Transcripts For CNBC Squawk Box 20240622

From the record highs. The dow is now down nearly 15 . The s p is off 12. 5 . Check out these staggering figures. S p 500 companies lost another 900 million in market cap yesterday. They lost nearly 2 trillion in market cap over the last seven sessio sessions. You see rich people lost 185 billion recently. This is good. This income inequality thing. Taking care of it. This is not i also like the now were going to do this every day where we can close on change but if thats not interesting enough its like a fit bit for the market. Its not even the range anymore. Its brand new. Were talking about the full ride. We moved 100,000 points this week. It means nothing. We totalled it up for you. Lets tell you where the u. S. Futures are after what was a wild yesterday as things got pretty bad late in the day. Well try to get an explanation from our guests throughout the morning but the dow jones does look like it will oip up now 275 points up. S p 500 would open up higher as well. 33 points higher and the nasdaq opening up by 66 points higher. 280 is not what it is. Now im seeing 28. Its like money when i was a kid. Now money do you tip people ever. Come on. Oh my god. But if you give someone a dollar now in a hotel. Its not enough. Its not enough. Its ten times. It is now in my life its gone to 10 or 20 times what used to be 20 at a restaurant. 20 at a cap. Airport they do your cabs. Do you still use pocket change . Not pocket change. Dollars. I meant change. Heres a quarter for you sonny. To your point, a 10 or a 20. A couple of bucks a bag. I saw 280 today and i go oh, 280. So its starting to work. These higher level of the dow when they go down youre starting to seem less significa significant. Its been a week. Bernie sanders, he has it on for sure. Anyw anyway. China once again the big focus for the markets today. Among the headlines, Chinas Central Bank pumping 21. 8 billion into the financial system. The pboc into shortterm liquidity operations overnight. It came after they closed in the session. After the regular session overnight it was incredibly volatile. Stocks hitting a low in the morning before surging 3 in the early afternoon back above the 3,000 mark but gains were lost quickly and the main shanghai composite finished lower. Also stepping up efforts to curb speculation saying they will restrict trading and stock Index Futures. More from our colleagues in asia in a minute. Did you see this list that our guest sent over of the 12 things china has done to prop up the stock market since it started falling. Is this a lesson that you cant control everything. Almost a 12 step program. But this wasnt hasnt worked. It hasnt worked. Theres more steps to come. But all of these things, step 13rks 13 and dont they realize thats what a market does. We have the opposite case in china, in their numbers because i saw shanghai close down like 30 points and i thought thats not bad and then i read it was down 30 . One and a quarter percent is 39 points now. Its like the 70s in the United States. Got to keep score. A little bit of deal news amidst all the crazy in the. Buying cameron for 66 a share. Its 14. 8 billion transaction. Its about a 37 premium to the 20 day volume weighted average price and this is offering new opportunities to create the Industries First complete drilling and Production System so its an energy bet and consolidation at the same time that all of this this was widely predicted. Very Strong Company with solid Balance Sheets would use this to kick off i dont know if you call this a weaker player but all of these guys were higher yesterday around midday. So this were calling it how much . 15 billion but yesterday we. Were calling it 15 billion. Its a mixture of cash and stock its about 47 premium. 568. 4. So do the premium based on that. Okay. Lets check on the markets this morning and there are how many are there now . Oil is always something that we need to check and its always intere interesting its still below 40 barrel. A couple of years ago youd think at least back to 4 but its not. Its at 2. The dollar interestingly, the strength has been the problem yet we saw the euro go back and then gold, started getting a little excited that maybe this would be one of the safe havens. Our global cnbc team has the market story covered this morning. Seema mody is standing by in london but lets start with sri in singapore. You gave us a lot of color yesterday about what china did with some of the moves but when it was all said and done, at least over here it didnt translate into higher stock prices. Thats right. It acted as something of a Circuit Breaker i would say but the sense in the market was this was too little, too late. It was a good start arguably but more needs to be done and the pboc does have policy scope and the ammunition so there is room for more easing. It was a curious reaction in the regional markets because they were well received in some quarters. The nikkei, Japanese Equities were a case and point as well. But the easing measures didnt really benefit the market that needed them the most and that was the shanghai composite. It was down, today, for the fifth straight session at fresh 8 month lows. We penetrated the 3,000 handle closing 1. 3 lower and we saw extreme volatility and extreme swings, 3 in either direction. Yes in the last hour or two we heard the pboc say they will commit to pumping in an additional 140 billion yuan via shortterm liquidity operations into the markets but lets not forget we have seen capital outflows and that has caused something of a liquidity squeeze. So theyre trying to address it by these recent measures. More so than anything else. They could stabilize the market tomorrow but only at the margins. Thats where we stand in a yach asia. Let me hand it over to seema mody in london. European investors keeping a close eye on china. The active roll theyre taking to prop up the economy unveiling the Financial Instruments hasnt restored confidence today. Some saying this just tells us how dire the situation is in china. Its the fear weighing on stocks today. Were down by 1 to 2 in europe. In germany the xetra dax down 1. 3 . Germany has the highest exposure to china and makes 10. 5 of the sales in the country. The xetra dax is in bear market territory trading down by around 20 from the recent highs hit in april. I want to talk about one specific stock that is getting hit here in europe and thats transocean down about 10 . This after the company said it is seeking shareholder approval to cancel its 3rd and 4th quarter dividends as it deals with a prolonged slump in oil prices. Heres one stock down about 9. 4 in todays trade. Joe, back to you. Okay. Seema, thank you. 600 plus point reversal of fortune. Late october of 2008. That happened during the depths of the financial crisis. Were going to start the day solidly in the green but is this another head fake and should investors prepare for another bumpy day of trading. Joining us for more on where the market may be heading, Charles Parker and bill snead Capital Management ceo and cio. Good morning to both of you. Youre hear at the table so ill start with you. Can you explain what you think happened in the last hour of the day yesterday . Right, good morning, andrew. Thanks for having me. What i we saw yesterday was concern about how asia would respond, not just china but other Capital Markets in asia of both emerging market economies and developed markets to the rate reduction by the pboc announced yesterday morning and the fear here by investors. Is there going to be contagion to those markets. We didnt see the fear last night in those markets but that was a concern. We saw on our desk volume accelerate on the street in the last hour and we could easily see this. You think that was people trying to get out ahead of whatever was going to happen in china because peel didnt know. Step back going into early august, hedge funds, large investors were getting offensive but their net exposures were too large given what unfolded and they had become increasingly cautious ahead of events that could cause pain. You look at the markets how theyre setting you today and obviously you look at today and how it was set up yesterday and the head fake question becomes the issue. Do we end the day positively . What this all reminds me of is and i know its not in the extremities of what happened in the 87 crash but the friday before the 87 crash and the monday was a huge drop. 21 in one day. The next three or four weeks the swings were 5 to 10 of the market in those four or five or six following weeks and it just scared the living daylights out of all of us at the time but the reality was if you bought things the market was substantially higher in two years. What are you doing right now . Whats the move . Our move is to augment the approach that we have been take chg is the domestic economy at large and people are fleeing stocks under what i call the spook factor. The spooks are out and things are swinging and so theyre trying to extrapolate more to it. If a business has a wide moet, a strong Balance Sheet, high free cash flow, all of this stuff is going to make a bit of difference in two or three years and people will look back and scratch their head and say why was i so worried about comcast because of the oil market. Lower oil prices. 87 million millennials, it all spells a Bright Future for the United States but the professionals, those that asset allocate and those that pick stocks its been a long time since they scared us. Andrew wants to know if its going to be up or down. Is it going to be up or down at the end of the day . We dont even have the first clue even where it will be 90 days from now. We just saw this big deal. Thats a substantial deal in the midst of what seems like, i dont know if we want to call it a market crisis but something is clearly amiss. Is that something you look at and you think thats being done by strength . Theres a positivity you look at or do you say actually this is being done because the oil markets are as tough as they are and this is a defensive deal . Its a blend of both. M a throughout the entire year has been dominated not by financial spontaneous source making acquisitions but its by strategic players making acquisitions. Many times theyre creative in nature and thats why the purchaser stock price ends up going up so this is a symptom of Company Executives looking beyond the near term volatility toward the longterm and making acquisition. You listed last night 12 steps the Chinese Government has taken since the sell off started a few months ago. Add two more this morning. Right. Clearly they dont have control. Right. What astounds me is that american corporations and investors seemed to think the Chinese Government would always have enormous control. They can do all of these things. They can step in and tinker and is everybody finally learning and the Chinese Government as well that you cant possibly micromanage this the way they are . If they want to be in a market economy they have to be in a market economy . Its interesting. They remain and probably will remain a planned economy. They are trying to expand and grow at a controlled pace and is supply driven as opposed to demand driven fashion. Unfortunately they are realizing the dangers of too much debt on the National Basis where debt to gdp. What they pushed for and created and incentivized. Shadow Banking System and margin debt which is off over 40 since june. The United States went from a back water Agriculture Society in 1800 to the largest economy in the world at 1900. We had 15 recessions, three recessions, a couple of all out panics and all along, the thing that doesnt pass the smell test, if youre going to do capital i feel you have to agree to the cleansings. Cleansings are the recessions in depressions. The longer you attempt to postpone the cleansing t worse the cleansing was. Look at what happened to us. We got attacked on 911. We were going through a recession caused by the break in the tech bubble and instead of letting the cleansing process take place, we couldnt allow our foe to see us have an extended period of economic difficulty so we offered 0 interest on car loans and did everything we could and actually did cleanse in 07 through 09. It was probably four times the magnitude of the difficulty. Great point bill. Thats an excellent point in history to remind us of the situation. Charles, bill, thank you. Jim grant made that point the other day. What is capitalism without failure. Exactly. What is survival . You dont want evolutionary economics. But what is survival of the fittest is everybody lives and Everybody Wins . How do you select for a behavior thats there to reward . Its impossible to do it. That collectively makes Society Better as you move forward. Yeah. Both of you are city dwellers. I love it. So the National Dog Day. I wish i had a dog. You dont have a dog. Do you have a fish . I have a son who is allergic to dogs. I think every day about wanting a dog. You have rats, i guess. Will it be a problem i think i need to at least show a picture of my two dogs. It used to be three. I wont show the one thats passed. Are you going to do it now or later . Its a tease. Bingo. Stay tuned for pictures of his dog. No dog. No dogs but my son is a dog trainer. No kidding. Really . Thats cool. So hes down with national dog Appreciation Day. Its trending huge, national dog at a. 19. 