Transcripts For CNBC Squawk Box 20240622

Trading. Check it out, 40. 21. The last time you saw prices like this it was 2009. March of 2009. We were in the midst of the financial crisis. It was a lack of demand. This time around its not just a lack of demand for slowing economies like china but also massive amounts of supply. Well talk a lot more about whats happening to wti but right now barely holding on at 40 dh 40 dhr 40. 21. The shanghai composite closing down by more than 3 and in europe greece making a 3. 5 million payment to the ecb on a maturing government bond. Athens using money from the latest bailout. Back here in the states a few economic report of note, weekly jobless claims at 8 30 a. M. Eastern time and then at 10 00 existing home sales. We got a couple of other big stories in focus right now. Of course the fed is on our mine. Yesterdays release of the minutes from the last fomc meeting raising a number of questions about the timing of a possible rate hike. Its the question we talk about virtually every day and the question continues. Policy makers agreeing that the economy was nearing the point where rates should move higher but officials are warning that lagging inflation and weak Global Economy pose too big of a risk to commit. At least so far overnight we heard from two fed heads. Both speaking overseas. San francisco fed president jon williams argued that raising rates is an effective way to cool off a Housing Market that is too hot but he warns resulting drop in house prices could wreak more economic havoc than its worth. On the other side wrong williams, guys, the music. The other jon williams. Williams not opposed to raising u. S. Rates farly soon though. He has said he believes the fed should probably raise Interest Rates a couple of times before the end of the year. If thats true, you have to figure out when youre starting. Three meetings before the end of the year now. Meantime, minneapolis fed president is in seoul today and suggests the possibility of increasing the feds inflation about inflating the target. The dual to reduce Financial Stability risk and make it easier. He floated the idea but didnt go so far as advocating the change. What is that . Moving the goal post . So instead of raising rates well move the goal post. We still dont know whats going to happen. Well, the Market Reaction yesterday was amazing. The market didnt seem to have a clue how to read the fed minutes. The dow was down pretty sharply. Came back and went positive for a moment before reversing again and by the close you were off more than 150 again. Im still confused trying to figure out what the market wants or what it would respond to positively. Is that a sign of relief . Were finally here. The fed is admitting they think the economy is Strong Enough to hold on to this or do they say we want more of this very accommodative policy. You take it as a great sign or as a terrible, terrible sign that the world is much worse than we think. One thing i do think is that it does increase volatility until we see what happens in september. Play the volatility trade at least. In the meantime, beyond the fed and the economy well be hearing from a number of companies today. Maybe factor into some of the feds thinking on this. Madison square garden, sears before the bell. Then sales force and gap all reporting. Lets get back to the broader markets. As we showed you the futures are under pressure. This say continuation from yesterday with the dow down 143 points. The s p futures indicated to open down today. If things stand like they are now. Lets check out the early trade in europe. Right now youll see that there are red arrows there as well. Most of the declines are below 1 . The dax is down by three quarters of a percent. In italy the ftse mib is down by 1 and in greece its down by about 3 . Overnight in asia you saw that the nikkei was down by close to 1 . The hang seng was off by 1. 7 and the shanghai composite which has been incredibly volatile lately has been down by 3. 4 . Energy the big focus and well talk more about this in a moment but check out whats happening with wti. 40. 26. The last time that crude was below 40 was march 3rd of 2009. At that point it fell to 39. 44. You can also see that brent crude is down another 1. 5 to 46. 42. Check out the treasury markets. The ten year note yielding 2. 098 . Even as we talk about the feds raising rates that pressure on yields continues. Same story weve been watching. A lot of market pressures on the yields. Check out the currency markets. The euro looks a little stronger against the dollar today. 11158. Dollar yen at 12355 and up against the pound and finally gold price which is have gotten a bid in the last several sessions are up another 10 to 1,138. 40 an ounce. Its been the opposite but gold getting a little bit of a bid in the last week. Crude oil prices, that pressure putting 85 of the Energy Sector in bear market territory. Chesapeake and Console Energy now more than 70 off of their 52 week highs. Joining us right now on the slide in oil prices, just talking more about the fall out is matt smith. Data director of Commodity Research an matt, this has been one that very few people have called correctly and i just wonder what you do at this point. Do you just sit and wait . The term of the oil price becky or . Yes, in term of the oil price. Were looking at potentially a three handle. Its something you could hit today. Sure. We havent hit the lows, tested the lows on brent alt that 45 level yet. It seems thats the next likelyhood in terms of wti because of downward pressure broent as well well probably drop to that 40 level. Its a one way street at the moment which is a concern in itself. When everybody is pointing in the same direction we could see a swift rebound. A lot of people are short in this market. Actually in terms of the financial positioning, hedge funds are getting close to their shortest, their longest positions for their shorts there since the lows end earlier this year. Were reaching an extrek but at this point were going to continue going lower. Are you suggesting that 40 doesnt reflect the market fundamentals at this point . Well, what we saw earlier in the year is the market get ahead of itself in terms of investment flows coming in. Once we got to those low levels we saw a swift rebound even though the fundamentals didnt necessarily justify that. And i feel were seeing a similar thing this time around as well where were going and everyone knows that crude demand is going to drop off. So theyre trying to get ahead of that and everyone is selling this thing down. Where is a fair market price. We talked so some experts yesterday about this that said this time around they thought it was going to be a vshaped rebound. He now thinks its a ushaped rebound. But what if its l shaped and you see prices bouncing along this bottom level. It could be a w rebound. A ww rebound. Were in the situation where were not seeing the market rebalance yet so until that happens were not going to see sort of any sort of price move higher and so in the u. S. Here we are starting to see production dropping off. Were seeing sort of 9. 4 Million Barrels a day but elsewhere in the world were seeing it as well. Its fair to say theyre behind us for the foreseeable future. Very much so. If you look at the forward curve its not a fair representation of the market. But below 50 for the end of next year. Youve seen mexico hedging in the next day. They hedged their production at 49. Theyre savvy so that could be a lid on prices over the next year potentially. Thank you for joining us this morning. Crude is closing in on a three handle. The dow setting up for another triple digit slide. The fed seeming glly giving the market mixed signals about what is going on. Nice to have both of you here. Allison, you first. I made the comment that the market didnt seem to have a clue what the fed was saying in the minutes yesterday. What was the message . I feel the same way. I thought going into it its a coin toss and coming out of it feel the same way. If anything they might be more dovish. That whats going on with oil prices and in china they might pause. My concern there is, it keeps the markets incredibly volatile. Just wondering if theyre going to do it. Do you have any idea . The fact that the mashlth has been as volatile today it looks like it will open sharply lower. At the same time watching this drop in the price of crude. A agree with allison. It wasnt clear. Some came out and said its dovish. Some said its hawkish. The reality is is that the Federal Reserve is considering raising Interest Rates at a time when the world is a wash in deflati deflationary pressures. We continue to be in a very weak growth environment. We con to have Oil Prices Decline and currencies fall against the u. S. Dollar. Thats denatiflatiodeflationary. You have excess supply and Spare Capacity around the world the risks is large. The fed should not move in september . I feel that a very small move of the margin might be stabilizing. Weve been in an easing environment for years. Thats what you think should happen . Should happen. Goldman sachs saying its going to be in december. Which bank is going to win that game . I dont believe its going to happen in september and i dont believe it should happen in september. People talk about what it means. Psychologically it means a lot. You look at the journal today and they have these commodity exporting countries getting hit as a result of the Energy Market and not to mention, you know, the first signal or move that rates are going to go up. The dollar goes up more. It continues to hurt those types of countries. Countries like canada which are already looking like a recession. China is weak. If youre looking at 7 years of zero Interest Rate environment when do you ever get off of this. If you dont think that now is the time in september i dont think in december the situation would be different. Im not sure either. Theyre going to try to raise Interest Rates at some point. I dont think its going to be september because of deflationary forces. Theyre going to try to raise rates this year in order to get off the 0 bound and signal to the world that the sun still comes up. But were in unchartered territory. Usually theres Inflationary Pressure and excess demand. We have not been in a period in a long time where were considering raising Interest Rates in a world of excess supply and Spare Capacity and thats what the markets are representing. This is going to be the longest cycle on record and the longest credit cycle and by definition the longest business and market cycle and the only way that plays out is if you dont have a disruptive policy mistake. We tried with the fiscal cliff. We have been able to overcome it. 25 basis points is not as big but it is deflationary. Theres all this bad news and were worried about the fed, china, et cetera and yet the s p is only 2. 5 or 3 at most from the all time high. Corporate profits are still look strong. Employment is picking up. Theres wage growth. Consumer spend as good picking up. So in the u. S. Economy except for the energy industry, but thats already hard hit, things are trending more positively. So some volatility outside of the United States but in the u. S. Things are trading normal. Thats when youre in a normal environment and Interest Rates are normal. Not at zero. We have been flat the last couple of months. The highs were awhile ago and you could argue that the flatness unto itself is sort of its own strange form of a correction. Right. But underlying the major averages there is a bear market in dozens and dozens of stocks that have gotten and countries. So your point is well taken. Its just when you step back and put it into perspective and say oh my goodness it feels terrible. Were like 2 off the all time high on the s p. Whatever thats worth. Allison, good to see you. Brian as well. Thanks, guys, when we come back much more on the Global Market sell off this morning. Well talk about that. Plus were all familiar with google street view but now the tech giant is doing something different. Its teaming up with researchers to bring us stunning views from under the sea. We have the pictures next. But first heres a look back at this date in history. The mercedesbenz summer event is here. Now get the unmistakable thrill and the incredible rush of the mercedesbenz youve always wanted. But you better get here fast. Yay, daddys here here you go, honey. Thank you. Because a good thing like this phew wont last forever. See your authorized dealer for an incredible offer on the exhilarating c300 sport sedan. But hurry, offers end august 31st. Share your summer moments in your mercedesbenz with us. Can a a subconscious. Mind . 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 . The futures have been under pressure again. This comes after a rough ride for the markets yesterday when the dow was down 163 points at the end of the day and that came after the session. The dow futures are down by another 150 points. The implied open is down by 150 points. S p futures off by about 17 points and the nasdaq looks like it would open by another 36 points lower. Other headlines for you this morning. I like this one. All work and no play. Could it make you very sick . Thats according to a new british study that says working long hours increases the risk of stroke and Heart Disease. Researchers tracking more than half a million adults over a 9 year period. People that worked 55 hours or more per week were a third more likely to suffer a stroke. This is not good news for me. And 13 more likely to developing Heart Disease than working more standard hours. 40 hours . 40 hour work shifts. But if you love your work maybe its okay. Yeah they dont take into account the loving the work part. If thats the case well all be good i hope. In other health news a new Study Suggests a healthy mood can spread through social networks but depression does not. Using a model similar to those that tracks Infectious Diseases they look at how the move of adolescents influences each other. While depression does not spread among peers having friends with a healthy mind set helped teens prevent or recover from depression. Having a Stronger Social Network could be an effective way to treat symptoms of depression. I always think social networks and online and also mean and terrible out there. Theres also been studies that suggest that they make people feel worse because everyones life looks so perfect when youre watching friends post pictures of great vacations and how happy they are theres a desire to try to keep up with the joness and were trying to make our lives look better than they are. Social media envy or something. As im looking at twitter right now. Anybody having a good vacation. I havent read any nasty comments yet. Thats a win 20 minutes in. Maybe everybody is still sleeping. In sports news thousands gathering on the streets of williamsport, pennsylvania to welcome the teams for the 69th Little League world series. 