some over here as well. Especially those that are most vulnerable to normalization and in terms of trade linkages to china, both vulnerable to further devaluations. They have seen at 17 years lows so they bounced off those very low levels but the narrative still has not changed. Theyre still looking very vulnerable because of the domestic policy, because of fed normalization. Lets not forget both of these countries are big commodity exporters so the pressure ahead of fed normalization still remains on. Thats where we stand. Back to you now. Sri, thank you. Back here in the United States stocks staging a come back. Down by 277 points for the dow at one point. Head scratching reversal and that begs the question what is going on. Joining us is steve friedman, Senior Investment strategist and george parks who is analyst at the spoke investment group. Steve what do you think did happen . People thinking this puts off the fed raising rates in september . This was a big reversal and it came shockingly. This is not as big of a deal as anticipated. The exposure attorneyings is 4 to 5 . The move itself was never a big deal and, you know, ultimately you do have a little bit of the factor open to the feds would be a bit of a safety net. But the main point here is this probably matters a bit more for the inflation outlook than the Growth Outlook because we import a lot more than we export. Of course overnight the statements that this is not going to be an on going devaluations also contributes to taking the air out of the story. We know when chinas economy falters thats going to have an impact around the globe at this point. Thats a huge concern. Chinas economy has been faltering for four years now. They have bad demographicis. This is not something the Global Markets are panicked about. Although what happened this week panicked people because it worried them that the chinese were panicking. Thats correct. As we have gotten more information from the pboc and seen them come through and we have come to understand the mechanism there now using a very market oriented one to set the fixing that fear has mitigated and just look at s p 500 futures reaction to the fixing over the last three days. So the first two days they had these depreciations versus the prior day. You dont think people are panicking . I dont think they are and i dont think they should be. Construction, core part of the economy weaker than ever. Confidence plunging, credibility issues for whats taking place in china. Why dont you think we should be more concerned about whats happening there . We should be aware of whats happening. Its much weaker than most people think now. It could be, with china you have to keep in mind the scale and magnitude of the economy were talking about here. Chinese retail sales are going 10. 5 year over year and the United States is 1. 6 . So this idea that the chinese economy is collapsing, something talked a lot about when apple recorded earnings, ludicrous. So, you know, there can be fears about the impact from china. There can be fears about marginal slow down absolutely and we should be worried about the pboc and losing control of the economy and confidence but i dont think weve seen any evidence so far that thats what is going on. What do you think about the market overall . Theres a lot more volatility and serious concerns about the market going nowhere in 8 months. This is one of these markets where our narrative is throughout the year and it point of laws down to earnings. This is not a market and being the year of the first rate hike you have this volatility. Youre going to have enough Earnings Growth to be able to propel the market higher but were talking about growth in the Single Digits rather than what we said over the last six years. What are you telling people to do right now . Right now were telling them to remain invested in stocks but we have been shifting our focus away from the u. S. Which is a neutral tactical position and focussing more on europe. Despite the volatility the earnings outlook will be so strong that it trumps geo Political Risk and we have also grown more interested when you say strong, how much marginally stronger than the United States, though . Were talking about Earnings Growth and teaens. Are you thinking multinationals or smaller players country by country. This is a broad statement about the overall index. You can probably pick your pockets in terms of sectors and countries but for u. S. Investors a broad exposure to the euro zone is likely to pay off. What do you think this is the best play at this point . As always and were in a bull market people should be invested and not selling every headline. We have been climbing a wall of worry since 2009. Were going to keep climbing that wall of worry in our view. The impending hike could be an issue for stocks but every indication is this will be a very mild hiking cycle when they do eventually get off. What would concern you . What sort of red flags . I think if we did see inflation start to really take off. Thats something no one is talking about and something that we should probably be more aware of and right do you worry about that . Not in the u. S. I dont. With the devaluations of the yuan. Thats all a massive inflationary impulse. Energy has base effects. Imported goods could have an issue as far as dragging down core headline inflation by, i dont know, maybe. 4 for a year or Something Like that. But as far as the core inflation nary in this country were running out of workers. Were slowing down. The acceleration in blue collar wages that we saw with the index. Theres lots of indications. Thank you for coming in today. Coming up, the streets reaction to ciscos First Quarter results plus what the tech giants ceo makes of the trouble in china now. But first a look back at this state in history. Apple now looking apparently to push the ipad into the Business World a little bit more. The wall street journal reporting this morning that the company is working with more than 40 different Tech Companies to make the device a more appealing tool for work. That move comes as apple tries to deal with falling ipad sales. They have their partnership with ibm. Its a little bit more business friendly going down to the point of you have been telling them look you have to grey this word out or you should have this word here or theyre going into the apps and theyre saying you need to make it this way. If you have a calendar over here, it should integrate with this and nobody is buying it i dont want to say nobody is buying them but the idea of using it as a business tool is gone but theyre talking about the ipad pro coming. Its a much bigger screen, that can come closer to a real laptop. Whats that going to do to the laptop business . I dont know. I want to buy the new mac book 12. The really little thin and beautiful but now im sort of waiting for the ipad pro or whatever that is. I like having a keyboard. I know, you dont like the glass. I have ipads but i carrie around my laptop constantly. Cisco reporting after the bell. The company beating on the top and the bottom lines. This is the first report under the leadership of new ceo chuck robins that took over for John Chambers. Talking about exposure to china with our own jim cramer last night. China is only 3 of our business so our exposure is very limited. However its the second largest economy in the world. It will become the largest economy in the world. So we have opinion there 20 years. Were committed to china for the longterm. We have spent a lot of time over there recently and we really understand whats going on but right now we have limited exposure. Were very committed longterm. Lets get a check on where the stock is trading right now. It was higher and still is in the premarket. Theres a look up about 3. 5 . Joining us to break down the results is tim long. Managing director and senior reerj analyst. Good to be here just getting used to a new voice. Not only were results good following 20 years of John Chambers got to be taunting for any new ceo but we have seen a lot of activity from chuck already in the three months since the announcement, a fua quiz situations of underperforming businesses and acquisition of the security company. A real solid quarter and some Management Changes flattening out the structure so we think its been very solid for him so far. Strong in the u. S. Offsetting some weakness elsewhere. How much is sis coe for a real economic view. I remember when John Chambers said the word lumpy. And everybody got concerned about what that meant for the Global Economy. How about now . Theyve always been good about whats going on. Particularly in Enterprise Spending its about 75 of their revenues. So its been a pretty good barometer. Weve seen the u. S. Has been very strong both on the enterprise and the commercial so the Small Business side and they called that out about two weeks ago and they have really been good on calling inflection points in tech and we have seen really consistent quarters. What about the idea that software is playing a much bigger role than it ever has. Thats good and bad. The bad being that it takes awhile to make that transition and we have seen that show up a little bit in the results. This is generally a very challenging thing. I cover a lot of tech hardware companies. When you want to make the revolution to Software Revenue hits because software might be cheaper so your revenues might go down and your margin profile and consistency is much better. Cisco continues to move higher and theyve been transitioning for three years or so now seeing that the world wants more software. Its a big spend. Theyre spending a lot of money. Areas Like Software youre getting low single digit growth at this point. Is the expectation that growth is going to ramp up as the Spending Continues and theyre able to adopt their software. You could argue theyre facing a revenue hit now because what could have been recorded right now gets more deferred over multiple years. Its a single Revenue Growth company over the next years. Theres still operating leverage in the model and with the software we should be expecting better growth margins overtime. Andrew, you look like if you were joe i would get killed on. Its a different type of china question. Edward snowden question which is to say what do you think of the longterm impact on cisco has been relating to the nsa and everything we are doing here and whether you think thats still trickling in as a problem to the business. China say little bit different for cisco than the other companies in technology because they have a very large competitor so theres two large chinese competitors so in addition to the geopolitical issues going on theres also within china and the Tech Industry i cover the wireless space as well, theres a big push by the government to use local companies and local components so how much of it was snoeden and how much of it was we want to use our local companies . So i think chuck on that segment said 3 of revenues coming from china. Thats probably largely u. S. Or Multinational Companies that are in china. So i think theyre hike many of the companies that faced competitions from the domestic Chinese Companies theres going to be a little bit more of a head wind because its not just a macro issue. Its a competitive issue as well. But you think using snoeden as an excuse is a good one. A little prop for me to say where i sit but i do know that its a global and theres such a real alternative there. We have to go but is there a read through to anybody else . Juniper . Have they reported yet . They had a very good quarter. But i would say for the larger Networking Companies this is a pretty positive read through. As i said, nice, straight down the middle of the fairway which is what we want to see from them. Thanks for being in the middle of the fairway. When we come back this morning, some video footage may reveal the largest great white shark ever caught on camera. Were going to show you the pictures and tell you if its safe to go back in the water next. First take a look at yesterdays s p 500 winners and losers. It took Joel Silverman years to become a master dog trainer. But only a few commands to master depositing checks at chase atms. Technology designed for you. So you can easily master the way you bank. Start this school year off right with a little extra credit from at t. Right now, switch to at t and get 300 credit when you trade in a smartphone and buy any smartphone for 0 down. With 300 credit per line, getting ahead this school year is easier with at t. Just about anywhere you can use splenda®. No calorie sweetener. Splenda® lets you experience. The joy of sugar. Without all the calories. Think sugar, say splenda® welcome back. We are in chairs taking a look at the stories that caught our attention this morning and guys you know that i have an incredible fear of sharks. Its been a lifelong thing. I saw jaws way too young. Theres new video out of a shark thats apparently 20 feet long. Its perhaps the greatest great white ever caught on video. 