7. Are you on firefox . I am on firefox. He created fire box . Yeah, its amazing. Anyway, coming up, charting the course. Well ask a market technician for guidance next. First though as we head to break, heres a look back at this state in history. Isnt it beautiful when things just come together . Build a beautiful website with squarespace. The s p riding a 6 day losing streak into todays session. Our next guest says that the charts tell him were not out of the woods yet. Here with a technical take on where the markets are heading. Chief technical equity strategist at bank of America Merrill lynch global research. We had a lot of fundamental analysts in and i give them all kinds of grief about the way they look in the Rearview Mirror and they never consider things that might effect the way an individual stock moves but then i kid around with technical analysts move because a flag means its going up or down and a support level either holds or done hold but neither are perfect what are you using technically to try to disearn whats going on or what the future holds . Great question joe. Thanks for having me on. Were looking at secular trends and cyclical trends. Its multiyear. Multibusiness cycle trends. Were trying to figure out where we are in that trend. We think we are in the early inning of the bull market. But whats going on right now for the first time in a long time looks like we can actually get a cyclical bear. We have seen divergences in indicators all throughout the range that occurred and all came to head last week for the price response for the first time in a long time. Whats going on right now is we think that we can have a deeper correction and we think the market finds some stability around 18 or 20. Maybe can rally up to 1965. Maybe 2040, 2050 but well be retesting the lows we think. Retesting the 1820 lows. And maybe lower. What does that represent on the high. Its about 15 for the high. But you said a cyclical bear so youre thinking we could do 20. We could. If you take that from the high its about 1700. What were saying is you could retest the break out point. So a cyclical correction is actually not a bad thing from a longer term perspective. I think what investors arent used to theyre very comfortable buying two, four, six percent dip and quite frankly most of the calls im getting now are what do i buy. Last october when we had the draw down everybody wanted to sell and the conditions were better so this environment is much like 11, monday felt like the crash. The flash crash and it took three to four months for the markets to stabilize off of those levels. I think we got more time here. Do you follow cramer . Not much. Im sorry. Hes working at that hour. Hes working at that hour. Jims recent thesis has been that when the market opens, and gets some strength, that a lot of smart people are using it to sell names they might eventually buy back lower and therefore dont necessarily look for an imminent move back to new highs at this point. Thats what you said but i would say youre correct that most people have been conditioned to buy the dips down 2, 4, 6 or 8 because we havent had a 10 in four years so the nonobvious thing to do is maybe when you get a good price for something maybe sell it and take a step back. Sounds about right. You hate to say that and certainly people in the business hate to say that that youre always long. Interest rates are always going down. You have to time it perfectly and the question becomes youre going to sell now and you think you have two or three months to go . What is your base case for a true bottom. Base case right now, retest, undercut, 1820, 1700. That would basically be a successful retest of a break out. Now if you go down and retest the break out youre hooking at 1575. You had a new market in the s p and came back at 82 and undercut it. If you have a decline of 10 or more theres been 93 of those since 1928 and on average it ends up being 19 and change. Part of what makes it so painful is we ground along really tightly. We finally have an answer to that question. We have been grinding around the same level for months and months and months. Well break out to the upside or the down side. Clearly to the down side. You look at the numbers, we keep talking about the correction year to date. We lost all of 2014 as well. If you put money to work january 1 of 2014 youre at zero. You got nothing after the big move we had last year. The dow is now down 5. 5 from january 1 of 2014. The s p is up only 1 . We could lose that in a nano second. The nasdaq is only up 8 . Theres a stronger chance that we could see something more than 10. Secular bulls. You can even get a 20 draw down on the secular bull. Its less likely. 13 october of the time you get it once you go down 10. Does that signal recession . I dont know the answer to that. A lot of times when you get market bull packs like this it can say that something bigger is going on. You know, something we dont know may be going on and thats the i dont know. The biggest problem that the whole fed is incredibly accommodated policy thats the biggest fear is were fine, were fine, were fine and suddenly one comes out of nowhere and youre totally unprepared what is that . Qe 4 . Diminishing returns to qe, probably. That didnt work last time. There you go. Yeah. You know but what do you do here . Right now you have to own the United States. Em broke down. Dollar is down but its not out, you know and commodities are weaker. We had it set up in 1997 and u. S. Out performed for another three or four years. Em is still a weak pocket of the world and should remain weak and basically that was the last time you went from a period where you had 4 or 5 or 6 declines that turned into 13 or 20 draw downs in 1997 and 1998. Thats the same happening here i think. Thank you. Thank you very much. All right. Coming up, china injecting 22 billion into its economy. A live report next. First though check out how chinese internet stocks have performed this year. Huge losses for alibaba. Stay tuned. Youre watching squawk box on cnbc. Were first in business worldwide. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Good morning, welcome back to squawk box. Our global team of reporters has the china story covered. Lets start with susan lee in hong kong. Susan. Good morning to you. No one expected china to get a huge lift today from last nights Interest Rate and rrr cut but what the markets were looking for was a stabilization that maybe things are not getting worse and at one point we saw asia markets here actually having their best day in ten months but then things fell back of course. Hong kong followed china in the session. Lot of volatility. Selling off in the last hour after the asia pack closed. Theyre now being investigated for suspected rule violations. No idea in terms of what exactly that means but the important part is that volume came back today on shore in china. One of the most active days in recent weeks. And this is significant because it looks like players are getting back into the market. I want to show you what happened in japan. Huge day. 5 billion inturn over which is double the usual amount and whats really encouraging across japan and taiwan and korea when i talk to brokers that cover the markets is we saw a lot of local buying coming back in and theyre usual hi mean reversion traders. They go in when stock prices are down and theyre hunting for bargain so seems like there might be backstop here and stability across asia pacific. On that note over to eunice in beijing. The Chinese Government continue to try to restore confidence in the stock market. The central bank injected 22 beside of liquidity into the Banking System and this comes after we saw a revival of the heavier handed tactics to try to sure up prices. Theyre now restricting Index Futures trading. They also said in the words of the official state news agency that the government is going to purify the capital mashlths. The Chinese Police said theyre going to step up efforts to investigate illegal trading, Insider Trading and rumor mongering. So what were seeing here is a continuation of a very inconsistent approach and one thing michelle i wanted to bring up and touch upon something that you had said earlier is there isnt a lot of transparency in how decisions are made here so with this approach it really suggests that the Government Entities involved and the central bank are not in alignment in how to address this issue and that uncertain approach is having a really negative effect on Investor Sentiment among regular investors. Today on social media a lot of the people were talking about how the government has no control. The general tone is that people are feeling helpless and in one investors words the government has cut Interest Rates but whats the point. Expect government to have control are misinformed and dont understand how the market is supposed to work and in theory its supposed to be Market Participants making the decisions and the belief that the Chinese Government was going to be able to control this thing from top to bottom. Were discovering its a fallacy and its interesting day by day to see every step they try to take here to sure things up and theyre going to realize that in the end its what Market Participants decide and every time you make it harder to trade you give people less incentive to get in the markets because theyre not going to be able to get out. It becomes a selffulfilling prophesy. Exactly. Tsa one of the things that is interesting here is that oh, go ahead. The delay from here to there. China is a far away place. These are pretty tough. Great to see you. Closer than ever. I know. It used to be like a six second delay. Do you know what a six second delay is . A long time. I was thinking in terms of the market price. Coming up next, jp morgans vice chairman of asia pacific. What shes telling clients about the market turmoil. But first as we head to break check out the dollar. Youre watching cnbc and squawk box. First in business worldwide. Car stronger across the board. After this volatile session another big day shaping up on wall street. It would open 314 points. S p 500 looking to open about 40 points higher as well. But guess what guys, when he the same story yesterday and we ended the day in a very different place. Well see how things shape up later. Decline at the end. Watching that. Didnt want to watch that too closely. There was nothing people were keying off the policy stuff in china but they didnt really know what the Chinese Market was going to do so i can kind of understand what happened. The u. S. Market had been way up before the chinese news. It actually barely moved on the chinese news, right . You thought we were decoupled completely. Obviously not after yesterday but from the beginning you could see it started 315 and then 330 and 280 and there was no follow through and it looked like some people were using it as an opportunity to get a better price the day before. If you think risk is much higher now than six months ago youre going to reallocate assets to a less risky portfolio in general. Even if you think its a buying opportunity. You have things to derisk, right . I dont see what is the actual fundamental ooecht that has increased the risk. The spill over of the emerging markets from china. You have a huge percentage of foreign, you know, u. S. Companies with exposure to that part of the world. You throw into that the perception that our market was sort of on fed induced fumes. It was running on fumes to some extent. Your theory might go away at some point. And the day is coming. Theyre still insisting 2015. They have to get on the board, right . Kick the field goal. Even if its a 4th quarter and youre down 400. Kick the fieldgoal. Just get on the board. Its three points. You know the political conspiracies throughout this by the way. Did you read the ben white piece this morning . I did. Raise Interest Rates. If it pulls the economy back. Any type of recession. Good for the republicans. You can spin it that it was sort of good based on the crisis and its not a great place. There is a perception that things are not the way they used to be in this country right now, right . Should we talk more china . Yes, please. Seems to be driving the china. Vice chairwoman of asia pacific at jp morgan chase. Great to see you. Thanks for joining us over from hong kong. Once again the Chinese Government stepping in overnight with more liquidity measures, more moves to try to prevent, eunice yoon reported theyre going to try to purify the markets. Look i never thought the Chinese Government really had control over the chinese stock market but there seemed to be a lot of people that think that they could do something. What is your assessment of their policy measures. What theyre going to do and whether its going to be meaningful . Good morning. So they did a 12 punch today. They cut Interest Rates and they also cut the Bank Reserve Requirement ratio. They injected more liquidity into the Banking System. I think all of these measures so far have been to offset the liquidity outflows due to the currency devaluations which occurred on august 11th of this year. So were having a crisis of confidence in china now among the investors. So huge volatility just taking today as an example from peak to trough. The market actually traded 8 . It was up early in the day but ended up down. We can help stabilize the economy first. No one can control the financial economy. If it begins to stabilize i think sometime down the road we could see a stabilization of Financial Markets. How long do you think that could take . Well, this is going to take a number of months. Before the Financial Market plunge we had actually begun to see some stabilization in a property market. Prices were beginning to recover. Consumer sentiment wasnt too bad but starting in august and july i think were seeing a down trend again. So in a second half of this year we are going to see more easing measures. Were anticipating another move in the Interest Rates. Remember chinas real rates have actually moved up due to the declining inflation. Interest rates now 4. 