Transcripts For CNBC Squawk Box 20140912

Send it over to you. Thanks, becky. Weve got Corporate News for you this morning. It is a very big day for apple fans. New orders to the iphones are officially on today and they are under way. The devices wont ship, of course, until september 19th. But Analysts Expect the phones to sell out during the preorder period. Apple shares in the last week, take a look and see whats going on with that stock. Right now were at 101. 11. And im wondering, joe, whether i should be preordering. Because if theyre going to sell out, i actually one one. I think wipt the 5. 5 one because it has the longer battery. I was just thinking, theres a lot of people that are going to want these. Is it going to be, like, a full on product cycle . Yeah, i think. It is . Yeah. Because i think the new size will you have that iphone or youll get rid of your iphone and just have that . Just that. I want kind of want both. Then if you want a little one, you could take it would go with your blackberry . No. I have a regular iphone and a mini ipad and a regular ipad. And a blackberry. And a blackberry. Im into carrying around a lot the watch . I dont want the watch. I want the rest of the stuff, though. Does it glow in the dark . Do you after you carry it around enough . In my purse. The whole purpose of this is to get down to one device. The future is great, isnt it . Even you are addicted to this thing, though. You have reached the point i have one. The only thing that bothers me is when i leave, it used to be i could leave and there was nothing important enough to go back for. If you leave without your phone, you have to drive back. Absolutely. Tell me what you think about this story. Are you segueing into this or do you really want to know what i think . I really want to know what you think. Okay. Go ahead. You havent had any coffee yet. Thats true. Here is whats going on. Yahoo now spilling the beans on its fight with the government. Here is is what happened. The company said uncle sam threatened to fifteen it 250,000 a day every day that it failed to turn over Customer Data to intelligence agencies. Now, this happened back in 2008. Yahoo had argued that the demand was unconstitutional. But at the time it lost that fight. This is all sort of very preedward snowden. Tech experts say that this decision actually paved the way for the governments Surveillance Program and now this news just coming out and some of this stuff is getting disclosed. So now theyre ratting out the government that they were pressuring us to do this. Well, theyve been allowed to rat out the government. This is happening at the height of the financial crisis, by the way, to spill the beans. This is in the middle of 2008. And what proprietary Important Information would yahoo have about its people . Email. Yahoo email, yahoo calendar, yahoo everything. Theyre not designing ceos or something. It didnt have anything to do with no, im saying this was at a time when the whole world irrespective of the implosion part, are you okay with them handing over the information or are you okay with the government going to get it . We were using b. But we were going to fine the company 250,000 every day. If they didnt give it to us. They didnt give it. Its a business decision now. Thats the whole thing, i got theres a lot of different angles. I dont know you who i feel. At this point, my question is are they being audited now . This administration does punitive stuff to people that dont cooperate. But were back in the bush era, remember that part. 2008. He didnt get sworn in until my first thought was good for yahoo for going to bat to try and defend its customers. I dont know what the government was looking for, i dont know what they found and what they got out of it. So beyond that, im speaking from a point of ignorance. But i was like, wow, yahoo youre loving your customers. That is the question, was jerry yang back in the hot seat then . Ya should didnt become that interesting until jack ma started hitting the cover off the ball. Google tooblg over the world. You have to give jerry yang an enormous amount of credit. He invented yahoo . You could argue that yoohoo has taken a strange slide over the years. But he was the one to decided to take the investment in alibaba. What would it be worth with no alibaba right now . 10 billion, 5 billion . Youre looking at me like well, i mean, think about it. It aint radio shack. Thats the good news. But it was still jerry yang in 2008. Carol bartz took over in 2009. Not google, either. In global news, the United States and eu are expected to unveil tighter sanctions on russia today. The new measure will reportedly sanction russias largest bank and tighten access to western ruins. That leadses into this front page article in the journal about exxon suggesting sanctions are putting exxon at risk. Were just ready to get a bunch of poil. The arctic and exxon has more direct exposure to russia than any other country. Mean while, pleading guilty to charges that former employees bribed russian officials for a contract. God, thats an ugly word, isnt it . Hp is being fined nearly 59. The sbc allegeses that the union paid 2 million to secure a contract with russian prosecutors. Weird. It is weird. Its going to cost them 59. We that you weought they were g is anything being done in russia without a prescribe . I dont know. There are some parts of the world that you cant get things done without it. But when youre a u. S. Company, you have to follow u. S. Law. Right. Thats scary. Thats a scary thought. Lets take a look at the markets this morning. So far, it looks like the futures are pointing towards well, relatively a flat open. Right now, the dow futures up by three points. S p up by just under a point. Same with the nasdaq. Right now, as i mentioned, this is the first time with only friday left to go. Both the dow and the s p suspect look like they would be breaking that whipping streak for the first time after five weeks of gains. Nasdaq is set to close for another six weeks of gains for the sixth week in a row. Take a look at whats been happening with oil prices. A lot of pressure on oil prices over the last couple of weeks. This morning, up about 40 cents for wti. 93. 