16 teams will compete for the title. Opening ceremonies scheduled for this afternoon and the first game will with uganda against the dominican republic. It will be played out in less than two weeks with the World Championship game on august 30th. We actually invite other nations. Its a great event. Verses the world series that we play in baseball where we dont. Its a great event unless you bring kids that are ineligible to play as happened again last year, unfortunately to a u. S. Team out in chicago. So it is a great event though. Check this out. An incredible journey under the sea to capture the beauty in serious danger of die agowying. It could be the closest we come to seeing these sites as they face a threat like never before. Hidden below the surface of the worlds ocean, spectacular gardens of coral and now documenting each stunning inch from australia to here in hawaii and beyond. Divers with a one of a kind underwater camera snapping a 360 degree picture every three seconds. The team partnered with google. So far, stitching together more than 750,000 photos creating a google street view of the worlds coral reefs. We joined the team off the eastern coast where corals where may look like rocks are actually living animals, facing what scientists fear could be extinction from what is called coral blaeeaching. This area here looks like it has snow on it. Yes, thats the bleach. And as you can see this is the healthy coral. Bleached corals turn white when they die. Now because of electric nino an warming conditions, waters that should be in the high 70s are 84 degrees and could reach 90 degrees killing more of the corals. Youre talk an event similar to the rain forest of the world turning white over a very short period of time. Everyone will be jumping upnd taking notice wondering what is happening. But this is happening underwater on a massive scale. This new google view of the reef will be used to compare the corals health in five years. Today its online. A virtual dive of what has been out of sight, out of min until now. Key sanders nbc news. The t sries including the Global Market sell off going on oil price right n just holding on barely to 40. 40. 30 for crude right now. Rrel crude is of course a huge story forhe alineindustry. Well talk about fairs and good news for csume next. I may be wrong about the airles. Rst w head to a break look at yestdays p 0 wiers d lors. You are loing at o rplane fuel gauges n u spheiffee . No u nseth . Gh letaka lo the one on the right just used 1 less fuel than the one on the left. Now, to an airline, a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Britta olsen is my patient. I spend long hours with her checking her heart rate, administering her medication, and just making her comfortable. One night britta told me about a tradition in denmark, when a person dies, she said, someone must open the window so the soul can depart. I smiled and squeezed her hand. Not tonight, britta. Not tonight. [ female announcer ] to nurses everywhere, thank you, from johnson johnson. Welcome back to squawk box. Were in the chairs looking at stories that are interesting. This morning, the one fascinating me, i dont know if you saw it, from ceo of cocacola this morning. Cocacola coming under a bit of fire last week for paying for some studies, some Health Studies around how we should be thinking about healthnd where calories are versus exercise. The studies they had been funding were in part suggesting that exercise is really the issue. Its not really the calories. You can drink as many cocacolas as you want . I dont think they were saying that but they were promoting the idea of much more exercise than anything else. Coming under fire for the transparency related to that. The study openly said they were funded by cocacola. After people called. So anyway, coming out today saying we want to do better. Were going to do better and be much more transparent about what we do. Theyll be listing who they are funding to the extent they are funding anybody on their website. Theyll be creating a governance Organizational Panel of experts helping them with this. Good for him. He took it on. He said, look, you know, to some degree our bad. Hes not saying were not going to be supporting or funding different types of research and he has every right to do that but i do think its great that he has come out and said this. Remember its the New York Times that wrote the article the last week or the week before. The oped today in the wall street journal. Yes, im aware of that. It doesnt change the fact that, lets be honest, Soda Companies have been slow to react to the obesity epidemic in this country and more times than not theyve been more dismissive than not. That there actually is an issue related perhaps to the amount of their products that are consumed and the epidemic itself. To some degree thats real. I think youre right but i would also say i think over the past year or two hes really started talking about smaller he does talk a lot about trying to make the bottles smaller. Hes trying to go to diet sodas. Theyre trying to diversify their mix. They got into theyre now doing milk. They have a great chocolate milk out of chicago. Better late than never. And when you have a product like soda, its kind of heart to get away from if thats the main product, its slightly hard to get away from that, at least in a very quick way. Years ago, whether it was five or six years ago when we did a documentary on obesity and not a single soda company would speak to us on camera at all and instead, you know, we got the spokesperson of the lobbying group and maybe the tides turned about. I remember Junior High School and high school when they had soda machines in the school and drinking a couple of sodas a day. Obesity is not the problem then it is now. So im not arguing. I drink diet soda now if anything and most of the time i dont drink that. But its more than just soda that makes you fat. Theres a massive change our society has gone through the last 20 years and a lot of problems that have gotten there. I think theyre getting closer. But its a challenge. But theyre at least moving to the right place. How you get from here to there, thats the real challenge. Can i talk about my story. Yeah, go ahead. Youre next. We have to go in order. Yeah, we do. Air fafares see the sharpest monthly decline in seven years. When you fly the service isnt going to be that great. The financial dynamic for the airlines has changed in a way that has made these companies more investable than maybe they have ever been and now prices are going down. Oil prices are down. Fuel used to be the number one cause for airlines but recently it fell to number two behind labor. People always say oil prices have come down so much. Why arent they passing it on . They pass it on so quickly when oil prices go up. Heres the thing, i dont know what im supposed to do here. I wrote a column about this earlier in the year that oil prices dropped dramatically. I suggested that theres not enough competition. But its a competition story. A number of other people said the same thing and written the same thing. Joe and i got into this in a heated way. Theres also been the argument that these airlines hedge and now the hedges are finally coming due so now they can lower prices. Theres also if your a conspiracy minded person, the Justice Department launched an investigation on the back of the commentaries about what was going on on the pricing issues. That happened just two months ago and now were seeing prices come down. Is that a marketbased issue or are some of the airlines saying, you know, we should start i dont know. Im just saying theres a lot going on in this space. Leave it there. You can resume this conversation when joe comes back for sure. Lets not. I want to talk about my story this morning. If youre eating breakfast im sorry. I apologize for this. Finish quick. Theres a new machine that researchers have been working on. They have been trying to figure out how the norov virus spread. Its a big issue. 21 million cases are reported every year. It puts like 70,000 americans in the hospital and 800 people a year just in the United States die from this every year. So the researchers need to figure out how it spreads. To do that, they created a machine, its a vomit machine. They try to mimic the same way that people throw it. It is designed to push out liquids and semiliquids in the same downward facing direction that people do when they barf. They used instand vanilla yellow pudding to replicate various textures of vomit and there you go. Theres a little bit of the example of it. Now they didnt want to use noro virus on this. Because its hard to control. They used another virus called ms2 that is similar but doesnt make you sick and its easy to grow in the lab and by tracking what happens in this machine theyre getting closer to trying to figure out how it spreads. Thing is, it can stay around on a fried fork or door handle for weeks. Is that the thing that you always hear about im going to get a bad email from the cruise industry. I knew where you were going with this. It tends to spread through the entire ship. They have to deeply cleanse everything. Because it can stick around for weeks on door knobs or things. Theyre trying to understand how things happen like in 2012 there was a huge outbreak and it came from a noro virus on a plastic bag in a bathroom where someone vomited. So figure this stuff out and enjoy your breakfast today. Okay. Great. When we come back well talk about something else, i dont know where you put this in the world not in the same category. Valeant nearing a deal for female viagra. The maker is sprout. Well talk about that next. First as we head to a break, take a look at whats happening in the european markets right now. Things slam add cross the board. Red arrows everywhere. Were back in a moment. Welcome back. Lets bring you up to speed on a Global Market sell off this morning. Take a look at futures after yesterday talk about a volatile day yesterday because of the fed minutes. Now an implied open for the dow down around 150 points. Been there for the last hour or so. Nasdaq and the s p would open lower as well. Yesterday the s p closed below its 50 day moving average. One of those key Technical Levels that traders watch. Well continue to keep our eye on that. If i take you across the pond to europe its red arrows across the board from germany to greece and greece hit the hardest. Lets show you the picture in asia shanghai down 3. 5 . Japan and the hang seng index falling as well and much of the intersags is centered around crude oil. Crude wasnt below 41. The last time it was was march of 2009. Now its barely hanging on to the 40 level. Could a three handle be in the near future. Wti down 1. 25 at this hour. The 10 year note was at 2 and now and its 209. Maybe the market continues to bet the fed wont move in september. Euro at 111 and gold has been catching a bid of late. Maybe since we learned they had taken a barely big position in gold putting a little bit of a bid into the precious metal there. 1139. Lets talk about a few stocks to watch lets look at l brands. Company posted a better than expected 8 increase in quarterly profits. This company includes names like victorias secret and bath and body works. The stock is under a little bit of pressure this morning. Part of this is coming because of concerns about guidance. Oalso beating the street and offering guidance as well. It looks to be paying off. You can see that stock is up 12 this morning. Reports out this morning that valeant is near a deal to buy Sprout Pharmaceuticals. Getting a lot of coverage for the approval of its female viagra. The deal has not crossed the table. You expect it sometime. Potentially. This morning tnchts wall street journal reporting overnight. How big of a deal is this for valeant. We cant forget the alle grrks an situation last year. This a much smaller deal. If its in the same wheel house. These are life style drugs. Out of pocket. Patients pay out of pocket. The first one was rogaine and then viagra. It fits squarely. Theres a lot of questions about, you know, what degree of efficacy women will see with this. Theres differences between women and men. Theres a big question about the efficacy of this, whether it works. And then alcohol. They dont want you Drinking Alcohol which which is also a complication. The safety benefit provile has been troubling. So when it was approved it has a lot of restrictions on how it can be used. Theres a black box warning on the label which is a pretty serious thing saying you cant drink alcohol and also has interactions with other drugs. Pharmacists and preshrivers have to be certified to get this. Did sprout somehow bully the fda to accepting this . No. I do think there was a lot of pressure from the perspective that viagra is out there for men and nothing out there for women. But the reality is via fwrksgra the same thing in terms of alcohol. Same risk profile in. Sno but it no but its the same thing with alcohol. Theres a lot of people claiming that the fda folded to that. Of course the fda said thats ridiculous. Feminists are split on this. Ive heard them come in on both camps to say this is a great thing or terrible thing. That Women Deserve better than this and we should keep trying. What about the drug has changed if it was rejected in 2010 and 2013. Whats changed . Nothing. Other than a more intense lobbying effort to get the fda to push it through. Theres always the balance between riskreward and risk or benefit and in addition, this drug has labeled such that buyer be ware. Physicians have to be trained. Pharmacists have to be trained. Theres a black box warning so i think at the ends of the day. To the extent that investors and analysts look at this, what do you think of the female Customer Base for this type of product relative to viagra to the male. Meaning do you think theyre just as inclined to buy this . First of all we should clear up this doesnt work the same way as viagra. This works in the brain, viagra works on blood flow. This is also a very defined disorder. Theyre calling it hypoactivity sexual desire disorder and 1 in 10 women may have this. A lot of different parameters are there. Its hard to gauge how many women will seek this out. There were a lot of really passionate women testifying saying we need this. Doctors saying we have nothing to give them. That was interesting to hear so it should be interesting to hear what the demand is. The company may not advertise this on tv and may hold off. Theres been all sort of charges that viagra used for people that dont have erectile dysfunction. A recreational drug as well. This cant be used recreationally . You have to take it every day. Is there going to be the same demand for that. Theres a lot of barriers to engaging with this drug for the Health Care System as a whole. In addition, the fact is that, you know, compliance is always an issue with drugs and if you have to take it every day for it to have a benefit and even that only 1 in 10 women may suffer from the affliction this is addressing. Most importantly medicare will pay for this or not . It does pay for viagra of course . I believe it is. Its gone generic now but it will be interesting to see whether theres any buriaarrier getting approval. This is pearsons 50th deal since 08 for valeant. You dance while the music is playing. Is there a time when the music stops for the ability to do these kind of deals and does valeant find itself once again being criticized . I think, you know, this was the debate last year with allergen. That eventually these things blow up. What i would say about that is, look, it is a consolidator. Its a roll up. I dont have any problem with that although the connotation is often very negative. It is a consolidator in the space. A lot of companies spend a lot of money in r and d and dont generate a return and you dont surpris surpri s survive. The model is continue to acquire products and affect synergies. They can continue to do these deals but the question is they have become so big its hard to move the needle so this deal is not going to do for valeant what allergen would have done. Different market environment too. Would Interest Rates go higher . Companies arent going to be as inquisitive just because Market Conditions change too. Right. Interest rates is a big factor. Interest rates will effect valuations in the sector as well and as long as they continue to grow theyll have some currency in terms of their shares to use as well. Interest rates make them go lower which would make it easier for valeant to start buying them. Thank you. When we come back this morning well have more on todays top story. Oil price pressures continuing. Check out wti. Its been nearing 40 barrel. Right now 40. 