Transcripts For CNBC Squawk Box 20140829

On it. I dont know. This one here. It looks like a military drone. There it goes. All right. I hope youre ready. It looks like theres a string attached. Oh, it does. And maybe they can drop that right on your lawn. Do you remember the guy that he jumped out of a balloon, the bungee jump. You have to make sure, a, that its the right length and, b, that the balloon is the right height. Because one or the other didnt work. If the balloon is too low, thats bad. So you have to worry about the same thing. Its an interesting story here. So its going to happen, huh . It could happen. Would you get your delivery if it did it with a little rope like that, i didnt see the rope. I like that. I dont know how theyre going to work it in on my island. If i ever do buy anything, the jeans, i was in the store when i bought them. How are the stretch jeans feeling . I havent touched them since i brought them home. But probably the same as they were feeling yesterday. Apple is working on pay by Touch Technology. The fg reports that the tech giant is partnering with a dutch chipmaker. And whats called secure muirfield communications into the device. Technology will let a smartphone communication wirelessly with other devices by tapping them together. Anyway, apple has invited the media to a special event on september 9th when its widely expected to unveil that latest iphone. And we get an update on the big hacking attack. A Major Banking Group is now down playing concerns. This explains why we havent heard a disclosure on it from the companies directly. In an email to members, it says its unaware of any significant Cyber Attacks and says no threats pose the Financial Services sector at this time. Other Law Enforcement offices around the world had announced that they were looking at reports of breaches at the banks with some speculating attacks came from russia. Thats what those media reports were about that we discussed yesterday. Now House Intelligence Committee chairman mike rogers is calling the Cyber Attacks very sophisticated and likely state sponsored. Nato convening an emergency meeting today about the crisis in eastern ukraine, the alliance estimating more than a thousand russian soldiers have invaded the region. In a new conference late yesterday, president obama confirmed Russian Forces are in ukraine. That stopped short of calling it an invasion. We are not taking military action to solve the ukrainian problem. What were doing is to mobilize the International Community to apply pressure on russia. Today, moscow rebels are advancing in the southeast part of ukraine, capturing a coastal town. Were joined now from moscow with more. Good morning. Good morning to you. So this morning in the early hours, russias president Vladimir Putin issued a statement on the kremlin website, calling for the pro russian rebels in ukraine to create a humanitarian corridor that would allow the Ukrainian Military to leave. They are apparent surrounded. The rebel leaders have responded saying they are theyre happy to create this corridor, but only if the Ukrainian Army leaves their weapons behind. Now, weve had the ukrainian the ukrainian response. This just shows, in fact, that the rebels are taking their command from the kremlin. Yesterday, the pro russian rebels admitted that there were 4,000 volunteers from Russia Fighting in east ukraine and that the Russian Military was also involved. Now nato saying there is around a thousand Russian Troops to the area and theres some images that have been released that survei lavrov says there is no evidence that the images that have been released from video. Meanwhile, the fighting in the region apparently is still going on. This is according to ukraine media were learning about. And in the city, which is the news, if you will, there are reports that russian tanks are approaching the city. There is a worry in the city that they will make their way through and capture this town in effect creating a whole new region of conflict. Back to you. Okay. Thank you for that. Lets check on the markets this morning with all this in mind. The futures yesterday did indicate that we would be lower, but it wasnt too bad. They were getting a little bit of a bounceback. Up 37 points or so. The markets did close just under 17, the s p 500 just below 2,000. Take a look at what everyone keys off of. That is oil. There hasnt been a lot of movement in gasoline prices, even though i guess its the late summer driving season. So if it didnt happen yet, they do kind of it seems like they will move lower. They have at 3. 20. The tenyear, which we have decided that instead of keying off our nominal gdp, its keying off the nominal gdp in europe which would make sense. It would make it easier for the fed, it has made it easier for the fed to not really feel like its behind the curve. The dollar, i just look at the euro most of the time. 1. 31. Im singly going to see 1. 29, you would think, but it hasnt happened yet. Finally, gold, gold is dead in the water, under 1300. What really doesnt make any sense, i like this, you know, i i dont the New York Times probably doesnt have this story. A lot of people are making a lot of noise about this. I guess there was another press conference yesterday. We do not have a strategy yet in syria. I dont know whether do you think his people said go ahead and say that just so i dont know. I dont know whether it was a gaffe or i dont know if id admit that or, even worse, avenue it was already when was the chemical weapons feel with kerry when we got lucky and they said they so i would have started with the strategy. Now, i understand, the strategy they really developed is the Climate Change strategy. Every day, we read a new paper that theres another thing going on. Hopefully nothing happens in syria between now and 2100. Because if we dont get this stuff to if we dont take care of what could happen in 2100 come on. If the models are correct, we have a problem. So the serious lets put this on the back burner. And if kerry said, the most significant threat to our security is carbon dioxide. So dont worry about syria so much. Lets focus on this. I thought you would be talking about his khaki shoes at this point. I cant believe that they just yesterday, they are working on this way to get around congress to do why werent they maybe thinking about this for a second or spending a little time on that . They do not have strategy on syria right now. The reason he doesnt have a strategy is because they dont have do these priorities seem like theyre correct to you at this point . I think youre rewriting what the priorities are. There has consistently been a minimalist in the use of u. S. Military. So he hasnt change. He never promised the ukrainians well help you. A rose garden. Basically, this is a consistent policy. Right. Its a consistent you can say, you dont like the policy, but its not inconsistent. He has spent a lot of the time figuring out redistribution. Again, this is consistent. This is the man that got reelected, the American People, hes president of the United States. He won by a pretty good margin. This is what the American People chose and he hasnt changed. Hes not a different president today than he was in his first term. This is a continuity of policy. Did the American People choose this congress . Yeah. Then why do we constantly hear that this congress is preventing everything . All we do is vilify these guys that wont let him do everything when theyre not happy with the choice. Investors are getting ready for the final averages of august. What if the road map for your money this fall on the markets, james swanson, chief Investment Strategy at mfs investment management. Now im starting to think, so are you, jim, im starting to think so many people now are saying buy the markets, hold your nose, just hang in here because its going to keep going higher because everything is looking for now im starting to wonder whether the market is going to surprise everyone and say thats not going to work, either. Where are you on this . Keep buying it, stay in it . Im looking at the fundamentals. Its unbelievable how these companies are making money. Im not worried about hitting new highs here. And i think the market is catching up with the fundamentals. Just to give you an example, the government said in the first quarter, the economy shrank. The margins hit close to 10 , which is pretty unbelievable if this economy is shrinking. Second quarter was better. So im following someone else in saying the story is getting better, not worse. So the story is getting better, but obviously the market has moved higher. Before the story got better in anticipation of it getting better, is it at a point now where most of the good news is reflected in the valuation or not . I think the valuations are probably in the fair range. Its not a cheap market, for sure. But if profits keep doing what theyre doing and we get a little better news out of europe, and im not saying we will or these em countries, its the Large Cap Companies that are the cheaper of the two choices, small versus large. And theyre going to benefit from that and so im saying im not looking for pe schan e expansion. It doesnt seem to get the earnings right. The earnings are growing faster than people think. So thats where i am on it. I think the good news is still coming. Hang on a second. You know, the reason joseph a. Bank is not you get a lot of wear out of that suit. If it worked for you, youre going to get with it, right . This is the new america. You know, you just have to really . Ten of them like that . Its the same one, you know . I try to be very consistent. No wonder retailers are having a problem. They havent sold anything to dick in 20 years. I thought you were trying to help the economy. The next decade, we may deal with i thought they did okay. Thats why they did so well in the 1990s. Youre a good sport. The beard looks good. We come to you more for just the Economic Forecast than whether you think the market is higher or lower. 3 . Yeah. I think we just made the transition to a couple of years of 3 growth. I think that that is what the market has been discounting. One thing ive noticed is that for years, i would get push back against the the idea that we had a long economic expansion that would extend for a number of years. And i dont get push back any more. The market has, to some degree, capitulate t to the idea that we have a long economic expansion. That means that weve had much of the discounting that takes place. I see the fundamentals as basically favorable. Weve got modern inflation, weve got Central Banks to in the u. S. In england, in europe and in japan. For the g4 Central Banks are very supportive of the economic expansion and inflation is not soaring anywhere. Theyre not going to stop this. So the basic trend is sustained economic expansion, rising profits, modern inflation, and sense of banks what about the fed . Well if the fed orchestrates something, it needs to be corrected in a nasty pullback. That is not right now, but at some point have they inflated asset prices to the point where were going to really feel it . And theyve set up us for something bad in the future or not . They have not taken on responsibilities for Financial Stability. They basically said, thats the regulators job. The regulators job is that good that they havent . Its a little concerning because one of Alan Greenspans stories was you shouldnt pop a bubble. Just let them burst and then well clean it up afterwards. That didnt work out very well if you think about what happened to the american economy. Right. So i do think that there are some on the fed who think that the Financial Stability risks are reinforce the argument that the fed should begin to normalize policy. We have a policy that is appropriate to an emergency situation. Right. We have for years this is no longer an emergency situation in the u. S. Economy. Yeah, but so an emergency policy doesnt make sense any more. They are making Real Progress in halting the quantitative easing and theyre tapering that out. If you go and sit on the other side of the aisle, the emergency is that no one has had any wage gain no point. We sit on the same side of the aisle together. They just had an editorial that did not raise Interest Rates anytime soon because the economy, the job market, the wage growth, people arent going well. They think the fed have to keep it there. Many of these problems need other solution s than a continuation of zero Interest Rates for many years. If youre not going to get it, maybe you should keep zerp. You know, i think that the potential negative side effects are growing. And, therefore, i think that as the keeps coming down month after month after month, you can say yes theres slack in the u. S. Economy, but its unarguable, that slack is being reduced month after month after month. We are getting closer and closer to normal. So for the fed to start to raise Interest Rates in the middle of 2015 is totally consistent with the fundamentals that theyre dealing with. Okay. Good. And were not going to rip the economy apart with the fed funds rate of 50 basis points or 75 basis points or a hundred basis points. As a matter of fact, it will halt the income of a lot of people who have been sitting there with their investments earning zero because theyve been too frightened to be in this hot market. Thank you. Jim, thank you. Weve got at least on the economy, but well see you again. Coming up next, were going to talk movies. Blockbusters, busting the future of the box office. Disney scoring big. What is the next film to generate buzz for dollars in hollywood . And then, the big labor day holiday. How early will everyone leave to beat the rush . It could mean more traffic. Squawk box returns. In just a moment. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. A weekend ahead for the labor day holiday. Aaa forecasting 35 million americans will travel 50 miles or more over the next three days. Both of us will. An increase of more than 1 over the last year was still shy of what was going on before the financial crisis. And looking at how people are getting their 85 , surveyed they will be taking a road trip, nearly 30 million buckling up and hitting the highway. Some in zip cars, others of us own an automobile. What a concept. You have nothing . No. How are you going to get up there . How am i going to get up where . Arent you going back up to to connecticut . Im going to take the train. And then someone picks you up . Do they have a car . You know, weve argued it. The zip car . Yeah. Mid size. Suv. Suv. Wow. Yeah, you are. And gasoline price ves moderated and are now pretty roam. And you actually did mention you didnt like pumping you wanted to pump your own and in connecticut they have pumpers. Yeah, in emergency emergency the same. You know what i do . I am so ocd, i get out and i go and they wont top it off. And i top it off. For some reason, i want to get all the way up to as much mileage that i can do, but i never even wait to run it all the way down. But i always get out and do it myself. Certain ones have the thing where you can just put the clipper in. No, im talking about the thing that keeps them up. I know exactly what it is opinion. Its way early, you can put another gallon or two in. I want to talk to you more about that, though. The Summer Movie Box Office delivering disappointing results. What were this years big winners and losers and how important was china to the future of americas film business . David bowen, moviecitynews. Com editor. It wasnt so awful for the movie business. Thats the funny thing. It was down significantly in the United States, but the movie business is primarily interested in International Numbers these days and those numbers are up for the big movies. The wall street journal today, i was reading that through the international impact, which is to say that yes, movies may do better over there. But actually longterm its bad for business because there is so much piracy that theres no sort of secondary market the way there is here. Do you buy that . Its somewhat of an issue. The netflixzation of the whole world will change the dynamic i think ultimately of posting the revenues. The whole thick is glass ceilinged around 35 of the audience in the United States. Eventually, that will become 80 , 90 , and it will feed over into the rest of the world. There are a lot of Companies Working on that all over the world right now. Lets go through some of the winners and losers in terms of move virginias this summer. What was the big surprise hit for you . It was guardians of the gal axis, which will be the number one movie in the United States for the summer. However, it will probably be the number six movie for the summer internationally. So, you know, that is where the mixed bag is. It probably wont do as well as spid spiderman or godzilla in the United States. Flip it around, Biggest Surprise loser, the one everyone thought was going to make a fortune and didnt perform at all. Well, whats interesting is that if you look at the movies where they spent 150 million or more, theyre very top of the chart. The only one that didnt perform well enough to make a positive revenue is thats the one picture that might lose money that cost over 150 million. The rest of them are all in black ink. Does everybody now have to play almost exclusively in the hundred, 150, 200 million space . Is it 50 million, 350 million, 20 million picture completely out when it comes to thats the other thing. Those movies that come from the big city almost all made money. So if you look at the big movies, its opened soft, ultimately that will be a very profitable picture. The biggest most profitable pictures are 22 and neighbors which are comedies at a much lower budget that did very, very good business, not only domestically, but worldwide. So theres still money in that. Its the middle that is questionable whether you should be in that marketplace. What is it about the dollar number . What is it between why do us that, between 50 and 150 that theres a problem . Why would that be the problem area . Because it costs so much money. If youre spending 75 million, say, the movie costs you at least 200 million, the Worldwide Market distribute as well as the production of the film, thats a much bigger nut to crack or thats a big nut to crack. Whereas some have figured out if you make these giant movies, this summer theres not been a single one thats going to lose a lot of money. Theyve kind of figured it out. David, we look forward to this. What rewe going to see . Another hunger games movie, a big disney movie in big heros six. And you have the hobbit movie coming. So theres whats the big surprise for the fall . David tell us the surprise. Im not sure theres going to be a big surprise. I think the story of the usually ultimately will be that theyve figured out how not to be surprised. It could end up doing 150, 175 million and be considered a surprise smash. But i dont think youre really looking at any movies that going to be hugely surprising in terms of box office. Certainly not domestically. Okay. David, were going to leave it there. Thank you for waking up early. Appreciate it very, very much. Good to be here. Coming up, president obama making comments about ukraine, syria and isis. And what scares me, it says here all the buzz is about the suits. Wearing khaki. This is what we used to do before anyone. We talked about stupid stuff. This is not this is serious, you know, whats going on right now. Did you see those 250 guys in their underwear . Well talk about the suit, fine, but that gives me a bad and 9 11 is coming up again, the anniversary. It was all chandra levy. The next thing you know about, the two belgs came down. All right, you want to talk about the suit, we would. And torontos mayor rob ford is at it again. This time hes in the middle of a fierce reelection. As we head to break, here is a look at yesterdays winners losers. Never before has this kind of passion, this kind of innovation, engineering, design and performance. Been available. For this kind of price. The 2014 cla from mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz Financial Services. [ squeaking ] [ water dripping ] visit tripadvisor hawaii. [ whistling ] with millions of reviews, tripadvisor makes any destination better. Cozy or cool . Exactly the way you want it. Until boom, its bedtime your mattress is a battleground of thwarted desire. Enter the sleep number bed. Right now, all beds are on sale. Hes the softy. His sleep number setting is 35. Youre the rock, at 60. And snoring . Sleep numbers even got an adjustment for that. You can only find sleep number at a sleep number store. Right now save 50 on the labor Day Limited Edition bed, plus 24month special financing. Hurry ends monday know better sleep with sleep number. I take prilosec otc each morning for my frequent heartburn. Because it gives me zero heartburn. Annc prilosec otc the number one doctor recommend frequent heartburn medicine for nine straight years. One pill each morning 24 hours zero heartburn. Good morning and welcome back to squawk box here on cnbc opinion im joe kernen alon long with Andrew Ross Sorkin. Becky quick is off today. Making headlines, Johnson Johnson reportedly plans to seek a buyer for its medical devicemaker business cordis. The wall street journal says the sale could fetch between 1. 5 billion and 2 billion. And cutting its workforce and cutting back its global route network, the carrier following two jet liner disasters. The company will be delisted by the end of the year. We just talked yesterday about that picture, someone in the new york post, taking a picture of himself on the Malaysian Airlines jet. He was the only person in the seats. Lets tell but wall street news. Morgan stanley reportedly planning to build and run one of the first u. S. Natural gas export plants. This is a sign theyre getting back into fiscal commodity markets. And Morgan Stanley is selling its fiscal oil business. I dont really like any of the banks being in the physical market of any sort. I mean, with the exception of cash. Moving money around. Lets check on the markets this morning. Which are indicated for a little bit of a rebound on its not really the last day of summer, but its the last trading session for august. Were looking for a rebound of 45 points. A little bit of a weakness yesterday. Nothing too significant. The s p is just 4 points, 3 1 2 points away from 2000, which weve only been above just for a very brief time in the history of the of the stock market. Lets check out europe, which is at this point is sitting a little bit higher. Italy doing best. Asia, take a quick look at whats going on all the way over there. Not a whole lot to talk about. Oil, we havent really had anything in the trading range for it seems like about six months or so. Subbornly above 90 even though gas has come down. And natural gas, still around 4. The tenyear is keying off of was going on globally as the economy has become more global. You wouldnt think 2. 34 on a tenyear with a 3 gdp in the works doesnt make any sense. Historically, but thats where we are. Europe is growing much slower and entering into an easier money stages. Were starting to exit, hopefully. And then finally, the euro, 1. 31, which is down from 1. 39 since the aforementioned easing in europe has become more obvious that that has come down and a lot of people thought that was very obvious short. Morning money is with us. Lets talk politics. President obama fielding questions about whether the u. S. Is on the verge of military action in ukraine or syria and admitting that the United States doesnt yet have a strategy for dealing with isis. Ben white is politicos chief economic correspondent. We could talk about the suit, the khaki suit. I would prefer not to. We will not talk about the suit. We will talk about this. This is what joe raised at the beginning of the program today. Obama, we dont have a strategy yet for syria. What an unfortunate phrase. I think what hes referring to is he doesnt have plans on his desk to nr strie strikes in syria against isis. That is true. Hes never trying to work up some possibilities. What you never want to say is we dont have a strategy. Do you think it was a gaffe 12347. I think it was a gaffe. They have a strategy to ultimately try to target isis and reduce its Debt Holdings in iraq. But they dont have a plan. They dont have an immediate plan for going after isis in syria. Its very complicated politically. Do you get involved in the civil war there . He doesnt have plans on his desk to carry out strikes in syria. They have this plan to do them in iraq and to try to build up the government. There are other plans in place. He should have talked about that broad strategy, instead, were developing possibilities for syria. Tell me this. So congress is going to come back to work. The president has had an awful summer. Sort of hard to argue hes had a good summer. Its sort of been a miserable summer. So walk us through, were all going to come back after labor day next week. Can anything happen . And does the president have any sort of moral authority on any of these issues at this point . He doesnt really. I mean, the one thing to watch is immigration and whether the president decides to do anything of these unilateral moves can you do that in the middle of this . He can. And i think he would like to. Both on inversions in corporate inversion and immigration. Those are the two areas where he wants to move forward. If he does that, hes going to enrage republicans in the senate and in the house and theyre going to try to block, continue a resolution to fund the government. If you continue this, were not going to and what does that do ahead of the election . Is there a political calculus ahead of november . Theres a very complemented political calculus ahead of november. And it does two things. Republicans are going to want to show to their base that theyre fighting back against the administration, particularly on immigration, which means taking to the brink of the government shutdown. At the same time, the American Public hates shutdowns, generally blames republicans for them. So i think they can rattle the saber on that, show theyre being tough, but in the end, theyll have to keep the government open. Its too risky for them to shut it down. You talked about my favorite topic, inversions. What can the president do . I think he has broad latitude in the tax code. Treasury, theyre working very hard on these proposals. What theyre worried about are legal challenges, does it get tied up in the courts and do they have a situation where they particularly target the debt, alternatings strip transaction any way that hits is there a i get why the democrats view on this. The question is, does this topic resinate with the American Public . Will you see it in the campaigns come november . Its funny, im working on a piece on that very topic now. I wont scoop myself by giving you every pit of it. But there is polling data that suggests when you ask people like this, it makes them mad. On both sides of the aisle or no . It does. People dont like to see these companies go abroad when theyre still mainly based in the United States. So it is a potentially winning political issue. Its a very complicated people argue with me that one of the reasons that romney didnt do well last time was because he said we need to lower Corporate Taxes and theres a visceral feeling among most people that obviously arent very well informed on the entire subject. They viscerally think corporations should pay more. And Companies Get away with too much. This is an easy issue to demagog and thats what were seeing. Unfortunately, the people that go along with it are a lot of people that dont have jobs that pay much and that dont have any upward mobility and that are stuck in what a really a tepid job market right mow. And republicans are it hurts their own cause a lot. Because we need to free up the private sector. We need more capital coming into this cup, not leaving it. And we dont want to punish reacting to, obviously, incentives with the tax code. Republicans are going to talk about it this way. Theyre going to say, look, we agree, we dont like this. But theres a reason were doing it and the reason were doing it is because we have this horrible Corporate Tax code. We can fix it, make it more competitive. 10 of the wheel if you just tax the people that are benefiting from the profits of the corporation, with dividends or you can look at it however you want to do it. Eliminate it and let the corporation hire more people and then you can have more tax revenue to pay for more government employees. I think its potentially a winning argument, although when you say not when you have to think through it. They dont say lets get rid of taxes on corporations, they say thats nuts. But if you explain why to do it, their eyes glaze over. So many populous things the last election one factoid, right now Corporate Taxes are 10 of our revenue. Back near world war i, world war ii, it was 30 . People forget there were a lot more 90 tax but 90 youre talking about but whats your point . My point is corporations represented about a third of the tax. I know. But is that a place we want to return to or do we want to go to zero globally . That is what we need to figure up. My point is that the history is very different. We taxed corporations higher than we do now. Arguably, if you want a better economy, faster economy, more revenue coming in, it would make more sense. But the number in terms of our relative taxation to the rest of the world, weve never been this high. Exactly. And thats the real problem. Theres no way to go back to those battle days of high Corporate Taxes. Because you think the big corporations have ways of not paying that. Mr. Morning money. Coming up, the nfl season fantasy football. The big Labor Day Weekend for sports, including an eruption in iceland causing travel disruptions. As we ahead to break, take a look at whats happening in european markets right now. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. [ squeaking ] [ water dripping ] visit tripadvisor hawaii. [ whistling ] with millions of reviews, tripadvisor makes any destination better. Welcome back. Splunk getting a boost this morning. The Data Analytics up 52 as it added more customers and the Company Raised its full year sales forecast. Officials in iceland, closing air space near the volume capeo, there was a small eruption north of the volcano after nearly two weeks of earthquakes in the region. At this point, no volcanic action has been detected and there are no signs of significant explosive activity, at least not yet. Coming up, it was all over espn yesterday. The nfl gets tough with Domestic Violence offenders. Is the league going far enough with its new set of penalties . And bellis on the courts again. You just have to win 70 of your points at net. And keep unforced errors under 10 . On the ibm cloud, the us open analyzes 41 million data points from 8 years of competition to uncover key insights. Data can help show you how to win, no matter what business youre in. Today theres a new way to work. And its made with ibm. Cozy or cool . Exactly the way you want it. Until boom, its bedtime your mattress is a battleground of thwarted desire. Enter the sleep number bed. Right now, all beds are on sale. Hes the softy. His sleep number setting is 35. Youre the rock, at 60. And snoring . Sleep numbers even got an adjustment for that. You can only find sleep number at a sleep number store. Right now save 50 on the labor Day Limited Edition bed, plus 24month special financing. Hurry ends monday know better sleep with sleep number. Dovisit tripadvisor new york. With millions of reviews, tripadvisor makes any destination better. I take prilosec otc each morning for my frequent heartburn. Because it gives me zero heartburn. Annc prilosec otc the number one doctor recommend frequent heartburn medicine for nine straight years. One pill each morning 24 hours zero heartburn. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. Hurry in this exceptional offer ends soon. We will talk nfl, toughening its stance on Domestic Violence. In a letter sent to every nfl team owner yesterday, commissioner Roger Goodell announced a significant change in the League Policy against Domestic Violence. With a sixgame suspension for first time offenders, a lifetime ban from the league on a second offense. And here with us, nbc sports anchor dave briggs will comment on this before we move on to c. C. Bellis. The commissioner had to do something because it was a big missed play on the ray rice hammer. It was hammered by everyone. There was no one that defended the know, i messed this up, im going to get it right now. So, look, a sixgame ban and then a lifetime ban for the second offense. Clearly the right thing to do. Imagine when you roll out october Breast Cancer awareness month, everyones wearing pink and ray rice is out there with nothing but a slap on the wrist so what happens if youre accused but not convicted . That is my big question. Theres still discretion that the commissioner has. Look at ray rice for example. He completes this pretrial diversion program, all charges will be dismissed. So will he have that flexibility to say look all charges were dismissed. Or the female does not press charges, which we see all the time. And should he be able to play during the case . Well, look, you have to let the Legal Process play out. You cant have every guy thats getting accused of this serve a sixgame ban. That would be terrible for the league, and look terrible for the justice system. But thats the question. The discretion he still has for a guy that may have charges dropped. That may have the woman drop charges. Right. How will they handle that . The reason ray rice was such a big deal is because we saw it on video. We saw him drag his fiancee, now wife, out of the elevator. If this hadnt have been on videotape, would we be here . No. But its a great step for the nfl. Well played by the commissioner. Now Major League Baseball and the nhl need to step up and make their own policies. Okay, good. I was watching last night. You were up watching the emmys and i stayed up too late watching c. C. Bellis. I saw her 3 or 40 in the second set. Shes very mature. And she is such a did you see her attacking, attacking, attacking. Every once in awhile she has a second serve coming and makes like a 15yearold mistake. Tells you about the business of tennis. Everyones clamoring for some young star. So heres the 15yearold. The youngest american to win at the open since 1986. She is not even the marquee event of the night. Thats andy murray playing in arthur ashe stadium. But this one here is on espn. Everyone clamoring to see inside that stadium. She won the second set 60. And then got taken out in that third set. But shes going to be a star. She has arrived. And thats what we all need. Serena williams, 32 years old, going for her third straight. Roger federer, 33 years old, going for his fifth title. That seems to be the only two stories that will allow tennis to get a win out of this tournament. If its not jeannie bouchard. The young canadian, 20yearold, brewively young lady, a bona fide star. Thats what the game needs. And has a beautiful game, more than beautiful. But in tennis, you know, you wouldnt necessarily talk about like the male player but you cannot deny who was the one that never really won anything kournikova. Remember . You cant really deny that the combination is no it plays a big role in the sport. Lets be honest. Right. And so, you know, i missed jeopardy and wheel last night. For me at my age, thats my demo watching. Thats your demo. Watching serena and venus. Theyre great. They win doubles they win doubles and then serena, i think, still the favorite to get back and do it again. This will be her 18th grand slam and tying chris evert which would be great for tennis. But again, need Young American star. So, we will andrew and i are both you know, we both would like to go. We dont have maybe necessarily the connections to go. Does anyone pay retail for these tickets . Kernen youve got connections all over the place. Its not an nbc event number one. Im just saying that were looking at stub hub which is now legalized scalping, right . Yeah. And on a popular day the only one we can really go, tickets are somewhere between 300, and 700 apiece. So ive got four people that want to go. Do people spend 2800 going to a tennis game . Nobody i know. So many of these tickets how are the seats filled . Theyre corporate. You go to stubhub. U. S. Open is not the most popular sporting event in the country. You can find them on livingsocial today. Some of these groupon type discount places have tickets available. A good deal . I dont know where the seats are. But an astronomical deal. When i go to hockey i look at the face value of those and maybe i do have look. Thats the big problem with sporting events today is the price. Even the nfl is immune to that. Thats why theyre doing everything to get butts back in the seats because the prices are so high. That its difficult to get people to these events. When theyre so good on tv. You said butt. Tony stewart is going to be tony stewart will race this week. First time in three races. First time since he killed struck and killed i thought you were out of your mind that someone heard a but then theres a difference between just gunning it and aiming at someone. Still a couple weeks in the investigation being all wrapped up but tony stewart had to get back on the track. Doesnt look like any criminal charges will come of this. The sport had to move on. He had to move on. And i have to move on because its College Colors day. Yes. So i brought you a cornell hat. Oh, wow, thank you. This is why i wore this nice what are you doing . You cant wear a nice suit and put a buffalo on your head. Is that really a buffalo . And i brought you one because youre a c. U. Buff. I am but im not going to wear this. When i take it off, you know the thing im already wearing might come off. Did you see joes you arent even going to put it on . No. Because it could mess up cornell thank you. That looks good. You cant mess it up. When youre out of here get your c. U. Jersey on. I thought there was one other thing, Johnny Manziel. So Johnny Manziel, new nigers commercial. His alter ego, forget about johnny football, its now johnny jam boogie. Its an aerobics instructor now. You can do it all. Its a great ad and he has a lot of fun with it but the reality of Johnny Manziel is right now one of the most marketable players in the nfl is a backup quarterback. He went out last night and was 6 of 17. He will remain a backup quarterback with the efforts that weve seen out of hill. Hes just not there. Very marketable. Tremendous personality and hell put again butts in seats. But i i saw you didnt see it on the onion, it was funny. Thought it was a real story said he immediately got hazed in cleveland. Johnny manziel apparently the team made him put on a Cleveland Browns jersey right away. So immediately were messing with him and hazing him. On the onion. Yeah. We got to run. A lot more squawk box in just a moment. Hiringg too much te and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Rising tensions in ukraine. Russia gets more aggressive, but president obama stops short of calling it an invasion. Will the latest saber rattling wake up the bears . The fear of getting hacked. From the Financial System to the power grid, how vulnerable is the United States to cyber terror . And wall streets drone wars getting kicked up a notch. Google unveiling project wing. Will they swoop in and knock amazon out of the sky . The second hour of squawk box begins right now. Good morning, welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with joe kernen. Becky will be back next week. The Labor Day Weekend is upon us. One last chance to get down the shore before september rolls around. Like long beach island, new jersey. Our Morgan Brennan will be ready to hit the surf later this hour. Wetsuit and all. And well talk about some of the business behind the boards with her. Just a little bit. Why did we pick lbi . We already have a crew there . We have a crew there. Executive producers yeah, we basicly have a bureau there. Yeah. All right, global hot spots dominating the headlines this morning. President obama, michelle maybe raised a few eyebrows with you, if you have any questions about syria, possible air strikes where isis is strong, heres what he said. I dont want to put the cart before the horse. We dont have a strategy yet. I think what ive seen in some of the news reports suggests that folks are getting a little further ahead of where were at than we currently are. All right. Earlier in the show michelle our chief International Correspondent Michelle Carusocabrera joins us this morning. I wont talk about the suit, because it the last time i remember us focusing on all this frivolous stuff was before 9 11, it was chandra levy, suddenly we got really really focused on important things and what really matters. And these guys scared the living heck out of me. Isis. Did you see the latest . You saw the 250 guys in their underwear all of them lined up, all of them shot. They dont bury any of them. They just left them to rot. And theyre you know, these are i mean this could be the huns or something. This is stuff that happened 1500 years ago when we didnt know that life had some value. Who are these people . And 9 11 is coming up, and i dont know, theres we keep finding people with isis flags in this country. Like maybe theyre messing around. And we had one of our own citizens that renounced citizenship and went over there. Named after named after douglas macarthur. So i dont like talking about suits. So, when the twitter is afather erupted when what . When he came out went crazy with the thats one of the problems with twitter. Thats one of the problems with twitter. They also went crazy on the we dont have a strategy yet. That one makes more sense. But i would also to some extent, i almost not admire but at least we know, you know, that he was honest and frank and forthcoming. I think what he meant was we dont have a plan yet. I mean theres we have you dont want to shoot, ready, aim, maybe some people would say weve done that. And he also said congress isnt banging down my door to take action here. And you saw who the 250 guys were. Troops loyal to assad. Right. Who we dont like either. Its a mess. I want to give you a big head line alert. Vladimir putin is speaking right now. I saw that. Hes at a youth forum. Historically we have seen when he speaks, he often says things that will move the markets abru abruptly. So keep an eye out on that. So far its been very repetitive. He wants ukraine to sit down with the separatist rebels and come to some kind of negotiated settlement. Ukraine doesnt want to do that. They see it as a major invasion of sovereignty. Putin would like to be speaking with obama, but obama wants him to be speaking to poroshenko. And Angela Merkel is caught in the middle. Shes the one who convinced the ukrainians and the president to sit down with putin and what did she get . The apparent, u. S. Isnt calling it an invasion yet, ukraine is calling it an invasion, nato is just saying theres been some kind of incursion with more than 1,000 troops. Lets show you the b. O. Of the fighting thats happening in donetsk. Theres a whole hodgepodge of things happening over in ukraine today. The fighting continues. At the same time, nato has released a bunch of stills. You can see this is the violence thats happening on the ground. All right. Show me the next b. O. Or the next element that we have. Around 11 00 yesterday morning nato releases this, and holds a News Conference, and puts out five different satellite images that says, they say showed russian combat military troops invading the sovereign territory of ukraine. Again not using the word invade. Saying 20,000 troops on the border, 1,000 absolutely within ukraine. What were waiting to see is, will there be more sanctions ultimately . Theres going to be an eu summit on saturday. Angela merkel said yesterday that they are going to consider more sanctions. And then one other hot spot, besides the situation with syria. Besides ukraine, italy this morning is in deflation. Their Inflation Numbers came out, crisis fell in august year over year, 0. 2 . Theyre now not disinflation, which is a slowdown in inflation. But deflation. Fullon deflation. Which is a big scary thing for the european union. Im a bit worried when we come back from labor day people are going to wake up to whats going on in the world. Do you find it bizarre that, given everything thats happened over the last month the markets have sort of taken all of this in stride . No. First, the fed was out there with that. Correct. To put everybody to sleep, number one. Two, ultimately, the underlying economy you brought this up yourself. The headlines themselves iraq doesnt move the market much except for oil and the question is, how much more or less are they going to produce because of that. Despite how horrific the headlines are. Russia is a major economy. Are they going to punish the europeans later this year on natural gas . That will be a huge event. I doubt it. And then, ultimately, italian gdp of all the things that weve talked about, could be the most important. Because all those banks in europe own so much italian debt. The third most indebted country in the world, the United States. First, japan is second, italy is third, and the worst when it comes to the ratios about how big your economy is to service. All right. So im going to lend the Italian Government some money for ten years. What can i get, 8 . 9 . No, less than the United States at this point. However, the world is upside down. If you believe ultimately theyre not going to restructure and you believe youre actually better off buying now than you are buying u. S. Debt because youre getting paid far more than the rate of inflation. 8. 