6 . Still quite high by global standards. Also remember the Bank Reserve Requirement ratio is still very high. We still have about 4 trillion u. S. Dollars locked up in bank reserves. So they could cut the reserve requirement ratio much more aggressively. The third point i want to make is basically fiscal measures. The government can start alotting more infrastructure programs to help prop up the real economy. So sometimes in the coming few months we really will see more policy measures coming from beijing which hopefully will help stabilize the real economy. To joes question he was raising earlier which is when it comes to the United States and our economy and our stock mashlt market, how much of a connection do you think there is, with china being a walled capital account, should we not be so worried about it . Theres huge connections between the United States and chi china. Bilateral relationships have been very strong but Global Markets are so interlinked. You cannot separate the u. S. Markets and European Market with the Chinese Market. If you look back on the recent months china has become the epicenter of market volatility. This is different than 20 years ago during 97 and 98, china held the currency very strong against the u. S. Dollar but back then the chinese economy was much smaller compared to what it is today. So everything that happens in china has global ramifications and vice versa. Everything that happens in the United States is felt across the ocean in Hong Kong China the very next day. So Global Markets are very much interlinked. So were in this global route right now and we can anticipate a lot more volatility in the days to come. Were certainly feeling it. Thank you for joining us from hong kong. You went with good evening because its morning here. Its 6 00 in the evening. We dont try. How you doing . So this dog thing, im getting indated. My twitter thing people want to see the dogs. No, theyre just sending pictures of their own dogs because its dog Appreciation Day and 25,000 and every time i dont look theres another 50 pictures. It is trending. Jealous. As i already extended a wish to call. Welcome back to squawk box this morning. Many say financials should be a bright spot but dick cautions. Good morning. Watching these stocks, monday, jpmorgan down 21 . People thought that was a great discount. Just reading some of the things youve been talking about, it seems to me youre telling people to stay on the sidelines. Yeah. I dont know where the moneys going to come from in order to push stock values higher. In other words, if you check, lets say, three key sources, one, you know, 20 of the u. S. Money supply is locked up in the fed and cant be used to bolster stock prices. If you take a look at traditional sources like large investor banks and traditional banks, theres a voekle rule. Places like money market mutual funds no longer have protection. Money has been pouring out of traditional mutual funds. Highfrequency traders and etfs tend to be trend runners. Theyre not going to go against the direction of the market. Theyre going to go with the market. Looking at the structural side of the market, i dont know where it comes from. The thing that bothers me most is declines in currency values. All the world believes capitalism is dead and Central Banks run the world. Yep. So, the Central Banks go out and print money like crazy. What happens when they do that . The value of their currencies go down. If you think about the buying power, the euro is down 36 from its high, right . Im sorry, the yen is down 36 from its high. The euro is down 24 . In the last 12 months alone, you saw a 19 decline in the canadian dollar. 24 decline in the mexican peso. Where does the money come from . Dick, this sounds like a sell signal for the market. Youre not even talking about the banks here. This is an overall sentiment. Youre exactly right. Unless someone can point to a huge pool of funds which is ready to go to buy common stocks, how are Bank Stocks Going to go up . How are any stocks going to go up . My thought at the present time, until you see a clear trend in terms of money coming into money stockings, i wouldnt buy them. Would you hold or sell, given this thesis . I would prefer to try to hedge positions. In other words, i think what people should be doing is hedging their positions because we dont know whether moneys going to pour in given this scenario you just laid out, among the banks, whos the most exposed to whatever crisis you think were in the midst of . Well, you know, obviously Goldman Sachs and jp im sorry, Morgan Stanley are because theyre pewly, if you will, associated with the market as opposed to traditional lending, deposit gathering, et cetera. So the more and then theres all these small advisory firms, you know, that are at big risk. Then youve got Companies Like northern trust, which is again also at risk. Those are the companies at biggest risks. Thank you for your perspective this morning. Its an interesting one. We have people coming in on all sides this morning. Thank you. Talk to you soon. Coming up, the dow set for 300point gain at the open. Well get you ready for the bell when squawk box comes right back. I hate cleaning the gutters. Have you touched the stuff . Its evil. And ladders. Sfx [screams] they have all those warnings on em. Might as well say. youre gonna die, jeff. you hired someone to clean the gutters. Not just someone. Angies list helped me find a highly rated Service Provider to do the work at a fair price. Everyone can shop, but members get more with reviews, live customer support, and better pricing. Visit angieslist. Com today. Market alert u. S. Futures rising after yesterdays head fake rally. Experts from oppenheimer and gamco tell us where markets go from here. Chinas rate cuts couldnt prevent losses overnight but after the close, china announcing 2 billion liquidity investment to bolster their economy, or try to. Well ask Robert Altman if they can stop the bleeding. Weve had one big deal in the oil sector this morning. Now a veteran investor says energy m a is about to break wide open. The second hour of squawk box begins right now. Burning through the sky leave from the beating heart of business, new york city. This is squawk box. Welcome to squawk box on cnbc, first in business worldwide. Im Andrew Ross Sorkin along with joe kernen and Michele Caruso cabrera. Becky is off today. Well try to make sense of it this morning. Major averages dropping for a sixth straight day after dropping sharply. It was the biggest negative reversal since the heart of the financial crisis. Dow moving from gain of 440 points to close down 205 points at the end of the day. You can look at that chart. It was one of those days where you looked at it and sort of takes your breath away. We have lost 2015. We lost 2014 now. Were back to a whole year and a half of gains gone. If you look at futures, implied open, dow looks like it would open 346 points higher, nasdaq would opener higher, 82 points. We saw a picture like this yesterday after we heard policy news out of china, the markets flew in the morning and ended, as we know, in the red. Overseas, european averages coming off the lows of the morning. As we flip that board around. Youre looking right now you know, everything is down marginally there. Well see whether that will give if well key off the European Markets at all this morning. Another morning, another effort by china to lift the markets. Latest came in a 2 billion liquidity injection into the Banking System. The announcement came after the shanghai composite closed down 1. 3 . This is overnight. This is even after china cut Interest Rates and slashed the reserve requirements for big banks about 24 hours ago if you were watching about the same time. They took even more measures in terms of intervention into the stock market when it comes to they say theyre trying to, quote, purify the markets. Those are the words used over there. So far, nothing seems to be working. We do have deal news, amidall the crazy mags nations in the market, schumberger is buying cameron about 14. 8 billion transaction. If you look at a 20day weighted average its less, but nonetheless its extraordinary that people are doing a transaction in this environment. We will talk to a private equity unvester who specializes in the Energy Sector to see if this move is a defensive one, what this means to the oil and Energy Markets or whether we think this is a sign of positivity. I thought there was going to be talk, there was going to be opportunistic moves for stronger players within the sector, right you . Give them credit. Instead of buying at the top, theyre certainly not doing that. I should say, by the way, the chairman and ceo of schlumberger saying, old Field Service companies that deliver Innovative Technology and greater integration while improving efficiency which our customers increasingly demand will outperform the market, so thats the rationale in that sense. I wonder what their sumgts is. Cnbcs dom chu joins us with a look at some battleground stocks. Thats right. We wanted to ask our viewers and readers of cnbc. Com whether or not yesterdays action coupled with the large stock market losses we saw last week and, of course, on monday have changed their outlook in any way, shape or form. We asked a couple different questions. First of all, has this changed your view fundamentally, bullish or bearish . Thousands of responses have come in on cnbc. Com. 20 say theyre staying bullish. Again, not panicking here. Theyre seeing this as, perhaps, just some noise around an otherwise bullish market. 14 say theyre less bullish given whats happening. Who can blame them . Its 1,000 noints a week. 1,000 points intraday on monday. Say theyre getting a little more neutral on things, just not as excited about the stock market as they used to be. 22 say these moves have made them bearish. 19 say sell everything. If you look at this end of the spectrum, neutral to sell everything, thats about 60 of respondents saying maybe things arent as good as they were before given the action. We also asked another question of our viewers here of cnbc. Com, what exactly are you buying and selling . Interesting responses came up. On the buy list favorites we looked at single stocks or assets. 20 of respondents said they would buy apple on the dip. No surprise. Its always been one of those battleground stocks. Facebook and netflix as well, and gold and silver, precious metals. Notice the big gap between apple and just about Everything Else out here. As opposed to the sell side list, the biggest sell, people say, is apple. One of those stocks that really is a bull bear debate right now. Oil, that asset down 2 . And then netflix and stocks in general as represented by the s p 500. This is on the buy and sell list. I should also point out, guys, that there were people who said theyd buy nothing or sell nothing. 15 of respondents say they would buy nothing given the current environment. 