25. We havent fallen below 40 since march of 2009. Our question, could crudes collapse be good news for consumers looking to see the world. Well have the publisher when squawk box comes right back. What if there were only one kind of dog . Then it would be easy to know everything about that one breed. But in fact, there are over three hundred breeds of dogs. Because no one can be an expert in every one. An app powered by ibm watson will help vets tap Specialized Knowledge in the cloud for every breed. And whatever else walks, flies or slithers through the door. Ibm watson is working to make medicine smarter every day. 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. The Global Travel industry expected to generate 7 trillion this year, a 4 increase over last year and a growing number of those dollars being spent by a new breed. I had not heard this phrase before. Theyre called beleisure travelers. Here to explain that and what hotels are doing to cater to this growing group is the publisher and chief revenue editor at conde nast traveler. We love your magazine. What is the betraveler beleisure traveler, im sorry. So beleisure travel is one of the trends thats happening with our readers. Its probably something were all doing which is you travel for business, and then you add a little pleasure on to it. So youre going to go to asia for two days because you have to go to a conference, for business, and youre going to take three days and make a leisure trip out of it. Thats new . I thought people have been doing that forever. Actually, the travel industry now is 7 trillion, more people are traveling than ever. And i think if you look at statistically from 15 to 20 years ago, that sort of what was considered longhaul travel wasnt happening like it is in business today. Everyone is traveling. Can i ask you youre almost as like the travel ethesis now. Heres my question. Which part of this trip are you allowed to expense . Im serious. People think about this, right . The airfare. The roundtrip heairfare. Maybe in your personal life you would be traveling maybe in a different part of the cabin. Yeah, but if you have to go anyway. The way i break it down is if you have to go anyway, theyre going to pay for your round trip. I should be responsible for renting a car because im not going to try to figure out three days on you, four days on me and im going to pay for the nights that im not there for work. Absolutely. And you pay for the minibar. Let me ask a separate question. How much of this is the family or spouse or partner or whatever joining in on this trip . I think theyre joining quite a bit, actually. I think theyre meeting you were setting up a time to meet together. After my business trip. And so i think family trips, adding that to beleisure, adding that to three or four days, what has actually happened in the travel industry is we are taking more trips but less extended times. There is no such thing as the longhaul travel, twoweek vacation anymore. Were taking two or three days because we can squeeze it in. Where are people going, and what in terms of the level of trip, is it getting crazier . Is it going to the middle . Whats happening here . We speak to the luxury of the market. And at traveler we find there are two major trends for our readers. One is experiential. Theyre looking for something that they cant find in their own neighborhood. And that may be a restaurant. That may be a view. That may be time with family. And the second thing that theyre looking for is authenticity. So Luxury Travel used to be about price and it used to be about the most expensive. Today Luxury Travel is about whats the most authentic. And that could be an incredible room or it could be a fish taco on the side of the road in cabo with no shoes on which is the most amazing fish taco. Weve got to go. Our airfare is going to continue to go lower. Are airfares going lower . They are apparently, legitimate, but do they continue to drop . More competition in the marketplace drives price down. Is there more competition . There is. If you have the chance, take the three cabin, threeroom cabin. It is their latest edition that they threeroom cabin. Its a threeroom cabin in first class. Im going to put that on my list of todos. I just went on mint on jetblue to i know thats not a threeroom cabin, but it was pretty good. Weve got to go. Thank you for being here. Appreciate it. Coming up, this mornings big story, stocks are under a lot of pressure. Were back in just a moment. 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 it all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberry apple scones smell about done. Ahh, youre good. I like to bake. Add new Business Services with at t and get up to 500 in total savings. Rude prices getting crushed, dropping nearly 40 a barrel, numbers we havent seen since the credit crunch in 2009. A world of worry. Global stocks selling off this morning. Oil, china, the fed, no shortage of things keeping investors on edge. Plus, new this morning, donald trump on the con the cov Time Magazine. Well tell you what he has to say about everything from Hillary Clinton to why he doesnt have any interest in courting wealthy donors. The second hour of squawk box begins right now. I find out that everybody talks everybody talks everybody talks it started with a whisper live from the heart of business, new york city. This is squawk box. Welcome back to squawk box, everyone. This is cnbc, first in business worldwide. Im becky quick. Our top story this morning is the markets. There is a lot of volatility out there. We want to bring you up to speed if you are just waking up. Check this out. Oil prices front and center. We are looking at lows of the session, just about, 40. 25 for wti. We should point out that the last time oil was down at 40 and below that, it was about six years ago. It was march of 2009. So we havent seen levels like this since the Great Recession since we were in the middle of the credit crunch. Take a look, though. Another 55 cents lower this morning. Brent crude also down by about 1. 6 . Also check out how thats been impacting our futures this morning. Yesterday was a bad day for the markets. The dow was down 163 points. This morning you are seeing additional declines in a similar vein. Right now it looks like the dow would open down by about 160 points. It looks like the s p is off by about another 18. 5 points and the nasdaq is down by 37. The same concerns are playing out in europe as well. You can see that right now the dax is down by about 1. 2 , that is worse than it had been earlier this session. The cac in france is down by a similar decline. You are also talking about a decline of about 1. 6 in italy. And overnight in asia we did see red arrows there as well. Japan down by about 1 . You can see that the shanghai composite which has been so volatile lately was down by about 3. 4 . Andrew. You can divide the world into two kinds of people these days, tall or short, male or female, fat or skinny. Thats not politically correct. And nowhe raging debate over the fed on wall street has created a new split. Senior economics reporter Steve Liesman joins us now, asking the question are you a septemberist or a decemberist. And while i notice, by the way, theres a little banking wall street battle between Goldman Sachss view yes. Lines being drawn, andrew. And jpmorgan on the other hand. Families divided, friends taking friends off speed dial. The big debate over whether the fed hikes in september or december or perhaps not at all. Kiing into a new gear yesterday with wideranging opinions over the minutes of that july meeting were hawkish or dovish. What andrew just said, goldman writing a note, we continue to forecast a first rate hike in december. Take that, jpmorgan. Firing back, saying we continue to expect the first rate hike in september. Heres how some of the forecasters we follow are divided. September has jpmorgan, barclays, credit suisse, amherst, pierpont, oxford economics. Goldman and Morgan Stanley and jeffries. Not too shabby a list there among the decemberists. The minutes said conditions had not yet been met for hiking, but those conditions were approaching. Some thought the conditions had already been met. But others saw inflation going the wrong way. They worried about china, about the strength of the dollar, about lower oil prices. All of which, of course, have worsened since the july meeting. Yet jobs have remained strong. Wages are picking up. We reported that yesterday. And the economy bounced back pretty smartly from the weak First Quarter growth. And the case for zero rates for some, sort of the people weve talked to and who we follow on the committee seem to be eroding. The difference of opinion between september and december is perfect because it shows you exactly how the market reacted yesterday to the fed minutes. I think thats right. Nobody has a clue when the fed is going to move. You know, and you could take a step back and say you know what . If its that close a call, lets not do it. I think you have brian from oppenheimer in the last hour who kind of said, why would you do that in a case where your biggest concern is deflation and not inflation and you know how to deal with inflation. My point to him was, look, whats difference in december. You are my speed dialist, becky. Whats different in december, and if your real issue is that you want to raise rates this year, i dont know how much different the scenario is going to play out in three months. You know, it gets back to that question which is this normalization test. Can the market withstand and gun lock is the one who exemplifies in a sense the feds challenge here. Is getting the market we had one of our i dont remember which one, but one of our economic economists or forecasters said that were forecasting september and only one in september. But this notion that the fed may stop and do only one and this gradual path doesnt seem to how do you communicate that in a real way . I dont know. Its not been done in nine years. You could say it a million times, but people wont necessarily believe you. And i think you also dont know. Do you know what the august job numbers are going to be, the Inflation Numbers are going to be. You keep telling us its data dependent. Rich from columbia yesterday talked about that. He said data dependence is not Monetary Policy, and that may be the flaw. Data dependent is not only our data, right . I mean, do they care about whats happening in emerging markets, about whats happening elsewhere . Its an excellent point. Partially because, you know, those emerging markets are going to get hit hard. They already will. In their currencies. They already are. And that could ricochet back on the u. S. Clearly the minutes show theyre trying to digest china. The impact of china. They dismiss the stock market as a big economic factor, but they go on to say that if theres a more severe downturn in the chinese economy, it could ricochet back on the u. S. Economy. Steve, stay with us. We have a lot more to talk about. For more on the feds inability to commit to a rate liftoff at the present and nearterm implications for the market, lets bring in tim freeman, partner at elevation. And marco cotta, chief Investment Officer of highland capital management. Jim, what do you think about this . What does the mark the actually want at this point, because i cant figure that out. Do they want rates to finally raise by 25 basis points and stop in this ridiculous position of not knowing, or do they want more accommodative easing . I think the market wanting more accommodative easing died yesterday as one of my clients pointed out. It clearly died yesterday. The thing that had me concerned was the way the market traded after those minutes. We saw a quick short cover of up 20 handles in s ps and then just after that, we saw a pretty decent tradeoff begin. And after the cash close at 4 00, futures fell another 13 or so, 14 points. And look at this morning. Exactly. You know, that is the last time weve seen that, its been quite some time that weve had that negative motion after stocks have closed. What changed . Is this the wait a second, what does the fed see about the economy . What are they concerned about that we dont see . The market is concerned a lot less about when theyre going to move, to be quite honest with you. What theyre now starting to look at is what does this mean when they dont move. These global risks that weve talked about. China has been the number one risk globally ahead of all others in my clients eyes. Now were starting to see the fed move the goalposts a bit. From its dual mandate to okay, now were looking at global risks, china softening, those sorts of things. Its woken my clients up. At 2100, were bearish as it is, and that seems like very much atop here. Now, if you look at the Derivatives Market and what index options are telling me right now is i wouldnt call for a 10 correction here. Could we see some sort of softness . Yes. S p index term structure, vix term structure, its priced for some stuff to happen, to have some sort of volatility in the more near term, but its not saying were going to see some sort of 10 correction any time soon. Its a Global Growth question. We need to watch it. But the fed needs to start getting a motion. When you think about what they might be positioning the market for is we can now start to raise rates and the market doesnt implode. Okay. Mark, what do you think . Well, on the fed liftoff, i really wish the fed would just rip the band aaid off a wound thats healed about three years ago in all of this sort of bellyaching around, whether its september or december, really to me is very meaningless as far as the economy is concerned. The markets care, obviously. But as far as their mandate about what the economy is doing, the economy is in doesnt shape. And so i really wish they would get it out of the way. I think the markets are ready for it. I think its priced in. And certainly, the volatility around a delay creates more volatility and more uncertainty in the market to tims point. So i think they should go ahead and get it done. Yes. Mark, let me interrupt you. Make yourself a policymaker for