5 . What did you say, 9 . Less than 2 . Ten years, italy with third most indebted country. You know what . They do have the amalfi coast. They do. Olive oil. Well. Rome. Venice. Yeah. Florence. Were like quadruple quintuple those three cities alone should be able to support double the amount of debt they have. You would think. Michelle, thank you very, very much. We got to talk a little about hacking. Because House Intelligence Committee chairman mike rogerss warns recent Cyber Attacks against some of the nations biggest banks were very sophisticated and likely state sponsored. A Major Banking Group is downplaying those concerns about possible security breaches. Eamon javers joins us from washington to explain the distinction between we have two sides here. Whats happening for real . Weve got a real mystery on our hands this morning and the question is exactly who was hacked here in this attack . The fbi says that they and the secret service are investigating attacks against several financial institutions, but who those institutions are we dont know. Jpmorgan so far has raised its hand and says it is dealing with the impact of the cyber intrusi intrusion. But if you talk to the other banks theyre all saying they havent seen any impact yet of this particular attack. Let me give you a little flavor here. A couple smatterings of the statements weve seen from some of the banks so far in talking to them. Weve reached out to all of the major banks. None of them have admitted that they have been hacked as far as this attack other than jpmorgan. Wells fargo saying wells fargo confirms that it has not seen an impact by the recent Cyber Attacks. Pns saying we have no information to indicate we have been impacted. U. S. Bank saying at this time we have no indication that the u. S. Bank systems or networks were impacted. And bank of america saying weve not seen any unusual activity, and theres no indication we were a target. You notice that the common word there seems to be indications, impact, information. A lot of sort of pg statements here from the banks not definitively saying no, we werent hacked but saying, we dont have any evidence at this time that we werent hacked. So the hunt goes on for which of the other banks were involved in this apparent attack here. That goes back several months. And were looking to see more information about what exactly was stolen from jpmorgan. Jpmorgan hasnt sent out any new information on this to us since yesterday morning. Okay. Thank you for that, eamon. Lets bring in an expert in the field, David Kennedy is the ceo of trust and sec. Big banks hire him to try to hack into their systems to prevent criminal attacks. Jpmorgan not a client but he does work with most of the other major banks. Thank you for being here. Pleasure. The news out yesterday was that there were five banks that were hacked. We heard one of them was jpmorgan. We dont know the other four. You may know of them, because you work with them. Do you . Well, you know, i have reached out to all of our customers as well as a number of friends and were talking, you know, pretty much the majority of the banks and none of them are seeing any type of elevation of attacks. Banks get attacked every single day. Hackers are continually trying to break into them from state sponsored as well as organized crime units. And none of them are reporting any type of nushlg activity. So were still kind of scratching our hays right now saying who are those other four banks that they had mentioned. Jpmorgan is obviously one of those. Theyre saying it was extremely sophisticated possibly leading from russia. But thats still to be determined. Fbi is still doing their investigation. Right now we dont know. One of 9 conversations that we talked about yesterday was this idea of when do you disclose . Meaning when do you have to tell your customers, when do you have to tell your shareholders, when do you have to tell regulators that youve been hacked . What is the threshold or what should the threshold be . Well i think right now thats a very great question and topic. The breach disclosure laws that we have are very vague on when you actually have to disclose an actual incident. When it comes to credit card data its a little bit different because youre dealing with the payment emerges of payment brands, visa, mastercard, american express, et cetera. When it starts to impact your users its usually around when youve done your response procedures, you mitigated the threat and youre understanding where the damage occurred at is when banks or organizations usually respond to these type of things. But in this particular instance we had a media report that suggested there was a major hack. Yes. We have a Banking Group that says actually there was a hack but, that happens all the time and we dont think its such a big deal. We have jpmorgan confirming that theyre one of the banks but they didnt come forward first. And thus far from what i understand at least from jpmorgan they say there hasnt been any fraud on those accounts so should any of this have been disclosed at least by the institutions themselves . I believe so. And thats the problem we run into with theres no precedent saying you have to disclose when miss type of breach occurs. It only impacts when it hits state or federal levels and theyre still very big, mostly on the state side around Social Security numbers. David, how often are there hacks that are going on that we dont know about that are actually much worse than we could ever imagine, that would probably should know about . This isnt this isnt me saying it in a fear way but it happens all the time. We see companies that just define what that what kind of hacking were talking. Not just denial of services. Right. Password are there people who probably have my passwords, and usernames and all of the data that i think is secure . No doubt about it. Unfortunately thats the world we live in today where organizations are not spending enough time and effort into protecting their infrastructure. And companies go six months to a year without even knowing theyve been compromised. And then dont ever disclose that they were hacked. Its a really unfortunate situation were in right now. So i bank online. Should i be . Well, you know, thats the thing. So, banks have a, you know, a really low liability clause in there. So when you get hacked, your Bank Information gets hacked, youre not liable for that type of fund. Its a pain because its going to take a few days for that money to get actually credited to your account. You saw when target happened you know the banks were really responsive, credited the money right away. So theres a low risk when it comes to online banking. But when you start doing like online orders like ordering things online, those are when you have the highest risk of your credit card being cloned and fraudulent charges being activated on it. You do some white hacking in to institutions that are traditionally clients. Yep. Are most banks pretty secure . I mean how do the banks have to go . How far do the retailers have to go . Should i be worried about my Gmail Account . Take me real quick through sort of the lineup as to most protected, least protected. Well i would say the Financial Sector is probably way ahead of the game when it comes to all of the other industries. And its not saying that theyre doing great. Theres a lot of improvement on the financial side. And i mean a lot, its a lot of improvement. But theyre probably the fushtest ahead of any other industry. You look at retailers, usually rely behind the industry and thats because of low Profit Margins when it comes to credit Card Transactions and types of markets that theyre in. So really low security on your credit cards that you use at stores. The worst id probably say would be the medical industry by far. Hospitals, medical research, you know, devices, all of those are probably the worst right now that we see. You know, gmail is pretty locked down but doesnt mean to say that they cant be hacked. But theyre usually doing pretty good when it comes to security. Apples good. David, thank you for joining us. Thank you. Scaring us a little bit. But thank you nonetheless. Have a great weekend. Find out what traders are watching ahead of the Holiday Weekend. And then a solution for the hundreds of great pictures and video that you took, and probably forgot about. The ceo behind an app that automatically edits them for u you. We uploaded some videos of us, and well show you what the app spit out. And then later google is joining amazon in the race for Package Delivery by drone. Details of this drone war coming right up. Where the reward was that what if tnew car smelledit card and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com welcome back. Checking the futures right now, see how the market is setting itself up on this friday lf Labor Day Weekend. Dow looks like it would open up about 41 points higher. Nasdaq, about 14 points higher and the s p 500 up a little over six points. Shares of big lots a bit lower right now. The retailers earnings beating the street by a penny and its raising the bottom end of its fullyear profit forecast as well. And other retail buzz this morning, abercrombie planning to remove its logos from most clothing. I got a comment about this. The apparelmaker says teens now prefer unmarked gear thats cheaper. Change is notable because a f made a big business with its logo emblazoned on tshirts and hoodies at top prices. So heres the i agree. I actually like some of the abercrombie clothes but dont like it because i dont want to wear the logo. However, j. Crew has no logo merchandise. In asia and europe, Everybody Loves logos. Logo, logo, logo, thats why people buy the stuff. So i wonder, and abercrombie has some huge stores in asia and europe so i wonder whether this works in the u. S. But they do the same thing abroad. Right. In on the champselysees. There is an abercrombie. There is. You cant get in. Theres a line out the door. Smells like that abercrombie perfume. Mixed with tobacco smoke. Its paris, after all. Yes. So bloomberg hasnt gotten there yet. Hes working on it. Looking out for the logos. U. S. Equity futures pointing to a positive start on the last trading day of august. We are joined by jim iuorio director at tjm institutional services. Do you i mean do you just feel like taking the summer off, jim, or do you have some really cogent interesting things to tell us . I mean at least set us up, maybe, for when everyone gets back next week. My thoughts are going to blow you away theyre going to be so insightful. Just sit back. You guys asked the question about an hour ago. Maybe a half hour ago about why are you surprised that our markets havent reacted to ukraine more than they have. And im going to sharnen that up a little bit. I think the markets actually in some ways think its almost positive because were concerned now about the ecb and if theyre going to add liquidity. The chance of sanctions affecting europe down the road, they might only be 50 50 but the market knows that the eurozone has to prepare for the worst and thats why the euro is just getting pummeled. The dollar is strong. And again its like a game of, you know, Musical Chairs and the u. S. Stock market ends up being the only game in town. When you look at portuguese tenyear rates that are hovering around 3 , whats not to like about the u. S. Stock market . Now, when we made this big 6 runup from the lows two weeks ago i did think we were going to take a little pause. Four days have gone by and weve still stayed around highs. If we finish strong today im going to ditch my notion of a correction. Circling that would certainly help more people i mean for people that want a correction it would help if people stop looking for one. Theres no doubt about it. We come into these fridays and i think that theres tons of people like me who get short thinking the correction is absolutely imminent, and then today there might even be somewhat of a short squeeze, which think about how bad that is considering all the global tensions. Normally were supposed to worry on fridays for something kind of blowing up over the weekend and now we probably are going to get bit up into the close on friday just from people predicting a correction earlier. So now im starting, the one thing that is starting long in the tooth maybe is its like the double negative. Now were starting to talk about all the people that have been looking for a correction for way too long. And you know once we get so cocksure in our opinion that these people are silly, then you know thats when you get blindsided by the 10 or the 15 . But i dont know theres no doubt about it. Thats what happens all the time. The day were going to get a real correction is when people we stop saying a correction is coming. People like me whove been wrong and its going to come and blindside us. Youve got to stay with your system. Youve got to, you know, rebalance things. Although this has been a tough month to do that considering bonds and stocks have both rallied about 3. 5 , 4 . What the heck are you going to rebalance at that point in time when youre making money on both sides . All right. Have a good weekend, jim. You, too, guys. Youre not working on monday, are you . No, im not working. But youre thinking. Always. Try not to just think about the burgers. I will try. Oh, its good. You should come out for a burger. Youd love it. Where are you . My restaurant is in palatine which is 30 miles northwest of the city. Which means that new yorkers visiting chicago probably wont make it out that far. No. It would be worth it if you did. I think youd like it. Could you get me a table near a waiter . I think i could swing that, yeah. A table near a waiter . What do you mean . Yeah, of course. Joke. You know, can you get me a table near a you know, people that are important want a table near a window, the henney youngman. Get me a table near a waiter. Im sorry. I missed take me away. Coming up the last chance to catch some waves before september. This is a live shot from down the shore long beach island, new jersey, to be exact. The business of boards and wetsuits and how the surfing demographic has gone upscale. Hang ten. Squawk box is coming right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Have you heard of the coolest cooler . Its now the most funded project ever on kickstarters, the number is now, ready for this, 11. 7 Million Dollars and counting. There are 13 hours left. This product keeps everything cold and comes with a Battery Powered blender, a water resistant bluetooth speaker. A usb charger and much, much more. The man behind the prongent is going to be joining squawk alley a little bit later this morning. Coming up next, does king dollar have to go . A game of thrones debate over the greenback remaining the worlds reserve currency. Has this become more of a burden for the United States . Squawk box returns with that and a lot more in just a moment. Welcome back to squawk box. It may be the friday before a Holiday Weekend but theres a lot on the market agenda this morning. Heres the economic calendar. We have on tap at 8 30 eastern time, personal income and spending. Then later chicago pmi and consumer sentiment. Also tell you apple is working on a pay by Touch Technology for the next iphone. Its going to apparently let smartphones communicate wirelessly with each other. Devices by tapping them together. Apple has invited the media to a special event on september 9th when its widely expected to unveil this latest iphone. Also Johnson Johnson reportedly planning to seek a buyer for its medical devicemaker cordis. The wall street journal saying the sale could fetch between 1. 