Transcripts For CNBC Squawk Box 20130725

Giveback in the markets, happening as the tenyear yield was climbing and that was concerning a lot of watchers of the market. The dow futures are indicated down by 70 points. The s p futures are dune by about 8. 5. These are some bigger movements because the dow was down by about 25 points yesterday. Giving back all of the gains that had it had made this week. Gains have been modest and this morning you see some red arrows. Didnt get out of hand yesterday, got down 50, 60 points a few times that i saw. And it closed down a little. Pretty good numbers, though, yesterday, to be down. And i dont know if there is anyone today reporting that could turn that minus 70 around at this point. I dont know. I dont know. Would have to be a good report by facebook was really good. And it makes sense because no one likes likes the stocks anymore. The shares traded higher after the earnings and revenue beat the street. The social network reporting an uptick in daily visitors to its service, also saying that it can thrive on smartphones and tablets from some of the metrics that it saw in terms of mobile. Well talk to a facebook analyst in about 20 minutes. I would think twitter, if it were public, given the whole weiner thing would be there is so many uses for twitter now that i hadnt interactive uses. And in weiners case, the apparently in terms of time and 130 characters, he didnt need a lot of time or that was in drudge yesterday. I missed that. Can you imagine in phone text, just where the person on the other line hangs up and goes there was nothing there for me. Hes, you know, hes sleeping already with a cigarette and there is nothing there this story has gotten who are you . Youre julio caesar peril. Your last name is peril . This is the carlos this is the things that i wasnt here for. Right. Im sandro you insist on having a lot of clothes on. I happened to come in this way, the show started if you think you look good that way and makes you feel more confident, thats fine. I can take no, no, no. I dont think we need you to have less clothes on. People want to concentrate on business. Youre the one that brought it up. I know i did. It only has been 20 years that we have not worn jackets, but you come on as a guest host and a guest person. Even chillier out today. It is. It is nice. Thanks for bringing some decorum to the table. I get those notes because i wear a jacket. Do you know that . People out there like timing, oldfashioned people. Corporate news here. Michael dell sending an open letter to dell shareholders yesterday. Yesterday dell and silver lake raised their by a dime. Ten cents. Im laughing at that, to 13. 75. Dell says the latest offer is, quote, in the best interests of the company and our shareholders. What does that say . Keep the king. They got a nickel and five pennies. He adds the decision is now yours. Im at peace either way and i will honor your decision. Lets check on the markets this morning. Already saw the futures down. They have confounded a lot of people and there are interesting the lead editorial of the journal is very interesting. You know this inequality, this income disparity, if that was obamas biggest concern, it hasnt really been going the right way. As the stock market has gone up, as housing has come back, the middle class has gotten even worse off over the past five years and the rich are doing much better. And the journal makes a point that before you start dividing things up more fairly, you should try to grow the pie. Just read the wall street journals lead editorial. You disagree with everything the journal said. I dont even want to hear no, no. Lets look at the oil board, also not helping the middle class at this point. Yesterday was down 2 , which was its biggest drop. Yeah. I like the Larry Summers, janet yelin im so behind Larry Summers now. Because the left is so agitated about this. And all the on the progressives, even going back to what he said at harvard, which was so misconstrued and mischaracterized about women where the idea of the debate that day was to Say Something crazy that we can talk about. But they just ran with it, the idea that these are two people i know and theyre both, i think, brilliant and qualified. And what Larry Summers may or may not have said at harvard, almost irrelevant in my opinion. The other thing that the far left hates is that he was hes known as someone that was involved in financial deregulation. And it enabled a lot of right. Shes a yale shes never really been in private practice, right . Has she . Shes a yale educated and complete liberal. For obama, it is a clear choice. He should pick yellen. I think janet was a hawk in the mid90s. Clear need for using him. Dont have to hang on her. You think that too. I dont know if it is relevant. Im telling you what i think janet thinks. I know you are. But youre not telling what you think she thinks in a way that im telling you and she thinks this. I agree with her, but keep listening to the other side and i dont hear a good argument on the other side. I keep listening. I keep asking the questions. Im with you. Lets just do it forever and go to the committee decided that tapering could come sooner rather than later. Is she not in in thinking with that consensus. You think shes an outliar . I think shes less concerned about the costs of qe than probably your average f omc member now. Lets see if we argue it out. Lets see if the economy gets Strong Enough to where they hit the targets they set, unless they change the target. I think theyll get out. We have the discussion that somebody asked me about, like what would happen if unemployment stayed at 7 forever. I think the fed would change its view about why unemployment is 7 . They would have to change the views and say, you know what, this is a structural problem, that should be dealt with by congress and the president if it can be dealt with at all. It is not a matter of the fed. Right now the view of the fed is this is something we can help. And it is not a permanent change in the economy. Thats important. And if somebody wants to come along and make an argument, some have, and say, look, your target is wrong. 6. 5 is the wrong place to be. Or wrong thing to aim for to raise rates. If you want to go back and talk about Anthony Weiner no, you lost me already. Well go to the tenyear note. What i was looking at was on google today, honoring Rosalind Franklin who missed out on the nobel prize. Her work they wouldnt have been able to figure out the double helix without her and she never won the nobel prize. Theyre honoring her. Thats actually where is the tenyear . We get above 260 yesterday . No. Almost back. Almost there. All right. Carbon was pointing out, you get to 2. 61 , thats a red flag. Back to 2. 69 , look out. Thats where bernanke was kind of turning and talking the market down before. And the dollar . 135. And then gold, which is showing a few signs of life, but well see whether this is a move back to the high end of a downward band or made of sand and is ready to maybe do a little bit better. Lets talk about global news as well. At least 77 people are dead and 131 are injured after a train derailed in northwestern spain yesterday. The governments working on the assumption it was an accident. An official says that speeding was a possible cause, but Brian Williams described this scene as danteesque and horrific pictures and video coming back out of the area. Time for the Global Markets report. Karen tso is standing by in london. We have a different tone across markets today than what we saw yesterday. Europe closing an eightweek high in trade, but now we have red across the screens. And a bunch of Different Reasons impacting the markets. Earnings out which have been negative. On the macro side, the data is positive. Stocks are just not responding. The stock share 600. The benchmark index down 1 so far. I want to show you some individual indices. A lot of pain is coming through for the German Market today and across the charts. In negative. The ftse is down just over 1 . Second quarter gdp coming in on quarter. 1. 4 on year. These numbers are strong and also in line with consensus, but the market hasnt responded. The acceleration in selling occurred after the numbers hit. The cac in france down by a similar tune. Xetra dax has been the weakest performer, despite the ifo, which is a take on business sentiment, coming in positive as well. It has done nothing for confidence here today. In terms of the other data, we had the Unemployment Rate from spain hitting at 26. 3 . 26. 3 in the Second Quarter. This is an improvement on the 27. 2 that we had in the first quarter. The market just slightly underwater, down. 2 . Let me show you a couple of the earnings in focus today. You can see this split reaction across the board. The fragrance maker givaudans profit jumped 36 in the first half, boosted by lower financing costs. Also a bit of tax rate helping out. Randstad, a company in the staffing business. A snapshot on how the employment picture is playing out. It had a healthy 73 rise in its Second Quarter profit. The dutch Staffing Firm says the result is due to lower operating costs, not the negative ones. Basf missed Second Quarter expectations and achieving four year numbers look to be a challenge at this point. The concern was the warning about the growth out of china, heard this right through the earnings season so far. And Credit Suisse numbers disappointing today. 2. 8 lower is how the stock is trading. It reported Second Quarter net profit of over 1 billion swiss franks compared to 788 million franks over the same period a year go. It basically extracted costs out of Investment Banking business, but the reaction has been there is no wow factor because if you match this up against the u. S. Bank numbers, it didnt stack up as well. On the bond markets, we have seen some Movement Across the curve today on the back of some of the macro data. 2. 38 is the yield currently. On Foreign Exchange markets, the sterling has been pushing lower on this trade as well. Were at 152. 80 to the dollar. Back over to you. Karen, thank you. We appreciate it. Were going to talk now about Goldman Sachs and Fabrice Tourre has taken the stand in his trial in new york. Accused of secretly helping paulson and company construct a 2 billioned deal that others could bet against. And they could bet against. In his testimony, he said an email he sent to a key participant in the investment was inaccurate. The email is in question is a note that tourre sent to describing what became abacus, the name as you recall, and sent it to an executive at aca capital holdings. Affordable care act, capital holdings, probably not. The s. E. C. Claims the firm was thats the same name, isnt it . See it, right . Yeah. Foreign company . There are a lot of foreigners that wanted to bet on they wanted to bet on they were excited to keep to stay on. Take your money if youre willing to give it. Well, arrange both sides of it. Lost money on that deal too. Werent they on the goldman . I dont know. But this whole thing. Well see what happens. In washington news, the Senate Approved a bipartisan deal on new federal student loans. The bill now moves to the house. Also on capitol hill, the house narrowly defeated an attempt to drastically curb the nsa surveillance program, which collects the phone records of millions of americans. Lawmakers debated the balance between privacy rights and government efforts to find terrorists. The measure was defeated following lobbying efforts by the Obama Administration and house members on the intelligence panel. They argued the program is crucial to National Security. Chinese authorities have charged a well known former communist official with corruption. Eunice yoon joins us from beijing. This say big story, eunice. Definitely a big story. This man, his name is bo xilai, he was one of the most powerful men in the country. A lot of people believe he was going to be one of the next leaders of china, but he and his family became embroiled in a political scandal that led to his downfall and also exposed some of the political risks within the communist party and alleged corruption. Today we learn his indictment was filed in the eastern city of jinan, formally charged with abuse of power, bribery and corruption. We know there is going to be a trial. No specific on a date, but most people here believe that it is going to be sometime in august. And what was interesting is that this announcement was widely anticipated, but the timing of it was really interesting. A time when were seeing the new leadership really ratchet up its campaign to fight corruption, were seeing that in the Health Care Industry here, and also the government just recently announced its plans to cut back on spending of government buildings. So right now it looks as though the government really wants to present itself as a regime that is different from the others, administration that is very clean, however, at this stage, we dont know how much of this action is for show, or how much is an actual effort to really clean up the governments ranks. Guys . All right, eunice, thank you very much. Eunice yoon. When we come back, well talk to a facebook analyst on the outlook for the social networking giant. Shares getting a big boost after yesterdays quarterly report. You can see up 17 . First, though, squawk sports news. Chicago has approved a 500 million proposed renovation of wrigley field. The storied home of the cubs will add luxury boxes, a nearby hotel and eventually a jumbo outfield electric sign. This news comes after months of negotiations, but a possible legal challenge by rooftop owners, that still looms. [ male announcer ] 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 july 31st. Help the gulf when we made recover and learnd the gulf, bp from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. Welcome back. U. S. Equity futures now down 58, making headlines, carls jr. , cke, is reportedly exploring sale of the fast food chain. Postponed its ipo last year. I know carls well, it is a there was a carls restaurant initially. It is not carl jr. s, it is a carls jr. And then a smaller one. Ruths crist. What . Ruths crist is the steak house with that. Yeah, yeah. Yeah. Thats a different carls jr. Is a carl had a bigger and then a smaller one. Ever been to one . No. Out in l. A. , had a Bacon Cheeseburger with an onion ring they put on. It is good. Pretty good place. Earnings in from star wood hotels. Six cents better than expectations, revenue inline for the year, 2. 