a minute here. Youve set out and laid out an inflation target to the market, to the world, and youre not hitting it. So now youre saying to ignore that and do youre essentially ingraining a lower inflation target if you move now. Well, theres another perspective on that. And, you know, the Monetary Policy we have today is very supplyside driven. We create more capacity. That lowers prices across the board. So i think zero Interest Rates and qe really have a different angle at the recovery. Its much more inflationary from a supply side as opposed to demand side. And thats why youre seeing what youre seeing. And so really stopping that policy at this point makes some sense to me in the cycle. So its a different perspective on things. But i think at this point, 25 basis points really doesnt matter to the economy. Its something that really should happen because the markets got it priced in. Its time to do that. If not, steve, for the fact that weve been at zero Interest Rate policy seemingly since the last century, theres no, it seems to me, logical reason to raise rates. If you take all of that out, forget the fact that theyve been at zero Interest Rates, inflations not can i amend what youre saying, scott, just a little bit . Heres what i would say. Every single reason to raise rates is prospective. Theres nothing in the current data that say we have an inflation problem, that say that the economy requires higher rates. The reason you would do it is you would do it to bring rates more in line with current growth rates, current capacity utilization, bring it in line with your sense of where inflation and the economy are going, and especially its insurance. Its insurance against the kind of bubbles that they fear may have been created by previous Monetary Policy. Hey, mark, i have to throw you some props. The last time you were on with us i think was may. And you told us at that point you thought oil prices would be coming down. Theyve come down about 30 from that time. You told us you thought the dollar would continue to strengthen, and i think its up about 4 from then. What do you think happens now . Thats right. So im always thinking signal, signalist noise. If you get that right and act upon it, you can actually make a lot of money in markets like this. So whats the signal today . If we look at whats going on in credit versus eckity with, its interesting. High yield x energy, taking the energy names out, is wide about 70 basis points since may when i was on the show last, about a 16 movement in spreads, and the s p is up about 3 year to date. So theres a disconnect here between whats going on in the credit markets and whats going on in equities. And another reason not to love equities in here and i think thats really the action point did you say not to love equities . Not to love the stock market because the credit markets already moved wider. Wait, to not love or not to love . Not to love, becky. And i think the equity markets have been ahead of itself. Maybe thats buybacks. Were in a record buyback period right now after the window opened back up. And also, if you look at breadth in this market, its not really great. The top 10 are about 80 of the return for the nasdaq and 70 something for the s p. So theres a lot of, i think, dispersion. The winners have been big winners and losers are starting to get more prominent. Its really time to take money off the table as far as the equity markets are concerned. Rotate that into spread. Sensitive markets. China isnt in a hard landing, if they arent growing the way they are, if Global Growths the reason why the fed does pause, as steve says, maybe its time to be pricing into portfolios so dont run away from credit, mlps, dont run away from rates, anything thats interest sensitive. Thank you for coming in today. Thank you. When we come back, raise the roof. Some big home builder stocks, they are rallying, trading at levels not seen since before the financial crisis. Well get ready for it when we return. We are back. Welcome back to squawk box. I want to show you shares of the retailer sears. Just out with quarterly numbers. It did lose money in its Retail Operations but posted an overall profit thanks to its real estate spinoff earlier this year. Profit margins improved but Comp Store Sales at both the sears and kmart chains declined. The stock is a fractional mover. And this next piece of news is a biggie. And you should keep an eye on it today. Shares of disney. May be piling on, whatever you want to call it, but the stock is down 1. 5 in the premarket following a downgrade by bernstein. That to market perform from outperform. The firm says the changing landscape from media stocks, historical valuations for the sector need to be rethought and that affiliate fee revenue now carries a higher premium risk, as our, you know, colleague, Carl Quintanilla, was tweeting, it pulled no punches, this downgrade. They, in some way, make comparisons to aol. Im going to read you a line here. We believe the market is now valuing domestic tv businesses similar to such comps as satellite tv, publishing and even aol. All of these comps have declining subscriber fees and or ad displacement. Some have hopeful Digital Futures but futures which look very different. These businesses all tend to trade around seven times ebitda. The market has already valued this in. I think you need to revalue. I think we hes saying you need to revalue. I have to tell you, i talk about unbundling and all the things its going to do to the business, and it will. But its going to and there are going to be times and moments where it will happen fast, and youll see big number drops and things like that, but i dont think youre going to have huge drops. Youre going to still see singledigit growth at least i would think over the next five years. Its amazing what one comment from bob eiger about subscribers for espn can do to not only that stock but the entire media space, in the span of two weeks. But thats a company, by the way, that was never at least recently hasnt been valued as a media company. Disney. Disney is much more like a Consumer Products company. In fact, because they have more people revenue and people look at the franchise Like Star Wars and the parks. But no, espns going to be challenged business as is a lot of the tv stuff but im not sure its going to be challenged as people think. The way the market has punished these stocks, right . It was stunning to see the drops, the declines of 5 to 10 that happened over the course of a week or two. What changed overnight . What actually happened, and i think thats a big question. Yeah, no doubt. Anyway, watch shares of disney today. A dow thats already under pressure in the premarket is going to have even more of an issue perhaps today. Coming up, were going to talk housing, Mortgage Rates and a lot more. Stay tuned for that. Squawk box will be back in just a moment. Todays aflac trivia question. What american won the title champion aviator of the world in 1909 at the first organized internal air meet ever held . The answer when cnbc squawk box continues. 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. 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Insurance coverage has expanded nationally and you may now be covered. Contact your health plan for the latest information. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Now the answer to todays aflac trivia question. What american won the title channel aviator of the world in 1909 at the first organized internal air meet ever held . The answer, glenn curtiss. Welcome back to squawk box, everyone. Real estate in focus today. Existing home sales are due at 10 00 eastern time this morning. Diana olick joins us from washington with more. Diana. Reporter well, becky, its a great week to read the tea leaves on the housing front. Lots of data starting with the builders earlier this week showing some really promising numbers and some caveats. First, Builder Sentiment was the highest in nearly a decade. They reported better buyer traffic, better current sales, but they were a little bit squirrely on sales expectations over the next six months, probably because of the fear of rising Interest Rates. Now, their confidence was only confirmed by a big jump in singlefamily Housing Starts in july, up nearly 13 from june. Theyre still building well below the 30year average, but hey, it was better, right . Of course, permits which are an indicator of future construction, they were down for the month. Now, all this as home depot easily beat the street with its earnings. Home depot traffic isnt always builders but when people buy homes, they tend to go to home depot the day after they close. By the same token, homeowners who cant move will also tend to renovate. Its a hard one to judge there. Now, theres your housing positives. Builders and retailers. The existing home sales market is a lot tougher. We get the numbers, as you said, on july sales in about three hours. But we already know pending home sales in june which are the contracts signed for those sales, they were down. We also know that inventory or a lack thereof is really plaguing most major markets. Also, Mortgage Applications to buy a home have not been strong these last few weeks. So, scott, stay tuned. All right. Diana, although rates are coming down today, diana, thank you so much. Lets bring in bob from rbc capital markets. He just got back from visiting Home Building sites. Home sales hit a nineyear high recently, i guess emblematic of where we feel like we are, right, bob . Things are pretty good. We would qualify the forsale market in california is nothing but red hot. And when you look at job growth in l. A. And Orange County versus housing permits, its 51. In San Francisco, its 101. Its the best in the nation. And if you look at a big picture across the u. S. , the growth in california, nevada, arizona, texas, florida as well and the carolinas and georgia, you have incredible demand, very, very tight inventories. Two to three months versus the longterm average of six months. So what diana was saying about tight inventories, sustained consumer demand in response to very robust job growth last year, its playing out. What has been a multifamilydriven story because the singlefamily starts number was so strong, is the tide turning . No. Actually, were really bullish on the multifamily story. And thats reflective of a millennial preference, in our view. But we think people really like redevelopment, living downtown, vertical living is hot right now. Even where rents are, right . Rents continue to go up. Rents reflect tight supply. We have not been building. And if you think about it, theres actually a big supply demand imbalance right now in the market for shelter. And developers and Home Builders are taking advantage of it by increasing supply, yet the demand is still outstripping what we build. We really stopped building effectively in 2007. So we have a supply deficit. So whats going on right now is builders are trying to step up production to meet demand. And in response to limited supply in key markets like Orange County and San Francisco, which is flush with tech money, youre seeing huge home price appreciation and rents move faster because we reprice rents every 1 months. Were seeing a massive surge up there. Are Mortgage Rates poised to have another dip lower . Im not going to comment on Mortgage Rates. I think its a very topical question. Lets go back to the fed and what steve was saying earlier on the program. Our general view is this. If rates are going up, youve got to ask why. Is it for the right reason . And from our perspective, if theres a 25 basispoint hike, will that derail demand for housing . Absolutely not. The key thing to consider, 2014, all about much better trends in the labor market. Thats showing up in stronger housing demand. We see that continuing. Rob, the firm told you you cant comment on rates. Thank you. Appreciate it. When we come back, deal with it. Thats the title of the new cover on Time Magazine this morning. Donald trump, the focus. Were going to bring you some of his most quotable comments in just a moment. Back in a moment. Welcome back to squawk box on cnbc, first in business worldwide. Take a look at stories that are front and center this morning. Busy day for economic numbers. Just an hour from now well be getting the latest weekly report on initial jobless claims. Those claims expected to decline very slightly. Then we have a triple header of data thats coming up at 10 00 eastern time. Thats when we get leading indicators, existing home sales, and the latest philly fed index. And a number of key earnings reports that are ahead after todays closing bell. Kicks things off with hewle hewlettpacka hewlettpackard, also gap, salesforce. Com and intuit. Time features donald trump. Editors interviewed the republican president ial candidate earlier this week. Among the highlights, on wealthy donors, he said, quote, i do worse with the wealthy well. Okay, its funny in my opinion. For you, theyll all support me but i dont want them to. On the economy, he said, quote, if you start adding it up, our real Unemployment Rate is 42 . As for the next debate, which will air on cnn next month, trump suggests a rhetorical question, what if he told the network hed only show up if they gave 10 million to charity . His theory, his appearance on stage brings big ratings. Yuge. He doesnt want his friends, his business friends, to support him. Ratings will be yuge. An interesting strategy. Anyway. Weve got big fuse thnews t morning. Valiant pharmaceuticals buying Sprout Pharmaceuticals is a 1 billion deal. In the First Quarter of 2016 plus a share of future profits. Joining us first on cnbc with more on this deal, mike pearson, chairman and ceo of valeant. Congratulations. And meg terrell is here as well. Thanks, guys, for being here this morning, two minutes after the deal crosses. Let me ask you. When you think about this company and the opportunity, one of the things weve been debating all morning is how big a Market Opportunity is there for this drug . I think the opportunity is quite large. You know, its certainly in the hundreds of millions for us, but hopefully its in the billions in terms of what this could do from a revenue standpoint. But more important is the unmet need for this disease. A disease thats been established for 40 years. Theres been nothing out there. So finally theres an opportunity for women to, you know, address, you know, an unmet need. Youre calling it a disease. And theres been a big question, though, about this issue. And how this drug got passed by the fda and how much lobbying had to be done and whether and the efficacy of this drug. So to be sure, science has won the day here. So this is a condition that weve known about medically since 1977. We have four decades of medical literature on it. I think what happens there is a little bit of confusion around normal low desire for women. Desire fluctuates. Women with hypoactive sexual disorder, that is a medical disorder, and a diagnosis thats clearly existed. So it has been a wonderful day that women finally have the choice alongside their Health Care Provider for treatment. What was if science won the day, what was wrong with the science in 2010 and 2013 that it was rejected . What people have missed i think in a lot of this