23 is wti crude. Brent is 98. 28. Tenyear note, ticked slightly higher this morning, 2. 562 . Also, the dollar, if youre taking a look at how it matches up, it is up against the euro. Euro is trading at 129. 2. Dollar is up against the yen at 107. 16. Dollar is down against the pound. With gold, it was down for the fourth straight session yesterday to an eightmonth low. 1,238. 40 an ounce. And the latest on the pulse of the consumer, retail sales will hit at 8 30 eastern. How will all this play out in the market . Lets ask rebecca patterson. Also with us is steven lighting, global chief strategist as Citi Private Bank and make up no, a couple of girls get something makeup, you said youre next year. Yeah. Or maybe you can go to scotland and there would be a whole new fun currency you bring home for your kids. And you thought maybe it was the gild because it rhymes. But as you said, today we have big news in the u. S. Are he are tail sales and i think the consumer is going to continue to benefit from low Interest Rates and low gasoline prices. What do you think of the market here . And i reference, did you guys read about mark, what his latest no. He says that the problems at mcdonalds are now indicating that everybody, consumers hes looking at this and its a proxy for how much money everybody feels like they have. Since its so abysmal that the paper world were living in its driving me into hamburgers. No, the only people doing well are the people that lead at le cirque. Im talking about what hes fashion. He did that after to spur the economy and sooner or later, money is not going to be worth anything and youre seeing it in whats happening at mcdonalds. And walmart, too. There is a bifurcation and we had that report out last week showing that the wealth accumulation since the crisis has accrued only to the top income earners, who special their home and have equity. There should be more focus on what Central Banks cant do. I mean, you look at the labor force in 2008 been it was 155 million in the u. S. Today its 156 million. There are lots of things that they cant control. And, you know, we want to think about how much theyve done for markets, but we have to look at where the underlying resources are in the economy. And this is an issue in years. The summer is not the year. We are still bullish. Earnings are still up. The rest of the world is lagging behind the United States. So you cant save up the rest of the decade will be clearer problems because weve managed thus far. So were going to talk to thurman today who is currently the council and hes a young guy. Its a mostly its not heritage. Did you read that weekend that suggested everything was completely and utter lly corrupted, by the way, by foreign governments who basically pay them fees so they can have their big issues . Well, in this case, the conclusion that theyre coming to is that the participation in the workforce purply for people like me, baby boomers, structural. But a quarter of it they say is because of the slow economy. This was because of people being discouraged. And you do have so much discussion, almost an object session about what drives the fed, that any utterance by anybody with chrisbility, that affects the debate timing. Whether we like it or not, we have to follow all of these reports for the next several months. This is an economy that is incredibly depressed. That is the reality where we are. Weve seen the tenyear yield rise in the last week or two on the back of speak expecting the fed to change its tone next week, to acknowledge the economy is getting better. Weve seen the dollar rally on that, thats pushing down commodities. Its actually a pretty big move when you think about it. Dollar yen at 107. Weve had a 4 appreciation in the treadway to dollar just over the last several weeks. Thats start to go become a big topic of debate. Historically, cyclicals, while perform defenses in a ridesing dollar market. Thats going to pull down serlg. The dpeeo political tensions, very crowded peripheral bond markets. I think european markets will tb to struggle and that is going to draw the euro lower. The chances of it passing are very low at this point. But you think its the tightness of the vote to the issue . If its a blowout, does anybody try to . Within fiscal policy, you have germany urging restrain. Even in germany, france shuffled its cabinet thee times in thee years. How are companies in europe going to be excited about sxaning . Its surprising that scotland is the one playing the surprise here in terms of potential political trouble when you have spain behaving relatively well by comparison. What is the biggest risk for us . Or two, we have been conjuring the stirrings of actual inflation down the road . Three would be bad. But i think one, a slower europe and a slower china than expected. It allows us to stay easing. But then you look at the risks building up. There have been two analysts, one running a big fixed income firm, another at a large bank and the last week urging people to put leverage on junk bonds. I worry low for long gives us more people. At this stage weve got to go. You dont go for