45 say they would sell nothing, so theyre just going to hold pat. Another 7 say theyre going to sell everything in this market. So, joe, the idea here is the views are really diverged. A lot of people who think this is an environment, a stock market thats ripe with opportunity, perhaps to buy stuff on the cheap like this deal, perhaps, in the oil services district. Then others who say maybe theres more downside to come and theyre not willing to risk it. Very much a battle brewing in the market. The methodology on the apple sell that you just said, tell me about that. We asked an openended question. We said, if you were to sell something, what would you be selling . You could write in literally what you wanted to do. We said the same thing with the buy side, you know, how you wanted to go about putting money to work, what would you buy here . People were able to respond openended. We didnt give them options. First one we gave them options, you click a button, more bullish, less bullish. Second survey we said, heres a box, write in what you think you would buy or sell and we counted all those things up and thats how we got this buy and sell list. Thats so different than at 125. Time for a buy on apple, i guess. Its interesting. Apple, its a lightning rod stock. Skeptics will always say apple comes to the front of all of these survey because that many people are interested in the stock. Still, its interesting that it tops both the buy list favorite and sell list favorite for a stock up 5 . Like a twitter search for a word that happened or an event. Apple would have more hits than anything else all the time. More mentions, more hashtags. All right, dom. They get more sells anyway because it gets more everything. But it wasnt a buy. Thanks, dom. For more on tuesdays brutal day, wasnt as brutal as monday, though, for stocks and red arrows in china, were joined by Oppenheimer Funds chief Investment Officer howard ward, gamco chief Investment Officer of growth equities. How are you . Who has something to say . You have to raise your hand. Did you see how fast that was . On jeopardy i speak louder. Well get to you in a second. When i say the guy that says, which machine do you to want do, i say that one, he goes to that one, so im going to you. Youre a little too anxious. I think the key question, is this a correction or end of bull cycle. Definitely not the end of the bull cycle. China has a lot they can do, they will be easing in the monetary market for quite some time, until they devalue more than what they have done so far. At the end of the day, that will probably succeed in stabilizing chinese economy a whole hell of a lot more than efforts to stabilize their equity markets. I think thats where they should have started to begin with. Eventually theyre getting to it. Thats what they need to do. Howard, as a bottomsup guy, is there any market where youd say, im not just adding the positions of the stocks . Would it ever get so bad where you wouldnt be adding sure, sure, sure. What are you doing now . Wait a minute. I have to frame this because youve had some people on this morning talking about china and how their market is linked to ours. I have to really disagree with that. The chinese stock market went up 160 from the 2014 low to the june 2015 high. Our market didnt go up but a sliver of that. It can be linked on down. You dont need to be linked so that doesnt mean the break weve seen in our markets in the last three years the chinese margin debt rose 30fold. I know that. But this isnt linked to the china selloff. U. S. Experts to china are less than 1 of u. S. Gdp. What is this linked to, then . Its linked to china. You just said no, no. The chinese economy it shouldnt be. It shouldnt be. Im saying when china had a 10 gdp growth, what did we have . 2 . So, the link between what happens in china and what happens in the u. S. Is not terribly strong. In fact, the chinese stock market isnt even very well correlated to their own economy. Its a casino. I think its perhaps not that simple. So, they are not totally linked, but china surely has been a great source of Economic Growth for the rest of the world for quite some time. Then going down meaningfully. Thats far more important than what happens in the chinese equity markets, i think, has repercussions for the rest of the world. Global growth is slowing and it is slowing because china is slowing significantly. We cant ignore that. Having said that, there are plenty of tools to do something about it. I think eventually theyll get around to doing those things they have already started, like adding liquidity, devaluing currency, making sure they destructure their economy. It takes a long time. Youre agreeing with howard, if somehow the u. S. Investor could or should look through absolutely. They should today. I have to finish the comment. Youre pounding on the table. I have to finish the comment. The chinese stock market was at 86 times forward earnings in june. When we had our big bubble, we were at 28. Its declined 40 since then. And this is, you know, an economy that has real problems. They have a credit problem, a stock market bubble, a real estate bubble, they have to manage this. Off camera before we sat down, i said, what do you do during this, disregard all of this. Whats what hes saying i want to know whats going on, but why do i have to react to this . Whats this got to do let me ask this. Forget china. All emerging markets which are far more pervasive in americans portfolio right now are very linked to the economy and theyre suffering dramatically. Yes. Weve seen emerging market contagion we saw it in 98. You dont think this can happen this time . This is 1998. This is very different from 1998. I agree its different, however we have more exposure to emerging markets than we did before. Were linked more to emerging markets from the standpoint of economic standpoint. Thats my point. Emerging markets may be slowing down, but theyre still growing at a reasonable clip. So, emerging markets from a 10, 20year perspective will still be the primary source of growth in this world. Brazil is in recession these are commodity countries. Yes, they are. But guess what, in a lot of portfolios. Weakness in Commodity Prices are a stimulus for stimulus for emerging market consumers. True. Price of oil is down 60 since june of last year. 60 . I think its way, way, way too early to give up on emerging markets. Cycle back to 1998. At that time it looked like end of the market for emerging markets. Five years later, they were the best asset you can buy. Can you make this practical for us . What are you buying as a result of all this . What are you doing . Why not buy stocks . If youre worried about china and things like old immediate, yeah buy facebook and google. Neither has a presence in china. Theyre new media, benefiting from the problems of old media. Theyre down. Take advantage of it. We would recommend to buy Global Equities on a diversified basis, including emerging markets. Because emerging markets are very cheap and can snap back if things stabilize. At the same time, i think you look at european equities, the prospect of europe to grow or change their direction or growth rate meaningfully would you buy an emerging market etf in this market . Big liquidity question i dont think you want to buy emerging market etfs because they get you exposure where you dont want exposure. You want exposure to emerging market consumption, not emerging market commodities. Not emerging market producers. If you wanted to buy active manager, emerging markets is the one place you have to buy active. Howard, this is another example where the market was ready for a pull back and this is what the market used. How can you decide at any given time which irrelevant exogenous event is the one the market goes down on . Because if you just write off everything as not having any impact on the market, how do you know when the market is going to have a break . What im saying is, has the u. S. The u. S. Economy right now is fine. No, i get all that. But something caused this to be the excuse to use to sell off. How do you know which irrelevant excuse is going to cause the market to sell off . You know, weve had a little bit of froth in our market, you know, weve had six years of 20 compound growth we had all that stuff. So, we were due for a pull back. Margin debt in the u. S. Got up to a record high this summer, 500 billion worth, 2point some percent, so we were due for a pullback. Here it is. Its a pullback that has erased not just year to date, all of 2014. So what . What do you mean, so what . A year and a half loss. Youre at 14 times forward earnings now. Now is your opportunity. Interest rates are so low, they are the gift that keeps on giving to this stock market and you will not drive this stock market down very far in an environment of 2 rates and nearly 3 growth. Joe, to answer your question, for to you look for signals for the end of the bull cycle, you actually have to look at the credit markets. If secular default rates away from just Energy Increase meaningfully, i think that tells you the end of the credit cycle, that means end of the business cycle. Weve got a lot of debt ready. If we ever do have issues, we built up plenty of debt to have problems with. In the corporate sector perhaps not as much as in the government sector. I think from that standpoint, from a credit cycle standpoint, this probably will be the longest credit cycle any of us has ever experienced. As a result, i think this bull cycle will probably be the longest we have that we have ever experienced just as much. Youre getting a thumbs up. Slower growth equals sustainable growth. Okay. Slow and steady wins the race. Appreciate it. When we come back, well continue talking about this and a lot more, the falloff in oil prices hitting drillers hard. Well talk to hear m a is about to break wide open. Then squawk market master Robert Altman. He says chinas real growth rate could be as low as 3 . Senator marco rubio sat down with john harwood to answer some of the biggest questions on the campaign trail. Well have that when we come back. Taking a toll on oil drillers. However the weakness could make these companies ripe for investment and a lot more m a in 2016, 2015. Dealbreaking schumberger buying cameron for 14. 8 million, cash and stock dealing. Joining us is charles schering. Good to have you here, sir. We planned to have on you before this dpeel, but whats your assessment of why this deal has been happening . Andrews been asking, are we seeing this because of a weakness in these countries or a slump with schlumberger or whats your investment of it . This is a merger of two great companies, both of which could survive any imaginable downturn so schlumberger needs more diversity of product, cameron provides that. Very little overlap between the two businesses. Something the industry has anticipated for a long time. This is sort of two very Good Companies emerging from a position of strength. Youre a private equity investor. Did you have any stock exposure to either one of these companies . Do not. Can you help us make any money based on this transaction thats happening this morning . Do you see similar deals coming down the pipe . Who do you think could be an acquire acquir acquirerer . Theres a distinction between the Services Market and e p exploration right. If youre looking at troubled public exploration and production companies, Oil Companies, youll see real opportunity very soon. There are a lot of companies that are on the verge of default if not in default and its going to get much, much worse with two triggers. The first is that banks redetermine those Oil Companies borrowing basis at the end of the Third Quarter. Next year, a lot of their hedges roll off, so theyre surviving today on a credit line thats going to contract and on hedges that are going to roll off. So i think from the e p side, everybody, public or private market s thinking 2016 will be a very good year to acquire and a very bad year for a lot of these guys to be in business. For services its a little different. Service stocks depend, obviously, for their livelily hood on Oil Companies. As Oil Companies get into more trouble next year, Service Companies will follow. They will struggle as well. Were talking really about north america right now. So, from a north American Service perspective, we are sitting on our hands. Most will wait until they think its in much later innings because youre essentially buying a a set have cash flows and youre buying assets with an oil company. Two very different sets of dynamics in those markets. Do you think youll be basically in the restructuring business, youll be buying a lot of these thinking out of bankruptcy . You have sort of e p Oil Companies looking to merge, spin assets, to sell. Theres still a bid ask spread. From our perspective, theyre worth more than they think they are. Until banks take away their capital, until their hedges roll off and theyre forced to do deals at fire sale prices, that restructurings wanted going to kick into full gear when do you think that happens . At what price. If you look at wti crude and you look at the models these guys have set up, what is the cash burn some of these guys how long can they last . The cash burn is spectacular. Everybody outside of those with tremendous Balance Sheets is spending more than theyre making. Its not so much driven by wti prices. Its driven by the fact theyre hedged in 2015. We cant rehedge going forward, so theyre going to be exposed to Lower Oil Prices not year. Doesnt matter if its 30 or 50 or 60, theyre going to have real cash flow problems. Thats an inescapable reality. Its time driven and hedge driven, so 2016 should be a very interesting year with a lot of distress deals done in e p. Service companies that are already in a lot of trouble will face much tougher conditions next year. Driven less by Spot Oil Prices and much more by hedges rolling off and bank lines contracting. Assuming oil prices do stay low. And i think the overwhelming assumption is they will stay low, certainly lower than is sustainable for kind of the north American Energy complex right now. Got it. Charles, thanks for joining us this morning from houston. Appropriate enough, oil capital. Thank you. Trying to find time for some of these great dog quotes. I wont show the video of you cant. Ill cry. Im crying looking at these. A dog who has gone to his masters grave every day for six years or a dog that is sees his master in a casket. You can hear in the dogs howling dont, dont, please dont. Im trying to get i got you. Im trying to get simulcast with carl whose dog lucky is getting up there. I got nothing. I love dogs. I want a dog. Well, i got some great quotes, some make me cry, too. The one, andrew, a dog is the only thing on earth that loves you more than you love yourself. Thats true. I would say thats true for most people. For most people. Youre speak being yourself now. Speaking about yourself. Im the one i know what that means. Anyway, coming up, i dont think it would work. I dont think a whole kennel of dogs would work. Great insecurity that is my life. No, no. You should love yourself. Youre amazing. Thats all im sale. Announcer time for todays aflac trivia question. Which threeletter word has the greatest number of definitions in the Oxford English dictionary . And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just one day. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck snoring] no students ever been the king of the campus on day one. 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With at t, strong can turn a simple lunch break. Into advanced economics. At ts network has the nations strongest 4g lte signal. Back on squawk box. Among stories front and center, transocean shares after they announced plans to cancel dividend installments and take writedowns of more than 2 billion. Take a look at nike. Just upgraded from positive to neutral. Price increasing to 22 from 103. You might think thats on sale. Also angry birds maker rovio plans to cut up to 40 of employee. The company ceo says eagerness to explore new businesses over the past few years led to rovio doing too many things. Thats your Core Competencies stick with birds. Theres a new angry birds. Is there . Yes. Have you played it . Ive played it before. Im not great at it but ive knocked a few things down. Forget the angry can cats, angry dogs, stick with angry birds. Squawk market master weighs in on yesterdays stunning reversal. Roger altman is here to make his case of investing in america. Take a look at u. S. Equity futures. Go big or go home so wake me up when its all over when im wiser and im older all this time selloff in u. S. Markets got a little worse yesterday after the dow and s p gave up gains and their biggest reversal to the downside since 2008. Joining us now, roger altman, executive chairman, founder of Evercore Partners and deputy secretary. The day before we had the half hour of the day before, the open. Last thursday and friday werent exactly anything to write home about. If youre sitting around the country and youre not a professional, its a deterrent to investing. One of the top stories that shows the moreover if youre one of those, im not and youre not, who thinks the system is rigged, quote unquote, placed directly into your hands. Youll hear a lot of that stuff, i think. What precisely went on. Was it actually fair and transparent market, so forth. I dont have the answer to that, but i think that was disturbing. It was like a flash crash sort of bad memory of the first time. Well hear a lot more about that. I bet we do. Some of those when its bidless and you got well, ge and jpm down 20 . Thats pretty i know. Even some of those. Netflix was down. Those werent real trades on any of them, even though exactly. Im saying, they werent the stock never deserved to trade there. It was bidless. If someone had been given the opportunity and time to bid, it would have been much higher for ge and much higher than when netflix was down. That doesnt help confidence. Just the china linkage, weve been talking about that today, whether there should be linkage or shouldnt be. Whats going on, i think, is two things. Of course, china is slowing. I did a little homework before this morning. My two cents China Growing at a rate of 3 , considerably below some consensus estimates and well below theyre own official forecast. Second and maybe morrell vanlt, i think theres a loss of confidence in the chinese authorities. For a long time the chinese authorities were thought they knew what they were doing in terms of managing their economic and financial sense. That was around for a long time. I felt that. Now i think theres a sense, perhaps, they dont know what theyre doing. Thats a doublebarrelled negative as it relates to the perceptions of china and, of course, plays into the underlying sense, which is a correct one that emerging markets as a whole has been slowing. Its interesting how the signs of that slowing, especially commodities like oil, have been around for a long time. The market has corrected. It coukeyed on something tha may or may not be related to the underlying economy of china. The stupid stock market went up and that wasnt related to the underlying. So any metrics you use in china, other than gdp, all of those have been slowing. The stock market may or may not be related to a slowing chinese economy. The chinese authorities are apparently, and im relying on various snippets of information here, apparently spent 400 billion in efforts to both stabilize the stock market and, in effect, stabilize their currency, all essentially for naught. And i think thats raised a lot of questions as to whether this longstanding sense the chinese authorities were competent the Federal Reserve here spent 5 trillion all for naught. What did you say, 400 trillion . We could have a long debate if the fed did that all for naught. We could have a i was just nudging roger. Whats amazing is to see china in the same spot as every other emerging market economy for the last 30 years. Oh, dont worry, they got piles and piles of reserves. They blow 400 billion and theyre back where they started. In a couple weeks. Exactly. Its the same old story over and over again. Roger help me with this. You talk to ceos and youre in corporate boardrooms all the time. There has been a huge m a boom, ipo boom, buyback, does any of that stop that . I would say not, except for the exception of stock for stock mergers where the volatility in the equity markets make it harder as a technical matter to do them. So, not yet is there any project youve been working on where everyone said, pencils down, lets take a week, lets think where the price dislocations make it hard to complete it, and theyre on hold until this is stabilizing of the two of the exchange ratio. Whether or not this volatility translates into a real weakness, m a volume remains to be seen. Do you think well have a slowdown on ipo market . That will have an impact on the unicorns in the Silicon Valley we keep talking about i think the odds are reasonably good, meaning a slowdown, but it depends on where we go from here. This happened very quickly and most of the ipos im familiar with that are in the pipeline, are still in the pipeline and proceeding forward. As the washington watcher you are, all of this linked to the campaigns . That depends on what the u. S. Economy does. The u. S. Economy remains especially solid. Is it exciting . No. Is it solid, yes. Is it the best place to invest in the world . I think it is. Were in second gear or third gear, if were in an oldfashioned fourspeed. The question about election season is as a charter member of f. O. B. , friends of bill, is biden going to get in and how ugly would that be for let me answer andrews question. Oh, yeah. I bet you do. Were out of time. Were out of time. But let me answer andrews question. The Democratic Party is the incumbent party as far as the white house is concerned. So, if we see further economic weakness in the u. S. , to me its not clear we will, and at the moment i dont see it. If we do, that undermines the incoming party, the Democratic Party, no doubt about it. I dont joe, i dont know if Vice President biden, who is a great guy, is going to get into this. I dont think that would change the likelihood of the ultimate democratic nomination if the economy would undermine the democrat of the United States, why doesnt the Foreign Policy faux pas of hillarys second term of the United States, why doesnt that play into whats happening . I dont think that will have any impact on the nomination fight. Whether theres a big debate about her record as secretary of state in a general election, well see. Probably there will be. Im sure there will be knowing the republican side. You dont think joe is getting in . I dont know. I really dont know. Do you think kerry is getting in, al gore, anybody else . No is my answer to that. Im skeptical, but i dont know. Roger altman, thank you. Appreciate it. Do you have a dog . I just got a new dog. Congratulations. I was listening i always felt personally good about andrew name is jerry after my mother. I have great quotes. One if if you have had a great dog, then you dont have one, its not aan unfulfilled life. The best is harry trumans. If you want a friend in washington, get a dog. There are touching ones ill have for you that you might like. Like next to a book, the next thing to a best friend is a dog, but im going to tell it later. Well tease that. Roger altman, thank you. Thank you, guys. Coming up when we return, gop hopeful senator marco rubio planning a speech on friday to outline how his administration would challenge the chinese. We sat down with marco rubio. 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. 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. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging, a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Marco rubios plan to change the tax code. You said in the debate the other day that you can compete toe to toe with Hillary Clinton on people who live paycheck to paycheck because you live paycheck to paycheck. And i was raised paycheck to paycheck. How do you think People Living paycheck to paycheck will receive that your tax plan eliminates taxes on estates, Capital Gains and dividends . First of all, Capital Gains and dividends is investment. My father had a job as a bartender at a hotel. The reason why he had a job as a bartender is because someone who had money invested it in that hotel. Thats why high dad had a salary and tips. One of the critiques from your plans as a conservative, you cant eliminate nature Capital Gains and dividends. Its a political loser. I think anything you tax, youll get less of it. Thats why we tax cigarettes. We dont want people to smoke. The only quarrel the wall street journal have is on the personal side primarily because of the child tax credit. People who work are making Huge Investment in future. Those are our future taxpayers. Economic conservatives say its all about marginal rates. Its not about giving money to that group or this group. Were not giving them their money. Single people thats their money. You encourage people to have kids . People are ultimately going to decide how big they want their family to be. Its about recognizing in the 21st century, raising a family is extremely expensive and we want to help people with the cost by being able to keep more of their own money. By the way, we lowered taxes on over 90 of americans. The substantial majority of what about those upper middle class people with the bracket going down . No, it wont. Number one, most people will be paying 15 . We bring the top rate down from 39. 5, thats a 10 reduction. Even there you can lower your tax likt by taking more pretax money and putting it into a retirement account. Many of those people will eventually get married, their taxes will come down, theyll have children, or they never get married or have children. They run a Small Business through an scorporation, their taxes come down. Ultimately, almost all americans can see a significant reduction in taxes. So, this tax plan that marco rubio has proposed is a big target, big topic of discussion, will be, as he gets toward the finals of this nomination race. Divides the supply siders who think marginal rates are important from the reformacons. He delivers it with conviction, a very effective communicator, guys. In terms of the markets and wild roller coaster weve been on and looking at the candidates, is there anyone you think has real credibility to be able to speak on the markets . Donald trump came out and blamed the chinese. I dont remember what he said. Said something crazy, i thought. Is there anybody in terms of whats going on that you think is actually speaking to the issues . Not really. I mean, pretumptively you would think the one who would walk into the debate is Hillary Clinton because of her husband and the economic success he had. I dont really think that the current Market Conditions naturally elevate anyone on the basis of what theyre campaigning on right now. I associate with barack obama. Right. Or Hillary Clinton. Im with you on that. Hey, john, for a while you said that biden was definitely going to be a no go. I wonder if you still feel that way and one reason scuttle butt seems a lot more likely to do it than you gave the possibility of. I think joe biden will end up not running. I think he and his team are trying to be figure out how could we run if we decide to . I dont expect him to decide to. Im not saying you, but i think most of the people that want to downplay the biden run are people that are loathed to admit there might be a problem with Hillary Clintons run and just cant concede that because that would show that they acknowledge theres weakness or a problem with the email problem. I mean, it seems no. Well, i dont really understand that linkage, but i think its about joe biden, about where he is in his career and i think to say shes vulnerable is something that people are big backers of Hillary Clinton wont even admit at least they wont admit it in public. Maybe theyll admit it in private. But not acknowledging there may be an opening for biden, that causes them to concede theres a problem with the clinton candidacy thats a bank shot, joe. Hillary clinton is gullible in a general election in terms of your inability to i thought it was a swish, not a bank shot. Its not about even the duke play. How about christian laettner, will that get you with me if i use a duke guy . Hillary clinton is vulnerable in a general election, no doubt about it. I dont think shes vulnerable right now in the democratic primary. Im riding with biden. Go for it. Thank you. Do what you have to do. Have you to go someplace and pretend youre a liberal and then daisht way they talk. Hi a woman tell me she was worried about Hillary Clinton. Of course she knew. You see . I do. Well have your list of stocks to watch next. Former wells fargo ceo dick kovecevich. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . 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. Also coming in ahead of consensus at its not as cool as it used to be, i dont think. Im going to do this quickly. Its National Dog Day. I love its tweeting like crazy. Or trending, is that what you say . Trending. Its trending. The groucho one i messed up. Inside a book is a mavns best friend. Inside its too dark to read. Thats funny. Heres a touching one. Carls wonderful dog lucky. Thats your puppy dog . She has her paw up on shes smiling. Paw up on penelope. Shes the sweetest thing. Did you see my kid . My kid had a laptop and a phone. Laptop was open and the phone was open. That sums up our life. Thats pongo. Hes a designer dog. Hes so cute a mix of its a maltipoo. Maltese and a poodle. And lucky has been around a long time. Hes been part of the show. Lucky is cute, isnt he . Oh, yeah. Here are some heres a couple quotes. A dog teaches a boy fidelity, e perseverance and to turn around three times before lying down. A door is what a dog is perpetually on the wrong side of. Dont accept your dogs admiration youre wonderful. A dog loves you no matter what. You think youre cler. One is the truth, once you have a wonderful dog, a life without one is a life diminished. People like thats a fake look. Thats a sarcastic no, it wasnt sarcastic. You would get one if you were out in the burbs. Yes, i would love to have a dog. If you think dogs dont count, try putting three business cuts in your pocket and give them only two. Youre going to make me cry. Sigmund freud had a good one. People always mix love and hate. Only dogs can have they know their enemies and their friends. Coming up, the fed gathering in jackson hole. Steve liesman with biggest questions for investors. How will a selloff affect the feds timing . China desperately trying to save itself from a freefall. Europe markets worried about getting caught in the contagion. Investors here in the u. S. Struggling to make sense of it all. The man who warned the world before many, ken rogoff joining us. Is todays 15 billion bet by schlumberger the way to come. The chance of a september rate hike, the moods on wall street and where hes putting his money beyond the banks. Get ready for another wild ride. The final hour of squawk box begins right now. I like to dream announcer live from the most powerful city in the world, new york city, this is squawk box. Welcome back to squawk box, first in business worldwide. Im joe kernen. We the futures have improved from when we started this, up 328. Who doesnt feel good on National Dog Day . I think its causing, you know, the dogs of the dow. National dog Appreciation Day. Yeah. And the dogs of the dow are probably some of the big winners today. We have nasdaq up 84. Hot diggity dog. Weird segue. Check out markets in europe at this hour. There has been quite a bit of improvement in red. Its still red, except in greece. There were a couple down 2 and 3 , i think. Oil up 39. 46. The tenyear at this hour is at 2. 12. Thats quite a bit higher. Got down below 2. 00 in the height of the angst, but now back to 2. 12. The big focus for the markets today is china. Chinas central bank pumping 28 billion into the financial system. Pboc pumping it into the banks through liquidity operations. The announcement came 24 hours after their previous measures we told you about yesterday morning. The injection of liquidity came after the markets closed. As for the regular chinese trading sessions overnight, it was a volatile one, even with those attempts to cut Interest Rates yesterday. Were joined from beijing with more. Eunice . Reporter thanks so much. The Chinese Government tried to restore confidence in the stock markets after the market closed the Chinese Central Bank injected 22 billion of liquidity into the Banking System. This is after we already saw a revival of the some of the heavierhanded tactics the government had used earlier in the summer to try to prop up prices. The authorities said theyre going to restrict Index Futures trading. They also said in the words of the official state news agency that the government is going to purify the Capital Markets. The Chinese Police are stepping up efforts to investigate illegal trading, Insider Trading as well as rumor mongering. These moves did not restore or rebuild confidence among investors in china, but theres been some talk some of the steps, such as the Interest Rate cut, were aimed at rebuilding confidence in the economy and also that the target audience could be global investors. The overall, the leaders here are aware that the Global Investment community is very concerned about the china fears. What we could see right now is a signal by the authorities here to the Global Investment community that they are taking action and that they do have tools and that they have the ability to manage the economy. Guys . Okay. Thank you. Appreciate that. In the meantime, lets get some details on whats moving this morning. John is at headquarters. Lets take a look at big tech and media stocks that will be part of the news flow. The reason technology is in focus right now, for a lot of these names, in fact, the majority of the sector, the biggest in the s p 500, theyre all in correction territory or worse. A good chunk of them are in bear market territory having fallen by 20 or more. Check this out. 43 of the entire sector in the s p 500, again, the biggest one there, is in correction territory. Fallen by 10 or more. 54 are in bear market territory. That means if you combine those two, 66 of 68 stocks in the sector in correction territory or worse. A lot of attention, guys, is going to be focused on these f. A. N. G. Stocks, facebook, apple, netflix and google. Facebook up 2. 5 , 3 in the premarket. Amazon also up as well after an upgrade, evercore up 3,000 on 10,000 shares. Netflix and google as well. Interesting moves ahead of this what could be a nice, positive open. Back over to you. Were watching to see if that holds through the day. Thank you. The feds annual economic summit in jackson hole kicking off this week. Summer camp for policymaker. This year, not so fun necessarily. Some notable names are not attending, including fed chair janet yellen and dan tarullo. One man who will never miss, steve liesman. Reporter good morning. Despite all the market turmoil, economists polled in the cnbc fed survey still see a rate hike this year, but they have pushed it ahead. Looking at the results, what was a september call is now a december call. Well look at the percentage on that in a second. Pushing it ahead three months. When it comes to when the fed will allow the Balance Sheet to decline, also pushed ahead three months to december 2015. The socalled terminal rate, where will the fed when it gets done hiking is now the Third Quarter of 2018. Also ahead a quarter. They brought down that terminal rate to 2. 79 from 2. 98 . Jim bianco writing in with his results with his answer says, data dependency has been put on hold. Its now about financial stability. What i found interesting about this survey was, a lot of folks Still Holding out for september. I guess theres three weeks left. Durables this morning, another jobs report. If you look at the percentages, 38 still clinging to this september idea, saying the fed would hike then. 62 saying no. Now, looking at the whats happened to the funds rate, very interesting. They brought about a percentage point off of the expectation for the fed. In the sense thats an easing. The funds right now is seen in 2015 at just 0. 37. Back when we started asking this, august 2014, it was 0. 89. Call it 80, 90 basis points off the expectations for 2016. The number is 1. 12, thats down 30 bips from the last survey and 80 bips from when we asked in august 2014. Some commentary, folks like lynn reaser digging in her heels on this september rate hike, saying the fed believes it should take a longterm view and we economists should as well. No change in my answers. But bob brusca says, the fed has been crazy and misleading people to thinking all was fine and that it could hike rates despite inflation. Way off track. Shameful performance by the fed. Guys, you have your septembers, your decembers, also people looking later on for a rate hike. Theres a camp like that. A big diffusion of people. Steve, before you go, how much is the fed likely to see all this market turmoil and relate it back to their policy and then, therefore, what theyre going to do . Im not sure theyre going to see whats happening in Financial Markets right now as about fed policy. I think they see it about regime change when it comes to commodities and what happens to currencies in emerging markets. The Commodity Prices have come down as a result of the supply demand equation there. And china slowdown. I dont think they see this about the u. S. I think they see decent u. S. Growth. Thats the way the data has been. I think what they believe is that the feds fund market creates an automatic stabilizer for the economy. If youre worried about the fed and the data doesnt go that way, you bring down your outlook for the fed and that should neutralize. I dont think they see this even though there were the 2 00 minutes that created a lot of volatility in the market, i dont think they see it about the fed and rate hikes. Takes a lot of courage, like the guys on the train, i dont see it. They should but i dont see it. Steve, thank you for that. Were going to now talk to one of our gurus on crises. Long warned of a financial crisis in china. Now his prediction may be getting a little closer to happening. Quen rogoff, harvard professor of economics. Youve said china is the ultimate example, but this time a different story. How sick is china and how much of a cold or how sick should the rest of the globe be getting . Well, of course, we have no idea because theyre not very transparent in their data. I dont even think the leaders themselves know exactly for sure is the economy has slowed dramatically. What we dont know is just how much cushion they have to try to control the fall. You see this in emerging markets all the time, and china is, where it grows and grows. They Start Building up debt, china surely has, then they slow down and investments dont look so good, Financial Firms start failing. China has trillions in reserves to help bail it out but its unclear how flexible it is. Its unclear, you know, how easily and smoothly it can make this shift. So, were definitely seeing a slowdown. Theres definitely a much higher chance it goes for the worst that we have a hard landing. Its a cloud exactly whats going on. Is there an historical example . Youve obviously looked at crises over eight centuries when you wrote your book. Is there an historical example of what parallels whats going on right now . I mean, its heart to put china together with, like, a thailand or asia. The chinese growth miracle is unparallel with the British Industrial revolution, the United States in the late 1800s, this booming giant. Remember, the United States in the late 1800s, even as we were overtaking britain, had some massive recessions in there. And i think thats the way to think about this. You just cant grow and grow and grow at this rate without some kind of pauses. The question market, and the chinese have been preparing for this, they have been thinking about it is, you know, are they going to have a bad five years or are they just going to have a bad year . Or two . Right now i think what theyre quietly saying is, okay, a year or two, maybe its not going to be 7 . Maybe it will be lower. Then it will be 7 growth. I think thats the question mark. Can we get back to andrews second question which was, okay, chinas economy is slowing dramatically. How much should the u. S. Market and the u. S. Economy how much will it be affected by whats happening in china . Well, its hard to know. Youve been talking about it all morning, im sure. Of course the big thing is the uncertainty that it puts. Of course, china is very important for some countries that export hightech machinery there. Its very important for emerging market. But this isnt yet as big an economy as the United States. I think the problem is, when china slows down, even if they maintain political and social stability, and theyve certainly been tightening the clamps down to be prepared to do so, will