conversation is theres a lot of new data. So the fda was asking for additional challenge work, additional safety studies. We completed all of those. And when the expert panel voted 186 in favor of approval, they were voting on a lot of new scientific information on the drug. How confident are you that insurers are going to cover this . I feel really good about it. And heres why. In conversations we have with them today, theyre covering the viagralike drugs for men. So they cover them at about a tier two to tier three copay, and we expect parity coverage for this. I think it would be difficult not to. If the questions were raised already just about the pill being able to be passed, what may have turned the day was wait a second. Weve done this for drugs for men. The idea that you wouldnt cover the drugs for women would surprise me. Well, this is a big moment that were recognizing the biology of sex for women, right . We certainly have recognized that for men, as witnessed by countless medical treatment options, and weve been paying for them through insurers for almost 17 years now. If the science was so clear, though yeah. Why did you have womens organizations lobbying the fda on this issue . Well, many womens organizations were lobbying positively. Is that what you mean . Yes. For this . Some were lobbying on the other side, too. I was surprised to see the break in camp. And i dont know enough about the research. I think we became a case in point in a larger conversation that needed to happen. Around female sexual health. Look, thats why i got into this, right . Ive been in the field of sexual medicine for some time. I built a company with one of the male drugs. And i really was watching people sort of walk away from innovation here because we have a narrative that really reduces all things in the bedroom f women to psychology. Biology is at play, too. And i believe if you have a medical condition, you deserve access to medical treatment if somethings going wrong to make the decision for yourself. Thats why i was so grateful that, you know, mike really saw that vision. I think he understood that there was such an important unmet need here for women. And hes shared, i think, my passion of the mission here. Mike, you say a several hundred Million Dollar business. Is that annually . Yes. And then you said it could be a billiondollar business. What is going to be the trygger . I think the tgger will be two things. One is, you know, good mketing and pviding good access. Will you market this on tevision . Ccess wille critical we wl probably use tv. But it pbablwille unbrande it also depends on our ality to rl th outround the rld. You ow, wha subset of women in the world, theres 4ps biion men theorld so there was a new york tis aicle yesterday that i think quoted you that you would hold for marketing for 18 mohs. En y say isoingo be unbrded,s itorwaress of this disorder or are you going to really going to hol of marting tsrug for 18 months . We had conversation around the aisor comtteemeetg. D t spirit of the conversation was we need to educate this markplac wenow ere aot of demand, a lot of interest in th pruct. And ate di actually, is we went forth with thepprols agreo ctication ogram. Sooth heth care prs anrmactso throu and beme ctiedn deo cribe spense. Thats how were going to go out. Those are the efforts out of the gate to educate the market. No plans immediately for direct to consumer advertising. That would be a followon. We need to have people understand the condition, understand whos appropriate for medical treatment. Again, i think we have a lot of views on female sexuality and what this is. Mike, youve done 50 deals since 2008, at least, that i can count. When is enough enough . Is there a point where you get too big . Hopefully not. Too diverse . Hopefully not. So part of our strategy, theres two parts of our strategy. One is organic growth, which is critical. If we cant grow the products that we own, and thats why were delighted to have addyi added to our portfolio. We think this is going to be a great product and its going to grow for a long time, and cindy will be leading the effort. Another piece of our strategy is continue to make acquisitions that create shareholder value and, you know, build a Larger Company and a more diversified company. How do you respond, then, to you know theres going to be some people out there today who say more evidence that valeant is a rollup. How do you respond . Again, id point to organic growth. We are the only Pharmaceutical Company that actually discloses organic growth. And weve had doubledigit between 15 and 20 organic growth for the last three quarters. And i think you can expect to see doubledigit organic growth for the foreseeable future. And so i think we have a great combination of a bunch of great products that are growing. And then well continue to look for opportunities. Can i just ask about this deal in particular . How long have you been talking to each other, and why wait till after the approval came . Well, it was about three weeks. And we had to get to know each other. It was important to cindy that we really were committed to doing this the right way. Were delighted that cindys going to run this company for us. And continue. So i think we have, you know, a great ceo of sprout that we will continue. From an, i think, cindy didnt speak to it, but sprout was quite convinced they were going to get approved. And that obviously took the risk out of the deal for us, at least one of the risks out of the deal. Cindy, did you run an option . Look, we had a lot of interested parties after the advisory committee. So we are a very small group. Theres 34 of us internally a small really committed group. And you know, as we went forth, we had inground incurring interest. Why sell now . Why sell now . You know why . Because this actually lets us make good on our mission. My mission here was always to turn over choice to women and their Health Care Providers, provided the fda deemed it safe and effective. Now partnering with valeant, were going to get more women access and affordable treatment. I think plus this gives us the capacity to go global with this. Mike, can you comment as well, just on the marketplace right now, the stocks, the sectors, health care, biotech, what you see, what kind of visibility you have Going Forward for a space that has done incredibly well but has perhaps shown a few cracks lately . I still have a lot of confidence in, you know, Health Care Health care is recessionproof, by and large. Theres lots of issues in the world right now, but health care is pretty well constant. You know, everyone always asks whether valuations have gone up. Absolutely. Thats just a fact. But i think the longterm prospects for health care are great, and the winners are going to be the ones that place the bets in the right place. The stocks have done amazingly well. Cool. Cindy, thank you. Congratulations, mike, and meg, thank you. When we come back this morning, should you sell the rip . Matching up stocks currently trading near record highs. Then well let you, the viewers, decide which one will rise to the top. Meantime, the futures have been under pressure. The dow down about 160 points after a similar decline yesterday. It looksike the s p 500 would open down about 18. 5 points and the nasdaq off by 36. Stick around. Squawk box will be right back. When you get up to 50 off hotels with travelocity, it means you can also afford to get up to 50 epicer epic rides. Making it the place yippeeee to find a place for labor day. Go and smell the roses in the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. Welcome back to squawk box, everyone. Weve been watching futures this morning. If youre just waking up, check this out. Dow futures down by by 165 below fair value. The s p is down by 18. Remember this comes after a rough session yesterday. The dow was down 163 points yesterday. And that came after a rollercoaster ride. Still a lot of people trying to figure out what the fed plans to do next. The fomc minutes released yesterday didnt really clarify any of that. Created additional confusion which might be leading to some of this volatility. Add to that whats been happening with oil prices which this morn having been trading just over 40 a barrel. These are levels we havent seen since march of 2009 when we were in the midst of the credit crisis. All of that adding up to concerns this morning. Can you see the nasdaq is also down by about 39 points. Watch shares of Madison Square garden. Msg says it has made significant process towards the completion of its proposed spinoff of the sports and entertainment business. Okay. A couple weeks ago we talked about buying the dip, picking out eight dow components to go head to head with viewers, deciding which stocks would rise to the top. Dom chu joins us with more. Eight stocks that could be overvalued. And dom, its good to see you this morning. Its good to see you, too, andrew and gang. Yes, this is the story. We got a lot of feedback from viewers, tweeters and readers of cnbc. Com about taking this idea of finding value when stocks fall, but theres also perhaps overvalue when stocks rise. Which ones could be due for a fall, due for profit taking, due perhaps for a bit of a pullback. We screened s p 500 companies and found stocks at or near within 5 of record high levels. So we want you, the viewer, to weigh in. Here are the matchups that we have this time around. Four of them, eight stocks total. On one side, weve got new and oldworld companies. Facebook shares and jpmorgan, our first matchup there. Which one both of them near record highs. Nike and starbucks, very up and coming, still has a lot of growth here. Thats our matchup on this side. If you take a look over here, weve also got chipotle mexican grill. Very hot stock on the food side of things. Were going to match that up with underarmour. Again, a very hot stock. Theyve had a lot of wins. Jordan spieth, the golfer, a lot of names in their stable. And housing continues. Were going to match that up with netflix, another stock thats been riding a huge wave of momentum. We would love it, becky, if you and viewers tweet in using the selltherip or go to cnbc. Com and vote online. Tell us why you would put these stocks as the ones that you think would fall the most relatively speaking if we do have a pullback, were going to count all the votes and throughout the course of the day, just like last time, were going to take your votes and then put them all in the basket and see which one comes out ahead. The winner revealed on closing bell. Remember, vote in right now. And on squawk on the street and squawk alley, well tell you which ones came out of this particular one. Remember, these are the ones youre voting for on the ones you think could fall the most if stocks were to have a bigger pullback than we have right now. And of course, becky, given the way futures are shaping up right now, it could be a rocky time for some stock investors. Back to you. This one will be a tricky one to call especially with whats been happening in the broader markets. Dom, thank you. When we come back, the new rivals. These are not your traditional competitors. Think upstarts taking on established names. The new guard trying to take out the old guard. Then at the top of the hour, he is the top performer of our portfolio. Willie will be joining us at the top of the hour to share his thoughts on whats been happening with the markets. Also give us some of his stock picks. Check that out, up 30 year to date. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end august 31st. Share your summer moments in your mercedesbenz with us. 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 . Were back with some stocks to watch this morning. Lumber liquidators upgraded to buy from hold at cantor fitzgerald. The risk reward profile is much more favorable now, following an 80 yeartodate slide. It argues its outlook was too conservative based on recent meetings with management. The Container Store upgraded to hold from underweight at bb t. The argument, the stock has underperformed while sales trends have improved. Becky. Scott, thank you. Rivalries today airport just about two Companies Making similar products maybe like coke versus pepsi or mcdonalds versus burger king battles of yesterday and even today, too. Now competition creeps up across industries and sectors. Where they took a look at this new and sometimes surprising rivalries in modern business. Bob, we know that competition in business is nothing new. We know that youve always got to look out, but whats different about how things operate today . This story that we talked about is a reflection of the conversations we have in our newsroom all the time. And the kind of conversation that you guys have here, too, where theyre different kinds of businesses that are driving together and they indicate the way the economy is moving and the places things are going to. One of the rivalries we talk about is apple and the chinese phone maker. If you look at the Global Smartphone market, you go back six or seven years, the Top Companies were nokia, motorola and r. I. M. Those arent the players we talk about anymore. Now its apple and samsung. Youve got a player that four years ago just started with its first phone. Now theyre number three in the market. Theyre the second biggest player in china, which is the Fastest Growing marketplace. And so im not necessarily saying were not necessarily saying that its going to crush apple and become the next appear the globally, but its an indication of the way that the marketplace is moving. Just that you have to look over your shoulder in Different Directions that things can come more quickly. I guess china is a major player in that. I would imagine technology. And the Business Models are different, right . Apples Business Model is making money on selling the phones. On the other, phones are much cheaper but theyre making money on the service. Its what they have to look at in different ways. It seems to me that amazon is the company that is constantly has look over its shoulder, but also is the company that every other company has to look over its shoulder. Amazon took on walmart. It just surpassed it. But one of the rivalries you look at is amazon versus instacard. Instacard is a startup that helps deliver food from, say, whole foods to your home, right . And this is a competitor with amazon sort of next stage of its growth, trying to look at grocery delivery. You know, we cant really talk about amazon without talking about whats going on internally there and the discussions about their management practices. I mean, that becomes the guiding issue for them right now. By the way, whats your take on them . I think its very its a very competitive world. Right. Amazon has been very successful at building a very highend and highenergy culture. I think their challenge at this point and certainly with this story, theyve reached kind of a Tipping Point in certain ways. And the key part is how are you going to get new talent to come to your company. But its very heated, right . Theres a community of people who say its terrible to work there. Its miserable, awful. Its literally like hell in seattle. Thats what you would think depending on who you are. Then theres a whole other group of people online who say i