5 billion and 2 billion. Andrew, what role does the u. S. Dollar have in getting our economy back on track . With the dollar being held in high standards around the world, our next guest says it is time to rethink its global status. Joining us now is jared bernstein, a senior fellow with the center of budget and policy priorities. And ed has a great fragrance, and also with us, that was a reference to last time. Yes, i remember, thank you. Did anyone approach you with that idea, abercrombie . Yes, im working up high whole fragrance industry, im going to call it ode to joe. Also with us, tony fratto, managing director at Hamilton Place strategies. Both gentlemen are cnbc contributors. I saw i saw you Say Something the other day, tony, i was like god im glad tony pratto is on this planet. You were setting somebody straight on something. You remember what it was . It was on inversions, actually. I think it was going after some of the attacks on burger king and buffett, was that it . Yes, it was. Funny that might have been it for you to explain to andrew on that. That is exactly what it was. Yeah. People pillarying buffett. Over the years i have heard 50 50, a strong dollar is great. And a strong dollar is hurting us. Jared, from where you stand, i figure you wouldnt mind a weaker dollar a lot of times. No. I mean, i think where im coming from is the fact that since the mid 70s, weve run not just trade deficits in this country, but really very large trade defic deficits. Most recently 2013 the trade deficit was 3 of gdp. Now we all know gdp. Fee plus buy plus g. Plus net exports now if net exports are a big negative thats a drag on growth. So im essentially neither for a strong dollar nor a weak dollar. Im for a dollar that is set in international markets, not by those who choose to manage their currencies in such a way that they collect dollars, and make our exports more expensive, and their exports cheaper. So im my whole point is that by having this reserve currency rule, were actually facilitating a level of manipulation youre saying that because youre saying that since china manipulates its currency, its hurting our people because growth is too slow. And its not just china. I know, but if we had to pick a poster child. Exactly. Tony, now, i have heard that every time a society debases its currency that youre in for trouble then i think about how much debt we owe and how great it would be to pay it back for half price and i think that makes sense. Whos right . You can maybe do that once. You just cant do it repeatedly, right . I mean if you become known as a nation that debases in order to get out of debt, then thats not good and people dont want to invest in economies like that. But, you know, the problem isnt that the dollar is we say the reserve currencies. A key reserve currency, used to be a rule that the dollar should be the primary reserve currency. Its not the case anymore. Its an open market for reserve currencies. The euro is a reserve currency. The yen is often a reserve currency. The prominence of the dollar as a reserve currency is in part because of some of these surpluses in developing countries, which by the way, are not entirely a net benefit for them. We focus so much on the trade advantages of their currency policies, but there are real detriments in terms of the standard of living for people in china, for example, the purchasing power is lower because of this. And thats a problem. It does cause distortion. Weve gone through a period where countries are trying to deal with financial close, after the Asian Financial crisis and some of the more recent crises but i think these countries are moving towards flexible currencies the way jared and i, i didnt know we agreed on this. I thought you were going towards managing currencies. Let me just say you raise some good points. You mention the japanese yen. A this really kind of helped make my case, i thought. I put it in think piece yesterday. A couple of years ago, there was an effort by other countries to raise the value of the japanese yen in order to export more to japan, and to force them to trade their trade deficit or to lower their surplus and what did japan do . You know you mentioned them as a reserve. Japan fought that back hard. They did precisely the kind of thing im recommending which is to say not to debase your currency but to actually get in there and not allow others to cause your currency to artificially appreciate to give them an advantage. Thats all im arguing for and i think its too late. I think we absolutely have to go there. I think the evidence of those first of all, we should say that the dollar market is so much huger, i mean it is so big that the ability for the United States to even try to manage the dollar market, the dollar market there are 4 trillion of dollar market transactions a day, its estimated. Weve got, what, 50 billion in our Exchange Stabilization fund. So even you know, zero Interest Rate policy hasnt done much to move the value of the dollar. I want to talk about Something Else really quickly. Because it really doesnt help our dollar, and that is reserve policy for a really, really long time, jared, and Everybody Knows what reserve stands for. Zero Interest Rate policy which the fed has had, emergency almost stance long after weve come out of this. Ive talked to andrew before and i always say his people i just mean the New York Times editorial page arguing this is not the time to raise rates not any time soon. Now that goes in to weakening the dollar, and im sure you agree with that, because you i do. You would say that those horrible republicans wont do anything fiscally in congress. But at the same time, you know that savers arent making anything. You know that its assets that are appreciating. Its not wage growth. You know that its adding to the problem that you supposedly care about more than anything, and that is trying to raise everyone up. You know it is actually counterproductive to everything you stand for. If you know everything i know, then why even have me here to talk about it . Why dont you tell let me tell you what i know how can you think something that is exacerbated the income pass tirty so greatly by enriching everyone who is doing well that owns assets, why do you continue to say we should continue that policy then . Look, zirp, unfortunately, you actually did kind of nail my argument, the zirp and i wear your cologne. I smell like you. Yeah, thats of great concern to me. The zero Interest Rate policy, the Federal Reserve targeting the labor market, and if you listen to janet yellen thats almost all she talks about these days, that was certainly the jackson hole speech, theyre the only game in town. Who else out there is trying to do something about the job market . Now i take your point. When you have a low Interest Rate for such a long time, it doesnt mean that jobs are automatically created. But it does lower the cost of borrowing. And if you raise rates preemptively, what you would do would be to slow the economy down to a set of industries that you havent mentioned, whether its on the mortgage side, its construction, its trade, its retail, its somebody whos going to build an addition to on their house. Theres so many Different Reasons the left has no they do not connect dots between what they want to feel virtuous about and good about on the front end, and that is helping people that are in need, but with their actual policies that end up hurting the people that theyre trying to help. And they never want anyone to tell them that thats whats happening. Jared, you cannot defend whats happening with the way that the theres no one point if youre not youre not participating in this economic recovery there is no evidence theres not a sliver of evidence of much of what youre saying, which is that somehow low Interest Rates are hurting middle class or poor people. Just not one sliver of evidence. In fact theres some evidence on the other side that its helping you are the last five years are directly responsible for exacerbating the income disparity, and not moving anyone on the low end higher in terms of wage growth. So the economy would be doing look sorry. The key that i want to see with the fed focus on dont just be nice im not. I want the fed to focus on strictly on price stability, and not i mean the topic out at jackson hole was jobs and thats why yellen was focused on jobs. Really the feds focus needs to be on prices going forward. Zirp forever is not a policy. Its boring. Its theyve orchestrated a Balance Sheet recovery not an income statement recovery and theres been you know its the wrong way to go. Joe, wait a second, first of all we need we need the real economy to pick it up. Joe, listen. We do. And look im telling you something im not worried about inflation. Joe, look, you know, i theres where i agree with you, joe, is that the fed cant do it all by themselves. The only thing they can do the only thing they can do is keep Interest Rates low. Your argument is that somehow higher Interest Rates would help the economy grow faster right now. And thats just completely unfounded. Yeah, but jared you can make a case that thank you. Jared for speaking sense. When the president says when the president always says look i was elected to do a job and im going to do it myself because i dont have congress you know congress stopping him from doing a lot of things he likes to do they were also elected. We never ever talk about that. This is where we are elections have consequences and to just vilify the other side and not try to work with them is not getting us anywhere. Im an economic you promise to come on the day after the election in november . Im an economic im an economic analyst. Im here to tell you that this congressional fiscal policy is really hurting this economy. Now that has nothing to do with who gets elected and what their job is. You know, we can have another argument about that. But from an Economic Perspective weve got good stimulative Monetary Policy. What were lacking is fiscal policy. Youd blow another 800 billion lining Union Coffers like we did with the last stimulus . We need more time to talk about the fiscal side of the problem. Because thats whats missing here. Tony, tony, you got i dont know, you i couldnt get a word in edgewise with you, joe. Youre at a place now where you have democratic clients youre afraid to alienate them. Ive got all kinds of clients. Ostensible i dont i have business clients. I know i got 70 of the viewers here. Balanced, sensible individual. Andrew thinks youre making sense. So consider that. All right tony . Coming up always like opposite day. Coming up new app using Algorithm Technology to transform video clips into cool movies. You are looking at a sample of a movie which was shot yesterday sent to the company within five minutes was sent back edited with music. Were going to introduce you to this cool product when we return and later, the business of surfing. From duck dives to eskimo rolls its all the rage and making big money for surf shops. Were going to take a closer look at the business on the beach when squawk box continues. Over 20 million kids everyday in our country lack access to healthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy, affordable, kidinspired, chefcrafted food. We looked at what are the aspects of food that will help set up kids for success . Making sure foods are made with high Quality Ingredients and prepared fresh everyday. Our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. Working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the Grocery Stores. We are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. Until every kid has built those lifelong eating habits, well keep working. But parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. Welcome back. Checking futures right now. Theyve been up about 50 for most of the session. And theyre up 45 now making headlines, the World Health Organization warns that the Ebola Outbreak in west africa could infect more than 20,000 people. The u. N. Agency estimates almost half a billion dollars is needed for the International Effort to overcome the epidemic. You saw it came about in a different place separately. Which is scary. You also saw weve had some people that have taken that drug cocktail that we have some of them recover, and other people have taken it, and have not recovered. And the people that have recovered have said i dont know whether it helped me recover, whether it made it worse, or whether it would have happened on my own. So i mean this is a, you know, something that will be nice if it could we knew it could definitely be contained. Now we need it to be contained. And we need hopefully it seems like its something not nearly as complicated as curing cancer so hopefully we can, and then get it into production and be ready for next time. You dont know what is different in the different strains. Lets talk about a new tech nothing thats pretty cool. If you struggle when editing videos, this is something we all struggle with, i dont know if youve taken live videos on your new iphone an app called magisto takes your videos and photos and edits them. It does it automatically to create movies within a couple of minutes. You can share them with your family, friends, upload them to the web. Joining us is the cofounder and ceo of magisto. Tell us about this. Where did it come from . How did you get the idea . And how does it work . Because the videos look pretty good and its all done by ai, theres no human beings involved in this . Yeah. I mean this is fully automatic. It all started essentially when i was a Student Learning Computer Vision and studying video theory, and me and my wife just bought our first camcorder trying to capture the first moments of our first daughters life. And we were shocked to find how useless raw video was and how difficult Video Editing was. It look us like three weeks to edit two good minutes of video, and thats when we knew something had to be completely different. Were showing video that was taken just yesterday that your system put together for us we submitted it to you, it came back, added the music, put all the little nice shots in between. Who does that . Literally the computer does it . Its in the cloud . Yeah, it runs in the cloud. Its fully automatic, using very, very sophisticated particularly intelligence technology. Its an expert video editor who understands who the main characters are the interaction between the main characters, when do they speak to each other, the main scenes and everything in order to create unforgettable movie for you. So we chose the love style so we have to choose a style. What happens if there is audio in the actual tape, meaning years ago i actually interviewed i would love your help with this, i interviewed my grandparents before they passed away, with voice. And i always wanted to take that video and sort of make like a Mini Documentary out of it. Would you service do that . It really depends on the style that you choose. The style tells what kind of emotion you want to inject into the movie. You want it to be like romantic movie like when you chose love or you want to feel happy or cute or sentimental whatever you want to feel. Magisto will inject the right emotion into it. The Video