81 to 2. 88, and low end matches the estimate. Thats not bad. And they are the owner of a lot of well known teams like westin, i think st. Regis, high end. And, yeah, used to be barry was there, now fitz. You want to do the National Weather forecast . I would love to. I wonder who is here . Lets get the National Forecast from the weather channels reynoldswhats going . How long can you keep the breeze going on . I heard joe talking about the burger with the onion ring on. Earlier in my career, in my early 20s, i was in california, i went to carls jr. It was breakfast, young and stupid, you can get away with that kind of stuff. Fried zucchini. While youre doing your report, wa want to see what you would be as carlos danger if you tweet a selfie. Okay, you deal with that, ill deal with this. A little more of the breeze in parts of the northeast, pleasant for you, so different from what we had a week or so ago. Chance of thunderstorms along parts of the gulf coast. Storms for you over parts of the four corners and moving into the front range of the rockies. What we can expect is very nice conditions to continue through parts of the ohio valley. Watch out for the storms. The storms in parts of the eastern seaboard, could give you a few backups, especially by later in the day in new york city. Minneapolis, scattered storms by midday and into the afternoon may give you a few backups too. But atlanta, hartsfield jackson, no problems whatsoever. Should be fantastic. Back to you. It hasnt generated yet. Here it comes. I put reynolds as your first name. Thats right. No danger. No carlos danger. Alfonso kill. Perfect. Alfonso kill. If you would prefer, let me try wolf reynolds. That might be thats almost cool enough to be the name itself. It really is. You can interchange the two. Like ross westgate. Manuel kill. Compared to other cutins you do, do you look forward to this one or where does this rank . I do love this one. Because you never know what youre going to get. What is even better is you have no idea what youre going to hear before you come on. I look forward to it. You know what else, reynolds, you know the english climate change, the guys that follow it, the met the theyre the ones that know what is going on. So they addressed this pause, and their post lating it is in the deep ocean, there is a sink area absorbing all the heat that isnt being expressed in the atmospheric co2. Thats what they have come up with. Thats where it is. But can you explain one thing to me. If every one of these weather events in the last five, ten years is attributed to the warming and really was a pause, how can it be attributed to the warming when it was occurring in the deep ocean, not in the atmosphere . Can you connect the dot oz on that to me . Not in seconds. This takes hours. Oh, you would be able to explain it . You would be able to explain it. Okay. I didnt know. If you all right, never mind. Im not going to put you on the spot. Ill expose myself to the environment environmentistas. Theyre getting the doughnuts ready. It is a free fat. It is a free punch. Doesnt help anyone. With that disgusting thought in mind, lets talk about shares of facebook. They have been trading sharply higher after the companys quarterly release. Joining us now with reaction is gene munster at piper jaffray. The stock up more than 17 . Have they silenced the critics at this point . I think they have. I think it is funny to look back a year ago as the mobile was the big problem for facebook. Now it is a big opportunity. It just has been a total reversal. Not only that, there was this what facebook called the urban myth of teens using facebook less. And zuckerberg was very clear in his prepared remarks to give some stats that would kind of go on the face of that, showing the u. S. Teens usage is steady. The classic prosecute folio manage whose daughter is using facebook left, he tried to calm some of the fears. Both the near term on mobile and how it fits into social, they have done a good job last night of calming those concerns. They also talked about new product, the facebook home product. What is that . Facebook home is when your phone takes over and they try to find new i was ways to engage y 24 7. The stock is back up above 31. Below the ipo price, but do you think this is a serious change in momentum and serious change in the direction of the stock . I really do. Part of the reason is that just that zuckerbergs comments about the engagement, we talked to investors about facebook over the last six, nine months, the theme has been, yes, youre going to have some opportunities with some of the new products which have seen the results, but ultimately is this the story you want to own for the longterm . Usually the answer comes back as probably not. It is a trade. Some of the results last night and also some of the big picture themes with about where they fit in social is going to move the stock higher. Keep in mind too, we havent even talked about new ad products about graph, search, video, ecommerce. They got other levers to pull besides what they did last night. I noticed as a Facebook User theyre much more aggressive on the page and trying to prompt people to boost a post or otherwise promote there and spend money on facebook. Is that one thing paying off for them, you think . I think that is. They have been also more aggressive with putting more ads in the news feed. I think like you talked about, more ads and they have done a better job of showing advertisers the ads have i dont know if you remember a few months ago, when gm said they may or may not use facebook, because they couldnt do the measurability, they created ways that advertisers can measure and thats had a big impact in terms of the engagement. All these things are very positive longer term. I can see this stock get getting back to the high 30s. All right, gene, thank you very much. Great talking to you. Coming up, it is really all liesman can think about, Dunkin Brands reporting Second Quarter results. The companys ceo will deliver the doughnuts. Do you like there is an ice cream cake over there too. You put your finger in and go, mm, purple. The outlook next. All business purchases. So you can capture your receipts, and manage them online with jot, the latest app from ink. So you can spend less time doing paperwork. And more time doing paperwork. Ink from chase. So you can. Good morning. And welcome back to squawk box here on cnbc. Im joe kernen with becky quick and steve liesman, sitting in for the vacationing andrew ross sorkin. Dunkin brands is out with Second Quarter earnings, a penny above estimates. The company just signed its first store agreement with four franchise groups that have agreed to open 45 restaurants in southern california. And joining us, nigel travis, the ceo and president at Dunkin Brands. Who we have called, like, a visionary genius because he figured out, you know, maybe california is a place we should have some Dunkin Donuts. I cant believe they werent there. They werent there because they didnt have a visionary, nigel. Nigel, how do you do it, to think, do they have mornings in joe go ahead. Thats one of the best compliments ive ever had from you and im and im delighted you put that in a thats true. But were delighted to be going to california. We announced it earlier this year. We signed up four franchisees. Theyre going to build 45 stores. You wont see them quite yet because it takes about a year and a half to get the stores up and running, but they will be up by 2015. Just to give you a mini exclusive joerk, you like those i do. Youll see Smaller Stores in unique locations comie ing up before that. In all seriousness, morning is not new out there. Was it competition . Who is the established morning brand for doughnuts and coffee in california now. I used to live there. I cant is it starbucks . There is a lot of people out there. Starbucks is out there and other chains are out there. But we go into new areas all the time, were very successful in doing it. One of the things that people dont realize is that when we sell bags of coffee in supermarket, the number one state for doing that is california. Were excited about going there with our stores. And we also have a flood of letters of request, when are you coming to california. The good news is were coming to california. People, like we all said here, they cant believe youre not there already. Thats what people dont understand is how dunkin couldnt have been canada, i understand, go up there, the hockey player has that chain, so you wonder whether you can take business away from loyal people up there. Why were you not in california up to this point . I think that simple answer is we were there once before, we came in, restructured the management team, restructured the way we support our franchisees and the back part of the last decade and by history, we had all our stores in the northeast. We moved under my spread cessers regime from being a regional chain to one that goes right across the country. So were now let me ask you a question. If california had the same number of stores, say, per capita, as new york, how many franchises would there be in california . In california, if you had that kind of density, i would say it would be about 1500, 2,000. So four now so the growth possibili possibility, if you were to be successful in california and probably massachusetts has a higher density than in new york, you would have 1500 stores. Is that your plan, to get to 1500 stores in california . Our plan in california is to get to 1,000. So were not looking for the same density. In new york, where the density is actually less than massachusetts and in massachusetts they have over 1,040 stores. We dont expect to do that, but we think overtime we can get to 1,000 stores in california. When i took my kids on the freedom trail from boston, i explained to them why we won the war over the british, it was because of Dunkin Donuts. We were Drinking Coffee and doughnuts and the british were not. Is there anyplace else in this country i think hes british. I know. We were drinking the tea thing, drinking the coffee thing. Apologies if i insulted you, but it is a sore spot for all of them. Then we took over the all they have is a baby to show for got a royal baby and no navy basic. I is there any place else like california . I read that release this morning three times, that said you were not in california. Where else arent you . Were not in most of the western states. Several states out there that were not planning to go to anytime soon. Were focused on california. Can i pick up a couple of sth g things. You mentioned boston, the freedom trail. Were known for coffee and tea. Joe, this is for you and i know becky talked about the royal baby before, becky, were sorry we didnt produce a cake for your son last year, here is the royal munchkin, in celebration of the royal baby. And we also got the baby shower cake you talked about before the break. So we like to celebrate these things and i think, steve, as we move across the country, one of the great things for people is well see we try to take life with a slight tinge of humor and people love coming to Dunkin Donuts because were about every day speed, where every day humor and like to celebrate great things. This was the perfect interview for that. Is some british guy running this company . Were celebrating the birth of the royal baby. Is that all your beats Anthony Weiner. It does. Though im envisioning a doughnut that might be no. Nigel. Im both im actually both nationalities. Im delighted to be american. I also am delighted to be british. We are delighted to have you on. Have you seen anything like the mcdonalds effect where they werent doing so well recently in the latest report, whether gas prices or the strapped low end consumer. Is business going swimmingly . We feel really good about the u. S. 4 comps, youll find beat most other competitors. That was driven by our ltos, great operations, what is interesting, when you dissect the number, we were up in both traffic and ticket, the ticket was driven by people going to higher price sandwiches. Based on our numbers, we feel good about the economy. Baskin robbins, our other brand in the u. S. , is coming back strongly. They had 1. 