russia, will brazil, these other countries which probably are even more vulnerable seeing the sinking Commodity Prices. Theyre already in recession. It creates a lot of uncertainty. Oh, absolutely. No the economies are in recession. The question is, is how bad is it going to get . They have Floating Exchange rates that helps a lot, so there are these vulnerabilities that almost reach into the geopolitical. Of course, it makes markets nervous. What do you think of the Banking System in china and our connection to it . Specifically maybe not even the Banking System as we know but also the shadow Banking System . So, you know, its very murky details, to say the least. They certainly rely heavily on a few big banks. Its not clear how theyre going to handle it. If there are a lot of nonperforming loans. The shadow Banking System has increasingly become important for the marginal investment. So when the central bank is cutting its Interest Rate, it doesnt affect all the Interest Rates the way it does, say, in the United States. The shadow Interest Rates, i think, i bet, have risen during this period instead of fallen. I will say the chinese authorities are aware that a lot of these firms, these Wealth Management firms, need to fail. And theyre a little worried, well f we dont let one get bailed out, is there going to be a panic . I think thats a problem theyve already faced but its going to get a lot worse. What about those who argue who say, look, they can have a horrific banking crisis in china, but because their capital account still isnt open to the rest of the world the way other countries have done for the last 20 years, that while we complain about it all the time and we say they need to modernize, maybe in this case theyre siloed in any way. Do you give any credence to that . Absolutely. Its one of these this time is different, chinas story of why its going to be okay. You know, theyve been at risk for a long time. And the debts have been piling up. Theyve been investing 50 of gdp. Theres this phenomenal imbalance. The scale of the problems are also phenomenal. Of course, the legitimacy of the communist party in china very much rides off its ability to deliver continuing growth. So, we just dont quite know how its going to play out. Look, theyve gotten very nervous about the stock market falling. Thats political. Its not economic. They encouraged every day people to invest. It looked great for a while. Now its collapsed. People who put their money in the tail end of the boom are hurting. Its hard to know how the political economy will play out. I would like to say when they first started allowing the stock market in china in the late 90s and having investment firms, the first batch of them were all sent to jail because the communist Party Officials and others put money in it and they lost it. Its hard to know how it will play out. Can you look at the policy responses china has taken thus far . You look at policy responses that other governments and Central Banks have taken. Again, is there an historical parallel . I start thinking about 2008 and a number of the things our government did during that time. Some of which worked. By the way, didnt work immediately. Well, lets face it, these chinese leaders have been phenomenally smart and phenomenally successful for a long time so, you know, everyones reluctant to bet against them. I think this issue of the stock market is one where theyve really stubbed their toe. They look silly trying to control the fall of something thats just too much of a market. They cant do it. And its undercut their credibility. They do have a lot of tools, for example. They were tightening fiscal policy. They can loosen it. They have done a lot to improve they seem to have, the finances of the local governments allowing them to issue bonds so they can sort of stabilize. That hasnt it isnt completely clear where thats going. They have a lot of tools. But this is a massive economy. Its very diverse. Its just not that easy to manage. Look at our political system, with just over 300 Million People and how diverse and hard to manage it is, they have 1. 3 billion people. Its not an easy thing to do. Theyve done a phenomenal job for a long time but you just cant do it every year. There have to be some pauses. We may be upon one. Well take a pause right there. Ken rogoff, thank you very much. Great coming up, schlumberger is in the market for buying cameron for close to 15 billion. That includes some debt. Also, how investors should play the energy patch, whether prices are at 30 a share or a barrel, excuse me. Rbc analyst joins us straight ahead. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Sharp price, but weakness can make this companies ripe for m a. Schlumberger buying cameron for about 14. 8 billion, cash and stock deal. Higher by 43 . Joining us is chris, oil and Gas Companies Research Analyst at rbc. Good to see you. Good morning. Did you wake up and say, thank god i had cameron rated as buy when you saw the deal . When i woke up this morning, i say, thank goodness for this deal because now we dont have to talk about 35 oil for a while. Tell me, you had cameron rated a buy and you thought the price would go eventually to 66. When you look what theyre willing to pay at this point or what the deal is structured at, thats where about it is right now. Im assuming you like what happened with cameron. You think this is a good deal . Yeah. You know, when schlumberger joined the joint venture with cameron a few years ago, i always thought cameron would be acquired by schlumberger. Its always the schlumberger m. O. What they get into a joint venture, they buy the company. Timing notwithstanding, i think its a good deal and i think its going to work out really well. Can you predict other transactions like this . What other stocks would you be buying that potential companies could acquire . I think ill sidestep that prediction, but i think from an investor standpoint, the focus could turn to Companies Like weatherford, national, fmc technologies and oceaneering. Why . When you look at National Oil Well, theyre very well positioned, Equipment Manufacturing company. As youve seen over the last few years, theres been an intense push by Industrial Companies to get involved in the oil and gas space. So, i think there could be an opportunity for somebody outside of the Energy Business to come in and take a look at National Oil Well of arco. If that doesnt happen, national oil has been the acquirer of a number of Different Companies over the years. I think theres a great industrial fit between National Oil Well and fmc technologies. If that doesnt happen, you have fmc technologies in subc business, similar to cameron. Theres some industrial fit between fmc and oceaneering. And weatherford is the number one provider. Maybe they would be looking for additional scale to compete more effectively with halliburton and schlumberg schlumberger. The lower oil goes, the more likely those deals are to happen . They usually happen after theres a stabilization so that the sellers can get a better view on the opportunity of their next 12 months and the buyers can basically see what the sellers are looking at. Might be a little early in that process but i would say as we exit 2015, i would expect there to be a number of deals coming. Back in july, there was a previous note, you guys thought wti would grind higher for the year and average 72 for 2016. So far its ground lower at this point. Have you reassessed that number at this point . What are you thinking for wti when you make assumptions . Sure, thats all fair, you know. Id say that the oil markets are very challenging, the dynamic that we have a very intense process in supply and demand dynamics and sometimes they dont spit out the number you expect to see. There are other factors involved. Not making any excuses whatsoever. We constantly recalibrate that dynamic. Maybe in a month from now, you can get me back on and well have our revised outlook. At this price when it comes to oil, except for m a, is there any reason to buy in this sector . Its a time frame dynamic now. Theres probably very catalyst poor for the next three to sixmonth period. Ive been through a number of different cycles in my career. This is a typical bottoming cycle. If you have a 12 to 24 month horizon, i think the stocks will be higher than today. Thank you. We appreciate it from texas again this morning. Thank you. I think were up almost 400. In the futures. Coming up, durable goods data, well head to the cme group, check in with Rick Santelli after the break. Plus, Dick Kovacevich is our special guest. Why he thinks the fed should raise rates. Check out the futures at this hour. 375, closing in perhaps on 400. I think we were closer a little earlier. 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. 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. 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 . Welcome back to squawk box. An upbeat quarter for abercrombie fitch, posting an surprising profit. Although same store sales declined, the drop was smaller than forecast. You can see its trading higher. Other apparel retailer shares are on the rise. Express Beat Estimates on top and bottom line and raised their 2015 outlook as well. Better product miss, fewer promotions helped to boost profit margins. Were just seconds away from july durable goods orders. Rick santelli standing by at the cme in chicago. We have about 30 seconds. Lets talk about dogs or something, unless something strikes your fancy today in the markets, rick. Its also equilibrium in discounts and premiums. A third china, twothirds normalization of the fed and those two catalysts colliding. You know, i think there were premiums going up. Youre going to take them going down. What do you define momentum as . Richness. Richness coming out. Durable goods, much better than we were looking for. Up 0. 20. We were looking for a small negative. Granted, thats a headline. Last month had a positive revision from 3. 4 to 4. 1. Lets go through the internals. We always like to take out transportation, a volatile aspect, a volatile component of durable goods. In this instance, it was. 0. 3 is expected. We end up with double at 0. 60. Reconciling these issues with the headline being so strong, we of course have to dig down in numbers like boeing plane orders. If we look at capital goods orders, nondefense ex aircraft, not shipments, thats orders. That was a powerful number and proxy for business spending investment. That was up 2. 2 . Many multiples up 0. 5 or a little less. Big revision from 0. 9 to 0. 4 last month. If we look at shipment versus orders, it was better than expected but not quite as powerful, up 0. 60, a little more than half of 1 . Also 1 revision from down 0. 10 to up 0. 90. The revisions were good, numbers were good. Not off the charts terrific but definitely solid. You know theres been a lot of talk, if you came from mars and you looked at the fed issues of the day, you would think they would be easing, not tightening. You look at it differently, to come from mars and you look at any data, even spongy gdp for the last ten quarters and then you saw zero Interest Rates, that would be shocking. Back to you folks. Okay. Thank you. When we come back, we have former wells fargo ceo talking to us about the fed, china and the state of banks. Also maybe what hes been buying or selling in the stock market given the matinations up and down. A private portfolio member making a big bet on cvs. Seven out of ten Power Outages in the us are caused by weather. But utilities can now predict where the power will go out, within a few city blocks. Working with ibm, theyre combining micro weather forecasts with detailed data from local sensors. To predict where outages are likely to occur. And send crews exactly where theyre needed, when theyre needed. Ibm analytics from the internet of things is making energy smarter every day. The former wells fargo ceo says tepid Economic Growth and the wrong mix of fiscal policy has held back our economy. Dick bover joined us earlier in the program and expressed his concern about the banks in stocks and in general, but you would have had to have seen that to know what im talking about. Take my word for it. He did say it. Can you confirm that, andrew i can confirm it. Thank you. Were supposed to have a little tape but it wasnt ready, so thats really whats going on here. You didnt need to know that. What do policymakers do from here on out . Lets talk to dick. There are two kinds of people in the world. There are those that think it would be absolute lunacy to raise rates here and those that think the notion that rates havent already risen off zero, for nine years, they think that is the height of lunacy and both think theyre right. Youre on one side, though. Yes, indeed. I believe they should move. Look, the market believes that the fed is going to move some time in the very near future. Theres no doubt about that in the market. The fed has signaled theyre going to move in the near future, so why not move and get it off the table and concentrate on how we get our economy growing faster than the subpar growth weve had over the last six years of 2 to 2. 