20 feet long. Thats crazy. A pregnant female. Looks like a whale. Yes. It looks like jaws. This is the shark we were told didnt really exist. Its for real. The shark is known as deep blue. By the way, hes a pregnant female so theres another baby on the way which makes me think of jaws 2. Is the pregnancy one of the size . No, shes at least 50 years old according to the guys that captured this video. 5,000 pounds i think. 5,000 pounds. Where did they find it . Off guatalupe island. He only posted it on facebook on august 10th. It received 1. 6 million views. When i saw deep blue for the first time there was one thing in my mind. What do you think that word was . I word i cant use in my mind. Holy cow. He thought hope because he says that a shark of this size is at least 50 years old and that tells him that conservation efforts are working. First of all can you believe that the divers were out of the cage . No. I mean maybe the shark was so big it couldnt turn that quickly. Or that he looks like an appetizer. You want something a little bigger than that. I just cant believe that. I couldnt believe that either but there she is. I always wanted to be in the cage. Not get out of the cage. Yeah but this is on my bucket list of things to do. Not what that guy is doing but inside of the gates. Have you been following the Tom Brady Deflategate thing right . Yeah. So brady and Roger Goodell were in manhattan yesterday for a hearing trying to before a judge for the whole settlement situation to deflategate. Brady, handsome guy, right . He is. Dashing guy, well, not according to the sketch artist who was in the courtroom today. I dont know if youve seen these pictures but the one on some of the newspaper covers today are funny. Deflateful dead is what the daily news says today. They say crypt keeper tom brady. The one on that actually looks thats better than the other one. Relatively doable. But i saw this all over twitter yesterday. Memes broke out with some of these because he did look like almost the guy from the screen. Show them this picture. This is way worse. Can you get that one . On the merits though, the judge seemed to not be happy with the nfl and Roger Goodell. Seemed to think this was a farce of a case. Seemed to ask them that. He seems to want to settle. From everything that im reading it doesnt seem like the judge wants to rule on this. Maybe hes trying to pressure them. In all honesty point of their point has been they didnt have the evidence and they didnt think he was a credible witness. I dont know if that holds in the court of law though. The problem with this whole thing is this particular hearing the judge is only deciding anything based on the process itself. Not only the actual evidence. Actual evidence. And, you know, if brady is going to miss four games, and theyre going to have a settlement and we give you a one game but you have to admit your guilt, well, brady stood up in front of the world and said i have done nothing wrong. I wouldnt expect hell take any deal like that when he has to stand up and admit guilt and some former players, i think mike, invited tom brady to not settle or admit any guilt either. I dont know how its going to play out. Take a look very quickly. I want to update everybody on the story from yesterday with geno smith getting his jaw broken. Thats a great story. Now theyre looking at rex ryan he immediately picked up the guy that broke his jaw. Picking up the guy that will be able to rattle geno smith any time he does come back on the field. Its a total rex move. I got a business story but im not sure if we should go to come h commercial. Watch out. Verizon getting rid of the two year contract. This is a huge shift in the way they sell phones. It will look a little bit more expensive in certain cases depending on who you are. To buy the phone. To buy the phone out right and it will look a little cheaper depending on where you stand too and whether youre going to hold on to the phone. What i cant figure out from this is whether this means youre more likely to keep your phone for an extra year or not . It will offer vouchers. Theyll still offer a 200 voucher but a little bit different. The beginning of what could be a change in the way that these companies do their business . Right. With apple and others . So could have a huge impact on the Telephone Companies depending on how we react as customers because right now were on a two year upgrade cycle and thats almost built in subscription business for an apple but if you can move your phone from one network to the other changes the dynamic. I cant not break the thing in that time frame. The one design flaw of all of these phones, if you drop them basically once they break. Thats not a design flaw if youre one of the phone companies trying to sell you a phone. Thats true. But we say nice things about apple phones all the time and thats it looks beautiful but come on, right . Should make it out of rubber. When we come back this morning is van guard making it too easy for cyber criminals to access your account. The scary warning after this. Youre watching squawk box on cnbc. First in Business Worldwide. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Welcome back, everyone, a new investigative piece on the street. Com exposes potential flaws in vanguards global account Cyber Security. It serves 20 million customers worldwide and has about 3 trillion assets under global management. Joining us is the writer of the article. Founding fellow of the street foundation. Its the Nonprofit Organization trying to expand among consumers through journalism. Were joined by the author of the piece. Thank you for having me. How did you focus on vanguard . You got in touch with a whistleblower . A woman called me in the spring and said i work at vanguard. I filed a whistleblower complaint and i have problems with their Customer Account security and i said tell me about it. It took a couple of months to get the whole thing down but there are some problems there. I wouldnt say pull your money out of the firm but theres problems there. It sounded like most of the problems were things where they were let too many people through and letting too many errors. If you type your password in, if you type it wrong its forgiving and allows you in anyway. You know these personal security questions, what street did you grow up, whats the name of your cat . So you can, instead of fido for your dog you can write in fidal. So they worked in this they allow you two typo. Forgiveness sort of. Yeah. And online what the Cyber Security people tell me is thats a real problem. If youve got somebody using a Computer Program to try to hack your password it makes it much easier if you have that kind of flexibility. Now the reason they would allow these is so when you cant get in youre frustrated and have bad fingers typing that you dont go call them on their 1800 line. Right. Theyre not the only firm that does things like that to try to make sure that they dont have people calling the call centers every five minutes. Theres a real rub between security and convenience and i think that all the Financial Firms deal with that. What was van guards response to you when you pointed these things out to them . Its interesting. They gave me a lot of time. We spent a lot of time going back and forth but the whistleblower brought up three important problems that she had seen. They only slightly touched on one of the problems. First he said he didnt want to talk about it and then he said to me thats the line between convenience and inconvenience. What were the other two . This whistleblower got a call one day from a customer absolutely furious because he had just signed up for their voice verification system so you can get on the phone and just say Something Like at vanguard my voice is my password. He had his son call in and pretend to be hill and his son got right into the account. Thats pretty bad. The other thing that she told me was that she had gone to a seminar last fall, vanguard was getting ready to roll out this personal advisor services, this Money Management kind of thing. So she goes to this seminar, maybe its the third or fourth time they have done one of these and she opens the book, this book and she starts seeing all of this personal information. Peoples phone numbers, peoples addresses and you can see, every one of these post it notes is where i found something that shouldnt have been in there. Someones personal information. We should read a statement from vanguard. Heres what they told us. Vanguard disputes the fundamental assertions made in the article. Vanguard has one of the strongest client protection programs in the Investment Management industry. We follow industry best practices applying state of the Art Technology and rigorous standards and we continually roll out additional options and we educate our clienlts ts best practices. Did they change anything you pointed out to them . No. They didnt change it because have gone in a dozen or more times myself to see if it works. It concern mess as a vanguard client as well. Where ever you have your money you should check that because schabb has the same problem which they say theyre going to fix by the end of the year. The biggest question to me about all of this is lets say some money gets moved by a terrible hacker. Are they going to end up being responsible or not . Thats a good question. They have an online fraud policy and the policy says we give you your money back in unauthorized activity takes place as long as you do the following things which include like dont use the same password anywhere else. I dont know about you guys i have a unique password for everything. Well, youre ahead of me. They say your password should be at least 8 characters. Which is interesting because they let you use only 6 characters. You have to change your password regularly. Dont share your password with anyone and dont click on any suspicious emails. So if you do any of those things the policy doesnt kick in. It doesnt sound like vanguard is saying that there might not be some problems but by disagreeing or disputing what they say are are the fundamental assertions made by you, are you suggesting that they knew about these issues and did nothing about it as a result. Oh, they absolutely knew about these issues. The whistleblower wrote to management including the ceo, i think it was in april of 2014 outlining these Security Issues and a number of other issues too but these were included in that. She has also she has talked to people on record lines telling them about the problem. She has gone to her manager and talked about the problem. They have known about all of these. What happened to the whistleblower . She still works there and she is on a leave right now. But just to put a fine point on it, the damage thats been done has been done have consumers lost money . Well, i dont know and they wouldnt say and i can understand them not wanting to say that. They had a series of fishing attacks last fall as did a number of companies in fall of 2013. I said did people lose money. He said nobody lost money and i said well did people lose money and you reimbursed them . And they wouldnt go there. Im thinking theres a calculus made. This is the convenience of letting people in and not. 5 or 10 , stuff may get stolen. Shrinkage. Thats fine and part of the Business Model. Well accept it for what it is. This book is not shrinkage. They were sloppy. The security guys i spoke to told me its a really bad policy to let you put typos into that. Raises questions about the industry overall. Yes it does. Thank you. Coming up when we come back, this is not your grandfathers watch. Well talk to a company that will bling out your time piece for a mere 10,000 so or. They join us right after the break. Welcome back to squawk box this morning. What would make an apple watch more than ten times worth its retail price . Handmade, a whole new technology to the Technology Luxury watch industry and recreates them to look decades or even centuries old with individual engravings. The founder and chief designer. Good morning. You have these watches. You have a rolex here. You have an apple watch and you carve literally right on the bands. Correct. And this apple watch, for example, we said ten times how much would you sell that watch for . This watch is 10,000 now that its