6 comps, net growth, they have been in a steady decline for many years. We had two quarters where they have grown stores. Were optimist big that business. Franchisees feel good. Profitability is very strong. Based on dungeon brands, joe. I think the company is going very well. Fantastic, nigel, thank you. We appreciate you playing along with us this morning. And happy birthday to Little George alexander. Im excited. He was so cute. George alexander louis, right . And then they had the little they took the little seat and put it in the back of the car and william drove off. Thats nice. They dont have to do that. They could have a driver like sorkin if they wanted. Nigel, thank you. Coming up, Southwest Airlines is purning into the earnings gate. Well have the Earnings Results and outlook next. My mantra . Always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. Welcome back. U. S. Equity futures at this hour are down 60 on the fair value board there for the dow, 7. F 3 for the nasdaq. A little better but a little weakness out there. I think well have a chance later to talk about earnings in general. I think thats been maybe the source of this weakness. You know, i dont know if it was that or the tenyear note pushing higher. We have been watching all of this. We have earnings up from southwest. Those numbers just hitting the carrier earned 38 cents a share for the Second Quarter in line with what the street was expecting. Also says passenger traffic is at record levels despite some external head winds. Gary kelly is the chairman, president and ceo of Southwest Airlines. Thanks for being here today. Thanks for having us. You say youre having all these strong numbers despite some external head wind. What are the external head winds . Primprimarily the economy. We saw trends off course beginning in march. Thats despite the fact that march was augmented this year by easter and passover traffic. But despite that, our folks have done a great job. Fuel prices are lower than a year ago. That helped a great deal. But at least for us, you know, in terms of the outlook, the good news is our unit revenues are up about 3 so far here in july. And thats a very nice turn around for what we have seen since the end of february. Is that just the economy improving . Things looking a little better for the average consumer . Thats our best read. Probably a little too early to tell. There are signs in our air travel demand, seeing effects from sequestration, seeing effects from consumer tax increases earlier in the year. And hopefully the, you know, the economy is just working through that. If you look at our government travel in particular, government travel is off significantly and i would certainly attribute that to the federal budget cuts. I know that it has helped to have lower fuel prices. At least helped for you, for delta, for u. S. Air ways. We have been watching oil prices. Does that start to worry you about the cost end of things . It does. But, of course, thats why we hedge. Were 80 hedged in the Third Quarter and 85 hedged in the fourth quarter. And in subsequent years. Never like to see fuel prices going up. But the nice thing is we have been able to adjust our business, to Energy Prices at these levels. If we can keep them in this range, i think well do well. We had record first half earnings. We had record load factors. All those things are coming together pretty well. We have a lot of things were managing at southwest in terms of our own Strategic Initiatives and theyre all going well. On balance, feeling pretty requegood. Unit costs were up by 1. 7 . What pushed the costs higher . I think it is just normal inflation, but a lot of things are going on at southwest in terms of investments for the future. And so thats whats creating some of that inflation there. But on balance, if we can keep our iunit costs near flat, the outlook for the rest of the year, i feel pretty good about that. I think our folks are doing a great job managing our costs. Can you update any of the information on what happened at laguardia at the other day . Nothing that i can really comment on. Were working with the ntsb. They take the lead on this. And im very pleased with how that investigation is going. Our primary objective, of course, is the safety of our customers and our crew and thats our first care and concern here. Im very thankful that we had only very, very minor injuries. Of course, any injuries are too many. And, you know, well be working very, very diligently to make sure we understand what happened and make sure it doesnt happen again. That plane had maintenance done on july 18th, can you tell us who or where that maintenance was done . Im not going to comment on any aspects of the airplane or the maintenance or the flight crew or any of those things. The ntsb will do a very thorough investigation as our folks will, and at the appropriate time well obviously comment on all of that. One thing we have asked you go ahead. Same question. I want to know more about the plan to replace the fleet and upgrade the fleet. How many planes over how long and what will happen to the older planes . Today, we have 696 or at the least of the second kwaerd, 696 aircraft in the fleet. Well maintain a fleet approximately that size over the next several years. Well be retiring our classic fleet, the 737 300s and 500s gradually between now and the end of this decade. Well be retiring airtrans boeing 717s over the next several years. It is a fairly young fleet. So well be replacing these retiring airplanes by two means. Buying new aircraft directly from boeing. We have 36 new airplanes coming next year and the following year as i recall. And then well be replacing some of the younger equipment, the boeing 717s with a likeaged 737. The used market has some good opportunities out there. And well maintain the fleet at about the current size over the next couple of years. How is the airtran integration going . Going very well. From the beginning, we had planned to have that integration complete by the end of 2014. Were on track to do that. The remaining work that has to be done at southwest is to finish our Technology Implementation for International Itineraries and thats on track for next year. Once thats done, we can move the rest of airtrans network airplanes and people into southwest and were looking forward to that. But it is going very well. I dont quite understand, is the capacity the same . If capacity is the same, is growth then your pronled on just raising ticket prices rather than increasing volume . We talk about a couple of Different Things here right quick. First of all, just our supply of seats into the market, were upgauging the size of our airplanes on average. So were adding the 737 800, which has more seats, the 717 is being retired in favor of the 737. Which will have more seats. That will create some seat growth by itself. It is a little premature to decide yet about 2015. So, yeah, i mean, Earnings Growth will be a combination of driving improvement in unit revenues, and also controlling our unit costs with fuel costs in particular being the variable, but were having Great Success doing both of those and i have a lot of significant or Strategic Initiatives under way. No, not this year. Again, we dont have any plans at this point to implement baggage fees. As i mentioned to you all before, thats something that well have to continue to monitor and make sure that were doing a best by our shareholders, our employees and our customers by our current approach. I like where we are. Obviously, we got record results to support. Thank you very much for joining us today. Appreciate it. Thank you very much. Coming up, our earnings coverage is just getting started. Well hear from the cfo of General Motors and Dow Chemical Company Andrew Liveris. Take a look at the futures this morning. It is a decidedly weaker picture than we have seen in a while t. Dow pictures are down. The s p futures are down over 7. 5 points. Nasdaq is down 2. 75 points. This is all coming after the market lost ground yesterday. Not massive losses, but the biggest losses we have seen in a while for the s p 500 and the dow. At this point we are continuing to watch the tenyear note as well. Its trading just below 2. 6 . When we come back, our guest host for the hour is Joe Lieberman. He will be joining us on set to talk banking, the economy and a lot more. Former senator chris dodd will join us, this is three years after doddfrank the banging regulation became law. Auto maker gm, stick around. Squawk box will be right back. I i. Another big day for earnings. A flood coming in before the bell this morning. And the life after washington. Connecticuts two longtime senators have moved on from the halls of congress. Now, Joe Lieberman and chris dodd are joining squawk box t. Second hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box here an cnbc. Im becky quick. Andrew is off today. We have been watching the futures. They have been under a little bit of pressure. You can actually see things have improved a bit. S p futures off by just over 6 points, in our Morning Headlines today, facebook shares soaring in the premarket trading up by better than 17 . This comes after the Company Reported a quarterly profit of 19 cents a share and Beat Estimates by 5 cents. Investors are encouraged by betterthanexpected growth, also some comments from the people there that zucker berg, in particular, that teams are not using facebook less. Has a lot of analysts and investors who have changed their opinion on whats happening. Dell is at peace with new offers to take the company private. In an open letter, he repeated his contention, current voting rules are unfair and should be changed. Those rules that are not voted say that shares not voted count as votes against the going private transaction. Also, our first premarket statistic of the week is 90 minutes away. 8 30 eastern time we will get the initial jobless claims, also on the june durable goods orders, they are looking for increase to 339,000 and increase to durable goods of 1. 9 . We have been waiting for some earnings this morning. Yeah, dow chemical is out. It first reported 1. 87 which was whew, adjusted at 64 cents, a penny ahead on sales of 14. 88 billion above estimates of 14. 81. The stock initially is trading higher. At 33. 52, the bid that im getting right now. No, im sorry. It closed at 34. 37. So you cant really tell anything at this point. I dont see an outlook for the company being posted yet. I got, you know, i can tell that you agricultural science sales 1. 85 billion. They have a performance unit. Performance plastic sales. Thats the unit in dupont. I think its a different type of unit than what were talking about with dow here. The performance is all your units perform basically. So well talk to Andrew Liveris. We will get more details on dow chemical. So far a penny ahead an betterthanexpected revenues. The outlook is relatively big. There is a section called the outlook. Et says the company is well positioned to deliver year over year earnings improvement in 2013. They dont give you numbers with that. They have already announced plans to di vest 9. 5 billion and expect to implement more portfolios over the next 12 months. I wonder if thats an answer talking about dupont looking to assess the chemicals performance unit. Ths something we can have Andrew Liveris when he comes on. Cbs and Time Warner Cable are in a standoff. Although, viewers wont see channels disappear just yet. Julia borstens joins us with more on this developing story. Julia. Well, becky, cbs and Time Warner Cable have extended their deadline for the second time, giving them more time to avoid a cbs blackout. At issue are Time Warner Cable feeds to cbs for 3 million subscribers in new york, los angeles and dallas. Cbs wants compensated for the top rated network, asking about 2 per subscriber. They write in an internal memo, quote, cbs are the most popular in the industry. There are many that receive more money from Time Warner Cablement Time Warner Cable accuses cbs of demanding an unreasonable price hike saying, quote, they want Time Warner Cable to pay over 600 more than we pay in other areas from coast to coast for the same programming. 3 million customer notes, three cities could miss summer hits like cbs under the dome. Time warner could be forced to eat higher fees or pass costs on to consumers. They are telling their subscribers and customers where to find shows go the channels go dark. Now, surprisingly, Time Warner Cable is recommending to new york subscribers, ario is a live over the internet app which offers viewing over the internet at a fraction of cables price, i asked Time Warner Cable about why theyre doing that. The company says they are confident people will still want to pay for cable and they will dispute the temporary measure. Back over to you. Julia, all right. Shes all media, all the time, but you know what, you cant go to a duncan donuts yet out there, can you . No, but we will be able to soon. I hear rumors duncan donuts is opening out here . Thats the lead today for steve and a lot. Dont start. Thats the lead. Dont start, julia. Its one of those things. You know how you think you are so advanced out there in california. Are you three hours behind in everything that happens, have you no duncan donuts. You can buy the coffee. The coffee beans. We have to make due for that. Very popula popular. Nigel just said that. Is there a reason why they wouldnt do well . They dont have a soy donut. I dont see why they wouldnt do well. I think, look the coffee beans are popular in supermarkets. Look at you. Its 4 00 a. M. Have you no coffee. I have coffee right now. I mean, you right there. Thanks, julia. Earnings from General Motors and 3m are a few minutes away as were going through the busy yeflt part of the eastern e earnings season, also a busy morning for economic stats as well. Joining us the regional chief Investment Officer andrew matis. Let me start withdrew. Any change in your positive outlook for the economy . You are looking pretty good about a lot of things. Own slowdown with mcdonald sales or anything . Ill just say this, i think if you look at the broad data, gdp will disappoint. If you look at the underlying data behind it. Most of it looks good. We kind of have the weird place were in, where the data looks good the numbers as theyre calculated dont look all that great. So you have to take a step back and look at really the numbers less refined, the raw numbers, claims,et set remarks theyre pointing toward a reasonably healthy economy. You see anything on the