work there. I love it. Its about huge and big ideas. Which is it . Employs 180,000. Theres a lot of variety in there. I think its both. Listen, you could look at Corporate Law firms, you could look at investment banks. There are people who say working there is too hard and too grueling. Other people love it. I think the most challenging thing is the way amazon seems to treat people with families. I think that becomes in terms of the longterm issue for amazon, if you want to attract talent, you know, is that going to dissuade the kind of talent that they want to come there. And i think thats what jeff bezos and the rest of the Management Team has to grapple with and at justments. Snapchat and twitter barrelling toward a social media collision. Yeah. Well, you know, listen, i dont know about you guys. I use twitter a lot. My kids use snapchat. Snapchats growing faster. The growth curve on twitter is problematic. Why do you put twitter up against snapchat, why not twitter up against facebook . The future of both of those is about Live Entertainment or live access to information, right . And their Business Models are both based on a challenge of how theyre going to get advertising into that model, into that interaction model in the way thats effective. Do you think competition is really all that different . Is it a more competitive world, or are we just kind of oh, i think its a much more competitive world. I think businesses are changing and moving faster than ever. I think you look at another one of the comparisons. Google and verizon. These are two companies we would not thought of as competitors a few years ago. And now theyre definitely competing in lots of different areas. So, you know, all of these things require us to think of the buckets that we put companies in in different kinds of ways because the futures of these companies are not going to be defined by the way they acted in the past. Bob, thank you so much for joining us today. Thanks for having me. Coming up, when we return, some lawmakers are concerned about antitrust issues with expedias acquisition of orbitz. We have senator Amy Klobuchar. She thinks this merge i may be bad for consumers. Plus, we welcome Louis Navellier for the hour. Hes up 30 and currently the top stock picker in our portfolio. Well get his secrets of success right after the break when squawk returns. 80 of the poor in africa are rural farmers. 96 of them are doing rainfed agriculture. Theyre all competing with each other; theyre all making very low margins, making enough to survive, but not enough to get out of poverty. So kickstart designs low cost irrigation pumps enabling them to grow high value crops throughout the year so you can make a lot of money. Its all very well to have a whole lot of small innovations, but unless we can scale it up enough to where we are talking about millions of farmers, were not going to solve their biggest challenge. This is precisely where the kind of finance that citi is giving us, is enabling us to scale up on a much more rapid pace. When we talk to the farmers and ask them whats the most important thing. First of all they say we can feed our families. Secondly, we can send our children to school. Its really that first step that allows them to get out of poverty and most importantly have money left over to plan for the future they want. Hold on to your seats. Another volatile morning. Oil and china. Key jobs data just minutes away. Well get Market Analysis from our guest host and platinum portfolio top dog Louis Navellier. Expedia deal by orbitz under scrutiny. Amy klobuchar joins us. Plus, opening cuba to tourism. And the nations ports in disarray. Shipping delays hitting businesses bottom lines. A closer look what needs to be done to fix the docks. The final hour of squawk box begins right now. Sitting on the dock of the bay watching the tide roll away live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box right here on cnbc. Im Andrew Ross Sorkin along with becky quick. Scott wapner is with us. We are less than 90 minutes away from the opening bell on wall street. Take a look at the futures, though. It is not looking pretty. The dow looks like it would open off about 147 points down. S p 500 off about 16. 5 points and the nasdaq looking to open down about 34 points. Check out the markets in europe as well. We do have red arrows across the board with the cac off about a percent. Dax almost off a percent and the ftse almost off a percent. What happened yesterday with the fed. We dont know what to make of it. Well talk a little bit in a moment about oil which is also having an impact. A lot of other stories to talk about today. Lets give you a rundown of the top ones you should keep an eye on. Oil prices certainly front and center. Crude right now, it was just above 40 a barrel. And thats where it is right now. 40. 58, a loss of 0. 5 , going below 41 yesterday for the First Time Since march of 2009. And among the ripple effects of that drop in crude, a federal auction for leases in the gulf of mexico this week attracted the lowest interest from producers since 1986. As for the broader economy today, a few reports worth watching. Weekly jobless claims 8 30 a. M. Eastern. At 10 00, existing home sales, the philly fed survey and leading Economic Indicators as well. Scott, thank you. Weve got a few stocks on the move this morning. Valeant is buying sprout for 1 biion in cash. Spout is the Company Behind the socalled female viagra drug that got a green light from the fda earlier this week. Retailer sears lost 67 cents a share for its latest quarter. That was below the estimates. Of course, theres only one analyst who provided an estimate on this. So youve got to take that with a grain of salt, too. Revenue did better than expected, but again, one analyst. The samestore Sales Numbers for both sears and kmarts kloehns declined. And that stock looks like its up about about 1 cent. Disney downgraded from outperform. Bernstein says that valuations for media stocks need to be adjusted because of a rapidly changing landscape, and that is putting additional pressure on that dow component which looks like its down by about 2 this morning. Oil in focus as the price drops to near 6 1 2year lows. Joining us, jamie webster, Senior Energy director at ihs. Good morning to you, jamie. Good morning. Help us, how much more does it have to drop, or does it . I think at this level, if we can maintain at this sort of level, this is low enough that you can bring enough production out of the u. S. That you can end up balancing oil markets, which is really what the market is trying to struggle with right now is this resilient u. S. Production. So when you think about youre saying i understand what youre saying in terms of where we are today. Im just trying to understand over the next several weeks, months, are you calling for a barrel to go down to 35 . I saw numbers between 30 and 40 now among some analysts. Or are you saying well go back up to 45 or 50 . I think right now over the next couple months youre likely to be trading down. It wouldnt surprise me i would expect well be in the 30s over the next couple months. At least dropping into that sort of level. Particularly as we start to go into refinery turnaround soeaso. Into the 30s. Realizing that oil is going to go down. Whats driving oil more . Is it supply . Or is it lack of demand . Its mostly right now still on the supply side. How do we know that . How do we know that . We keep hearing that, but the movement in crude would suggest that demand is playing a much larger role than people want to admit. So i think the reason why you see a lot of focus on demand is really oil bulls who are trying to explain why they think the prices should be much higher. Oil demand this year is more than double what it was last year. But in order to handle this oversupply, you need it to be about quadruple what it was last year. And youre just not going to get to those sorts of levels. Whereas u. S. Productions still up. Saudi production since the opec meeting in november, theyre up over 1 Million Barrels a day. So this is a market that doesnt need that right now. So it very much is a supply story. Are the saudis going to cut production or not . I would be extremely surprised it makes no sense for them to cut production right now. Youve got iran potentially coming back into the market. Iraq is still there. And u. S. Production is just ready for the price signals, and it will jump right back into the market. So jamie, youre saying a couple months potentially in the 30s. The trigger point for that to go higher is whos going to blink in this game. So the trigger point is very much im focusing more and more on stocks and stock levels. Eventually we get to the point where we start to quote, unquote run out of stocks or run out of easy place to place crude oil. Thats what ends up pushing things back up because you dont have any place to put that oil. And thats what can help us to get out of this pattern. But in terms of the supplies, which countrys going to say okay, were not going to produce as much . Is that the u. S. . I think its likely going to be the u. S. Because the u. S. And the u. S. Shale is the most responsive. Okay. Were going to leave the conversation there. Jamie, thank you. Thank you. You bet. We are lucky for the next hour, we have a special host whose stock picks are far outpacing the markets. Thats an understatement. Hes the number one performing platinum portfolio manager, up 30 up year to date. Lets welcome Louis Navellier. Good to see you. Thanks for coming in. Good to be here. Id love for you to weigh in on this oil question because the stock market seems uneasy and getting uneasier as Oil Continues to come down. Isnt it a good thing that oil prices are low . Sure, thats why all the consumer stocks are now rallying because the money is going from the gas pump now over to the lowes, home depot, target, all those stocks. But oil is seasonal. It always goes down in the fall. Theres more people in the Northern Hemisphere than southern hemisphere. Theres something more at play here. 40, we havent seen that since the middle sure. Of the middle crisis. Were going to go make a new low. And in theup upcoming months, as your guest said. And then well see where the high is next spring. Where do you think the market goes from here . Does it feel like the bottoms about to fall out and were going to have a pretty goodsized correction . Even though and weve been talking, you know, the underlying market is already having a severe correcon, if not, you know, bear market for many stocks. Were not going to have a big correction because last week was the biggest period for stock buybacks weve seen in over four years. So companies tend to buy their stock back after earnings season. This happened last august. Companies are out there supporting their stock. They return 904 billion to us last year with dividend and buybacks. Theyre going to return over 1 trillion to us this year. So the foundation of the market is good. The s p is over 2 . Is that a Good Foundation . I mean, i understand the foundation youre talking about, but that seems like an artificial foundation. Financial engineering, i guess. Yes, but its here to say, and thats what you do when you have low rates and low p ratios. The other thing thats going on, the s p is a wedding cake. The big ones count more than the little ones. And the big ones are sick because the strong dollar is crushing the profits of the multinationals and the commodity stocks. So the only reason were up this year in that stock contest is you have is i just Pick Companies with strong sales growth because we knew that they were going to be reshuffling the s p. And so whats happening is this reshuffling of the s p, we call it a Seismic Shift is going to probably last for a few years. As long as our rates in america are higher than the rest of the world, moneys going to keep pouring into america, you know. You have the chinese pouring into the west coast. I guess youre building condo towers here for them in new york. And weve got all the europeans pouring in. I live in florida. Its all europeans and russians. Only american on my street, i mean, the capitalist point in america, so were going to be fine long term. The biggest problem is the dollar is taking out the leadership of the s p. So the folks at mcgrawhill are going to have to fix that index. And its just right now not engineered what does that mean . You make that sound really easy. But when you say you just look for companies with big Revenue Growth, does that mean you are looking for companies that have Revenue Growth without making acquisitions . How do you define that . Obviously, i had a lot of Health Care Stocks. Allergan, gilead, cvs, those have done very well. A chinese stock earlier that i sold because it was getting too volatile, but it still has strong sales, but its margins are in a compression. I can tell you right now the consumer stocks are stronger than the Health Care Stocks near term. I can tell you the techs will probably turn when they announce the new iphone. Oh, theyve been awful. Tech has been awful. Well, yeah, because everybody says that china is not going to use cell phones. Thats not true. Trust me, theyll use cell phones. Ive got kids. Theres an iphone 6 coming up and everybody has to upgrade. Im sorry, go ahead. And all the suppliers, apple and everybody will be upgrading. But, you know, markets have these rotational corrections. The marketss a big bathtub, and moneys not leaving the market just sloshing from one side to the other. There was a big report in the Financial Times that everybody is leaving emerging markets. That doesnt hurt us in america. Were the oasis. Theres a silver line of Critical Path im trying to follow. Its obviously Consumer Health care and i think it will be the tech when the earnings come out. You know, september is windowdressing month. And theres going to be a big flight to quality in september as the Money Managers want to have pretty stocks in their portfolios. So that should help guys like me because thats my job, pick the good stocks. When you say that the index needs to be fixed that mcgr mcgrawhill needs to fix whats happening with the s p, how do they do that . Well, they had to do that in 2005 just to set the stage. A lot of people dont talk about that. Thesome s p is what caused theh in 2000. That tech bubble was because of the concentration in the s p. So when everybody bought the s p 500, they were just shoving more money into cisco and oracle and intel and microsoft, et cetera. And eventually the top ten stocks in the s p were at 62 times earnings. So they made a mistake, and then the tail end of the s p beat the top end for several years. So what happened in 2005, mcgrawhill did a thing called a freefloat adjustment. They reweighted it. And it took six months to do. So every day for six months, the walmarts, the microsofts got up on the wrong side of the bed because there was selling pressure every morning. They didnt hurt google back then. It wasnt in the s p. We have to realize that indices screw up markets sometimes. And the s p was fine through last year. So what does the rebalance look like to you . Well, im not scott scovall, but i would tell him what to do. Lets reduce the companies that have negative sales. You just had the worst sales in six years. Every quarter we have negative sales. But rates are going up because theyre buying their stock back. So its a very interesting conundrum we have. The s p is not engineered for this negative sales growth and strong dollar we have. Its the dollar thats taking out the leadership. But let me ask that question because there are plenty of people including Warren Buffett whos come on the show and said if youre not a professional, if youre not somebody who have this as your day job, they say invest in things like the s p 500. Is this an argument against doing that right now . Im from berkeley, california, okay . I was taught were all supposed to index, right . But socially irresponsponrespon me to outdo somebody else. Im talking about the ability to do it. If you can do it, great. But if this is not your day job we give away research for free in our public domain. Go use our databases. But whats happening is you can definitely beat the s p. I was lied to in college, okay . It is not the best benchmark, especially when the dollar is strong. Okay. Louie, well have much more with you over the next 45 minutes. Louie navellier is going to stick around with us. Well chat more about his portfolio and views on the markets as well. The expedia deal announced in february still under scrutiny. Were going to ask senator Amy Klobuchar why shes worried about it, but her thoughts on cuba and the possibility of travel there. Squawk will be right back. 