finished. How much was it before . The watch was around 1,000 when you first get them. Lets see if we get a closeup look. You can see the detailed work. And each are carved by hand . Its the filigree of controlling like on guns and knifes. And so how many of these watches are you selling in a given year . Well, i use a handful of the finest engravers around the world. Its a limited resource so theres not theres a limit which also makes it somewhat beautiful. Theres only so many you can do because theres only so much manpower. We carve between 20 and 30 watches a month. This watch goes for 10,000 . It does. I apologize if im wrong. I get this on a rolex watch, for example, because that watch, to me, will never really be outdated unless we only wear digital watches in the now tofu. This watch tim cook will come out with a new one. Unlike a vintage watch, you will want a new one. What do you do about that . You see it in the wearable fashion with tech. Apple obviously came out with the gold watch and so forth. Its one of those things people buy luxury pieces or luxury things at times for not to put it in the weak sense but because they can. Ive been a fan of apple since the products first came out. Who is your customer . I think its amazing to carve and bring the artistry back to what apple is known for. Who is your customer . Are they in california . Are these Silicon Valley guys . This watch is on its way to dubai after the show. Dont drop it. I have a large buyer in dubai. What happens if they screw up . Because you have to buy these watches correct. You have to buy them retail. Apple is the hardest one because we cant disassemble. The rest we take all the guts out so were purely working on the band and the body of it. If you screw up on those, in general you can buy another one and fix it. Its not something you want to be screwing up but it gives you more wiggle room. The apple watch if you screw it up, yeah. The band is interchangeable. If a new watch comes out, you can at least put the band on the watch. The bands you can interchange out on all the watches. Thats an aspect that makes it nice. Thanks for coming in. A cool idea. This mornings top stories including latest investments. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm, theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. Breaking overnight, china trying to ease fears about currency wars, dismissing reports powerful government officials wanted the yuan to go lower. Volatility in china could disrupt deal making back here in the u. S. According to gary parr. Hell join us on the squawk set. The tippnder ceo ousted earlr this year is back. Why the dating app is putting its cofounder back at the helm months after replacing him. The second hour of squawk box begins right now. Breaking up is hard to do live from the beating heart of business, new york city, this is squawk box. This is cnbc first in Business Worldwide. Joe is off this week. Our top story this morning continues to be china. The countrys central bank taking steps to calm fears on the yuan calling reports of a possible 10 drop in the currency groundless. Earlier in the day the pboc set the yuans midpoint rate lower than yesterdays close, the Third Straight day of devaluation. The stocks in china trading higher overnight. Take a look. The happening seng up the hang seng was up 0. 4 . Take a look at how this is playing out in the United States. After two days, two mornings of very rough openings, you can see this morning there are positive signs. Dow futures are up by about 63 points. S p futures up by eight. The nasdaq is up 25. This comes after the market pulled off a stunning rebound yesterday. At one point the dow was down by about 277 points, ended the day flat. Lets tell you about the other top stories going on now. A busy day for Economic Data. Congress expecting firsttime filings to remain steady, about 270,000. Retail sales and import prices also coming this morning at 8 30 a. M. Eastern time. And then we have ray dalios Bridgewater Associates reporting its latest investment moves. The Worlds Largest hedge fund disclosing new stakes in fossil group, foot locker, and Level Three Communications and Parent Company of this network, comcast. Bridgewater increased stakes in cocacola, monsanto, exxon mobil and in potash, agrium, nvidia and southwest airlines. It was in the filing required by the fcc. Sean rad is returning to tinder. He was replaced by chris payne. In a statement payne said we mutually determined this wasnt going to be optimal. Thought that a quick transition served everybody best. Sean rad served as president and was in charge of product and marketing at tinder. Is he the guy a scandal of sorts. He got into it . There were some things that happened, yeah. Cant talk about it. We can talk about them but we wont go into the detail because its a family program. Its a family program. All right. We should tell you more, there is a developing story out of china. A huge explosion shaking a port city killing at least 44 people. Injuring hundreds. The blast sent massive fireballs into the night sky. The initial blast erupted at a warehouse and triggered other explosions at nearby businesses. The cause is not immediately clear. This morning, though, hyundai Officials Say about 4,000 imported vehicles were destroyed by the blast. Getting back to the markets this hour. Our next guest says that though the market is showing resilience, damage has been done. Dan greenhouse, chief strategist at btig, a cnbc contributor. Good to see you, man. Good to see you, sir. What was up with the comeback yesterday . That was out of the blue. It was. It started at 12 00. Normally these things happen around 11 30 you can say it had to do with the european close as art cashin says. Were talking about a stunning reversal and it was to the degree it came out of nowhere but you had an even greater reversal on july 7 from the down side to the upside. I looked back at the data in late june for the s p you had a reversal in the opposite direction, a bigger decline top to bottom. I think the larger story this is just sort of part and parcel of the trading range in which we found ourselves for what is ultimately going to be a record period of time, and i dont think necessarily anything really changed it. Are you going back even longer than the last eight months . The way i do it is since february. The spread between the markets high and low, you can go back to the s p, i believe, 1944 or for the dow you can go back about 100 years to find a similar thin period of time. Maybe apple getting some stability yesterday helped the overall market. Sure. And maybe and were just learning of, you know, ray dalio, for example, taking a position in fossil, which is just one of the stocks of more than half of the s p 500 that is in correction mode down at least 10 and if many cases much more than that. And maybe some people just look at the long and distinguished list of companies and said enough is enough. Down 73 from its most recent interday high. Fossil down 74 . Dupont, caterpillar, ralph lauren, mattel, discovery, whole foods big companies. Maybe they just said enough is enough. Sometimes thats all it takes for a market reversal. Listen, i dont know why the market does what it does on an interday basis. Lets ask this. If youre talking about the tightest trading range youve seen in decades and decades and decades, are you guessing it breaks out to the upside or it breaks lower . The answer a lot of people would tell you will break out to the upside. Listen, the market almost always goes up. But weve had a pretty consistent theme all year and that was that the fed was going to raise rates in september which is what we thought more or less all year. And you still do . Yes. They still are going to tighten in september. Listen, i like to say we invented the one and done camp. I think if anything whats happened with china, which is not as big a deal as some people have said but also not as little a deal as the network will be littered with people are saying today, this reinforces the idea if they tighten in september theyre not going to do it again in december. Do you think the market can really handle it . Theres two answers to that question. The more complicated answer is, of course the market can handle it. Its only 25 basis points. To the extent they sort of reduce your expectations for how much theyre going to tighten thereafter, then the effects are going to be somewhat limited. If youre arguing that the market, the economy cant handle a 25point basis hike, youre essentially arguing that this is a very, very bad economy to a degree that most people dont think, that even 25 basis points is enough to tip us over. The shorter, more direct answer is for some reason the s p 500 declines almost every time that the fed begins a tightening cycle and you can go back quite a long period of time and the data supports that. So if youre asking me, and this gets back to our year, is the stock market going to rally in the wake of the first hike in september . Our answer all year has been no. I still hear people suggesting that theres going to be a catchup trade in the u. S. Market relative to whats taken place elsewhere in the world. Europe has outperformed, even though the dax has been in correction lately. I dont want to catch on to what the dax has done. Down 6 . Theres been to be a u. S. Catchup trade. Does the fed move in september coupled with concerns about china make that impossible . No, i dont think it makes it impossible. I think it makes it much more difficult. I will say that a lot of the outperformance that youve seen occurred very much in the First Quarter and we had a number of clients i consider very smart arguing around april that perhaps the idea europe would outperform in perpetuity would be challenged that it was so strong. It would be very hard for that to continue, and they are arguing for a rotation into u. S. Equities thereafter. But, listen, i cant tell you how many clients with whom we meet say its only 25 basis points. Who cares . That is generally speaking the argument of my clients. The data shows otherwise. Dan greenhaus, good to see you. Coming up when we return, Nbc Universal taking a stake in socalled new media with a 200 Million Investment in vox media. The chairman and ceo of vox joining us next. Then conventional wisdom says car collectors will swarm cuba. Travel restrictions are eased by that may not exactly be true. A live report plus lazard vice chairman gary parr is here and the pace as a result of all of that in deal making. Stick around. We have that and a lot more in just a moment. Welcome back to squawk box, everyone. Weve been watching the futures. After that rough market session yesterday where the dow was down as much as 277 points before rebounding and ending the session flat, you can see some green arrows this morning. Dow futures are up 66 points above fair value. S p futures are indicated up 8 1 2 points and the nasdaq up 26. Check out retailer kohls, missing on both the bottom and the top lines in its latest earnings report. The retailer earned 1. 07 a share, 9 cents below expectations. Revenue fell short as well. The company cited a bigger than expected negative impact from a number of states declaring tax free sale days july into august and this is what we heard from macys, too, negative news. Kohls is down 5. 