horizon, whether it be oil prices, europe any black someonsomeonwongs . No one expects the unexpected. Whats your gdp number you are expecting . For the year, were just, you know him, a little over 2. You would say the surprise is likely wont be on the downside, it will be on the upside . Second half looks like it will be very good, but it requires some things to change. One will be the fiscal impulse. There hasnt been much drag from the sequester, what drag there has been will reverse itself a bit. We will have kevin brady on who points out. You saw the sequester versus the tax increase. He quotes cb we can ask drew about this hes going to quote cbs saying that there was almost no increase from or decrease from the sequester, all of the drag came from the that sounds have been supply side to me. Its not what the wall street economists had estimated. They basically said i think a half or threequarters, kind of even after the drag was from the fiscal. It was the Federal Reserve bank of San Francisco and a june 3rd economic letter. We were talking about this. We had a conversation in the green room. Personally, i think the bigger drag in the first half was the payroll tax. It hit everybody broadly the sequestration only affected a certain number of industries. It was a very acute type of effect. Republicans were not arguing, do not increase that tax, right . The tax increase as well. Take kind of like shoreing up social security. Right. So thats why i thought it was a little interesting. If i could just ask darryl, you have some stats you brought on the earnings so far. Yeah. They have not been great. You think were on the cusp of an earnings downgrade from the third and fourth quarter. Does that make you nervous about stocks at these levels . I dont know it makes me nervous at stocks at these levels. Obviously, i think q3 and q4 estimates are running too high. Even with the limited amount of genes we seen if q2 from companies coming through i think the run, the average expectation tore q3 is around the expectations earnings number. Q4 is around the double digits, 10, 11, 12 . Obviously, wed have to have a material catalyst that hits us in the second half of the year. The fed is able to orchestrate an orderly exit from qe3 . Good luck with. Thats what you were saying. Growth picks up. What happens in the market i think will depend on margins. How about tapering . There are ways they mitigate the impact of the taper. They probably wont do them. They always complain were priceing it too much in terms of rate increases. If you tell us the Balance Sheet will stay unchanged and youre thinking the economy is picking up. At some point you have to tighten something, right. If you only use one lever, you have to use it harder than you otherwise would. So i think it will be interesting. I want the prospect of us some day being free of authentic accommodational. I want that to be possible. You and i will be in the ground. Look. You obviously havent heard about the singularity. I might be a cyborg. You will freeze your head, just like walt . Look it up. There is a lot going on. Its on a grid. The hair is already there. The hair is already immortal. It is human. I actually think the tapering is largely priced into the bond market, right . We know the tapering is coming. We know certainly the pace of tapering will have mit gatd effects. What if the data doesnt do what its supposed to do. I dont think theyre looking at moment by moment, number by number. I think theyre looking at data dependency over a longer period of time. It will come down . What if it didnt come down . Then i think they could slow it. But they cant get out. Joe is afraid they will do qe forever. He doesnt see any possibility. Its singularity. Murphys law is what you are planning doesnt go according to plan. The bank of japan is still doing it 20 years after the fact. No bank ever if you are talking about the effects on the market, tow, if you go with the idea of tapering is largely priced in, i think the bigger pressure on Interest Rates on the upward sides is a better growth in the environment in the second half. I did, we talked to him in the green room. Unbelievable. Hes famous. Drew, an unofficial member of the advisory board, helps me out. Did you get a donut . We got free donuts. You are used to. Thats my read. For the hour, former senator Joe Lieberman, tackleing the economy, banking, National Security, plirks on this day one year ago. Former citigroup chairman sandy weil made his famous call to break up the big banks. I think what we should probably do is go and split up Investment Banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans. To have banks do something thats not going to risk the taxpayer dollars, thats not going to be too big to fail. Wi drive a ford fusion. Who is healthier, you or your car . I would say my car. Probably the car. Cause as you get older you start breaking down. I love my car. I want to take care of it. I have a bad wheel i must say. My car is running quite well. Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah . Welcome back to squawk box. We went 60, the last read becky had was 48 on the dow. Now its 38. Its improving. Maybe some of the earnings are sinking in, if people like the earnings with facebook. Dow was good this morning, joe, up a penny. Nasdaq is now positive. At dow chemical is now indicated higher. 34, 68s. That is negative at minus 4. Its only be six months since he left the senate that he is back in the spotlight. Speaking out on national and International Security and the economy. Our guest host the next hour is former senator Joe Lieberman. He is joining us as we said for the hour. He is currently senior counsel. Thank you for joining us. Thank you, its great to be with you, joe. I cant imagine a better person to have sitting here to talk about so many events around the table this morning. Yesterday the president laid out his latest plan on how to reset the economy. I just wonder if you think that this is working, if this is going in the right direction . Yeah. So. Its good to let the middle class, which is under stress, a lot of people lost their jobs, havent gotten them back since the tough times. Let them know the government is thinking of them. Theyre not back to where they want to be. Obviously, there are no programs, no suggestions in the president s speech yesterday and thats the problem. We dont have a lot of extra resources in washington. So you are not going to see Congress Adopting a lot of big news spending programs or tax incentive programs. So i come back to this. The president said he wanted to change the conversation from the sort of fiscal dexterity discussion to focus on the middle class. In my opinion, the most significant thing the federal government can do is have a bipartisan deficit reduction longterm program adopted that would create certainty for the business community. I think stimulate a new wave of investment and actually create the jobs that a lot of middle class people have lost. So bottom line, goed to focus on the middle class, really, the best way to do it is to get back to a discussion that people are tired of, which is about austerity and the budget deficit. Job, the best way to help middle classes is with jobs. The government is not going to create jobs. There are times as during the depths of the recession when we adopted the socalled stimulus, you needed that kind of investment, i think. We dont have the money to do it. We are headed in the other direction, turning the spending down. So jobs will come from the private sector as we always have. You got to create confidence. There are two philosophies. I tried to put together to connect the dots to how this would work. If you were to take income disparity, there are wealthy people that dont spend the money. If you can take some of that money and move it to the middle class through redistribution. Then it goes to ooem people that will spend the money. Helps generate demand for all the corporations. Helps the economy. I can see how they think that works. Its not. If you fundamentally dont understand the private sector, that seems like a noble thing to try and do. Thats why i think we are locked in this. I agree, of course, its too very different visions. On the front end, you get to talk about the middle class all the time. Now they end up getting. It doesnt do anything to help them. They are worse off now than five years ago . If you look at the curve of wealth in america, of course, a lot of people, a small number, a relatively small number of people are at the top. If you look at the wealth, its always in the middle. Thats the broad middle class in america today. President obama was right, under stress, how do they get back up and get the confidence to spend . Its how the Government Works best. I dont want to take a cynical view of this latest tour, giving all these speeches and everything. Considering he isnt trying to negotiate with the house and who he has there. Wasnt his point i dont know whether hes using the bully pulpit to call constituents. Is this about 2014 . Is this about getting the house back . I mean i hope not. If are you the president , there are some people around him that feel the only way he will get the house back in 2014. But i hope because weve got a lot of time between 2014 and a lot of middle class people who need help before then, that whats happening here is the president is leveraging. Hes beginning to get some people like my friend john mccain who want to sit and talk about a bipartisan agreement on longterm. Wouldnt it be better. One second, just a moment. We do have breaking news. We want to get this out immediately, there is breaking news on sac capital, a person informed charges are expected to be announced today against sac capital. Criminal. The details of charges will be unveiled later today. Steven a. Cohen is not a target of todays actions. As we have been telling you, these are criminal charges against the company. It was expected top ha. Steven a. Cohen is not a target of todays action, but the firm, itself, sac capital is. Would it be better, senator, to get locked in a room with his adversaries and just be talking about things that with the current makeup of congress that they can agree on between now and 2014 . Wouldnt that make more sense than going from campus to campus and giving campaignstyle speeches . I think he has certain people that advise him that say, screw them, theyre not going to do anything, lets try to do it on our own, dont try to deal with these. There is reality to that. If i were advising the president , i would say, go make the speeches. Then come back to washington and get in a room t. Reality is, the odds are, the house will remain republican. If you look at the way the districts are composed, is it possible the democrats would take over the house . Its possible. They said thats in the senate is in play. Again, id say the odds are the democrats will continue to control the senate. So it, to get something done, you know, people were starting to talk as if the presidency was over. Hes got three. 5 years. Talk about longterm discussions awe about all this stuff . Hes really. Remember, what did rumsfeld say we fight with the army we have . So hes got to deliver solutions with the congress he has which is likely to be pretty much the same t. Odds are for the remaining three. 5 years of his presidency, that requires the kind of compromise that doesnt exist. Can it happen . Of course, it needs to happen. Come back to the middle class. Whats the one thing the government can do to make their lives better . Honestly, reach an agreement. Create the kind of confidence. The private sector, its mixed. But basically, the trend lines in the American Economy are all, in my opinion, heading in a positive direction. Its the government thats holding this economy back from i think really surging in growth. I hope that president and congress, listen, he cant do it alone. He needs harry reid and john boehner in the house. If it stays the same, we better get a good fed chairman. Im with you. We have to pull away. Well be back. Coming up, another influential former senator will join us chris dodd about banking reg lace in the economy. He is the chairman and ceo of the Motion Picture association of america. This billboard down . People find out state farm does car loans as well as they do insurance, our bank is through. Some breaking news on sac capital. A person informed cnbc charges are expected. These are criminal charges. The details of the charges will be unveiled later today. Steven cohen is not a target of todays action. This is what we had been expecting and anticipating. Those charges are expected to be brought today. When we come back, we have dow component 3m, they are expected to report. 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[ female announcer ] if you cant afford your medication, astrazeneca may be able to help. Right now, guy, we are looking at earnings hitting the wires, so far i see 3m and gm are supposed to be out. I think why dont we go for these numbers. Everybody is expecting them or we are hoping them to have a beat. They do deliver. Earning 84 cents a share versus the estimate on the street of 75 cents a share. They beat by 9 cents, earning 2. 3 billion for the quarter. Revenue coming in slightly betterthanexpected. The two numbers that a lot of people will be keying in on. They earned 2 become. A slight improvement over last year. The most important number is whats happening in europe. Remember, thats been a sinkhole for these guys. They lost 100 million. Thats a rough estimate. 100 million in europe. Compares with 400 million in the Second Quarter of last year. Thats a significant improvement. 3m . 1. 