5 . The market hates uncertainty, yet its almost certain theyre going to move so they should move. Its weird because this is a body of policymakers that shouldnt be individual egos, but there is talk they worry about being laughed at like, what was it, trucet that raised rates when they shouldnt have been raised. Others say, my god, what if they raise rates only to have to come down, if there was some economic weakness . They dont want obviously, theyre not on a mission because theyve been wrong about every economic forecast, so would it be that bad if they were to reverse themselves if they had to and went up a quarter . I think they should get on the board. I think its ridiculous that were at zero still. Exactly. And it is. And their economic forecasts have been wrong by about 50 consistently. Again, the expectation is throughout the markets theyre going to raise rates soon. If that wasnt the case, then the uncertainty they would be surprising the market. I think they need to move and i think it would be positive because it would confirm the fed is not worried about a recession in the United States, that they do know that were a lot better shape than we were five or six years ago. How can we have the same rates we had today that we had in 2009 . It makes no sense. They need to Show Confidence our economy is doing better. I just want to jump in here because i dont theyre probably focusing on what youre saying and maybe not on the screen. We have the dow looking like its going to open up much higher. Jumped, by the way, about 7500 points. After durable goods number . We look like well open up 436 higher. S p would open up 53 points higher. The nasdaq up about 122 points higher. Dick, separately, i was going through the notes and realized on monday, youve been youve been buying things in the stock market, as if its walmart. You think everythings on sale right now . I do. Were have 50 off sales on some stocks. What are you buying . Well, im buying a lot of things. You know, certainly im still in the dividend camp, so im the prices have been low, so ive been buying dividendoriented stocks like p g, like exxon, cat, los angelas vegas sands. Youve always got verizon and at t. The retailers are on sale. Their dividends are up to 3 now on target and walmart. And theyre off you know, walmarts down about 25 from its high. Kkr literally fell in half early in monday. And got down as low as 8. I bought some at 10. 20 price it had a 9 dividend. So, theres just a lot of opportunities out there. And as i mentioned, i think the last time we were together, i expect that there would be a correction. And i expected that the correction would be a buying opportunity, so are you calling a bottom here . Should people look at the futures and have confidence . They should be in this market . Well, i dont think theres necessarily a bottom. I think we have to go through at least the rest of this week to figure that out. But if the market like yesterday did fall, i bought more yesterday. Today i wont be buying. Is this the bottom . I want to know, do you think this is the bottom . I just want to know. What do you think . Actually, i dont want to know because i dont care, actually. No, i dont are you saying yesterday wasnt no, no. I just dont i dont know. I want to know i want to know what he thinks. I know, i know. I want to know whether dick, did you put any money to work monday. He just told us monday. Im sorry. What are you reading . How about this, dick, at this point with the fed, is it just that the policies are no longer benefiting us or that at this point do you think there has actually been some type of damage inflicted by fed action over the past couple of years . Oh, i think theres been damage inflicted. Thats the other thing people disagree on. How so . Whats your how would you characterize the damage . How can it hurt the economy by staying at zero . Well, i think the fed has done more for income inequality in the last five years than any fiscal or tax policy ever. The fat cats are enjoying record after record of stock market increases and 75 of americans who basically save put money in the savings account are getting 10 basis points, and they buy all of our services and products. So, i think its inhibited the economy. I think theres bubbles in asset prices because they manipulate Interest Rates. Thats one reason why ive expected a correction in the stock market. Certainly the bond market is in a huge bubble. And now thats carried over to commercial real estate. You know, bubbles when they burst, dont help. Larry summers was on the other day, and he thinks this is the new world that we should accept. That we have subpar growth for a very, very long time and that in order to deal with it, we just have to have super low Interest Rates than weve ever been used to having for a very long time and this is the way it is. Hes a very powerful voice. Well, i totally disagree. I think you know, larry was the architect of our fiscal policy back when he was in the white house. And its been the worst recovery weve ever had. Because of the lack of doing the right thing fiscally, let alone monetary policy. There is no reason why our economy should not be growing at 3 plus if we had, in my opinion, the right fiscal and monetary policies and we dont. Dick, real quick before you go. When you look at the risks in the system, especially the Banking System, the financial system, you look at the volatility thats taking place right now and you think about the issue of liquidity which keeps coming up over and over again, is that something you worry about either in the etf market or elsewhere . Yes, i do worry about liquidity. Its related to the whole volcker issue. When markets what we know for sure is that markets get overextended and then when times are tough, they go down lower than the fundamentals. And someone has to step in when markets arent performing and fix them because banks have the expertise and the money to do that. Theyre not allowed to do that because today because it would be considered proprietary trading. I think well have more volat e volatility in all the markets when we dont allow Financial Institutions when they see opportunities to go after those opportunities, which then helps the markets get back to to where they should be based upon fundamentals. And your upside market on the s p . Come on. When people can hear, i it is a bottom, you told me. I dont know fitz a bottom or not. The guy manages a lot. He ran a bank he manages a lot of money because he ran a bank. Because he ran a bank. And people want to know what he thinks. I know. Dick, great to see you. We will see you soon. When we come back, names you need to watch in todays trading session. Plus, a platinum portfolio member changing some picks, including swapping out apple for facebook. In the meantime, check out shares of both of those companies over the past year. Facebook outpacing apples gains. Find out why he says the stock is a buy next. Okay. Our platinum Portfolio Managers have been coming on saying, now is the time to pick up some solid names that have been beaten down. Paul meeks is doing just that. Hes in our platinum portfolio contest. Hes switched out apple, delta and Power Solutions replacing those with facebook, fleet kor technologies, cvs. Hes Portfolio Manager of suturna capital. Hi, paul. Good to see you. Im going to put out your caveat at the beginning which is you still own all those stocks, just youre in these contests so you think these other companies will be better performers in the shorter term, right . Thats correct. Tell me why you like facebook in the near term versus apple instead . Well, facebook, the world is going to all of your browsing on mobile, as everybody knows. And particularly when you take a look at messaging on the app and also the next big tranche of digital ad spending is going to be video, particularly on instagram and youtube with google. I think that the Growth Drivers for facebook, despite the valuation, and a lot of people will coming back to me and say, paul, facebook is expensive, i see much clearer Growth Drivers for facebook. Apple, on the other hand, which is still a big holding in my portfolio, like everybody else im worried about the second act after we get through the iphone 6 ramp. This year is going to be an extraordinary year. The problem is, next year with about 60 to 70 of your business coming from the phone, whats the next leg . And what happens if iphone units are actually down next fiscal year . Yeah, a question we have asked many times on this show. You like flt, and youre switching that out replacing psix. Flt has an uber connection. Very interesting. So, fleet core is a very wellrun company, organically and with savvy acquisitions. They have fuel cards. Recently they did score a deal with uber. We know ubers driver base is growing very, very quickly. If we can get 40 , 50 , 60 penetration with fleet core products, it could be a very nice driver, maybe a dime to 20 cents eps positive impact. And then youre switching out delta, replacing it with cvs. I likedelta. Ive been on your program talking about it but cvs i brought aggressively on monday. We all know the United States is 2 or 3 times the rest around the world. It plays nicely with the hybrid pharmacy benefit manager model in containing costs. Its become an important part of this Health Care Spending chain along with its competitor express scrips. All right. Well see how you do. Thanks so much. Everything sold off, obviously, in this last round, but that one seems to have held it a little bit better than most. Thats right. A quick reminder. You can go to cnbcpro. People with suggesting we have a squawk dog. Yes. Thats a great idea. And then you take turns. Your idea the today show has one. I wanted a monkey. You would have it throw darts. A squawk index. Thats a oneday parlor trick. You know what monkeys throw. The question is, if the monkey does throw that, who is going to punish the monkey . If it throws its, are you hear to volunteer to do that . No comment. Im not going to say it. Im not going to say it. When we come back, were going to talk to a guy whos not a monkey, jim cramer and what investors can expect at the open. Were going to hear what he has to say about the craziness in the markets. Dow looks to up about 420 points higher. See it . Thats a sensor. Using ge software, the light can react to its environment getting brighter only when its needed. In a night, it saves a little energy. But, in a year it saves a lot. And the other street . Its been Burning Energy all night. For frank. Franks a cat. Now, two things that are exactly the same, have never been more different. Ge software. Get connected. Get insights. Get optimized. Lets get down to the new york stock exchange. Jim cramer joins us with burning ears. I dont know, i have no life. I talked about you again today, because yesterday early on, you know, and that is going out on a limb, to say a lot of times you should use some strength, maybe, instead of using the weakness to buy, maybe use the strength when you get a chance to sell some things. Thats what uyou were saying yesterday. You want to come in and buy them up today and you forget the fact that at 3 30 the buybacks stop and you have big sell orders. I think they were correct about the idea that you buy them on the way down. The question about whether it was the bottom or not, it was the best stocks. I think its interesting that there are moments when you can buy and do well. I dont think the opening is one of them, because weve seen that the market doesnt work right anymore. You know, you come in and you buy. You sell them down 200. You buy them down 300. If you want to buy, wait for a better moment. I said, listen, this is not the right moment. I see these kinds of openings and say what are they based on, chinese liquidity . Weve had some discussions about who i would i dont know about the whole notion of asking someone on any given day, is this the bottom. I think its kind of a weird, its a question thats not going to get answered. I might ask blank find, i would ask you. Its is successful retest is what people are saying. I would ask you. I dont think you think it is the bottom. No, i dont. I dont like this kind of action. Theres not enough good things happening. This is what we want to know. And were going to find out more on squawk on the street. This morning we have the big movers and tomorrow we have the Kansas City Fed president. Shes the woman behind this weeks big gathering in jackson. She can give us some perspective on what the fed might be thinking. Thirsty . They said it would make me cool. They dont sound cool to me. Guess not. You got to stick up for yourself, like with the name your price tool. People tell us their budget, not the other way around. Arent you lactose intolerant . This isnt lactose. Its milk. Buying Cameron International for 66. 36 a share. 12. 7 billion. Shares of abercrombie getting a big boost. Revenues and comps coming in ahead. Were up in the futures well above 400 and thats the big question we wish we could answer. Does this hold or do we see something similar to yesterday . Nobody knows. Well see. Make sure you join us tomorrow. Squawk on the street is next. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. They are trying to try this again. Futures are up. High profile upgrades. Pretty good durable goods numbers. Well get to all of it with jim. Europe seems less convinced. Shanghai got merely sold