three. You know, you get at least a few years out of it. We may need some regulatory finds. Lets get 10 . Do you want to . All on margins. Im not putting anything down. Put your house down. Thank you. Ive leveraging my kids and my coming up, thats a thought. You dont have any pets. A pr nightmare. I told you henry wants a cat. Is the world ready for another top begun . The need for speed next right here on squawk box. The Baltimore Ravens rolling past the pittsburgh steerlts. Several female ravens fans were spotted wearing number 27 last night. Which was in support of ray rice. I dont know how some were burning them. Then there was the rihanna song that they were going to play, they pulled because of. People remember what happened with her. They said they did it so they could devote more time to coverage of the rice incident. But yeah, thats the first thing everybody thought. I mean, im afraid to say anything because i just thought the coverage was just awful. I was watching nance and sims before the game thinking, wow. Did you read the its flat watching those two guys. It wasnt as excited about it. You remember worried about what i was going to say. I really do think sunday is a much better presentation of i think i could do much you know whats going on be interesting . They may get a break, cvs, they may get some big numbers because of the whole ray rice thing. We have sunday thats a great pregame. Theres two reports that i dont understand. The wall street journal says roger goodell, he didnt push hard enough when he was asking these questions at the time out of respect for the wife. Okay . I thought that was interesting. And then theres this other report out of espn that cites four people close to rice who says that he explained in explicit detail to goodell Everybody Knows that she went in at that point, they knew something awful happened just seeing the video itself. And goodell at this point is almost being as demonized almost as much as ray rice. Which i just dont get. Im sure he tried to do what was right and the best thing possible. Well, when ray rice went in for the disciplinary hearing, janay, his wife, came in and said please dont do this. I hit him first, i spit in his face. Goodell is not i mean, hes not god. He doesnt hes a guy trying to do his best. And you look at the way the tabloids, the daily news and the post, its like a feeding fre y frenzy. They say theres a possibility goodell might walk away. I might at this point. When you see the video, its very stark, its very clear that you have domestic voins that shows us in video form and you can how raw it is. I want to switch gears quickly and can do one more thing. So i watched this new guy a few times on abc. All right . David mura. Im gone for good. Never going back. Ever, never. Because i just wanted to see how theyre doing. I told you. They led last night with ray rice. Every night, the second story is rain, its weather, its severe because theres rain. Is was raining somewhere yesterday like a little bit. There was a few clouds. That was the second story. They never did get to so i put on brian. Immediately, isis. Richard engle is over there. It was all really good pertinent, important, not bs i mean, i guess theyre trying to i dont know what theyre trying to do at abc to get viewers. Theres a whole lot of stuff thats not news in that news cast. Oh, my god. Im never going back. I told you. I was just watching to see what it looks like. Good to know. Keep it in the family. A lot of support. Lets tell you about a couple other things going on in the news this morning. General motors, the company has stopped delivery of 2015 corvettes. I dont know if you were in the market, but the automaker says it needs to fix two potential problems. One of the problems is the air bag. The other one with a parking brake. At this point, gm hasnt issued a recall. Consider corvette was designed for sales of the car were more than four times what they were during the same the period last year. In Entertainment News this morning, top gun 2 is getting ready to take flight. Reports say paramount and sky dance have found a writer for the long awaited sequel that tom cruises 1986 hit. Justin marks is said to be in negotiations behind the film. Hes the man in disneys upcoming live action version of the jungle book. Cruise is set to come back as match rick. No worse if iceman will be making the steeple. Really. Cool. Kind of a you cant be a what is a hes probably going to be the teaching structure like the last time around when he came through. Kind of depressing. Were all 20 years older than when he was like match rick, right . Engaged mat ed maverick. We could do a parity of that. Tom cruise is still in pretty good shape. He is. But you know what i mean. Val kilmer would definitely come rolling out with a big gut. Yeah. I dont know why, but he has gone up. I have seen some fluctuations with him. Yeah. I could do a saturday night live ought to do a parity of top gun 0 years later. Everybody is moving slower, not quite as sexy in those uniforms. Although i think the russians would still be the bad guys. Like you would come full circle as the opposing guys. Up next, the crude realities of cheaper oil. Check out this chart. Take a look at whats been happening with oil prices. Youll see its down about 15 since midjune. All of this is coming as global tensions reach new heights. What gives here . Were going to head out to find out. As we head to a break, take a look at yesterdays winners leasers. 