71. It looks like revenue came in. The stock, i cant tell yet. The outlook 660 to 685 and the estimate is 671. Are we three for three on the beach . Dow . Theyre not big. Right. And then the revenue, but we havent compared revenue to the last year in any of these to see if there is actual increases year over year. What were strikeing about. What we heard from gm and ford. At a time when ford is having trouble. They are firing on all intind cylinders. They downsized to the point where the costs are allowing them to leverage those lower costs. Theyre raking in. You were talking about revenue, the estimate of 38. 37 and 37 billion a year ago. Theyre making 2 billion more. Mike jackson. Were going to finish somewhere between 15. 5 and 16 million. Thats estimate. What were we at, 11 . 10. 5. More importantly, they took advantage of a crisis and they stripped down their costs so they can break even at 10. 5. Absolutely about trucks. These are trucks. Suvs and trucks. Thats been the real interesting thing. Nobody buys an suv anymore. Really . Suv sales are through the roof, large suv sales are through the roof. Thats the benefits of having relatively stable gas prices. I know a lot of people will say thats generally high. Check out the parking lots, the malls, you will see a lot of suvs. The government really did help General Motors. Im sure thats a terrible time. Incidentally, in terms of the middle class people. They are buying cars again. So theres, that express has gone to of course some confidence. Its beginning to drive the economy t. Changes they made inside the auto companies, has the government helped them through the worst time and the fact that obviously theyre selling globally. People that have three, four kids, you know, unless you you dont want to get stuck with a minivan. Oh, you got two suvs. No wonder its hot in here. Are you pursuing Energy Efficient automobiles . Absolutely. You look at all of these, all the auto makers. The volt is the one. Theyre selling volts. Not as many as they would like. The sales are going in the right direction there. The bottom lean is fuel efficiency, if you look at the standard internal combustion engine, it continues to improve. Thats the key. You said that to me on one of the news calls. I thought it was a great comment. The biggest gains in Energy Efficiency have come from changes. You want to call it up right now, all time high . They sell turbo chargers. Theyre whats making these engines so fuel efficient these days. Warner is the hottest stock going. In large part, its because they were at the forefront of turbo charger technology. I need to ask you, ford yesterday, gm today. Can i change the production schedule at any time economic model, theyre going to be producing more cars . Is that something that will be good for the economy the next couple quarters . They are all ramping up production. There will be 10. 5 million produced. Will be an all time high. We should be keeping an eye on how close they are to full capacity. Ford has seven of nine plants in full capacity. Its darn close. They dont want to build another plant. Good forbid. Whats wrong with that . Let me come back to what becky said, in the midst of these very good reports from the Auto Industry, motown as a town, as a city, as a government is in desperate shape. Should the federal government get involved in that . I hope not. Theyve got to settle it. But so whats interesting is that a city that took its name from the motor industry. The motor industry is doing brilliantly. Basically, it goes to what we were talking about before. The local government is so imbalanced. Even the surge in their best local industry, theyd be in worse shape if it wasnt where it is now, of course, the other story is that the Auto Industry has diversed. Its spread out. Its not only in america. Its around the world. I mean, it seems like such a mess. You look at the population from, you know, to 700,000, it was more than twice. You would shrink government, right, make the city a better place than it was before . Its got to be better managed. Theyre really on the front leans of what was going to be the next generation of toughest decisions. What do you do of the pension obligations that are legal obligations that have been built up. The other problem you have there, you have a city that is physically too big. So if you are going to shrink the government and shrink services, what do you say to those people that say, wait a minute, i want my streets taken care of and sanitation services. Far too big for no property tax. Its worth nothing. So there is no property taxes. People are paying so high a tax that there is an incentive for them to leave, including the businesses. Its a bad cycle. I dont know. Thats not even freudian. Gm. A new 52week high, 3770. They get above 38. 17. Something like. Ipo is 33. Theyre above ipo. The question is, can they get out . You got to relish this moment, right, to remember . There will be a time they will come back and say, the autos are not doing so well. 94, everything is going, higher production, better sales, better profits. Even europe. Well, theyre not out of the woods in europe. Theyre getting there. Theyre definitely getting there. Both gm and ford reported lower losses in europe. They are starting to turn the corner. There is too much to give. More from joe, former whatever, joe. Coming up, not that joe. You will hear more for me, we will hear more from joe. We will talk to cfo daniel amman first on cnbc. When we come back, it has been three years since doddfrank banking regulation was signed into law and one year since former citigroup chairman made his squawk to break up the bank. We will be talking the former senator kiss dodd. Welcome back to squawk box, you can see the u. S. Equity futures are indicated lowerment dow futures down by 35 points. S p futures down 3. 5. The nasdaq at this point is indicated up by about 13 points. Part of that may be facebook, which was up by better tan 17 . Well continue to keep an eye out as we get closer to the opening bell. It has been three years since doddfrank was signed into the law. Joining us to see how this landmark legislation changed. Chris dodd is currently the ceo of the Motion Picture association of america. Joe lieberman is also with us. Wade be remiss, senator, Joe Lieberman is now morning talk show host. You are, you know, are you out in hollywood. We got to ask you, you get to rub elbows with brad pitt and angelina jolie. Which is better . Im rubbing elbows with you this morning. I got becky and joe here. Angelina and brad. This is like homecoming. I miss joe. I had a chance to see him the other day. We had a Great Birthday Party for bob dole, a lot of people got together to celebrate our leader. This is wonderful. In connecticut. The inducement was to spend some time with a man i had a close relationship with for 40 years. Thanks, chris. We are talking about. Whenever anyone talks about the old way things were done in washington. It kind of is, it just remind you of how starkly things are different now, doesnt it . Not in a good way. Im not trying to be conferring here. This is not the First Time Congress has gone through these rough patches. They do. It runs in a cycle. One of the difficulties is, again, people give me thoughts on this. You have an inordinately high number of people just beyond their first term. The senate, particularly, is an institution. It takes time to understand the rhythms of it. You get to know your colleagues well. It operates on comedy, unanimous consent . Were all laughing. Oh, comedy, im sorry. The other kind. So im confident it will come back. You got some wonderful members. Democrats and republicans in my view who fully demonstrated the ability to do some things in this congress. Not as much as its liked. Its moving in my direction. I read the polls as well. I have a lot more confidence in these members i met, i didnt serve with. I served with some of them. They will get this right. Im more optimistic than most. Senator, knowing how many regulations were in the bill, how far along with rein implementing doddfrank in percentage terms . I think in fairly good shape. I realized this. I talked to people with the cftc. They believe they are basically done. The agreements reached a week or so ago were important. Jack lew, who is terrific as a leader. He did a wonderful job with treasury. He believes by the end of the year, they can have most of this done. Theyve done a long time, getting it right, listening to everyone. The regulations are important. You cant right them in congress. Obviously, we defer to the regulators with a lot of guidance in the bill. Theyre getting there, the views have been pretty good in my view. Clearly, there will be adjustments made. Nobody ever suggested i ever did, we wrote something biblical in nature. You do the best you can under the circumstances. We never could have passed the bill in 2006, 2007, 2008. You probably couldnt after today. So you have that window to go through. Putting 60 votes together in the senate, getting it done in the house along with all the stake holders, to reconstruct the architecture of our Financial Services and restore confidence beth here and abroad. Senator, people still want to bring back elizabeth warren, you talked about people that are new. Theyre full of the vinegar. Yeah. We had her on. You know, the left, i got her to concede that steegele would not stop the financial crisis t. Financial crisis was brought about by the investment banks. It wasnt even the commercial banks. I got to admit both those things. It doesnt stop her from saying we have a glass layer on top of dad frank. You said it well. One of the blessings that burdens our wonderful country is we dont have much of a memory. May have been an asset from time to time. Also it is a burden. You are exactly correct. It was not the commercial banking, except we had the problems, obviously, in certain areas dchl bulk of the problems were in the investment area. Glass steegele wouldnt affect it. You saw how helped the government by, you know, absorbing some of those, guys, why cant the guys absorb Merrill Lynch and country wide and wamu. I dont understand the whole thing. Another point, too, i think this is important. In the bill, itself, of course. Systemic risk is the issue. You are seeing certain things being done including nonbank Financial Institutions we need to watch out for as well. Actually, there is authority now in that legislation. Should there be a need to break up some institution because it owes systemic. Rick, the law provides the power to do that. Thats there and at law. Secondly, this is the United States. We need to have large banks that can deal with complex, large, financial activities. If you just shrink all of these banks, you lose the capacity to do that. So we need to think about capital requirement, leverage and the like, which weve done in the bill. Size alone is not poseing systemic risk. Its capital, its lever annual. Its whether or not they are engaging in those risks. The biggest criticism from this bill. I think this comes from the right and the left, is it does not end too big to fail. I disagree with that. It doesnt end too big to fail . It doesnt. Can you explain that . People say thats why warren says we need a glu glass iegel. You cannot today if you try toyed do what the federal government did in 08. Its against the law to do it. This law prohibits it. The very first amendment, joe will remember. The shelbydodd amendment, which passed with 90 votes. It basically ends too big to fail. It puts those provision, not only that, we require those discussions posing the risk to pay the bill for the unwinding of those institutions and when those resources ung run out, the industry has to pitch in. So, again, well have to test this at a certain point, but if you tried to do today, first of all, politically, youd never do it. Do you think the American Public for 30 seconds would tolerate that kind of a vote again in politically, its not a nonstarter. Also, legislatively, if you are read the bill, it prohibits exactly by law of doing what we did before. I dont want to put you on the spot, but maybe the biggest, most important question, what happened with the lone ranger . I mean. Look at the grey hair here. I mean, that movie bombed. Jay silver. I remember ris listening to it. The movie will list 200 million. Are you in charge of those things, specifically . Welcome to venture capital. A lot of bonds this year. Were having Great Successes as well. Wow. It wasnt your fault. Thanks for coming on. We appreciate it. Too big to fail in hollywood. Thats right. Coming up, gm reporting earnings of 84 cents a share, beating estimates by 9 cents. He did sort of take it. I thought thats what he was quoting kimosabi. Johnny depp got a much better role. Welcome back to squawk box. Gm, phil lebeau is here in studio bringing us a special guest. Lets bring the cfo of the headquarters in michigan. Dan, you beat the street 9 cents. The profit is down 19 from Second Quarter last year of 1. 