7 . Nbc universal investing 200 million in vox media. Vox runs sites like the veshlg and sp nation to name a few. Hoping to build a partnership in editorial content, advertising and technology. Nbc universal and cnbc, of course, both owned by comcast. Joining us from washington, chairman and ceo james bankoff. Maybe i should say welcome to the family, james. Good morning. Were excited to partner together. So tell us a little bit about how this came together and what it really means in terms of how vox is going to now line up and be involved or not with Nbc Universal. Well, we couldnt be more excited to announce this strategic partnership. Theres a bunch of partnership elements, too, ranging from creating great programming together particularly video programming to doing some cross promotional efforts to building some have you for brand marketers, brand advertisers across our two great platforms and then also leveraging vox Media Technology which is a platform that helps us build great media brands like we have over the past few years. So were excited. We think theres a great fit. Can you tell us a little bit about the valuations of Digital Media companies in this space right now . Your company is worth about a billion dollars. You put it together starting in 2008. If you really look, your valuation has doubled the last two years if not more than that. Its a great universe to be a part of, james. The question im trying to get at, though, do the valuations, to you, make sense, and maybe its hard for you to say no but maybe theres a different answer. Im sure theres a lot. Creating a great business, creating Great Properties for our audiences and value for our advertisers. The market does what the market does. I would say it probably does that because theres clearly some shifts going on. Technology is driving all industries to disruption and new things and were benefiting from that. Were creating were on a mission to create some of the great new media brands for a new generation of consumers. We have over 170 million unique visitors every month to our sites around the world growing some great brands and really taking off. I think its partially reflective of that and we just keep our heads down and do our work. Though were partners, a, are you profitable . Yes. You are profitable . Yes. Can you say how profitable . No, were not disclosing that. Well see. Were not done with the year yet. Weve steadily grown and actually our growth has been accelerating over the past few years. This 200 Million Investment, what are you doing with it . Is anybody cashing out, taking any money off the table . Were figuring that out. Theres going to be a small secondary component. We havent figured out the details on that. The rest of the money will be used to make sure we can grow the kind of company that we want, that we can invest in our future. Were focused on four areas of growth first, building our brands. We, as i said, want to be the leading Media Company going into this next generation, and that requires in a changing environment we want to make sure we have the capital to act opportunistically, so grow our brands, grow our advertising capabilities, grow our technology platform, and then invest in our infrastructure and our people. And generally thats what were going to do. Thats what we have been doing and well continue down that trajectory as a strong, independent company. James, you talked a lot about creating new media brands, but obviously part of this partner ship is developing the existing brands that we have here at Nbc Universal. Ive read some places that youll be kind of showing up at some of the Nbc Universal properties including cnbc and i wonder what do we do in those scenarios if i see you around the building . What will you be working on . I dont know, highfive . We collaborate in a few different areas. Already frequent contributors to cnbc and that will be one element. I think well be working on a various cross promotional element. There are many things but one of the things is our brands line up really well together. Were trying to build these brands. In sports we have sb nation and Nbc Universal has nbc sports. We have recode and cnbc, we have vox. Com and msnbc and nbc news. We can go on with racked and curbed which fit well with bravo and other things youre doing. We see plenty of opportunity for clollaboration, developing new franchise together, cross promoting one anothers programming, whether theres delivering Cross Platform to the brand marketers that we both work with. Were going to pursue all those things and stay tuned as you all say in the tv world to see some great collaboration. What percentage of vox does Nbc Universal now own . I dont even know off the top of my head. We already have a previous relationship with comcast ventures. Collectively do they own a third of the company. Its a minority. Were Still Closing and seems to be in control of our own dest y destiny. Should you just own it outright . Its an independent company and we want to continue to build it. This is going to be a great investment, a great partnership. Jim, its scott wapner. You talk about the changing environment and its undeniable where new media is going. A week ago the destruction in traditional media stocks. If the concerns are overdone, the death of traditional media is greatly exaggerated or not. I think its mischaracterized. The fact that we all carry around supercomputers in our pocket, the fact that were viewing on demand, its changing. For me that means theres more opportunity being created not less. Different methods, different programming approaches, but it creates massive opportunity. I mean, just think about we all have monitors in our pockets so the amount of time that were going to be viewing is going to be going up. Now who takes advantage of those opportunities . Who can move with the creative talent to move and appeal to the new Consumption Habits will create new opportunities i think for Companies Like ours but i also think for the incumbents as well. This is in part about that, taking advantage, learning from one another and creating some great products for audiences. Given your valuation, you look at my friends at the new york times, valuation at 2 billion. Do you look at that and say youre overvalued . Or do you say maybe theyre undervalued, or do you say somebody like that is overvalued . They were valued on our potential partially and on the industrys potential. My job is not the same as yours. I dont sit around and compare valuations like that but i focus on building value for our company and our audiences and marketing partners. Were proud to continue growing and building a Great Company and our results are reflecting that. We have to go and im going to get killed for asking but theres been a lot of conversation that he wants to turn the company more like vox. What do you think of gawker . I have tremendous respect for nick. Hes been one of my inspirations in this industry and built up would you ever buy him . I dont think were going to buy gawker but im a supporter of nicks. I know hes doing what he needs to build his company. Well leave it there. Again, welcome to the family, thanks. Thank you. Were looking forward to it. You bet. Take care. Lazard vice chairman gary parr talks deal making. Then, is there a bubble in Subscription Box Services . The cofounders of services that send you cosmetics or pet toys coming up. Time now for todays aflac trivia question. What two families have had three members on sports ill frustrated covers . The answer when cnbc squawk box continues. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. Now the answer what two families have had three members on Sports Illustrated covers . The answer the mannings and the ripkens. Throughout cuba there are thousands of vintage american cars that make up a large portion of the transportation fleet on the island nation. Now with u. S. And cuban relations beginning to thaw, could cuba be a car buyers paradise . Not so fast. Michelle Caruso Cabrera tells us why many collectors are starting to pump on the brakes. Reporter it seems counter intuitive, doesnt it . You see all this video of incredible old cars in cuba, the result of the embargo by the United States. A lot of people assume that once its legal to do so antique carmakers will descend on the country to scoop them up. We spoke with a lot of experts before we came here and they told us they dont think that will be true for two reasons. One, the value that an antique car demands to the degree that the original parts are still in the car. And we can tell you that here theres almost no original parts in these cars. The exterior may be a cadillac. The interior could be a pugot. The sweet spot in the antique car market is 65 to 73. The majority are from the 50s and a few from the 40s. Cuban exiles could have a lot of interest in having cuban cars because of what they represent, incredible ingenuity and everybody we spoke with had an unbelievable amount of respect for the people here who have been able to keep these things on the road for so long. Bottom line, a car in perfect shape you can get in the United States easily for 50,000, here with all the bondo would only go for 5,000 that would be a lot. They would probably sell them even for the lower values. And they have not been sitting in grandmas garage for sunday drives. These are things weve been using every single day along the way. Reporter yeah, absolutely. And because the cars from the 50s and 40s as well are so big, they command a higher price because you can fit more people in them. They call them a name because of their most shape and you can fit most people in. Well see you at the top of the hour again, too. Okay. When we return today, youve heard the adage, dont fight the fed. Lazards gary parr says dont fight the chinese government. He joins us now on how volatile markets could slow down deal making in the United States. Lily lily, may i call you lily . I dont really know what else youd ca lily, i want an iphone, with a great data plan to share pictures of this smile. Well, all of our mobile share value plans come with rollover data so the data you dont use this month rolls over to the next. Wow. Using unused data for all sorts of uploads. My constituents love. To. Watch. Me talk. Todays leftover data means a Brighter Future tomorrow america. Write that down. Right now, get 300 credit for every line you switch to at t when you buy any iphone for 0 down with an eligible smartphone trade in. Some day somebodys going to make you want to turn around and say goodbye until then baby are you going to let them hold you down and make you cry live from the most powerful city in the world, new york. This is squawk box. Welcome to squawk box first in Business Worldwide. U. S. Authorities reportedly launching an investigation now into the former chairman of dean foods. The wall street journal reporting tom davis is suspected of leaking confidential information about a corporate spinoff to professional gamblers to billy walter. Pro golfer Phil Mickelson is who youre looking at now. Head of the companys Earnings Release monday. We didnt understand what was going on. We have a little bit better idea. The next question becomes what happens to the gambler and what happens to Phil Mickelson in all of this. Should they go down the line and where do the responsibilities lie . Former president jimmy carter says he has cancer. He had a mass removed from his liver earlier this month. In a Statement Released yesterday carter said that surgery revealed cancer had spread to other parts of his body. Of course we wish him well. Checking the markets, u. S. Equity futures this hour well flip that board around. Looks like it would open up higher. The s p 500 looking to open about eight point higher. China sending some shock waves throughout the Global Markets with its latest currency moves. You wonder what impact on the deal space. Joining us now on set to talk about this and more is gary parr, the vice chairman of laza lazard, the leading restructuring firm. Thanks so much for being here. Nice to be here again. Good morning. I know you spend time in china. How are you reading whats been going on . People are saying this is massive currency manipulation, others saying maybe not as much of a big deal. What do you think . Well, a few observations. Clearly the government is involved in managing the markets and trying to affect the markets but thats not so unusual. The ecb is flooding the market to lower Interest Rates in europe. The u. S. Fed has been managing Interest Rates here since the financial crisis. It happens all over the world, and weve done it in the u. S. For a long time. We dont do as much direct intervention in the stock market, but it happens and its common. The Chinese Markets are still new. For the government to figure out how to intervene, where to intervene is a process. You think theyre more ham handed about what were doing . Its not too dissimilar to what weve done if you look back. Stepping and sarajevoing, okay, we are going to support the yuan, peg it here, allow it to come off here and play the other side of it. There were times we did that with the u. S. Dollar, many times in the last 100 years. There have been multiple times we managed the dollar. In the last 100 years. Fair enough. You say we dont do that anymore. Youre right. Now were managing Interest Rates. In terms of managing Interest Rates i see that completely. It does give investors huge issues on two counts. Watching what they did with the stock markets, what theyre doing with the yuan. Its more ham handed, less theyre still learning. Still learning and figuring out how to do this. It raises concerns because we think theyre doing this because they are panicking based on a serious slowdown they see in the country. Certainly concerns. Panic may be too ebbs trem but certainly they are concerned about that. It is one of the core initiatives of the government to make sure theres stability in the economy, stability in the Banking System and providing liquidity. For that matter