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. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Welcome back to squawk box. Depot med rejecting a bid saying horizons bid in their words significantly undervalues the company. Also, Boston Scientific receiving approval to market its stent for Peripheral Artery Disease in the United States. The device was approved in europe back in 2011. It was recalled by the company because of partial deployments of that stent that could result in injury. Lets talk about the deal between Online Travel websites expedia and orbitz because its hitting some turbulence. The 1. 3 billion deal under government scrutiny pushing the Justice Department to reveal that deal. Joining us right now, senator Amy Klobuchar, the Ranking Member of the subcommittee on antitrust competition policy and consumer rights. Good morning to you, senator. Good morning. Help us, whats the problem with this deal in your mind . Well, i think first of all, everyone loves these online sites. You can price compare, but right now expedia and orbitz, if they merge, they would control 75 of the market. Obviously, pricelines out there. And the thing that many people dont know is that those three companies own 30 of the websites that you look at every day. If you think you have a different website, but its actually owned by someone else. And the problem will be if they have that much market power, whether or not they will then raise commissions. It will affect obviously hotels, not just hotels like radisson and marriott and hilton, but small hotels like up in northern minnesota. How much of this is a hotel story versus an airlines story . Because so many people also go to these sites, of course, for airlines. But i think that the commissions on those are tiny, right . Right. It could have the same effect there. I think the bottom line that mike lee and i, the reason that the republican senator, mike lee, and i sent this letter together to is that were just worried of the effect all this could have on consumers. And we simply asked the Justice Department to look at it. We know they are looking at it because this is something that could have an effect on consumers when youve got 75 of this market owned. Theres others that may come in, and im sure thats something that the Justice Department will be examining, but were concerned from a consumers standpoint. To the extent the doj would approve a transaction like this, are there remedies that you could think about that would make a deal like this make sense to you . Well, you know, thats up to them. As you know, they often put conditions on mergers to see if that will this is actually about, you know, some pure market power here. Its not like you could defer inshat based on what they could and couldnt do. They do two things. They basically allow you to price compare and book. And a lot of the other options out there right now, whether its google or amazon or trip advisor, right now theres rumors they may do more, but right now theyre mostly doing price compare. Senator, what do you make of the fact that some airlines dont participate . For example, american, southwest. Its actually much harder to compare prices for airlines like that. Well, that is te when you have some participating, some not. But obviously, you know, thats up to them. And i think the bigger story here is that just that youve seen so much consolidation in the airline market, as you know. Weve seen some rising prices. And you want to have competition going. And then on top of that, if you have this major consolidation in the Online Booking industry, it just makes it harder and harder for consumers to get a fair shake. The doj is said to be investigating the airlines for price and competition and potentially even collusion over the pricing issue. Prices for Airline Tickets have recently come down. Actually the biggest drop weve seen in quite some time. Are you concerned about competition in the Airline Industry still, or does that suggest to you that there is competition . No, im always concerned about competition because weve seen a lot of these carriers be bought by others. And so thats something weve seen a general rise in prices. But you are right. Recently, which is great for summer travelers. Weve seen a decrease. So its something that senator lee and i have had hearings on in the past, and im sure we will in the future. I want to turn the topic, if i could, to the iran deal. Some news, nbc reporting that there is a side deal thats been made with iran in terms of how some of these inspections of the Nuclear Sites will go. This is to look at past issues, and in particular, it allows effectively iran to do the inspections. What do you make of that . Well, obviously, thats concerning, and im going to be asking questions in the coming week about that. But as you mentioned, this is about their past activities. Something we really wanted to know about and find out what they had done in the past. I dont believe that it applies to the current inspections of the current facilities of the three reactors, the three just let me finish and i think to me the most important thing is when we look at this deal, it may not be what i would have negotiated, but we have to decide when were dealing with a country like iran, our top security priority to prevent them from getting a Nuclear Weapon, is it safer to have iran to engage in terrorist activities with the Nuclear Weapon when theyre two months out of getting one or without. And i came to the difficult decision in supporting the agreement, its better to have them not have a Nuclear Weapon, and i believe go ahead. Would you continue to support this agreement if, in fact, as part of this deal theres a side deal in which iran effectively gets to inspect itself or some of these past issues . Well, again, i want to look at what this is, what this side deal is. Just like you, i heard it reported on the news, so i cant come to that conclusion yet. Senator, can i ask you what you think about whats been happening with the race for the Democratic Candidates for president for next time around . Hillary clintons poll numbers have fallen as the email scandal has kind of played its way out. I wonder what you think about Hillary Clinton, what you think about whether biden should get in and run, if theres anyone that you would throw your support behind right now . Well, im supporting secretary clinton, and i really appreciated a lot of the policies and the reforms shes come out with in the last few months and her focus on the economy. Im from the midwest, and i like some of the things shes been saying about agriculture. Were right across the border from iowa, and shes been spending a lot of time there, obviously. And just with her experience and just the kind of energy, and she brings to these issues. Im a strong supporter of hers. Have you had any concerns, though, about the email . Have you had any concerns about the email situation . Youre always concerned when these kinds of things come out. I think its important shes turned over the server. Shes turned over the 30some thousand emails and shes also appeared before congress. I think theres going to be plenty of time for questions including some of her sort of archenemies will be able to ask her questions about this in a public setting. I think thats important to get to the bottom of it, but trust me, these issues, as weve seen from the republican debates, we have one candidate that wants to now on the republican side, you know, send kids that came to this country through no fault of their own and just pick them up and send them back across the border. And so we have some major issues going on that have to be debated. And im hopeful that we will move to some democratic debates and ultimately the general election because this is a pivotal time in our countrys history. Senator, thank you for joining us this morning. We appreciate seeing you. It was great to be on. And i hope we can go to cuba soon. Yeah, we should talk about cuba. Next time youre in new york, come on by, by the way. I will come by and we will get that embargo lifted. Thank you. Thanks. When we come back this morning, we are on high alert. Were going to run you through whats happening in the Global Markets right after this break. And then jobs data that investors will be watching closely. It could set the market up for yet another volatile day. It seems like were there already with whats been happening with the futures. Stick around for those numbers, though. Later, the race to rebuild the nations ports. A special report is just ahead. And squawk box will be right back. A new season brings a new look. 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Currently 77,000, becky. I know the kind of whisper number was we were going to get closer to 270, but it is 277. The 274 last week was downgraded subtly, slightly 1,723. Continuing claims, 2. 25 million. And thats a slight decrease from last week, slightly adjusted 2. 278. So well call it 2. 28 million. The big news continues to be, you know, imagine the snake and the mouse as it moves in. Thats the way the curve has been training. We have this bulge moving down the curve that was incited by maybe the emotional trading we had even a few minutes before it ended up being about 15 minutes before the actual release on the minutes. And these minutes are more important because of the Chronological Order of the september tightening purportedly. But what i mean is the bind is moving down the curve. Yesterday it was fed fund futures, big move in the dollar lower, and you saw big yield drops and big price up moves in 2s, 3s, 5s. Well, those stuck almost exactly to where they were right after yesterdays minutes hit. But now you see tens have moves a bit lower. The one that continues to fight it the most, 30year bond, and this is important. Were getting ever closer, ever closer, to testing the 275 level from last years settlement. That has been the only holdout maturity that is still below the yield and above the yield and below the price of last years settlement. These are very important to traders. These big annual closing levels. And the final thought is today we get philadelphia. And i know that, you know, these arent toptier data, but its always been a favorite of traders and of course we get existing home sales. Becky, back to you. Rick, what happens with the 30year . What happens if that actually moves below that closing trade from last year . Whats the fallout . Whats the implication . Reporter well, i think that the implication is being the last holdout, when you start to trade all maturities now under the yields or above the price of last year, i think its hard to defend whether its the curve or just the general assumption that everything is going to trade like equities. You know, they go up and down where they settled last year quite often. Many traders down here think on the first move, should we close below it, you want to maybe be an observer. Many traders down here talk about maybe going through a hot knife through butter. On the entire curve, when the signal of 30year gets below 2. 75. Rick, thank you. Thank you. More Market Reaction from jim yurio. Good morning to you. Good morning to you. What do you make of this . Well, this number, as rick said, this is not toptier data and it came in relatively in line. Thats fine. But i am concerned about something. Yesterdays fed minutes were relatively dovish and the stock market didnt smile on it. This could be an indication the stock markets getting a little sick of the fed to the rescue game. Were not were still within the yearlong range, and right now were just at the bottom of it, so it deserves to be watches very closely. If the s ps broke about 20 handles lower than this, i would consider that a big deal and think that its time for the correction. Are you septemberish or decemberish . Im decemberish now. But to put that in perspective, there was a time where i was sure it was september and then sure it wasnt. So i am with the market on this saying were moving september back with things going on in china, i dont think they could risk doing it at this point in time. So december. And the funny thing is that i dont i think if you dug down deep into their head, theyd think to themselves, this is probably not the best time in the world to tighten. Theyve said it. They want to do it kind of to prove they can, and i think theyll couch it with a tremendous amount of dovish rhetoric. I think they care about the stock market. By the way, if it goes below 230 in the s p and we start cascading lower, i think that the fed will come to the rescue with dovish rhetoric and no hike. Okay. We appreciate it, jim. Thank you. Thank you. All right. Steve, what do you think of what just happened with these numbers . How does this add into the entire consensus . Jim said something interesting. He noted that the data today is not toptier data. We have not had a lot of toptier data in the past, say, week or so. I mean, the cpi yesterday what qualifies as toptier data . Retail sales . Exactly, payroll, jobs, obviously. During times like this, the market gets very focused on stuff happening outside. It will be interesting to see if like things like the philly fed were to come in strong, if the market gets refocused on where growth is. But, you know, we were talking in the last hour about the split out there on wall street between Goldman Sachs and jpmorgan and the guys, theres another split worth talking about, and it is very clearly between economists and the market. The market voted yesterday, and to me the clearer sign of the markets that it was a dovish set of minutes comes from the twoyear note. If you can put that up, it came down from that 70 level down to around the mid60s. Thats where its trading today. You talk about the 30. If you want to see the market sense of nearestterm fed intentions, you look that the twoyear note. Its