2 billion. How much is because you had the launch particularly of your trucks and your new vehicles . Sure the net profit was down primarily because of increased tax expense year over year. The operating profit, it was up for the year. Revenue was up. Our margins were up. Cash flow was up. All of that attributable to the new products, getting into the first phases of all the launch activity we have coming. Dan where do you stand on the Profit Margins right now . Margins for the quarter, just under 6 him improved year over year, we are looking to continue to grow those margins. As we get into the second half of the year, bringing all the new products to market, we see a good tail wind. We should point out, dan ackerson said 10 is the target area. You lost 100 million. We are rounding there. Compared to 400 million in the Second Quarter of last year. Is it fair to say you turned the corner in terms of restructuring the business will . We made some very Good Progress year over year in europe, through the first half of the year, led by a lot of new products into the marketplace, very aggressive cost control we have been working on. We have a great team on the ground executing what remains a challenging macroeconomic environment its cost driven, very Good Progress yeartodate. Dan, one last question year e here, average price, do you see anything slowing that down in the economy . We see solid demand. Good progress from a price perspective. We feel good about where things are and where theyre headed. We expect traction as we bring a lot of new product into the market. We expect to get some momentum. Dan amman, joining us on a day when the Company Beats the streets by 9 . These launches in the second half is correct, al to General Motors, theyre launching 19 new vehicles, twothirds in the second half of the year. Whats the coolest one . Without a doubt the stingray. Will get the most attention. Thank you for being with us this, mo. We want to give a special thanks, to former senator joe leemplt we appreciate you being here today. Thank you all. Are you a liberal republican or a conservative democrat . Im an independent. So you are somewhere merged between the two . Yeah. You sure talk private sector very well. Its what i learned over the years in public life. It takes experience and wisdom to get there. Ideology has a rule. If its controling you or your party is controling you, you are not doing your job using your brain or your heart. To pay for every government program, you need private sector dollars . Thats what runs the government. Come back. Ly. We want to talk to you again soon. When we come back, we have a personal interview with dow chemical ceo Andrew Liveris. What makes the sleep number store different . What makes the sleep you walk into a conventional mattress store, its really not about you. They say, well, if you wanted a firm bed you can lie on one of those. We provide the exact individualization that your body needs. Oh, yeah once you experience it, theres no going back. Dont miss the final days of our summer closeout, for the biggest savings on all sleep number memory foam and iseries bed sets. Only at the sleep number store, where queen mattresses start at just 699. Sleep number. Comfort individualized. If then schwab is the placeing your trato trade. 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Tdd 18003452550 and learn how you can earn up to 300 commissionfree tdd 18003452550 online trades for six months with qualifying net deposits. Tdd 18003452550 our trading specialists are waiting to help you get started. Tdd 18003452550 so call now. Tdd 18003452550. Dow chemical out with results. Our americanmade series continues with the ceo who knows sunshineola. Thats. And this shineola. Thats shinola. The luxury watch and bicycle maker based in detroit, michigan. Shinola. Son, you going to be all right. We ask the ceo about the bankruptcy in the motor city. My favorite time in the morning. Markets will be watching for jobless claims and durable goods. President obama kicking off his economic tour. We can do what america has always done, which is pull together, fight back and win. Thats what we have to do. Hell get reaction from republican congressman kevin brady. The third hour of squawk box begins right now. Welcome back to squawk box here on cnbc. You know, im joe kernen along with becky quick. Our guest hosts for the next hour, richard fing bernstein, ceo. Did you say that . He has no middle name. I have no middle name. You are giving him the middle name. Effin. He has a middle name. Is that not . High five. How cool is it . Richard effin bernstein, genius on the market. You were with Merrill Lynch for over 20 years . Forever. Was it named after you . It was. You dont have any other bernsteins working there . Although, bernstein is like smith in new york city. It is. You are looking cool, just the hair is cool. The lack of hair. You may need a danger name. You look dangerous. You do. Lets get a check on markets. All the earnings have been good. You have to count them up here. Theyre all good. United. Continental. Under armour. Sirius, raytheon. Intel. Gm. Gm beat the market gm is at a new high. Nasdaq has improved big time this morning. Facebook is helping the nasdaq make that much money. Its not a nasdaq stock. But it still is representative of club technology. Becky, thanks to the dow the stocks are pressured by the ten year. Yesterday, theyre on the ten year gooeld yields. I looked at it a minute ago, it was 260. I hate it when it happens, it does look like the silly tail is wagging the dog this morning. Japan or a part of the hang seng. China has serious issues. India has serious issues. Those are supposed to be the growth recessses of the year. How about europe . Europe is looking better. Theyre all down. Do you remember guys with the acne and the they may not come in, in july or august. There is the ten year right at the top, 2. 6 . Psychologically important. You get tug of war between rising Interest Rates and improving fundamental also. Daybyday, somebody wins one side and another day somebody wins the other. I welcome the appeal. I got carded, too, recently. What . I got carded. Where . Keller swiss concord. Did you go with your dog . Were you so excited . Because any time somebody cards me, im like thank you. The guy next to me got carded. He said, this is the second time i got carded. He was 55. When will you let your daughter go to a concert by herself . Never. No. Oh, man. A 15yearold. I wouldnt want you to go to a dead concert. Im worried, breathing there. They had cnbc recognize grateful dead. All of wall street is ex or current dead head or hippies. It is. The dow component 3m reported a quarterly profit of 1. 01. 3m saw sales growth across most of its business segments. General motors beat the streets expectations by 9 cents. Gm was held by stronger demand in north america and cost cutting efforts in europe. Stock is up better 2. 5 . It comes out a day after incredibly strong reports from ford as well. We will be watching facebook stocks, soaring after revenue both beat the street t. Special networking reportings an uptick in daily service. Analysts say facebook showed it can thrive on smart phones an tablets. It was up 17 before. 38 was the ipo. So 32. 59. Still climbing back. They certainly silenced critics with this earnings report. Someone is leaning in there. I have a big case with you there. They are pumping those you are . We advertise our band, all through facebook. We have 2,000 likes on the page. We tell people about the shows through facebook. Thats how we do it. You are a big, what are you . Lets not talk about. My handle is im having too much fun. What was your name . Carlos, alberto menez. Thats not mine. In other corporate news, michael dell. This is a funny story i think, michael dell sending an open letter to dell shareholders, dem and silver lake raised a proposal for the buy, get this, a dime. 13. 75 a share in cash. In its letter, dem says the latest offer is quote in the best interest of the company and our shareholders. He adds the decision is now yours. I am at peace either way. Now, were watching for news on sac capital. Persons familiar with the matter, inform cnbc charges are expected to be announced today. Details of the charges will be unveiled later today. Steven cohen is not a target of todays action. We will continue to monitor the story and bring you updates throughout the day, becky. Dow chemical reporting quarterly results, the Chemical Company posted earnings on revenue of 14. 6 billion. Joining us is Andrew Liveris, the chairman and ceo of dow chemical. Good morning. Congratulations on the dow earnings. Thank you, becky. Tell us a bit about where you see the world, where you see the economy, just based on these numbers you brought in today. It was a penny above what the street had expected. Yeah, i think very instructively, from about a year ago, when china headed south and stayed south through most of last year, we started to see help from the emerging markets to add to a not so strong u. S. Economy, you know, last quarter, with esaid the u. S. Economy was the only bright spot and the emerging markets were quite weak. China showed some strength of late in the quarter continuing on in july. I dont want to be given a head fake, though, becky. I do think they are working their way through their course correction. Its stabilizing, though, which is a good sign, asia in general, it was quite strong, eastern europe, latin america was starting to come back. Article of that together, if we can add to the global combhi as we saw in the quarter some strength in the emerging markets, thats now 34 of dows revenues are in the emerging markets. Thats a big number. If we can show that strength for the rest of the year and beyond as well as the u. S. Economy, i think the world will start to feel a lot better placed. Our numbers were starting to reflect that in the quarter. Your costs were down because of declining feed costs, feed stock costs environment. What happened there . Well, so, costs are two big components, you mentioned one, food stocks. As of last year, we went into strong self hefl help because clearly the World Economy was entering a weak and anemic phase. The feed stock, of course, is a tail wind, especially here in the United States, you saw that in the plastics result, 1 billion in ebita plastics, its the strongest we have seen since 2004. 2005 we were a different company. We were a commodity company. Today that unit is value added downstream into packaging. That was a strong driver t. Value add plus the feed stocks. But the self help is across the company. You saw that in the result. I think for the rest of the year and beyond, Companies Like ours in a weaker economy, you got to work out the businesses. You got to keep working the Balance Sheet. You got to keep working the cash flow. Our cash flow story was very strong. Actually, year to day, our cash flow story is 2. 4 billion. 2. 8 billion on the quarter alone. Andrew, oil prices are higher . That means that lower feed stock story is over . Sore it a natural gas on the feed stock . Not the Petroleum Product . No, clearly, joe the arbitrage is what matters to Companies Like us. Oil and gas arbitrage, high oil, low gas, is a very good thing for Companies Like ours, because, frankly the rest of the world prices many of their products off the high oil price. It also means strong demand, especially in the emerging markets. So its a converse kind of a relationship, as long as you input natural gas feed stocks, which we can. We have 70 of our entire enterprise in low natural gas environments. What does that mean for the coming decades when it co himself to dow and its competition with foreign providers and manufacturers, you have a low cost inputbase for decades, right . And that means what for dow . That is a tremendous boost for Companies Like ours and for that matter the United States of america. We can evaluate inside this economy, add jobs for the economy. It makes lots of money for our shareholders. Its going to 10, to 15. Were investing 6 billion on the u. S. Gulf coast against the paradigm you mentioned. We can become a large exporter from this country and obviously get the benefits. More cash flow for dow and our shareholders. We had Ellen Coleman from dupont earlier on this show, she talked how they are now evaluating their Performance Chemicals unit. I wondered, when i read through your outlook, there was something that jumped out. You said you are aggressively managing and continuing to evaluate and release and deliver value for shareholders. You have announced plans to di vest 1. 