liquidity in the real estate market. You said no panic, though. How bad is it . We had an analyst on before who said we shouldnt worry about china at all. What level different way of observing first of all, for any westerner to say they really understand, i wouldnt believe them. Its hard to know whats behind the curtain. I think theyre concerned in trying to get it right with a longterm view. I have sat in meetings with a number of the people that are involved in the peoples bank of china and other regulatory authorities and the perspective they take is a longterm view. Then theyre trying to make the adjustments on a daybyday basis. The way i see it, it is a longterm fundamental concern they want to maintain growth and shift to consumption. You know banks very, very well. Hank paulson has come on this program, has written extensively about what he thinks about china. Do you see a real crisis pending coming . I dont. Im going to say why. Tr there are, again, risks. There are a number of risks embedded. Here and even back to the intervention question, weve had a saying here in the u. S. For a long time, dont fight the fed. I say the same, dont fight the chinese government. They have a lot of firepower. And so how it will play through i cant be sure, but when theres risk whether in banks or other places, the government has a lot of firepower to step in and provide stability. It may not work aright away and may have volatility. The fed intermeans in ovenes in market. Thats a fair point. The massive pace weve seen. Thats about where we were in 2007. So what does that tell you . Are you concerned its at the same level we saw in 2007 . The m a activity is a lagging indicator. It is sceo confidence and board confidence which takes time and so its been five years since the depth of the financial crisis, even six years, and finally were at a place where boards and managements are comfortable again, confident again about taking the risks of mergers. The stock market is still rewarding mergers by and large even for the buyers. Of course well get to some place there may be heated activity. But if you look at the percentage, the dollar volume relative to the stock market, were just now approaching sort of the historic mean. Were not in a bubble place if you look at that as just a percentage of activity. There are risks that could slow things down. It is interesting whether china moves their currency one way or another or they raise 25 or even 50 basis points we dont think will slow down m a activity. The consequences of those may slow down m a activity, meaning the stock market goes bad, or Something Like oil price really plummets, things like that. How will you know when m a activity is about to turn or cant you know, it just stops . When would you know when the stock market is at the peak . The one aspect of merger activity is companies should be taking a longer term view so its not like a stock trade. So every day the stock trade is i could sell it again tomorrow but a merger is supposed to be something that lasts a long time. Hopefully boards take the more deliberate measured and longer view, but there comes a time when there will be a peak. The bell is not ringing yet, in other words . Youve been involved in consolidation with banks over the years, virtually every bank on wall street has been a client of yours or youve been on one side or the other of banking consolidation and you talk about the transformation of wall street and how it might transform. We talked about the big banks either splitting up or changing themselves because of regulation, a new debate again about the president ial candidates. What is your sense of where we are in terms of that consolidation or breakup . Yeah. And you might recall ive talked about concentration not consolidation. Usually industries that are fragmented and have over excess capacity to eliminate the excess. In investment banks you have people leaving the business. They shut it down. Theres nothing to sell. So a number of firms have continued to be shutting down their Investment Banking activities or reducing trading or exposure. You end up with this concentration going to goldman sachs, jpmorgan, a lot are leaving the business. Its like a darwinian exercise. Its been slow. A lot of banks have not responded as quickly as i would have thought they would. Whats interesting in the last six months four banks at the board level decided theyre not changing fast enough so theyve changed the ceos. And thats very telling. So you look for where is the change, instead of day by day, theyre making business changes. The boards have said, in part because of shareholder pressure, change the ceos. You have to change your strategy. And, therefore, you think something comes from those changes . Reduction. Its more the concentration. More big banks will reduce their exposure to Investment Banking. Because its a bad business . Its so capital intensive. If you start working your way through, it takes so much capital to be in parts of fixed income, parts of commodities that your return equity you cant get to 10 . You start exiting. And the regulatory risk. Another m a question. Weve seen it so dramatically pick up lately in health care and those sorts of areas. What about energy . Are we going to see deals given whats happened . Energy is likely the largest deal is an energy deal. Its in europe but its Royal Dutch Shell so there is big. Theres so much stress in various parts of the business. What were going to see over the next 612 months is more restructuring activity. The second tier companies, a lot of over levered companies that are under pressure and so at least for 612 months restructuring is what we expect to see. Gary, a broader question on m a. A lot of people have come on and said since the financial crisis ceos have been afraid to invest and build things. Its easier to buy something and thats why weve seen such a frenetic pace. Do you think its a fair charge . Its interesting, becky. The first phase was companies wa bought in their own stock. We sat at least four companies with a lot of companies saying im afraid to even go buy another company. Thats too risky. Ill buy my own stock or sit on the cash. It could be were going through a phase. Now its not as risky to buy a company and maybe get in a phase where Companies Invest in their businesses more. Its been a huge frustration i think for the fed and the federal government with all of this money out there they thought that companies would be investing in people, investing in factories, doing things to put people back to work and it hasnt necessarily worked. It hasnt been a big translation, youre right. What we see are companies saying in their core businesses are not growing very fast and a lot of industries to invest in the business you wont make the revenue go up. The best way to get Earnings Growth is to buy someone else, get the consolidation benefits and that will drive earnings. It may not drive revenue. A lot of people are saying what we want is Economic Growth which will get Revenue Growth. Does the change of political environment have anything to do with your business . Youre going to get a new president. There are regulatory issues that are considered on an everyday basis. Justice department and how it behaves, other segments of regulatory. You think about it now . Starting to figure start to go strategize around that stuff . I dont think so as to will it get easier or harder. Theres more real time like health care. Are there certain sectors where people see a window closing and they think i have to get through that window now, or things that were waiting on thinking, okay, in the next term we have a shot at getting this deal across the finish line we didnt before . Im not aware of people managing because the next election is too far away is one reason to know which way the shift could go. Its a more difficult environment today than it was ten years ago. In the regulatory arena. It is fundamentally important. People know the delta. Thank you for coming in today. Nice to see you. A pleasure. An easy walk back to the offi office. Right over there. Welcome to the neighborhood. I know youve been here before. Come on back. Coming up when we return, stock movers ahead of the opening bell including one Internet Company getting a boost from an upgrade. We have details on that next. And then later, g op president ial candidate Lindsey Graham will talk about the crowded field and the iran nuclear deal. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. All right. Welcome back to squawk box. Check out shares of yahoo this morning. Bernstine raising its rating to outperform from market perform. Yahoo has been under pressure the last couple of days following alibabas earnings. Yahoo selling off just as alibaba had. But here you get a little bit of some relief. Up 1 3 4 percent. And shares of tesla this morning are ones to watch. 500 million equity follow on is set to price after the market closed today. Tesla offering 2. 1 million shares and elan musk plans to buy up the 20 million worth. The electric carmaker is trying to raise more cash. When we come back this morning, is there a box bubble brewing . From cosmetics and fashionable outfits to do it yourself meals, shaving kits, even treats for your pets. The Subscription Box Services are everywhere. Well talk about what it means, what you can get, what the future holds. Up next, the cofounder of bark box about the longterm prospects for the subscription economy. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. The latest consumer craze giving retailers a run for their customers from beauty to clothing to food, shoppers looking for the doorstep convenience of the box a month subscription trend. I dont know who here is part of that trend. We will talk about it. The money has followed. Pouring billions the past few years with scores of companies popping up. The question, is there a boom or a bubble brewing in the box industry . Here with us on set to discuss are two of the biggest players in the space, the ceo of a subscription cosmetic company and bark box that send treats and toys to your pet. Your wife is a subscriber a happy subscriber . Birch box. Must be happy because they keep showing up. If you sit in they give you a birch box. I have a mens birch box with good stuff in it, by the way. Thank you. Im so glad to hear you enjoy that. It seems theres a box for everybody. Already a lot of them. Were all following in her footsteps but its big and popular. Subscription is a great business because if you can get the credit card once you hope that they wont it is a great business but i think in both of our cases it isnt why we started our business. It was a fit for the consumer problem. Its hard to discover beauty products. Its particularly hard to purchase beauty online for the first time. Consumers want to touch it and try it and thats the category. When we thought how do we overcome that, build an Online Company where you want to buy new products for the first time, thats how we developed the idea of having a subscription. Explain how it works because the Business Model is interesting. Theres also we are between the consumers and brands. They sign up, they tell us about themselves. They tem us their preferences, the way they shop for beauty. And then we tailor a personalized subscription for them. Its 10 a month for women. 