down in the mid60s. There you go right now. Thats since august it came up, it ratcheted up, as it expected that federate hike, and now its down. Still in the range there, but below what was sort of certainty of that move, say, in september. But this morning, me and my producer, elizabeth, have been surveying as many economists as we can. Here are the results. A snap survey, im calling it. 10 of 15 economists who put out reports since the minutes yesterday still calling for the september rate hike. And here are your septemberists weve added to this list since the last hour. A lot of smart guys in there, and women, of course. Jpmorgan, barclays, credit suisse, wells fargo, Steven Stanley at amherst, constitute hoffman at pnc. Josh friedman, lou crandall. And there are your decemberists, Goldman Sachs, Morgan Stanley, smart people, and the first 2016er we have out there, sti stifel. Steve. Who is that, jimmy . Yeah, its me. And i believe these are smart guys, but when you look at the market, the market doesnt have the burden of having already decided they were in the sep camp. The market can change on a dime. Good point. These guys are bright guys, it might take them a couple days to digest it and say gosh, maybe i was wrong about the september thing. And again, i respect these guys a ton. But id give them a little bit of time after yesterdays minutes before i make the call. I talked to one bigtime guy this morning who is managing a lot of money and who was calling for rate hikes earlier who thinks now the fed would be i believe the word that was used was insane to hike now. Because of whats happening with china. Because of whats happening with the inflation data, and thats just out there. A lot of people think that there was a moment to hike. And that moment to hike was six or nine months ago when you had gdp levels at a decent rate. But now that moment has passed because of the market. Louie, what do you think . Theyre not going to hike till december if they do and then they cant hike next year because its a president ial election year. Schumer was begging yellen not to raise rates a new months ago. Elizabeth warren cornered here. Theres going to be immense political pressure. If they do, its one and done in december and the holidays and its all based on market rates. What does that mean for stocks if youre looking at low rates continuing for another year essentially . My average stock retires 6. 2 . Thats higher than the market which is 4. 7. So at this pace, im not going to have a market. Its going to disappear. I guess ill be retired in 14 years. I have a bond business. So i guess ill do that, you though. We have people out there and i want to know, louie, you say there is still room and value in the lower for longer trade. They suggest thats true in the bond market. And i dont know if thats also true in the stock market. Im not certain on that. All i can tell you, when you have low p ratios and low rates, buybacks are out of control. And thats whats happening. So yeah, if my name is chipotle, i dont want to buy my stock back. If im netflix or tesla, i dont want to buy my stock back. If im a multinational, i can borrow europe at even cheaper rates, im going to do that. Obviously tim cook is probably the best at that. Does that change your strategy at all . Obviously this is already what you think headed into this. Has it been are enclosie incolog what youve done . We Like Companies with high return in equity, high cash flow, you know, good price to sales. A lot of m a activity. What do you make about the political backlash against buybacks and to the extent you think that will have any impact on the market . Every Business School in finance 101 teaches kids, do we finance our business with debt or equity . Michael milcan used to teach everybody this and that if you can borrow and buy your stock back, its totally legit, i dont care what Elizabeth Warren says. Shes wrong. She has to change every finance textbook in the country. Shes not going to do that. Hillary clinton now making the same argument. Thats because shes trying to get the Elizabeth Warren wing. But she cant raise Capital Gains unless you raise dividend taxes. Her Capital Gains proposal was bizarre. You cant have Capital Gains higher than dividends. Because lets say hillary does raise Capital Gains. Weve got to wait six years. Then the companies will just pay more dividends. You have to have the rates the same. Okay. Well have much more with louie throughout the program. Gentlemen, thank you all very much. I also want to talk to him about marty liptons comment about getting rid of Quarterly Earnings reports. Okay. When we come back when we come back, the nations ports have a problem, congestion, long delays could mean big money for businesses. We take a look at the future of our ports and what needs to be done to handle that traffic, and thats when squawk comes right back. Welcome back. As you know, ports are getting more congested, and long delays can mean lost revenue and traffic. In order to stay competitive, these days the ports are getting smarter. Jane wells joins us with more. Jane, good morning. Reporter hey, becky. If the last century was about energy, this century is about water. Right now im standing in front of a massive new dam being built by the San Francisco Public Utilities commission after we talk about water including stuff coming in by boat, this, this, this all came here on a ship. And while america is first in many things, it is not in ports, and that has got to change. Route 1, lane 5, water side. Reporter instead of one dockworker on one crane, in the future, one dockworker will work several cranes, tackling the number one problem at americas ports congestion. A half billion dollars is being spent at the terminal in los angeles on scifi robotic cranes which move eight times more cargo on one ship. Truck turnaround times are being splashed in half. But it aint chief. It costs about 2 million an acre today to create the infrastructure necessary for electification and automation. And that would be borne by the port itself. Reporter trade through americas ports accounts for 1 in 3 of gdp. That could double by 2030 if ports can handle the traffic. The u. S. Currently ranks ninth in the world in logistics performance. Clearly the United States in general is way, way behind on infrastructure. Reporter so 46 billion is being spent to unclog the ports and prepare for bigger ships. Experiments include cargomatic, an ondemand Truck Service able to take any container anywhere. And the port of long beach is spending 2 billion building a fully electric automatic terminal, able to handle the biggest ships on the ocean and put some cargo directly on railcars to keep trade moving quickly. But as americas ports dig deep, as important as they are to the economy, taxpayers may not want to pay. I dont think we can turn to the government. I dont think the government has the money. I dont think theres the political will to do this. I think that we have to find the commercial solution and do it ourselves. Reporter at least for the port of long beach, they have money from the rents they charge. The biggest challenge is getting Terminal Operators to chip in. Later on power lunch, america is bursting at the seams with water pipe explosions and on the closing bell, folks, weve got a dam problem. Guys, back to you. Thats a dam shame, jane. Jane, you talk about congestion being the biggest problem at the ports, but what we hear on the front lines is just about how some of the union issues have really led to the slowdowns and the shutdowns in some cases. All of those things you were talking about, i would imagine that doesnt go over well. Reporter well, that is the amazing thing, becky, is of all of problems we had on the west coast ports with the slowdown this year, automation was not a problem on the table. But the truth is, as these ports become more and more automated, there will be fewer and fewer workers needed. But they will be better paying jobs than they have now. So fewer jobs, better jobs. All right, jane, thank you. And we will be watching throughout the day for more. In the meantime, joining us now to talk about whats need to do keep up with the speed of trade is joan mileski at texas a m university at galveston. Joan, thank you for being with us this morning. Thank you for having me. What would you say is the biggest solution in terms of trying to fight the congestion thats out there, and how do you think were doing so far . We have three things that are probably very important to trying to address port congestion. The first thing is to enhance our infrastructure, and that needs funding. There is a harbor tax that is assessed on every port. But we only receive 50 of that tax back to the ports to maintain and enhance infrastructure. Where does the rest of it go . Second into the General Revenue Fund of the federal government. Wow. And then about then theres different funding areas. Theres the fed, of course, states, and local municipalities have to pony up money for funding infrastructure at the ports. That is not well integrated, and wed like to get a better planning across stes. And here in texas, we do a fairly good job. And places like florida do a fairly good job of that integration, but not every port does that. And then, of course, we would like to see very good integration with the other modes of transportation because once something comes into port, it has to go somewhere. And we can make the port more efficient with as you were saying with cranes and automation. But you have to be able to put that on a road or a rail. And most of our large ports are in large cities. And so congestion on those roadways and the rail is also very big issue. So those modes of transportation have to enhance their infrastructure as well. Perfect. Joan, i want to thank you for your time today. We appreciate it. Thank you for having me. When we return, were going to talk to our good friend jim cramer down at the new york stock exchange, find out what you theyd to watch in the opening on wall street. As we head to break, take a look at futures. We do have some red arrows. Squawk box returns in just a moment. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. But hurry, offers end august 31st. Share your summer moments in your mercedesbenz with us. By the time Police Arrive on a crime scene, they could have little to go on. A vague description. A single piece of evidence. A partial plate number. With an app from ibm, officers can now access over a billion police documents to find hidden connections, and identify potential suspects. Ibm analytics helps one hundred thousand officers work smarter every day. I needed work done around my house at a fair price. F sure can. So i could get a faulty light switch fixed . Yup or make a backyard pizza oven . Oh yeah. I can almost taste it now. Tastes like victory. And pepperoni. Lets get down to the new york stock exchange. Jim cramer joins us. After the down close yesterday, what are you going to tell people . The dollar is weaker. China is the 3500 line in the sand. China, very bad. Oil going down, very big again. I dont think there is any support for oil. It creates a mixed picture. The disney down grade, very important. People want to pay less for earnings. The market is oversold. People are getting very negative, the dollar, weaker. Still, one of these situations where nobody wants to step up. The fed has to come out. It would are crazy considering the worldwide turmoil. It is oversold. Im not saying today is the day. I understand, this market does not want to go higher. Louie neville said he is looking for companies that want to come in stronger. You agree with that . He said chipotle doesnt want a buyback. They have been buying back the stock because they have so much cash. I get that. The number of companies that have great rev into you growth with strong dollars is really just a small for the domestics. Jim, we will see you in a few minutes. Coming up next, the best idea for this volatile market. We are going to get that when squawk box returns. Everyone loves the picture i posted of you. At t reminds you it can wait. Lets get to our guest host. Number one, david navellier is here. The race isnt over. You are like a decemberist, maybe a 2016ishist. If they raise rates, it will be in december. They will not raise rates in 16 because of the intense political pressure. I am going to give you your single best idea. I am going to give you kroger and target. Because . They have consolidated near term. Home depot is overbought, near term. Lowes just took off yesterday. Kroger and target are in a pretty good range right now. When you say for now, you think these are stocks that are going to go on a run. Yes. They are benefiting from all the consumer spending. Krogers is beating the whole foods of the world out there. You are not picking anything clearly that has a lot of exposure overseas. Dollar, too much of an issue. In large cap, we have to be as domestic as possible not easy. Hotel, retail, southwest airlines. It is very hard to be domestic in large cap. Thats what we do. Jim was talking about disney earlier. We have talked about a couple times. Your take on the media stocks . Is unfortunate, they hit them all. Dont you need cable for all your netflix. I get confused why they are hitting all the Cable Companies. You like the Cable Companies providing the broadband. You dont like the contact. I dont have them in my portfolio. I think they were oversold. In the dividend, the verizons and comcast have the juicy dividends and you need the fast band death witth. Financials . Finances benefit from the yield curve starts to steepen. Now, it is starting to unsteepen. We have seen more consolidation in the regional space. It is because of dodd frank. The cost of compliance is incredible. My next meeting affects me. Weigh in on this debate. It is in the wall street journal. There was a letter by marty lipton. This goes back to the buyback issue to some degree. Marty lipton, coming out and saying, we shouldnt have Quarterly Earnings. They are bad. Do you think they are doing a disservice to this country . I dont know what we would all do if we didnt have this to look at. I dont know what we would do. But i like the Quarterly Earnings. There are companies that can do it differently. There are companies that offer no guidance. Google and amazon. The scce is all about disclosure. Quarterly is plenty. As a banking regulator, they had to disclose monthly. Are you an apple guy . You own apple . P ale apple is fine. Would you double down . I would buy them on a pullback. Do you think the fears of china are overdone . Thats just a headline that hits the stock. There are professional short sellers that are very good, blasting things and run. They take the money and run. Thats all they are doing. Every time cron research hits one of my stocks, i buy it. Great to have you here. Make sure you join us tomorrow. Right now, it is time for squawk on the street. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer at the new york stock exchange. David faber is off today. Are we breaking out of the range . That is the question this morning as the s p will open the farthest below its 200day moving average since the Ebola Outbreak last october. Down grades of disney, not going to help. Europe, solidly in the red. The