5 million of nonstrategic businesses and expect to let out more portfolios. What does that mean, you are seeing the pressures they are seeing, reevaluating what you want as a result . Yeah, the company that were running today versus ten years ago, becky, one that has twothirds of its businesses in i. P. Valueadd businesses, of course, the other onethird is cyclical type businesses where my competition is stateowned interprides, they dont have the same return criteria, theyre certainly not looked at every quarter on wall street like i am. So literally, my competition is racing to commodity advertise my products. Means, ive got to keep working them out of the portfolio and keep moving, if you like to areas of high margin, hightechnology, high i. P. Rich. So were an integrated Science Technology going into valueadd, competition is countries, not company. So the stateowned enterprises. The arab and the oil cruisers that dont want to do something with their chemicals and their feedstocks and have just underwritten these things, there is no economics there, i reported on this ten years ago when they made the venture move into it 20 years ago. Andrew, thank you. Exactly. Not at all, becky, go ahead. I was going to reenforce the point that that isnt going to change the consequence of that, the thing we can do at dow is valueadd, thats an advantage dowusa. Advantage the countryusa. Thank you. We present you joining us today, andrew. Happy to be with you guys. Interesting interview. Coming up, president obama kicking off his economic tour in illinois and missouri yesterday. Up next, we get reaction to the president s speech from republican congressman kevin brady as we head to break. Take a lock at what the president said yesterday about the economics of equality. This growing inequality. Not just a result. Inequality of opportunity. This growing inequality. Its not just morally wrong, its bad economics. Bauers when middle class families have less to spend, guess what . Businesses have fewer consumers. When wealth concentrates at the very top, it can threaten the economy. Welcome back. This morning you see weak inside for the dow and s p futures. We are back down the dow futures below fair value. S p are down almost 5 points t. Nasdaq continues to power higher. President obama kicking off his economic tour yesterday. Heres what he said about gridlock in washington. I sincerely believe there are members of both parties who understand this moment, understand whats at stake and i will Welcome Ideas from anybody across the political spectrum, but i will not allow gridlock or inaction or willful indifference to get in our way. Is. Joining us now is the chairman of the committee, republican congressman kevin brady. Just hearing that, it almost sounds that gridlock or inaction wont get out of our way. That looks like what we have and had, it sounds weird, congressman, do you see any hope . Well, you know, hope springs eternal. Unfortunately, i think this president contributes a great deal to that gridlock. Im just surprised, occupy wall street didnt protest that speech yesterday. Wall street is booming here. Joe sits back. Middle class family is getting hammered. You are, i think we need a whole new direction. Its weird, what i saw yesterday, the front page of the New York Times outlined exactly what the republicans in the house want to do to the budget. It has contrasted what they want to do with the spending, that the president wants to do. It was absolutely staggering. What seems to be setting us up for a huge battle. The markets dont like that. People say the economy will keep going along fine unless someone presses the pause button. We go back to gridlock that affects us in washington. It looked absolutely hopeless for what you guys plan to do to that budser. You know, im tired of these crisis, too. I think they august to be avoided. But you dont avoid them by going out and making campaignstyle speeches, rallying the troops t. Truth of the matter is we are spending way above our means. Lets work out those problems. We all know what has to be done. What i dont think helps is continue blame game and call for higher tax, more stimulus, more reg lakes, hoping the economy improve improves your business, main street is telling the president , this is whats keeping us from hiring. You dont have to listen to us, listen to them. In a perfect world, i wish the president would meet with his adversaries in a closed room, see if there is anything that he can get done before the next election in 2014. But then again, i think if i were the president , there are there is something to be said his enemies wont let him pass anything at this point. Even something you can say, for every tax dollar that you raise, you cut 10 in spending. You got people in the house that would say no just to make sure the president can get anything done. He gets divisive and gives six more speeches talking about them, both sides keep moving further and further apart. There is more animous created. I dont see it as that, people i think are tired of the balance game that keeps changing, the truth is we ought to be able to come together to agree on tax reform. If we dont like the sequester the way its applied. We agree we have to get spending under control. We all know we ought to be taking, in fact, in the president s budget are common sense steps on how to make reforms to medicare we actually with getting put back against those common sense reforms. I think there is a lot of common ground. You have to get off the campaign trail and lower yourself to talk to members of congress. Congressman, this is rich bernstein speaking. Im not happy with either side of the aisle these days. Im an investor, i have a simple question, Consumer Confidence is basically a cycle high, whats so bad about whats going on . Has the household sector just become stupid here . I dont understand whether the president yesterday or you today, why is Consumer Confidence at a cycle high . Heres my thought you look at the recession, Government Spending is above where it was before the recession began. Consumer spending, what is missing . Business investment on main street who by the way also have a lot of cash in the economy. Sitting on the sideline. Isnt the market at a cycle high, too, sir . Yes, do you think the feds have any role in stimulateing the stockmarket high . But we are not hiring. It seems to me. The aflcio calls this pathetic. 200,000 is the new low normal in america. The truth is, we have 200 Million People who cant find a job. We are missing 4 million jobs in this economy. Again, average worker, average joe six pack, their takehome pay is getting hammered. So i dont believe this meant a everything is going well in the economy. Congressman, i thought you and bernstein would get along. Have you the same barber and all. Hes a handsome man. They both are. You are jealous, joe. You are jealous. Im sure the congressman will agree. Step over to the dark side. Let me take it off. Thank you, we appreciate it. Coming up, strengthening economic data. June durable goods and the weekly jobless claims set to taper at 8 30 eastern. Weve completely integrated every step of the process, making it easier to try filters and strategies. When we come back, we are a week away from the weekly jobless claims. As we head to break, the u. S. Equity futures are down. S p down by about 4. Nasdaq is up by 15. Squawk will be right back. 03452550 call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. Tdd 18003452550 see how easy and intuitive it is to use tdd 18003452550 our most powerful platform, streetsmart edge. Tdd 18003452550 we put it in the cloud so you can use it on the web. Tdd 18003452550 and trade with our most advanced tools tdd 18003452550 on whatever computer youre on. Tdd 18003452550 also, get a dedicated team of schwab trading specialists tdd 18003452550 who will help you customize your platform tdd 18003452550 even from the comfort of your home. Tdd 18003452550 and talk about ideas and strategies, one on one. Tdd 18003452550 get all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 call 18882849410 or visit schwab. Com trading tdd 18003452550 to open an account. Tdd 18003452550 and learn how you can earn up to 300 commissionfree tdd 18003452550 online trades for six months with qualifying net deposits. Tdd 18003452550 our trading specialists are waiting to help you get started. Tdd 18003452550 so call now. Tdd 18003452550 announcer sundays your last chance announcer to save big during sleep trains triple choice sale. For a limited time, you can choose to save hundreds on beautyrest and posturepedic mattress sets. Or choose 300 in free gifts with sleep trains most popular tempurpedic mattresses. You can even choose 48 months interestfree financing on the new tempurchoice with headtotoe customization. The triple choice sale, ends sunday at sleep train sleep train your ticket to a better nights sleep. Welcome back to squawk box, we are 30 minutes away from the durable goods numbers for june. Rick santelli is standing by in chicago. Economist tom higgins is joining us from boston. Steve liesman is on the set along with our esteemed guest host richard effin bernstein is here as well. Rick, the numbers are what, please . Jobless claims moved from a slightly upwardly revised 3 who, 334,000 to 336. Then that moved up 7,000. To 343,000. Lets look at june durable goods, shall we . Up 4. 2 headline on june durable goods. Pretty strong number. Last month revised upward from 3. 6 to 5. 2. Okay. Lets dig through the internals, take out transportation, unchanged. Theres the fly in the ointment. Not that i have anything against boeing. Everybody loves the idea of how many planes are on order out to 2020 but it definitely seems to have skewed the headline a bit. All right, lets look at proxies for business spending. Capital goods orders, heres the issue. If you look at this sequentially, its not as good. Were going from 2. 2 to current. 7. The 2. 2 is double what we thought it was, they originally released it 1. 1. So there are a lot of moving parts here. Durables is all transportation. We can dig through that. Im sure steve will. Initial jobless claims, lets see, its the 25th of july. I guess there is no seasonalities like the 18th, 19th or 20th with july as there was on july 4th as we seem to be hitting the number. Economists might say is somewhat real. Then again, i know steves done some work on the relationship between these 343,000 people showing up for new claims every week and the job creation we have every month, breaking that up into part time. Okay. Im done. Mr. Bernstein, when that came out, lets see, thats a big number for durable goods. I wonder if the market goes up or down, what is it now . Then it wasnt so good. Are we in good news is good news . Or do we want some combination . I think were in an environment where good news should be good news, were at that point of the cycle. Were not at that point where the fed is outpaceing the good news. You think good news will be good news . I dont know if it will be the next ten minutes. It seems like it seems were too good. I think thats normal at this point in the cycle. You think good news is good news . Yeah. I always thought that. For the reason that rich effin said over there. This is spreading. You started something. Bern sten just sounds so awful. So if the fed makes a policy, thats what you worry about. If you are not outpait paceing it, i want to be an investor, the economy is growing. I do not want to be an investor, the feds is pumping up the markets. Doesnt make we want to stay long term. I think the story the fed is pumping things up. I think people have forgotten. Thats the whole point of monetary policy. Every time you lower the cost of capital. Hold on, for more on the data, lets bring in the chief economist. Standish investment management. Tom, what do you see when you look at this number here . They revised up the prior month. We got the 4. 2 on the headline durables. Its all boeing. Thats exactly it, steve. If we look beneath the surface. When rick was talking about the core capital expenditures, excluding aircraft and defense the number is decent, but its not the extra impetus that you need to see in order to see a bigger peck up in Business Investment. Right now, it looks like Business Investment is running in the low Single Digits at the end of q 2, heading into q3. It will be more difficult to achieve that high end of the forecast which is 3, 3. 5 going into 2014 with Business Investment growing 5 to 8 . Are the numbers today suggestive of the Second Quarter should be revised up a little bit . I had an average of below 1 . For us, according to our estimate the slowdown in Consumer Spending and Business Investments seems to have picked up actually a little bit if q2. We are seeing something around 1. 2 right now. What about the claims number . 343, this level, what does that tell you about jobs and what we might get next friday . Well, we had stand, our view right now, job growth will remain between 175 and 200. Claims number to me suggests we are probably close to the consensus around 180 right now. And unemployment would be what . Unemployment is a tougher call because weve started to see some stabilization in the par sispation rate and as people reenter the work force the combhi is improving as we head into the second half, we believe you will start to see the Unemployment Rate stabilize here and decline more slowly going forward. Rick, i had some questions, rick, are you still there . Yeah, im here. You had questions before about the data. I was looking at the table. What were you asking . Well, there is a couple of bits of information here. You know, when we look at the business investing that our guests just talked about up. 7 but with a positive revision, we normally look at the orders. We dont look at the shipments. Im actually pretty surprised as i look through these numbers, steve the capital goods shipments, not orders, it was actually down close to 1 . Is actually, the economists look at that number. Thats the number that feeds in the gdp. Oh, no, im not saying economists dont look at i. Im saying traders dont normally dig that deep. They are crossing the line. They have, in order to have orders, have you to have shipments, right . So there is a relationship there. And that shipments number is really key. So thats new information. Sharp decline in shipment suggests that actually, we may have seen a slight contraction in Business Investment in q2. But q3 focused more on the foreign looking orders data, so we see a pickup headed into q3, at least according to data today. We have to wrap it up here. This is definitely fodder for figureing out how fast the economy is growing. We will have to figure that out and be back later today in another show. That stool is like a piece of wood on the ground these days. But its got a nice pad on it. No, are you right. There is a nice pad. Thank you, ben. Never miss a metaphor. Thanks, tom. When we come back, we will continue our americanmade series with detroit manufacturer shinola. The companys ceo. By the way, they make watches. They make bikes and the companys ceo will be joining us right after this. On this day one year ago, former Citigroup Sandy weil made his famous call to break up the big banks. That was right here on squawk box. I think what we should probably do is go and split up Investment Banking from banking, have banks be deposittakers. Have banks make commercial loans and real estate loans. You have banks do something thats not going to risk the taxpayer dollars, thats not going to be too big to fail. Investment banking from banking, when we made our commitment to the gulf, bp had two big goals help the gulf recover and learn from what happened so we could be a better, safer energy company. And real estate loans. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, and real estate loans. Our commitment has never been stronger. And real estate loans. Welcome back to squawk box. Take a look at the shares of harleydavidson. The Company Reported Second Quarter profits of 1. 21 per share, 3 cents above estimates. I saw one that matched. Thats what i saw so far. I havent followed everybody since we last did it. I forget who else. This was on a strength. Better motorcycle sales in the u. S. And overseas. And in the all important bacon news arena. The u. S. Gost is going to take an additional take your time, take your time. An additional 45 days to review the proposed purchase of Smithfield Foods by a chinese company. Theyve heard you. I hope so. The deal would be. Its the other white meat. The deal would be the largest chinese takeover of a u. S. Company. They are reviewing the deal to examine the impact that no bacon ever would have on National Security. Reviews typically take 30 days. Some transactions. Theyre not doing global security. Were you making that up . Its actually in the prompter . No, there are some people that think once you get a foodhold in the pork supply, you start exporting chicken thats not safe and other things thats not safe. We will end up with baby milk thats got plastic in it or worse. You know, you see the food supplier. You want anything close to that food supply here . Arent they buying our bacon producers . It improves. Will you ever have a blt ever again . Why is that a National Security issue . Oh, i dont know, you dont think a blt is something we are all entitled to have as americans here . I dont know how theyre doing it. How do you do this every day, becky . We had the senator on. That is an issue. Yes, it is. Do you eat pork . I do eat pork. Sorkin does, he got all kind of grief. Anyway, transactions, given in a statement Smithfield Foods says its confident the deal will close in the second e second half of 2015. Do you think you can go over and buy a company in china right now, steve . I dont. Im pretty sure i cant. You raised a question. Fairness and being on the same equal playing fields is one question. How about oil . I think oil is another issue. I think bacon, if you are worried about not being able to run your cars, you dont worry about the most basic of all sub ste nance. Bake isnt not a substenance . Oh, yes, it is. Luxury watch and bipsych i sickle maker shinola wrote in a New York Times ad, to those who have written off detroit, we give you the birdie t. Birdie that theyre referring to, of course, is their watch. Joining us right now is heath park. The ceo of shinola. Heath, thank you for coming in today. Thank you for having me. You started shinola about twoandahalf years ago . Twoandahalf years ago. Your whole story was what. We wanted to focus solely on manufacturing in the United States. So have you successfully built this company up. You have watches here, one was 650 that we were looking at . We have watches from 475 to 725. I like them. I wish i could take one of those. We cant, unless i pay you for it. You can pay me for it. Wholesale . We can work a deal. You had a nice one on. I did. They invited me in. They said duncan donuts, i will leave with a donut, tickets and a watch. Very 50 is the max for anything. Is eight hundred million . But, heath, when you take a look at whats happened with detroit. Whats blown out since the filing for bankruptcy, does this diminish your hopes about the fade in the future of the city or do you really see things that are happening that are positive there . It hasnt changed our point of view at all. As a matter of fact, when we started looking at detroit if 2011, the threat of a bankruptcy was out there at that time. So for us, it was always something we thought could happen. But it hasnt changed our focus at all. So how do you operate . How many do you employ . Today we have 7,500, we have over 75 based if detroit. What is it like being a manufacturer in detroit today . We heard these stories since the bankruptcy came out about how wait times for police cars have been well over the national average, Something Like an hour vs. 11 minutes around the rest of the country, Something Like 40 of the street lights are working, 60 afternoon. Whats it like to be there . We havent seen any negative impact or our business at all. Our most difficult thing was building a watch fact i in detroit and telling people we wanted to build in the United States again. What was your reaction . Thats the reason. When we told the story in detroit, everyone asked, how can i help. We found a creative and positive spirit. How long is your plan . There is some auto maition. If its done by hand, how are you able to find the skilled makers given it wasnt something we did very much here in the United States . It really came from our partners the Swiss Movement manufacturer, they helped us establish the training. When we went out to the market. We said we need people to assemble watches. We had a positive response, people wanted to tried something new. A lot of companies are not doing the training until they get government assistance, is that the right role to do it . Absolutely. Were investing future and how we can become training partners. Are you able to find the people you need to do these jobs . Yeah, it hasnt been that difficult to find the people we are looking for. A lot of people there are looking for a job. This is how detroit comes pack. You obviously chose not to manufacture in china, things like that. More and more companies are doing this. People dont believe this could happen. What led you to actually costwise and from a business perspective, why are you manufacturing in the United States . I think this is a trend. Most boehm people dont. Its two to bring that manufacturing from overseas back into the United States, and to prove that the American Worker can still add value. We can design and build product u products here that quite honestly are being received very well around the world. Cant you be i would this thing for manufacturing for half the price or a quarter of the costs . We could. Why wouldnt you do that . We want to manufacture in the United States. Are you from detroit originally . No. We visited detroit as an option. We sat d. Idea was born in dallas. We sat and talked about, where would we manufacture . Not just made in the usa, but made somewhere very specific. We want to be a part of a community. We went to detroit. Fell in love with detroit. Detroit fell in love with our idea. I may need to boy one of these. It might sound, bankruptcy is bad, things like this, you get in some of your costs in order. This is how you do it. We were well into this before we actually believed we could make watches in detroit. There was a lot of this was on faith and a pleef that we could do this. But we found partners along the way. People in detroit were very excited about this and helped us. Without those partnerships and our suppliers, we wouldnt be able to execute this. How did you introduce the name shinola . From the original sang on tv. We were talking about what we would name this made in america business, someone threw that out at a meeting and said, you dont know from shinola. It was at that point we realized we had our name. It was a great story. We really appreciate your coming in today. We wish you the best of luck. Thank you for having me. Lots of earnings coming up, 3m. Auto maker gm. We will get jim cramers take next. Tomorrow on squawk box, president obamas economic tour continues ahead of a week of major data reports and a key fed meeting. Plus one year since mario draghi vowed to do whatever it takes to save the euro. We will get an update and the opportunities to make money. Squawk box starts tomorrow at 6 00 a. M. Eastern. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back, everybody. Lets get down to the New York Stock Exchange and jim cramer is standing by and jim, once again, a lot of the earning stories and lot of the positive news to keep playing into everything that we have been talking about. We had gm and 3m and dow and where do you want to jump . Well, 3m, we have to learn more, and gm is the turn in europe that is amazing and i think that it is pretty clear and we saw from the spanish unemployment today that it went down for the first time. These companies are doing very well. I thought that the dow was terrific on the show, because they were talking about taking advantage and the First Company to take advantage of the natural gas glut in this country. A lot of the good, and obviously, the one weakness this morning is housing. Pu pulte looks bad, and horton and that is the pillar of the move and right now, that is over. Yikes. Look at october. Well, you have been warning about that, how long the runway would be on this. And other Companies Taking over, and by the way, the facebook, and that is what i want to talk about, facebook. Is this completely silencing the critics on this . Well, you want Strong Revenue growth, you got it. Margin improvement, you got it. Leverage, you got it. Management i mean, the whole thing that it is clear he is on the game. And jim, does the street know that when oil prices go up and they get concerned about the chemical makers that dow is actually making money on that trade, because their inputs costs are much less and is the street up on that trade already. Well, we are burning off more natural gas when we drill for oil in this country, than we actually need. In other words, just the flairs that you see from the you are in outer space and big flares everywhere and north dakota and texas, and that is more natural gas than you need to make the whole country, and the glut is horrible. Ridiculous. That is why chesapeake is at 22 and the stocks of capital oil and gas cant get out of the way. And capital, because they need new england, and the glut is incredible and that is why you see nabors downgraded today. Would you be, jim, for the government to increase spending for some type of Renewable Energy to happen well into the future . No. Thats what spain did. They are trying to cut back now. I think that the market will work its way. It is hard to say no to that. Well, because half of the country thinks that you are crazy. I want to create jobs. But it is a nobrainer and like a mantra, we must do Renewable Energy and we must do. It is like a mantra. I want Renewable Energy coming down from keystone in canada. Renewable is ethanol, and renews all of the water system. Jim do, you believe that the bacon supply is a natural security issue . Jimmy is with me on that. And do the chinese purchases need to be reviewed with that . Is. Well, it is everything, whether it is the steel plate or whether they take over the food chain. I think that last night it is so great that he is with you, joe. And at least the chinese are not flooding our country with compposites that does not work. Some of it does, but most of it do doesnt. And china is not a friend to me. It is just not. I dont like what i am getting from china at all. Wow. Yep. Jim, thank you. I learn every time i talk to you. We will see jim in a few minutes. Thank you. And coming up our guest host Richard Bernstein will give us the last word when squawk box continues. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] [ telephone ringing ] now a waiting room is just a room. Could save you fifteen percent or more on car insurance. Mmmhmmm. Everybody knows that. Well, did you know that old macdonald was a really bad speller . Your word is. Cow. Cow. Cow. C. O. W. E. I. E. I. O. [buzzer] dangnabbit. Geico. Fifteen minutes could save you. Well, you know. The healthcare law gives us powerful tools to fight it. To investigate it. Prosecute it. And stop criminals. Our senior medicare patrol volunteers. Are teaching seniors across the country. To stop, spot, and report fraud. You can help. Guard your medicare card. Dont give out your card number over the phone. Call to report any suspected fraud. Were cracking down on medicare fraud. Lets make medicare stronger for all of us. Lets make medicare stronger wi drive a ford fusion. Who is healthier, you or your car . I would say my car. Probably the car. Cause as you get older you start breaking down. I love my car. I want to take care of it. I have a bad wheel i must say. My car is running quite well. Keep your car healthy with the works. 29. 95 or less after 10 mailin rebate at your participating ford dealer. So you gotta take care of yourself . Yes you do. You gotta take care of your baby . Oh yeah welcome back. Lets just quickly get to the guest host Richard Bernstein and throughout the show, you have been making the point that things are going pretty well. They are okay. They are okay. That makes you long on the market . We are still very bullish and very bullish on the u. S. Assets and still very concerned about what is going on in the emerging markets, but we think that, look, we are probably what, fourplus years into the bull market here, and i think that most people dont think that we are in a bull market. I think thats, you know, is the economy cooking . No, but Getting Better . Yes. Maybe that will equate to job s. Yes, it will, and it already is. Thank you sh. Thank you. And it is time now for squawk on the street. Turn it up scream it out tomorrow way too far away good thursday morning and welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. More than 1 10 of the index report earns today, we are watching gm and dow and 3m and others after facebook blows it out last night. F futures are reflecting the pullback yesterday especially among the chip makers and the transports and we will talk about that. The road map belongs with facebook on fire. The stock is on pace for the best oneday gain ever. The social network says