20 for men. Inside you get products to try but the purpose is for you then to find products you love and purchase them with confidence. Thats the whole idea. Were now opening stores. Its really about getting customers to almost, like, consider a whole new set. Love for the Beauty Industry and birch box gives her confidence and makes her want to engage in a new way. I love that. It makes sense people dont know if they want to spend a lot of money or a little something. However, you are now talking about major retailers getting into the same spot like a sephora who may be doing Something Like this. I dont know how you keep out others from competing like that. We have hundreds of thousands of dogs and what they like, what their preferences are. Its being there first. Its really understanding what they want, delivering the convenience, the value to them and then continuing over and over. We have dogs with us for almost four years now. We know theyre largely living in an urban environment. We talk about bark science of different types of squeaks, fabric that the dogs really respond to. I think the boom was years ago. You saw so many people go after this business because that annuity payment was so attractive. Really you see that you cant last if you arent delivering value to consumers and brand. Its getting interesting. Are both your businesses profitable . We dont have to disclose that. Were private. You dont have to. But im asking. Were cash flow positive. Its a decision on where you invest, right . So the birch box for the guy is 20 a month . Why is it double what it is for a woman . Theres different value. There are fewer grooming items so well send you tech accessories, chargers, new boxers, headphones. So it isnt just the grooming products. Its a way to discover lifestyle moments. How much value would you say is in the box . It varies every month. Ed 50 to 100 is regular. You dont have a choice what comes in the box . Whatever is in it is in it . When we started it was all about surprise and delight and that really helped consumers kind of suspend their whole preconceptions of what they wanted. Today we have a way for you to have more hand in this process of choosing. We allow you to choose a product in your box and sometimes you can choose the whole box in and of itself if youre looking for a new shave product or you know you love Nicole Richie and you want her. We have to run but quickly, if its 100 worth of stuff, are you losing money or is it subsidized by the companies . Its really strong. Its more the value. Okay. Guys, thank you both for coming in. We do have a busy hour still to come. Key Economic Data including weekly jobless claims and import prices. Plus gop president ial candidate Lindsey Graham will join us. Stick around. A new sea chance to tryew look. Something different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. [ radio chatter ] [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage, or major disaster, when you need us most, were there. State farm. Were a force of nature, too. Third times the charm. A Third Straight day of china devaluing the yuan. More on the move, plus, breaking news on retail sales. Thats all straight ahead. We will hear from market pros on how you should play this volatile market. Connecting with senator Lindsey Graham. The president ial hopeful joins us to talk iran, immigration, and the economy. His plan to win the white house is just minutes away. And the scramble to find eggs with prices on the rise, importing the incredible edible may be an excellent idea as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box. First in Business Worldwide. Im becky quick. We are less than 90 minutes away from the opening bell on wall street. We have been watching the futures and theyve been in positive territory. The dow futures up 33 points. The nasdaq is indicated to open up by about 23 points. Lets take a look at the markets in europe this hour. You can see that the dax is up rebounding a little, up 1. 7 . The cac in france is up and in it laly the market up about 2 . China central bank holding a News Conference overnight arguing there is no basis for continued currency depreciation. The pbo set the midpoint range at yesterdays close. Lawmakers are discussing some terms of greeces bailout before the meeting tomorrow. And then back here in the u. S. A busy day on the data front. Well get weekly jobless claims, july retail sales and import export prices. And we have a developing story from china. A huge explosion shaking a port city killing at least 44 people and injuring hundreds. The blast sent massive fireballs into the night sky. The initial blast erupted at a warehouse for Hazardous Material that triggered other explosions as well. The cause is not immediately clear. This morning hyundai Officials Say about 4,000 vehicles that were imported to the country were destroyed by the blast. A few stocks on move this morning, retailers kors missed estimates on the top and bottom lines blaming at least part of that miss on a delay by a number of states. Some states that usually hold those events in july actually pushed them off to august. You can see by the chart its been a rough ride since the spring for shares of actually were talking kohls. I think i said kors. Kohls is down did i say kors . I did. Were talking kohls. Kors has had a tough ride, too, in case youre scoring at home. Cisco systems beat street forecasts for both profit and revenue. Cisco did particularly well in the u. S. Market which helped make up for weakness elsewhere. Microsoft shares trading higher this morning upgrating the stock to buy. 1 premarket and shake shack under pressure. The hamburger chains 4 million Share Offering priced at 60 a share well below the Closing Price yesterday. Talk about a roller coaster ride, a huge swing in the dow. Blue chips down nearly 300 points at the lows of the day bounced back to close basically flat. Joining us now is a fix ed incoe strategist and the director of global macro for Fidelity Investments and global assess allocation division. Good morning to both of you gentlemen. Yuri, ill start with you. I just want to go to the question about the fed and well get to china in a second. I think it matters, are you still a september man, and how is that impacting your thoughts about where things are heading this summer . Yeah, well, thats the big question, of course. Will this latest deflationary way from abroad sway the fed to wait another quarter to begin liftoff . And i think it may well do exactly that. Weve heard more from members about a september liftoff but its certainly a 2015 start to this rate normalization cycle. I think falling well below 2 and credit spreads widening and commodities down and the devaluation in china, it may very well be enough to sway them unless things sort of come back together fairly quickly in the coming weeks because we do still have a month. Youre a wonderful guy, but what do you make of what jurrien just said . Its a coin flip in september. Were looking for not a full 25point basis hike by but a micro hike. Nowhere is it written in this new environment they have to move by 25point basis increments. The bank of japan when they hit zero or near zero and their liftoff was much slower and 10 to 15 point range. You could certainly see that from the fed and that would meet Market Expectations throughout the rest of the year. Instead of one hike we see 10 to 15. Between now and then the markets set themselves up how . Well, in terms of the bond market, we have it priced in and, frankly, the only thing we dont have priced in is the feds stopping rate. In 2018 the markets are currently pricing at stopping rate of roughly 2 or so. I think that number comes down another ten basis points give or take and thats far more important for bondholders out there which just matters to a ha handful. On equities, what do you think, jurrien . The market has been flat basically all year. I think the s p is up 1 or so. So weve been in this holding pattern, this sideways pattern for months and months and months. Waiting for the earnings estimates to come back up after that hit from energy and the stronger dollar. And so far theres little evidence were going to come out that have range, but theres not a lot of evidence were going to break down from that range. Were in one of those years which is not uncommon when the fed is starting a rate cycle. Does the market move up or down on that news . If the fed doesnt move in september, the dollar maybe goes down a bit and the market goes up a bit. But then all eyes will be on december fairly quickly and i think really the key is which way is the fed going to go . Are they going to go early and shallow or late and steep . And i think i agree with guy, even if they go in september, as long as they carefully tell the market, it doesnt mean theyre going to go 25 at each meeting, which i think theyve already said that. I think the markets will be okay. Going from zero to a quarter or even an eighth or an eighth to a quarter in the grand scheme of things isnt really that important. But clearly the markets are kind of pricing in the possibility of a policy error with the front end coming up and the back end of the curve coming down. The fed will look at that. How important is it on the twoyear . Were not that far away. Were not that far away. We dont quite get there. Its psychologically significant, but really the level im looking at, not to revert to your earlier question, is on a 2018 euro dollar market. This is a way that Institutional Investors can trade and make bets on the point in time level of the fed funds rate. And that number is as close as its going to get according to janet yellen. That puts in an economic or fundamental floor on how low tenyear rates will go. A large portion is based on the feds future trajectory and stopping rate. In the short term we could get more risk aversion type buying we saw on the events but i think for the most part its played out so we probably dont hit the 2 level. Given that the markets in the u. S. In terms of the equity market have been flat, where do you put your money otherwise . If you look around the world, you want to go where the reflation is taking place. Europe survived yet another greek crisis over there. I like europe. The ecb is doi massive quantitative easing. A country like germany trading at 13. 9 versus u. S. Of almost 17. And its in the same sort of mid cycle expansion phase as the u. S. Is but with a central bank thats easing further rather than looking to tighten. I still like europe a lot now that greece has faded back to the background where i think it will be for a while. Japan has been interesting with, again, fullon reflation. The japanese market is strong this year. Maybe tactically thats not a place to put money now. Certainly europe is good. Emerging markets with this china news i still think has some problems. Gentlemen, thank you so much this morning. Really appreciate your perspective. Thank you. Okay, coming up, the cfo of medical Imaging Systems and Surgical Products joins us. Well hear about the companys turnaround and its latest products to help women in the fight against cancer. And then, its been more than half a century since an American Flag flew in cuba. The embassy row opens tomorrow. Michelle Caruso Cabrera is there. Shes been playing with a smartphone as well in a place that barely has any internet. Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple, unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Welcome back to squawk box. Got the dow opening up higher, about 40 points higher. The nasdaq looking to open up higher as well, about 20 points higher. Headlines this morning just coming across the tape. Coke naming james quincy as its new president and chief operating officer, will have responsibility for all the operating units worldwide. We will be reporting directly to the ceo. He previously had run the group in europe and of course theres now speculation when you think about succession about whether he would be the next man in place after if there was a transition. Theres no news that there will be. Okay, coming up, whats it like owning a smartphone in cuba . We put Cuban Technology to the test after the break. And then our newsmaker of the morning, our producers had a tough time getting in touch with Lindsey Graham. Were not sure why but hes finally made it to the show. President ial politics in a bit. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. So whats it like using a smartphone in cuba . Whats on it and does it even work . Michelle Caruso Cabrera joins us this morning. Shes in havana. She has more on that story. Good morning, michelle. Reporter hi there, andrew. We have one of the more common ones used here in cuba, a galaxy samsung s4. You can see the orange packaging here. Ill take it out. Typical smartphone. Smartphone in cuba and yet theres very little internet here. Why on earth would you have a smartphone . When you purchase this, which costs about 360, it comes preloaded with apps. Already has wikipedia fully loaded. You dont have to get on the internet. You can just search everything there. It gets out of date sometimes so you need to get it updated. Maps come preloaded. The entire world on your phone so you can do map searches, et cetera, without having to access the internet. When it comes to smart phones we can tell samsung and android far more popular, more pervasive on the street. The reason is, one, theyre cheaper. Two, pcs are far more common here than macs from apple. Its easier, your system is easy to connect to. The difference in price, this is 360. If you wanted an iphone almost 900. But we see a lot of other apps for communicating. As the wifi becomes a little more available, more and more people using whats up, et cetera, to communicate. Okay. Michelle Caruso Cabrera, i thought maybe there was a toss to a piece or something. I apologize. Its great to see you. I should tell you, michelle, when i was in cuba a couple years ago the only people who had cell phones were doctors, and doctors would take them or sell them or rent to other people who wanted to be able to get on the internet. This was five or six years ago. Reporter its become far more the place looks so different to you now. If youre a firsttime visitor you would come here and say, wow, the place is really antiquated. You would come here and say theres been so much progress. Many more people with smart phones. Theyre using the Android Version of like a skype or a face time and theyre talking to family members overseas. And they are so excited about it. It was only available as of last month, the wifi hot spots, and theyre thrilled to do it. Michelle Caruso Cabrera in havana, thanks so much this morning. Medical Diagnostics Company gaining momentum with new products to detect early stages of Cervical Cancer and advancements in mammogram technology. Joining us is bob mcmahon, the cfo, and, bob, thousand fank yo being here today. Thank you for having me. I appreciate it. Weve talked about advancements in the past. The mammography is driving the bulk of your growth, is that correct . Yes. We just reported thirdquarter results two weeks ago. The thing were really pleased about we had top line growth of about 12 on a basis, net Income Growth of 24 . I think the thing thats really exciting 18 months ago this was a business that was in decline. To your point around steve, he came in about december of 2013, brought in a brandnew leadership team, and weve really been making great progress of really growing the business kind of on a steady basis. As you mentioned the last quarter it was a Breast Health business between the 3d mammography systems. You look at the stock and it has certainly been on a tear attracting all kinds of businesses including carl icahn. He still owns like 9. 9 in the company. But when people see things like that happening, they wonder if the bulk of the stock gains are in the rearview mirror. I think the exciting thing about the business, we have multiple Growth Opportunities under way. The genius 3d mammography is still only 20 penetrated into the market. We still have 80 of that market to convert over and thats a multibillion dollar opportunity. I think the other thing is we have a very untapped, under developed International Business and we think that has Growth Opportunities for multiple years. Were only about 25 of the Business Today outside the u. S. And we really think when we look at some of our peers and the markets, over time theres really no reason that shouldnt be close to 50 . We think theres a lot of growth ahead of us. What are the hurdles to getting into International Markets and what have the hurdles about having penetration here in the United States . You know, we have market leading products and its something that the team is just now start iing to scratch the surface. We have dedicated teams. Weve put a brandnew leader in place and hes building out his team and i think its really just focusing on a number of markets both developed as well as emerging markets really taking the technologies that we have here in the u. S. And bringing them to the International Business. One of the areas that hadnt been focused on. It sounds like a great pr prospect. What have the hurdles been . I think the hurdles are really just establishing some of the infrastructure. We have a Dealer Network outside the u. S. Making sure we have the right dealers in place focusing resources in the countries were looking at and really driving that business. I think historically weve really focused on the u. S. Markets and i think really having the ability to have both 2d as well as 3d mammography systems will allow us to play on all sides of the market from a price point perspective. Bob, maybe you can help me out. I was confused. I looked at information that showed analysts overall, a lot of them raised their price target and rating on the stock after the last earnings. It looks like on whole about the 18 analysts who cover the company have a buy rating on the stock, but it looked like the average stock price that they have, the price target over the next 12 months is Something Like 40. 25. Youre trading well beyond that. How do you add up or square those two numbers . Im not going to try to get into what the analyst projections are. What i can tell you were really excited about the business and i think what weve seen over the last several quarters is an acceleration of growth. I think we will continue to see very positive growth in our business both on the top line and the bottom line. I think the other thing weve been doing is not just performing better in a commercial standpoint, weve been driving operational improvements so our cash flow is up almost 47 year on year and so i think i dont know where the analysts are projecting but i know were confident about our future. Bob, thank you for joining us today. Thank you for having me. Apple looking to push the ipad into the Business World. The wall street journal reports the company is working with more than 40 Tech Companies to make it a more appealing for work. Apple tries to deal with falling ipad sales. Coming up, key Economic Data that the markets will be closely watching today. Retail sales and import prices and jobless claims after the break. And then president ial candidate and South Carolina senator Lindsey Graham is our special guest. We head to a break. Take a look at u. S. Equity futures. Hello. I am here to offer sophisticated investing strategies. My technology can help you choose the right portfolio. Monitor it. And automatically rebalance it. All without charging advisory fees, account service fees or commissions. That may be hard to compute. But im a computer. So trust me. It computes. Say hello at intelligent. Schwab. Com no students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. Im in a new york state of mind welcome back to squawk box. Among the stories front and center, teslas Share Offering is set to price after the market closed today. Elan musk plans to buy up to 20 million worth of the electric carmaker. Theyre trying to raise more cash to offset heavy spending on increased production. And merck upgraded to outperform. The firm citing increased optimism about mercks product pipeline. And then watch shares of go pro. Coverage of the camera makers shares with an outperform rating. The analyst pointing to an expanding product line and new software which will increase ease of use. And then take a look at roche, buying up to 24 million. The move should help the swiss drug Company Expand products for fighting socalled super bugs. And newscorp posting better than expected earnings. Cost cuts in the news and Information Services including the dow jokes and the wall street journal. The Company Announcing its reviewing options for amplify its Digital Education brand. Weve had them on the Network Several times. Joel was on i dont know if he was on the board but he worked for murdoch for quite some time and handled the scandal that took place in the uk. There you have it. Were also talking about cocacola this morning. The beverage giant naming james quincy as its new president and chief operating officer. Will report directly to the ceo. We are a few second away from retail sales, import prices and the jobless claims numbers. Theyre numbers the street is anticipating and watching for especially the jobless ones. Rick santelli is standing by at the cme in chicago. Rick . Reporter thanks, becky. And here they are. Up 0. 6 as expected on headline. Retail sales, no revision to june. Through the internals, strip out autos, its up 0. 4. These are like spot on with anticipation. Strip out auto and gas, youre also up 0. 4. Control number 0. 3. Thats light. There are revisions to july outside of the headline number and all of them are better. Down 0. 2 autos and gas. So this is all pretty good news all things considered. The control number last time down 0. 1. Moves to positive 0. 2. Theyre on the light side. Import price for july, down 0. 9 month over month. Actually thats better than anticipated. A smaller price increase. Were expecting a number closer to 1. 2, 1. 3 on a year over year basis. These are minus numbers. And 10. 4 is light. Were looking for something closer to 11. Jobless claims, 270,000. Survey says 274,000 up 5,000 because last weeks 270 stands slightly corrected at 26 9. Claims moved up to 2. 7 million. Lets summarize we had a 30year bond were paying very close attention to thats been above its 275 closing yield. Its basically about the same level. I marked it 2. 82, 2. 83. Higher from the context of retail sales delivering, it did deliver. Is it enough horsepower . Remember, its a july number so its not necessarily going to impact what we are seeing in all the other numbers. Theres mmm more to come. I know everybody is going to Pay Attention to how atlanta fed gdp gets updated. It builds as all the pieces get put together. 30year bond at 1 00 eastern, yesterdays tenyear note auction was a bit of a dog. Everyone is watching china and maybe more important all the hands on all the levers trying to figure out exactly what to do with their currency market. Back to you. All right, rick. Thanks so much. For more on the numbers the chief economist and Senior Investment officer at oppenheimer funds. Welcome. Good to be here. Whats your reaction . Pretty much in line, maybe a few revisions, pretty good. Its a good number. If there was another disappointment like last month we would have been concerned. This is a ho hum number but it suggests this steady grind stronger u. S. Economy is still in place. This is the most important component of it so its okay. Nothing terribly exciting but okay. Weve been looking for a pickup in retail and maybe the read through of the unemployment report where hiring was actually pretty good in the Retail Sector was a tell that the number would be at least okay. I think thats a good point. We saw some of the preliminary gdp numbers being okay. E interesting thing will be to watch the savings rate and see if particularly when we get to backtoschool sales this month where there are incentives, sales tax holidays and so forth, if people dip a little bit into the savings theyve been building, people are getting jobs. The job market is okay. Like everything else, okay. Well see where that goes. This keeps us on track for what we would have expected coming. I dont think anything is different than 15 minutes ago. So things are, as we say, okay, but there are concerns about the ripple effects of whats taking place in china and what ultimately it could mean to the Global Economy here in the u. S. How is that all factoring into the way youre thinking and a rate move in september . What china is trying to do is avoid some kind of tightening, and theyre in a kind of tough situation because the devaluation encourages capital outflow that is produce as tightening for them. It goes in the opposite direction what theyve been trying to do with Interest Rate cuts. So theyre trying to figure out how to run a 21st century economy. I think that 5 devaluation that might back up has minimal impact in the u. S. People are trying to because a computer is 5 last summer, that will go in the companys margins. I dont think this is a big move for us. The problem is the u. S. What i was concerned about with todays number the u. S. Consumer is probably the only moderately strong part of the whole world economy. Maybe singapore. Its hard to find any place else. This is about it. Its not going to push the fed back, china . I dont think unless there had been some tumbling down and some major financial issue, i dont see why the fed says, okay, this is part of the world economy. We have to look at whats going on in the u. S. Its time to make this change. Thanks for swinging in. Glad to do it. Always glad to be here. Oppenheimer fund chief economist. When we come back, well take a check on the markets after the big economic nuls. Plus, senator Lindsey Graham on the run for the white house. And then what are you willing to pay for a dozen eggs . The numbers may fry your brain. Stick around. Squawk box will be right back. Having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom, you had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom, youre blindsided for a second time. They wont give you enough money to replace your brand new car. 