Editing will be done and using the audio in a what if theres people talking in the video . Again, depends on the style. If you want to have video where you have voice if you have more slow paced sentimental style youll have more dialogue between the main characters. Wow. Real quick, how do you make money doing this . Okay. So, the app is free. You can download it now and maybe your family simply 20 seconds of your time. But if you want to make better videos and this is probably what will happen after your family see that, see the movies that they make, youll make longer videos, and videos on basic quality or using more styles with magisto in that case you need to upgrade to premium subscription and thats how we make significant part of our earnings. All right. Thank you for joining us. Pretty cool technology. Magisto is the name of the company. Joe, we should make more movies. Maybe next week after we hang out on wednesday well make a movie of what were doing. I look like i had head lice. I scratched my head like 16 times. And then i was also are you finally admitting to no, but people are going to think. And then mack. That only made sense during the love part because with you two guys that was because i have a lot of love for both of you. But that was my favorite. The Darius Rucker song and everything. That was my favorite. Coming up, surfing is big bucks and Morgan Brennan is looking at business on the beach and she will join us next. [ dog barks ] [ male announcer ] imagine the cars we drive. Being able to see so clearly. To respond so intelligently and so quickly, they can help protect us from a world of unseen danger. Its the stuff of science fiction. Minus the fiction. And it is mercedesbenz. Today. See your authorized dealer for exceptional offers through mercedesbenz Financial Services. Storms on the east and west coast generating monster surf ahead of the Holiday Weekend. This was the scene yesterday in malibu captured by the way by a drone. Wow. Morgan brennan is on the beach with the details of the surfing industrys impressive growth. Youre not in malibu, right . Youre back here close to us. Where are you . Yeah, im on the east coast. Im on the jersey shore right now. And if you take a look at the waves behind me theyre pretty big for new jersey. And thats because we have those two storms that are kicking up the waves and theyre really attracting an onslaught of surfers to both the coasts right now. So you just talked about that footage. Lets take a look at some more video from Southern California yesterday. These are 25 foot waves that are wreaking havoc on the beach. But, they are drawing attention to a sport thats been riding its own wave of growth thanks to better surfing equipment, bigger, more organized live events and new media platforms complementing this kind of physical activity. Theres not a lot of data on surfing. Its dependent on weather and location. Also the fact that Many Companies in this space are privately held. Global industry analysts, which is one of the Research Groups that actually cover this sport expect it to become, get this, a 13 billion industry globally by 2017. And Jason Scorsese a columnist at Middlebury College says surfing is experience double digit growth across the world and get this, its not driven by millennials, its driven by jen exers. The two primary drivers are wealthy people, really attracted to surfing. Especially in california. And so they have a lot of money and a lot of time. And alsoed cultures change so that it doesnt really have the negative stereotypes it used to have. Its looked at as High Performance sport. So hes been tracking the economic effects of surfing in two ways. Hes been looking at real estate mainly the fact that houses near desirable surfing beaches tend to command much higher prices. Also hes looking at the explosion of surf tourism as more participants drop money to explore lessknown beaches for example in west africa. Hes calling this economic discipline. Its called surf nomics. But theres another thing thats driving surfing as well and thats gopro. Thats something everybody across the industry is really buzzing about. The positive effect of that technology on surfing. But were going to get into all the details of that a little later today. Back to you. Awesome. Are you going to go surfing on the air a little bit later . Were going to see you out there . I am i am. Im not im still a novice. But i do have a board. Its sitting on the ground right next to me, and so as long as that riptide is not too strong and going to pull me away im going to try my hand at it. Okay. Well make sure to film that. Thank you for the report. Coming up, google joining the ranks of Companies Like amazon and dominoes pizza. Theyre testing product delivery drones. Jon fortt has the details on project wing. Thats next. Plus, tech geek gone chic. A provocative new ad campaign for womens lingerie, and you wont believe who the models are. Were back in a moment. Ddy for defending our country. Thank you for your sacrifice and thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. [ jackhammer pounding, horns honking ] [ siren wailing ] visit tripadvisor miami. [ bird chirping ] with millions of reviews, tripadvisor makes any destination better. My golden years will not just be gold plated. With millions of reviews, i had 3 different 401 k s. E trade offers rollover options and a Retirement Planning calculator. Now i know when im going to retire. Not if. Attack of the drones. Are the skies about to get unfriendly as google challenges amazon in the delivery business. The race for the latest version of air map. Rollbacks at walmart. The retailer offering primary care health services. Employees will pay just 4 for a doctor visit. Tech gone mild. Female coders stripping down for new lingerie ads. Is it empowering or exploitation . Were going to ask the companys founder, the third hour of squawk box starts right now. Welcome back to squawk box here on cnbc, first in business worldwide, im joe kernen along with Andrew Ross Sorkin. Becky quick is off today. Look at manhattans firstever dennys location opening this morning. This financial district location is an upscale version of what is called americas diner. One option on the menu will set you back 300. Yeah. Later in the hour were going to tell you what 300 will buy you at dennys. If its, you know, suitable for cable. And take you inside the new location i see, 300 pint are you meeting someone will . I mean what maybe theres caviar on the pancakes . I dont know what maybe its caviar, which you order. I have not ordered. You do like caviar. Thats why you go to davos. You have said that before. Lets get a check on the markets. U. S. Equity futures at this hour. Take a look, see whats going on. Joseph kernen always making trouble. Dow jones looks like it would open higher. Nasdaq up about 15 points. S p 500 up about 7 points. Take a look at oil prices right now. Wti crude price right now 94. 83. And the tenyear there you got it 2. 347 is the number. The story that everyone what . Tnote or a tbill . Tnote. I just i read what they tell me. Youre not like a ventriloquist. Youre like sitting on the no, go ahead. Youre right. Thats what i am. Thank you. The story everyones buzzing about this morning ready to go head to head with amazon, a fleet of drugs designed to deliver small packages. Jon fortt has that story from the new york stock exchange. Good morning, andrew. If selfdriving cars werent sort of dangerous sounding enough for you, how about selfflying planes . Thats what these drones are about, and really when you look at it, google is calling it project wing. These are drones with about a fivefoot wing span. Whats interesting about this is theyre generally a couple of different types of drones out there. One thats a helicopter type design. Those tend to be more expensive. Then theres the wing type. The helicopter type can take off straight up. They dont need a long runway. Google designed one in project wing that has the best of both worlds. The advantage for this for Package Delivery would be packages less than five pounds should be able to deliver it whether its in a remote location or one small package doesnt make sense to run a truck. This could solve that issue. Of course weve got regulations in the u. S. Restricting what you can do with drones. A number of different Companies Working on this. Amazon is interested. So is google. A number of independent Companies Like 3d robotics based out in northern california, former wired editor Chris Anderson is working on that. And the Technology Challenge here isnt so much just about flight getting this thing up in the air. Its the stabilization that keeps it up in the air, depending on weather conditions. Its the flight tracking in an automated way, make the computer televise where to go, how to land, and how to take off again in a lot of cases. So, its not so much just about comparing this with the remote controlled aircraft. You might see people flying in the park. This is a lot more sophisticated than that. It will be years before we see these in the skies if these really are delivering packages. John, lets talk about the danger. The security issues. I mean weve seen situations where these things have fallen out of the sky, landed on people, no less. Yeah. Thats certainly an issue. I think you shouldnt assume that these will necessarily be in highly populated dense urban areas. Theres probably a reason why google is testing these out near sheep farms in australia. I think use case for this tends to be in more sparsely Populated Areas. Part of the reason why one of the first big markets for drones is expected to be agriculture. Because its largely private land, drones would fly over those, photograph areas to try to find crop blight. This is different from that. This is Package Delivery, but expect to see this tested in more sparsely Populated Areas first. Where there arent quite so many i get the testing issue. But im thinking longerterm do you imagine five years, ten years out from now, major not in a major metropolitan area because its hard to deliver something to a building this way, but you know, in the suburbs somewhere . You know, i can certainly imagine that. You think about where some of the warehouses are, the Logistics Centers that folks like walmart and amazon have. Theyre in places like kentucky, where interstates tend to merge and line up. If youve got a home thats not far from there, say a tenminute drive, its actually difficult to get one small item to a place like that. There arent a lot of People Living in between the warehouse and that location. Why not send a drone . So i think its most likely that you see that type of use case within that fiveyear time frame. Does that mean were going to be seeing dozens of these things in the sky all at the same time . If i look up in the sky am i going to see them all buzzing around . Because theres going to be a lot of them i would assume if what youre talking about is real. You know, five to ten years is actually pretty nearterm. I would be shocked if we see kind of the sky looking like locuses filled with drones delivering packages. Because there really are issues, insurancewise if these things fall out of the sky. Looks like a lot of these companies are going to be trying to develop designs that are borderline disposable so if they do crash or if there is vandalism theres not huge loss. So a number of different issues to work out here before we see, you know, drones constantly flying around like mail trucks. Jon fortt. The new york stock exchange. Telling us about the future. Thanks so much. Sure. Geopolitics creating uncertainty ahead of the Holiday Weekend, and that could be a recipe for a big market move on tuesday. Joining us now is boras fosberg director at b. K. Asset management. When are we going under 130 on the euro, its coming, isnt it . Its coming in a little bit. Ive got to tell you i cant wait for the day until somebody hacks one of those drones and steals your case of diapers. I think thats going to be the first on those things. My case of diapers. What do you mean . You know like what do they deliver from amazon, primarily diapers and waters. What are they going to hack and take away. You know my kids are 12 and 14, so referring to referring to a different type of diapers. Are you referring to me in particular or no, no, no. Dont no harm intended. Joe admit it, its a long show. It is a long show. It all depends. I resemble that remark. And im going to sue you for defamation of character. That was a purely innocent remark. But back to geopolitics. Youre right, i think the story geopolitically is kind of serious. But its a side show in many ways. I think the biggest story right now is the fact that u. S. Growth is clearly way outperforming the rest of the world. And i think the interesting side show that most people are not focusing on is that while fed is clearly going to cut off the liquidities figure, theres a tremendous amount of pressure on the ecb to open up and create a new qe program. Clearly nothing in the eurozone is working. The eurozone is just actually moribund and the only thing they can do is stimulate monetarily. One of the things people may not be appreciating is the fact that easy money may be here to stay but its going to transfer over from ecb and possibly to boj increasing their qe which means ultimately that i think its pretty positive for u. S. Assets and positive for u. S. Dollars it means the show continues to go. It does, but it is so interesting because were talking it could go on for years. Just makes you think youre building up some type of imbalance that could have a bad ending. Maybe. You know it all depends obviously if it turns into a massive financial bubble and we just go to a why dont we just have an act of congress to just set Interest Rates permanent at zero. It would be good for everybody. Think mortgages would be zero. I mean you know arent there some issues about these things should be set by market rates so that capital is allocated in the most effective way so that it doesnt come back to, you know thats a supplyside argument. But the argument on the opposite side says that basically a problem we have is not supply side, its demand side. We dont have enough income on demand side to stimulate the economy and we have to stimulate that one way or the other. All western governments right now are in Fiscal Consolidation or austerity. Theyre not spending money. Its only left up to the Central Banks to create money and try to stimulate the economy which is why all the phoneous and pressure is on Central Banks to try to rectify the situation in europe. You see what happens in europe. They went to austerity and theyre dead. We went to qe and were doing much better. The argument much more to the demand side. Okay. All right my friend. See how i can insult you with something i was thinking of my baby daughter. No harm done. Have a great Labor Day Weekend. The Upper West Side the other day. What a great job as a dad. Started out the interview with joe what would you do if someone stole your diapers that were being delivered to you. I was referring to my own boxes which i get all the time. You know. Still, 50 is the new 30. It really is. I got to tell you, man. Its so much fun to do it the second time around. Oh, you got one of those going on, huh . I have one of those going on. I have one in college, one in the crib. So its a lot of fun. Freak. Yeah. Yeah thats what is it a trophy thing or oh, no, no, no, no. My wife is much smarter and much better person than i am. Im sure shes much better looking and a better person yeah. You lucked out again. Absolutely. See you later. Have a good weekend. See i struggle i couldnt possibly do that unless i had a child because its too late for me its never too late for you. Thats right, kirk kerkorian. Wait a second. Not sure about that. Coming up walmart looking to roll back the cost of health care. Up next, details of the retailers ambitious new plan for employees and customers. And then later a controversial lingerie ad Campaign Featuring computer coders in their skivvies. Were going to talk to the founder of that coming up. Greenline do for you . Whaty just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. Hurry in this exceptional offer ends soon. Hurry in this exceptional offer ends soon. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Welcome back to squawk box. Walmart trying to roll back the cost of health care for associates and customers. Bertha coombs is in atlanta with more on that story. Bertha . Were actually outside of atlanta, in one of the suburbs, carrollton about an hour west. Heres the base of the appalachian mountains. Walmart has had instore clinics partnering with hospitals for years now. But now theyre doing something more ambitious with their own brand of clinics. The clinics are located at at the front of the store. This one here in carrollton will be the ninth one that theyve opened and theyre going to focus on offering a wider array of services, specifically more primary care. Come back live to me. These clinics, theyre going to man them with Nurse Practitioners. Which allows them to bring that price down to 40 for their customers. Without insurance. And for their employees, just a 4 copay. Each of the clinics has private exam rooms, like this one. Where the Nurse Practitioners can examine patients, and they also have little lab where theyll do screenings, things like cholesterol for just eight bucks and they can also write prescriptions. The idea here is to try to help people manage chronic diseases. Manage their care and give them a little more value. Now, for a lot of retail clinics, with limited services, often its not profitable. The Advisory Board company, which is a Health Care Advisory and consulting and research firm, they estimate that standalone urgent care clinics, because they offer more services, tend to be more profitable than instore retail clini clinics. They have about a 9. 5 profit margin. Instore retail clinics because often their services are so limited, tends to just break even at best. By offering more primary care services, more services that keep customers coming back, keep them tied to walmart, and maybe buying more instore, walmart has a chance, the Advisory Board says, of turning a profit, and at the same time, pushing other providers. Providers have a choice to make. They can either compete with many of these retail providers, these urgent care providers, by offering lower Cost Services that are not just cheaper, but theyre also more convenient, and have a Higher Service standard. Or they can partner with them. And if providers dont respond accordingly they could see many of their most profitable channels disrupted. Walmart says it wants to partner with area doctors and hospitals on this pilot program. They expect to have 12 of these clinics by the end of the year. But you can bet everyone inhe industry is watching very closely how that 4 price point for employees will work. Okay bertha thank you for that report. Pretty interesting. Were going to continue this conversation. Yep. We are. Joining us now with more on this, and whether it could shift the Health Care Cost curve for americans, joining us now is dr. Scott Gottlieb American Enterprise Institute resident fellow. How long will it take you to talk about this, then we can talk a little bit about ebola . I mean, are you how concerned bshs well get to this but how concerned are you about ebola right now with this latest outbreak . Well, im very concerned. Very concerned . You look at the World Health Organizations new statements and theyre estimating upwards of 20,000 people will probably be infected before they can get it under control. I think thats the base case. It could get worse. You see the virus mutating in ways that could make diagnosis and potentially treatment more difficult. You have to get this under control. The problem is that this virus generates very high titers. When someone gets sick they have a lot of virus in them. You dont want to let this spread. A high titer means lots of possiblibility for dna mutation that might be favorable to a different strain . Right. This is in some ways its like hiv in that it undergoes a lot of mutation. Hence its treated with a cocktail. But i ask you, did the cocktail work . Did it work . Nobody knows. I mean but it probably would be a cocktail that would work in this case if you try three Different Things that maybe attack different parts of the virus, and be unlucky to get all three of them mutating. Theres a lot of interesting products in development that would target ebola. Given the scope of this outbreak i think we need to Start Testing these things. Thats what the World Health Organization is doing. What we need to do in an organized fashion is collect information and see if theyre working. The only way youre going to license a product for ebola is to actually deploy it. You cant do clinical studies because you cant infect people to see if your product is working. You have to deploy it. Could you infect animals . Thats what you do but you dont know the side effects. You can look at the side effect profile because you can put the product in healthy adults and observe the side effect profile but to see if its working you have to get it in infected people. Fda does license products based on that. What do you think the time line is like . In terms of getting it under control . The World Health Organization their optimistic scenario is two months that they can stop the projectry, meaning the growth in new cases, and six to nine months to snuff it out. Now that is the base case. This could be worse. I think my concern is i dont think the United States is doing enough to get resources in there immediately to try to snuff this out. I think we need to be doing much much more. This does represent a threat. Its a geopolitical tret if you start destabilizing these countries. Even if the virus cant come here weve got to be concerned about whats going on in western africa. The second outbreak which does not seem related to the first. In the beginning as you remember that wasnt ebola then it became ebola but was unrelated. Unclear. Hard to believe its not related. I, again there have been drifts in the genome science that shows that. We dont know. Okay. From that to 4 at walmart i guess. Right. Well theres two different models to these clinics. One are the retail clinics like the Minute Clinic and the others are being started by employers. Theyre being set in notion by health care reform. People are forced to much higher deductible health care plans. They want to go to these clinics because theyre less costly. Employers are trying to manage their costs more aggressively so they want to put these clinics on site. What kind of care are you going to get in one of these places . It depends. I go to the Minute Clinic for routine stuff like a throat culture they can be very good. The ones that are in cvss of the world. The employer employed clinics that the employer is opening up on site are actually looking to supplant the doctors. So those are staffed with physicians not just Nurse Practitioners. So different clinics have Different Levels of service. Looks like the walmart clinics are going to be staffed with Nurse Practitioners so theyre not looking to supplant your visit to your doctor, but to augment it. That would be fine but for from what percentage of things that you go see a doctor for are perfectly well handled by a Nurse Practitioner . 95 . Probably a little less than that. But you sure . But a lot. We go to doctors for a lot of reasons. Who cant figure out strep, right . Those are the kind of things, you know, that a good Nurse Practitioner can handle. What you want is the nurse to be backed up by a physician. Just in case. They have an easy way to refer patients its not 90 . I know youre a doctor and i know how you guys are about theres in russia i think coal miners make more than doctors. You cant always make more money than everyone else, scott. It depends on a patient. A patient with a lot of chronic medical conditions should be seeing a physician. A patient with routine Health Things a good Nurse Practitioner is going to provide a very high level of care. Much harder. So many things working against doctors in terms of tort and insurance and everything else. Tough. A lot of guys leave because its just not theyre seeing their costs go up and revenue go down every year. I know. And when you need a good doctor, i used to say that about lawyers which is really hard for me to say. If you need a good lawyer you need a good lawyer. That was what shakespeare said. Thank you scott. Coming up restaurant chain dennys. Wish we had you on retainer for everything. Because i got a rash lets go to break. Dennys opening its firstever manhattan location. But this isnt your average dennys. Up next well tell you why this could be your next brunch destination. Im type e. My golden years will not just be gold plated. I had 3 different 401 k s. E trade offers rollover options and a Retirement Planning calculator. Now i know when im going to retire. Not if. Popular diner chain opening its firstever manhattan location. Dennys opens in new york city today at 5 00 a. M. This location has been tailored to the financial district crowd. The diner features a full bar and craft cocktails. That start at 11. The menu offers an upscale version of the popular grand slam breakfast. A grand cruise slam comes with bacon, eggs, pancake, sausage and a 2004 bottle of dom perignon. The price tag 300. You going to go out there . No. For me, you had me as tom cruise would say you had me with the pancakes, eggs, sausage you didnt want the champagne . No. That shows as you get a little bit older. You had me with that. What can i get that for, its not 300 then . Probably good price. Isnt pancakes, eggs we should do that right after the show. Mimosas are good but you can use korbel for those. Coming up, you you dont need to do better than that, do you . With the orange juice it doesnt matter. A read on the consumer. Were minutes away from the latest data on personal income and spending. Stay with us. You do a lot of things great. But parallel parking isnt one of them. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. What does it mean to have an unlimited Mileage Warranty on a certified preowned mercedesbenz . What does it mean to drive as far as you want. For up to three years. And be covered . It means your odometer. Is there to record. The memories. During the mercedesbenz certified preowned sales event now through september 2nd, youll get complimentary prepaid maintenance and may qualify for a twomonth payment credit. Only at your authorized mercedesbenz dealer. Welcome back to squawk box. Breaking news, july personal income and spending, income up 0. 2. A little light. Expectations were for up 0. 3. But we got that last months 0. 4. Now stands at up 0. 5. Heres where it gets a little strange. Spending, down. Yes. Down 0. 1. Were expecting up 0. 2. Last months 0. 4 stands unchanged. It still remains, i should say at up 0. 4. Deflator, 0. 1, month over month, year over year 1. 6. Thats pretty much our last look and what expectations were. Pc core up 0. 1. Year over year that was month year over year up 1. 5 that 1. 5 is also exactly as expected and exactly like our last look. If we look across the landscape today, of course, we see that the equities in europe, you know, they were under a bit of pressure. The dax trading on the lows. Nothing huge. Its not below yesterdays low and we see Interest Rates well we were under 90 in booms but trading a bit above 90 basis points in bunds. Foreign Exchange Markets are not that rambunctious with the euro holding its own and their inflation outlooks came out as expected. Matter of fact, if you look more on a year over year basis you could argue at 0. 9 it was up just a smidge more than they expected. Equities well behaved at 17 on the dow futures. Maybe the most significant data of the day may be yet to come. Chicago purchasing manager im a bit biased. And of Course University of michigan but considering the path of equities in u. S. Of late, my guess is that most likely will come close to the expectations of 80. Back to the gang. Okay. Rick, thank you for more on the numbers. Lets get to steve liesman. Because youre up, working, you ready . Yeah, its up. Ed numbers are not so great. But they are a rebound lower from what happened in june. You had a pick up to the june number, 0. 5. Personal income up just 0. 2 with wages up 0. 2. That was after double that increase in the month of june. We know that durable not durables, utilities are off because it was a cold summer. Or a colder summer. So theyre not spending for that. Thats one piece of it. Doesnt august. So minus 0. 7 was the durables number. Thats probably a bounceback or a bounce down from the strong car numbers we had in june. And the nondurables minus 0. 1. Services unchanged at 0. 2. Probably highlight the Inflation Numbers at 1. 6. Year over year on the head line and 1. 5 on the core. These are the numbers the fed follows theyre looking for a 2 target. And, the issue is theyre still about a half a point below. We had a ramp up in the spring and early summer and now it looks like it stabilize not going down. Were going to have a decline in august of gasoline prices and thats probably going to keep the edge off the rise in inflation as long as the stronger dollar is going to help as well. Steve you know what . I think its getting harder and harder in a Global Economy to base Monetary Policy on domestic concerns pip dont know how we can continue to do this. And the john taylor stuff that we talked about. Its it almost makes sense that letting something be so subjective based on someones opinion, youre setting yourself up for a problem we talked about this with jackson hole. We did. We got inflation in europe thats so low and japan, as well. And youve got totally different multispeed world in terms of gdp. So their growth over there is much lower. So its actually affecting ours. So so we might be having our rates that we think were basing, you know, you know, global meanwhile global versus are only different than what we have here and we could be totally missing the boat can i just say without being gratuitous i think what youre saying is genius and i dont think it just applies to Monetary Policy. Everything about this world is more global when did it happen . Computers started working. It became possible to have a headquarters in new jersey and run a plant in beijing in an efficient way. That was always possible. But it doesnt look just like Monetary Policy. Everything we do this Global Banking conference i was at ahead of time is this issue of how do we govern because we think locally in governance while the world is global. The inversion story its a Global Governance story. Banking regulation is a Global Governance story. Monetary policy, a Global Governance story. All the stuff that miss Michelle Carusocabrera is going to talk about, its Global Governance. I call it global competition. But okay so thats fine. How and i know youre going to bristle when you hear this, how is the publics will, the public good, the National Interest expressed in a global world . We have not figured out how to do that. Sorry we i immediately thought why the hell, then, if its all why are we cnbc headquarters in new jersey. Plenty of parking. No, because it could be miami. It could be santa cruz. It could be san diego. It could be la jolla, it could be necco wavers. We could have a bureau in montana. Theres a lot of places. In the bahamas. Fort lee in Englewood Cliffs new jersey and i know to your you know, to your chagrin i would do the montana thing. You would not youd hate it. L. A. How about l. A. . You would do that . Well we could combine you get up early now. All of the youd have to be up at all your irons in the fire how much money to just be anywhere . 30,000 . 40,000 . You know what . This next story this is the story that we started off today with, that put me in a very sober mood, and that is these guys are just you didnt even want to criticize obamas suit. I dont even want to talk about his suit. You were so serious. You remember how before 9 11 we were talking about nonsense. And then the world so the president is coming under withering criticism for what he said. Not for the suit. For what he said at this News Conference that he called hastily late yesterday. Why he suddenly decided to do this several times this summer but this did not go over very well what is certainly, lets hold that video first. Want to run that video first. Lets run the sound bite first which is why he has come under such withering criticism when asked about what he was going to do about isis. We are not taking military action to solve the problem. What were doing is to mobilize the International Community to apply pressure on russia. But, i think it is very important to recognize that a military solution to this problem is not going to be forthcoming. Okay that was the second bite that i wanted to roll from president obama. Only to highlight that on these two fronts when it comes to ukraine, he has, again, military options off the table, and so it has to some degree given Vladimir Putin an ability to do what he wants, we dont have the other bite . Okay. Lets run the vo then at this point, which is also getting talked about a lot this morning. Which is, this is isis. Propaganda video released on youtube. Showing video of troops that they have captured. That work for the regime of syrias assad. We only show you a part of this video because we cant show you the rest of it. They go on to execute all of these members of the syrian military. And what is horrific, horrible video. Which is getting talked about quite a lot. And when president obama said yesterday that we dont have a strategy yet when it comes to isis, this is what has caused so much intense criticism, what is to be done, especially if the reports are true about so Many Americans being involved there, could they, under the guise of their passport, come back and conduct attacks in the United States . Its an intractable, almost impossible situation. I dont even recall far be it for me to withhold criticism of the president but i dont even fault him for this. We dont need another ready, aim we tried that before. And also in ukraine. Most of the country when hes saying were not going to use military force in ukraine is going yeah, yeah, thank god. I agree. Were not ready and as for isis, did you see the guys that theyre killing are loyalists to assad. Our enemy. To our enemy. Right, right. So figure out how what to do. What is your those who are criticizing the lack of a strategy, is there a strategy thats on us is to them . Yeah, exactly. Its not clear. I think, though that from the very beginning the interpretation is that when he comes out at the very beginning of this administration and says, were not going to be nearly as involved in the middle east, we are, you know, taking a step back its not our role to be doing all these things giving a leash to the crazies. Yes. Vladimir putin knows that europe has never invested in its own selfdefense. He now has an open ability to do what he wants. And you could say that it was a year ago or when was it that kerry said then give us all your chemical weapons. That was probably almost a year. Why hasnt he got a strategy a year later . Its a totally different situation hes facing now. There wasnt isis back then. It was Free Syrian Army and other the syria thing and its just totally who they should have backed if they backed the rebels we should have backed the free syrian guys. Maybe. But now i have no idea. I and then youve raid that assad supposedly has been playing a chess game where he knew exactly what he was doing. He let isis do what it was doing to destroy the Free Syrian Army. So wed have to come around and wed be the president would be in a box. Is the answer that we should let these strong men rule in these countries . Because every time they topple, you see the whole tito effect. Yugoslavia fell apart after tito fell. That was russias response way back when in syria, better the devil you know i hate that idea. But hold on. I think what we are discovering is that hes very inexperienced on Foreign Policy and the crucial moment goes back to the red line in syria. And when he said there is a red line, and then there wasnt a red line. It unleashed so many things. So many unintended consequences. That were living out. That is going to be a Pivotal Moment in his administration that was this makes me want to go back to the fed to try and figure out. It would be easier. Monetary policy. Because exactly. All right. Thank you. When is your last appearance . On your show. Have a good weekend. Shes going to be here all day. On this show . Theres so little in the news today i think im going to be prp here . Im wishing you a good weekend. You, too. I guess you, too. Coming up, food prices rising. Were going to talk to the grocery ceo of stu leonard jr. I was just hanging out at stu leonards. Ive never even heard of them. Awesome. The public also how supplies are. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Welcome back to squawk box this morning. Meat prices hitting record highs and the usda is forecasting pork, beef, and veal prices to rise by up to 7. 5 by the end of the year. How much of this is going to be passed on to consumers and is it impacting how they shop at the Grocery Store . Joining us now is someone who watches these numbers very closely. Stu leonard jr. Is the president and ceo of stu leonard supermarkets where i was this weekend with my kids. Thats what i like to hear. In the parking lot toy have real cows. I like you to explain that. Because ive seen lobster tanks. You do not pick a steak. They have cows. Theyre always sleeping by the way. What are they for . Its an animal farm for kids. For decorative purposes. Yeah. You dont buy any milk. Always screaming moo at the cows to wake them up. Youd probably sell some fertilizer if i asked, right . Oh, yeah. Weve got plenty of that. Little chickens. The kids love it. Its educational for the kids. You know, we try to make it a fun family shopping experience. So lets talk about meat. Okay. In a different context in this regard. Are you passing on to the consumers . What are we going to see . Any retailer has to pass on costs. Right. The thing when costs get high like on meat theyre the highest ive ever seen in my life. Ive been in the business since i was a kid. And its the highest theyve ever been and you have to pass them on but what do you do, you really just cut your margins down. You try to bring in great deals, great value for the customer. What is your margin traditionally on meat . Supermarkets in general, if you look at the industry, probably around 25 . So you would add say a quarter onto the cost of a product. And that takes care of your butchers, and your labor and all of your overhead. Whats happening now in terms of that margin getting compromi compressed. Youre probably bringing it down to around 23 right now. Just forecast out for us for the rest of the fall into the winter . Were expecting prices to stay up because of the drought, what you found is that corn prices are high. And, you know, you dont want to raise as many cattle if the cost of feed is high. Whats the highest margin product in a supermarket these days . Not the prepackaged stuff but the stuff that you guys are making. Its usually bread. People who make bread at home, you find marginalized its the highest. But, what you really have to look at is how many gross profit dollars you get. Because you may have a high margin product that doesnt sell that well. And how much of the stuff on the shelves these days, this is the prepackaged stuff, the frozen stuff, are those guys paying for the shelf space . How much i mean we always hear about it. I try to understand when im walking down the aisle and i see a certain cereal or certain frozen good how it got there. Were mainly fresh stu leonards. We make stuff fresh at the store. We dont do a lot of the groceries. I can buy cereal there cant i, paper goods and things. We have certain items, very few, so you can pick up your normal things. Its mainly meat, fush, fruits and vegetables and dairy. But you can pay slotting fees is what it is. People can pay for shelf space in a supermarket. We dont do that at stews. Because we want to we want the product to sort of jump up and take off on its own. Whats the competition like with whole foods . Whole foods, i admire them as a competitor. Theyre really good. Theyre expensive. And i feel you can get the exact same product at stew leonards that you can get at whole foods at a lot lower price. Can we talk about some of the stuff you got here . You saw our coffees. First you got to see the coffees. We roast our own coffee at the store. Look at the special coffee labels. Our own special blend. Thats nice. Ive got heinz ketchup from buffett. My own crock pot with my picture on it. This is awesome. How much are you charging for that . Right now were 7. 99 a pound. I think if its going to have our pictures on it there should be a premium. Actually we tried we had to discount it. We had to buy two, get one free. Oh. Were cheap now. They cheapened us. What else do you have here . Corn is right now at the peak of the season. Thats a trending labor day item right now. Which is hot. Youll see that we have those crow that was a cronut phase. You have the chips, and thats a big filet mignon lobster weekend coming up. Andrew, do they cost the same, mine and andrews . I dont know. What are you trying to get me in trouble . No. Im trying to figure if mine is decaf, mine is just loaded . Well do andrews at a higher margin and yours at a lower one and see who has the most profit at the end of the day. Thats a good idea. Its going to be competition. Im going to be selling mine at stew leonards this weekend. Are you going to show up . Right next to like a too big to fail you could set up a little yeah, yeah. Set up a little table. Next to the cows. Anyway, stew, thank you. Appreciate it. Thank you. Coming up weve got a story for you. Lingerie company dear kate taking a very nontraditional approach to advertising. The companys founder is going to talk to us about its controversial ads which feature some of the top tech women. Squawk box returns in just a moment. Are you pointing at the camera for me to read . Thank you. Were on the air. I got a monitor. A new ad campaign promoting beauty and brains. Thank you. Youre welcome, dear kate uses real women from the tech world of all shapes and sizes who are seen coding and programming and baring almost all. There is controversial about the ads, the founder and ceo of the line, dear kate, and, julie, cant everybody lighten up . Is it app exploitation . Is that what they say . Really . Its really surprising the controversy seen around the ads. Controversy is good for ads. Can you say calvin klein . It is good, right . We p feature women in the ads base of what they do, not only what they look like. Were an Underwear Company so we have to show some women in underwear. Exactly. Why just super models . Show everybody. Even mr. Pc has to agree. How is that exploitation . They have to model what you sell, dont they . Absolutely. Its interesting because our underwear is actually functional so its more than just a pretty pear of underwear. We have the innovative fabric, and i have a pair to show on screen today. What do you mean functional . We have a Patent Pending we developed, im a chemical engineer by trade, and its the best pair to wear at the gym, fantastic for mom, and believe it or not, its great for that time of the month. Wow. I bet you didnt expect that. Thats a lot. Thats a lot to take for us. You know, modern men have to be comfortable with all these subjects. We talked about ovulation the other day. We can get it down to the hour. That made me scared. I need to know a little longer than that. No mens stuff . No, only womens. Functional, anything that is, like, a spanxtype thing that sucks in my gut or something . No, were about comfort. Functional is comfort and breathing and stuff like that . Our Patent Pending fabric in dear kate is the interlining is a thin leak resistant layer. They are protect and prepared for anything. Now i see what you are talking about. I see. I didnt know. Now i do. For that and now we are getting uncomfortable again. So you dont need Something Else in addition to it. So thats your a chemical engineer developer. Exactly. What did you do before this . Straight out of college, actually. Out of college. What sales do you have . You know, its interesting. We have seen our sales this year so far triple already from last years sales. Viewers who want to buy it, where . Go on our website at dearkates. Com. All direct . 90 are direct. We put the controversy with the ads. The ads are fine, leave here knowing the rest of the stuff are, you know, were working on, right . Were working through it. Thank you for coming in. Congratulations with the campaign. Coming up, the whole enchilada. See what we mean with we return, and the man behind the kick starter program, the coolest, the ultimate tailgating cooler. Were back in just a moment. Never before has this kind of passion, this kind of innovation, engineering, design and performance. Been available. For this kind of price. The 2014 cla from mercedesbenz. 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Mexican chefs made a oneton enchilada yesterday at a fair in mexico city, measuring 278 long, fell short of the record, stick that with a 99 beer thing that we had, and i think you got, like, a really good night, and then go to denys for breakfast. There you go. Happy labor day, everyone. Have a great week, markets closed monday so join us tuesday, and squawk on the street begins right now. Good friday morning, welcome to squawk on the street, im Carl Quintanilla with sarah eisen, and jim and david return after the long weekend. Closing out august, futures up despite disappoinments here and in europe. All of that later on this morning. The road map begins with a rare, nonrecord breaking day for the markets, last trading dayn