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We promoted earlier in the hour the issue of iran. Its a topic weve been talking about a lot. I want to get your thoughts on what is about to happen. If we can get the senators to disapprove the deal that would give the next president leverage. Its not between this bad deal and a better deal and i think almost anybody could get a better deal. Senator, that is the issue. Sandy berger said its not between a bad deal today and a better deal later. Its between a deal today and nothing later, that there is no second option. Thats garbage. Thats complete garbage. The iranians know they would lose a war with us. But you have to be proepd to go to war if thats the case, sir. Absolutely. If they try to break out and we dont go to war, were idiots. If you want a program for peaceful purposes, you can have it. Youre not going to get a dime of money and buy new weapons until you stop destabilizing the world and supporting terrorism. Were about to empower a radical ayatollah with a path to a nuclear weapon, a missile to deliver it and money to pay for it. What about allies across the globe who have agreed to the deal already and what does it say about our standing with them if we get into a situation where the president agrees to a deal and then we back out of it . I think this is a terrible deal. Because the world comes together doesnt mean its a good deal. Look at munich. If we could tell the french and germans and anyone else if you do business in iran youre not going to have access to american banking, that would matter. Congressional sanctions gives the next president leverage to a better deal. Can we talk about the Broader Campaign at this point, just to get the leverage, it is a crowded field at this point. You just missed making the big stage at the recent debates. You were there neck and neck. You said you think Hillary Clinton would beat donald trump like a drum in a general election. It has to be frustrating to you. Why do you think hes getting the numbers in the polls . I think a lot of people are frustrated. Hes expressing frustration with washington. Im frustrated we cant solve any problems. Thats whats broken about washington, we cant work together. I think hes tapped into frustration but his policy solutions are gibberish to me. Thats not an immigration solution, thats just gibberish. Senator, Donald Trumps president ial candidacy has been described as a sideshow and yet as a main show. What is the Tipping Point . When the Republican Party thinks about winning in 2016. We have problems with hispanics and women. Demagoguery is taking hold on immigration. Everything is a. M. Nexty. Saying Illegal Immigrants are racists. Im pro life. It will be tough if we dont have an exception for rape or incest. I hope the desire to win will take over the desire for anger. The other thing is the economy and how youre planning to approach it differently than others. You talked about flat taxes. Do you think right now that raising theyre in the headlines every day that a flat tax will not be considered regressive . I want to do Something Like Simpson Bowles. The economy will crash in about 20 to 30 years because 80 million baby boomers will go into retirement. We have to flatten out the tax code. Take some of the money to pay down debt. People have to work longer. Means test benefit for people of my income or we become greece. The sole purpose of my presidency when it comes to the economy is to get us off track from becoming greece, take Something Like Simpson Bowles and get a bipartisan position. I love chris christie. Hes a good guy. When he signed the Grover Norquist tax pledge, that means eliminated deduction in the tax code, you have to put all the money to lowering tax rates. No money goes to lowering the debt. Youll never get a democrat to means test benefits or age adjust under that formula. The other issue i wanted to get to you on which really does have to do with the campaign is Campaign Finance reform that you have talked a lot about but is an issue we all agree or think should happen and yet nobody really wants to do it. How would you do it . You have a constitutional problem after the Citizens United case. Unlimited money from unknown donors is a problem over time. I dont know how you can fix the system unless you address the Citizens United case. Transparency is probably the best way to do it. Some democrats would make the argument, by the way, that case helps republicans not democrats. Do you buy that . No, i dont think it helps america. There are about 50 people funding all of these campaigns. Super pacs will dominate campaigns. Were heading for some corruption here pretty soon. At the end of the day Campaign Finance reform is very important but nobody is talking about isil. Nobody has got a coherent solution to keep radical islam from coming here. And this whole debate has been lackluster in terms of substance. Theyre coming to hit us here. We need boots on the ground in iraq and eventually syria to keep isil from attacking our homeland, and were not really talking about that kind of issue. How much do you think that issue resonates with the American Public versus immigration or some of the womens issues and prolife or not issues . Thats a good question. Other domestic finance issues. Thats a good question. I think its right under the surface. Im talking to you from new york. People in new york are anytime something happens in new york, you wonder if its terrorism. I can promise you that radical islam is thriving and surviving in iraq and syria. They want to hit us here. Theyre having the capability to hit us here. If we dont send some of our soldiers back over there, we dont have enough in iraq and have to go into syria with a regional army. If we dont pull the caliphate up in syria, they will attack us here. I think most americans are very worried about another 9 11, and one is on the way if we dont up our game and go on the offense over there. Senator, you said you obviously have taken some shots at donald trump and dont appreciate who he is, but you also said you didnt like the debate the other night, the way they went about it. Why is that . Well, you know, its good to challenge a candidate, but no one has talked about would you do revenue as a republican to get democrats to reform entitlements . Thats a big issue. You know what drives the longterm debt. Do you mean would you raise taxes in order to cut spending . Well, its not raising taxes. Its eliminating a deduction. Nobody is talking about raising tax rates, but we are talking about eliminating deductions and applying some of the money to the debt. That violates the Grover Norquist pledge i like a lot. Id be willing to do that if democrats would age adjust and means test. Nobody has talked about the big things like that. Do you need boots on the ground in iraq and syria . I think you do. No ones talked about how to destroy isil on the republican side much different than obama. Its not just enough to criticize president obama. What would you do to stop isil . How would you degrade and destroy it . I didnt get a whole lot out of that debate. Senator, were going to leave the conversation there. We appreciate your time this morning. Thank you. A great conversation to have. We hope you come on back. Absolutely. Talk to you soon. Thank you. Scott, an update . Right before the senator came on i was turned this way. Eric now i see a lovely member of the nypd. Your car is gone. Im going to give a shout out to the nypd for cutting me a break. No ticket. They were literally about to tow the car. The car has been moved. The car has been moved. Im thankful that i happened to look over my own shoulder and what was one nypd officer was quickly two and then three. The radios were out. So i was out and, thank god no ticket, no tow. New yorks finest cutting you slack. You got lucky. Big shout out for the men in blue this morning. And the men and women in blue. When kwe come back, news frm twitter. Jim cramer joins us from the New York Stock Exchange with a look at what investors need to watch at the open of trading today on wall street. Lily, may i call yo . I dont really know what else youd ca lily, i want an iphone, with a great data plan to share pictures of this smile. Well, all of our mobile share value plans come with rollover data so the data you dont use this month rolls over to the next. Wow. Using unused data for all sorts of uploads. My constituents love. To. Watch. Me talk. Todays leftover data means a Brighter Future tomorrow america. Write that down. Right now, get 300 credit for every line you switch to at t when you buy any iphone for 0 down with an eligible smartphone trade in. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Tweets will be capped at 144 characters. There will be a character limit on direct messages. Everyone is focused on what the future will be and who the ceo will be. You are looking at 29. 57 on that stock. Stocks on the move. Microsoft trading higher. Upgrading the rating to a buy. Kra hoo getting a boost. Bernstein is raising its rating of the stock to outperform from market perform. Shake shack is under some pressure. 60 per share, well below their Closing Price of one day ago. Jim cramer joins us. I have seen your tweets about my lack of being towed. This is a great thing. Do you know how badly this day would have been had you been towed . The Halftime Report might have been a quarter time report. My own mood would have been changed. Being towed, people in new york know that being towed is literally the end of the day. No doubt about that. Speaking of changed moods, jim, what happened yesterday, what does it mean for how we go forward here . We should have never been down. The dollar held, oil held, Interest Rates are steady. Very important. The dollar is strong. Interest rates, bla. This is some market, scott. Honestly, we came in yesterday with all real good setup. We come in today with a terrible setup. The market looks up. I dont know how long that can last. What do you make of some of the moves this morning . I know you had the ciscos new ceo. Trump definitely delivered. He came in with an attitude that said, i am taking no prisoners. He hit the ground running. He was talking about buying stocks in the cybersecurity space. The most important thing is, he gave guidance in the press release. We didnt sit there and try to find out whether to own cisco or not. You bought it when the release came out. Nice change of page. You got yahoo and microsoft upgrades. Yahoo needed one. The yahoo upgrade is grade. They were suffering under the ali baba thing. It presumes they cant sell it with a good tax base. Microsoft is about consumer products. They talk a lot about clouds. You know 53 Million People play grand theft auto . You were almost involved in that situation. That would have been grand theft auto of the worst sort. They take you to Brooklyn Navy yard. Thank goodness for the windows here. Thats all i can say. He ran out and begged not to get towed and had somebody drive the car away. Pretty fun to watch. Well see you in about 5. Have a great one. Up next, the bird flu leaving egg farmers scrambling. Some analysts see prices hit 6, a dozen this winter. Could imports keep egg lovers happy. Morgan brennan is on the egg beat. We will hear from her next. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. The bird flu is far from over. Egg crisis since april. The threat to poultry flocks in the midwest remains high. Morgan brennan joins us from des moines iowa at the site of the iowa state fair. Reporter good morning, andrew. Two months since the last case of reported bird flu. 142 , thats how much the wholesale price of a dozen midwest large eggs has risen since the beginning of april when the peek took effect. They are expected to stay elevated until 2016. It takes 1218 months for production levels to get back to normal. We have some producers that will begin restocking their farm soon, including Center Fresh Group that lost 8 million hens to the outbreak. That farm or that Company Expects to begin bringing birds back as soon as next month. There is a huge wild card to all of this. That is the return of bird flu that fall when migratory waterfowl begin flying south. The industry is aggressively preparing for this. If this were to wipe out more flocks, with he could see egg prices hit as high as 6 a dozen. It is not just eggs. Tucky pric tucky turkey prices have been climbing. You are seeing a shortage of turkey deli meat. The pain is very real for consumers and farmers. The hope is the next round of bird flu can be swarted athwart thank you very much. I hope you get some eggs out there. Egg on a stick. Thank you for being here. We are glad your vehicle is safe and sound. Make sure you join us tomorrow. Squawk on the street begins right now. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the New York Stock Exchange. The bulls trying to follow through on yesterdays upside reversal. We are coming off the highs in the morning. China intervening for a third day saying there is no basis for a further devaluation. Retail sales for july in line,. 6 higher for june and