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. Good morning. Welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and Andrew Ross Sorkin. Our colleague Steve Sedgwick running down ukraines president. He didnt actually run him down. And it wasnt wasnt easy work. Steve getting pushed and shoved. Well bring you the headlines in just a few minutes. The ukrainian president is okay. Hes okay. A new poll showing support for scotts independence now is slipping. Theres just days to go before the big vote. Supporters are keeping scotland in the United Kingdom now have a four percentage point lead over separatists. Take a quick look at the pound. Is. 62 right ow. Theres a story we should talk about this morning. Front page of the wall street journal. Jamie dimon finishing his cancer treatment. Profiles him and the recovery and his recovery, says he is being closely monitored by doctors. Diamond stayed active in the country. Limited his travel. Hes now expected to resume international travel. Looks like hes doing okay. Theres a great anecdotal talking about how you should have breaking bad or bringing an ipad to watch. Hes been doing all the 8 00 meetings on friday morning. Hes definitely getting better. And this is tough, what he went through. Now you recuperate for six weeks. The next couple weeks may be the hardest part. I was gratified to be that he was going to have to watch for years. Hes keeping a close watch 20 years from now, hopefully. I read twister while you were reading that and that is that this guy immediately a segue, but immediately pictured val kill mer in that volleyball game that they play. The shirtless volleyball game . The shirtless volleyball game that they played. That would be funny. There would be a lot of movement, a lot of moving parts. Tom cruise kept himself in really good shape. Remember how he got right in tom cruises face . Yeah. He was not a nice guy in the movie. Andrew, its friday. Cant you loosen up on a friday . What were you reading over there, but the yahoo story . No. Before we were going to talk about the jamie dimon story, i was rereading the end of the story because i read the top of the story. Apparently jamie heard from barack obama, too, during the treatments. I thought you might be rereading the Richard Branson book that you pored over over the weekend. I had read the book. Just because i said i read the book, and i did read the book. You read the cover, i think. No. I was actually inside and back. No. I was looking for something specific in the book. That copy you were holding that day hadnt been cracked. You know what . I may never believe anything he says again about all the other stuff that he supposedly i love you. I love you. Lets get a check of the markets this morning. Things have been relatively flat, but we are talking about the potential for the s p 500 and the dow to break what has to this point been a fiveweek winning streak. Well see what happens today. The nasdaq does look like its on track to win for the sixth week in a row. In europe, early trading, you can see at this point spain up by 18 points, ftse up by 11. Germany is up by wall down by 0. 25 . The shanghai composite ended up by 0. 9 . Oil prices have risen slightly, but ever so slightly. Only up about 20 cents for brent crude. 98. 26. Wti is the number we usually watch. Thats up about 43 cents to 93. 26. The tenyear note yesterday, the yield sitting at just actually the yield picked up a little bit this morning. Dropped slightly this morning to 2. 563 . But, again, that yield has risen substantially over the last week and a half or so. The dollar this morning looks like it is up against the euro, which is trading once again below 1. 30. At 1. 2922. Its up against the pound and the yen. And gold prices, which yesterday yeah, okay, looks like theyre down about 1. 50. Dropping it again to 1,237. 50 an ounce. Oil prices as we mentioned, theyve been defying conventional wisdom. The deteriorating situation in the middle east, not shocking the market at least at this point. Crews still sitting near eightmonth lows. Could we see an eight handle on oil by thanksgiving . Joining us right now is matt schmidt. Matt, in terms of that, could we . Could we see an 8 handle . Do you think the supply continues . It is possible, becky. I think we could see a little bit of a bounce now. As you can see my tie, it has london on it and bearish influences in the market have been like london buses. They havent been present at all sort of back in june and then theyve all sort of come along at once. Theres been a strong dollar coming through. Weve seen demand dropping off from europe and china, supplies increasing from libya. The political impact has not been an impact in crude specifically. All of these bearish news have knocked crude down to that 90ish level. By all means, we could potentially drop below that. Matt, i feel like its been about a year since weve talked about opec having any impact on prices. Is there a point where opec does have a little bit of strength and where they could step back in and push Prices Higher . Thats this thing. Once we get down though 90ish level, we stau start to get jaw boning from saudi arabia and other countries. Weve seen them dropping back exports, as well. Theyre obviously showing concern on that front. So the lower the prices go, specifically on brent, as well, below that 100 mark, the more sort of rhetoric we get out of the cartels. Is there a point also where geopolitical concerns step in once again . Thats the thing. When prices are so high, you never think theyre going to drop like in midjune when iraq pops up to 1. 15 on brent. When prices get below with all these bearish influences, you dont think they can rise and then they kind of slip on the flip of a coin. So we could well see prices slip. Whether its relating to iraq or indeed russia. That makes it sound like its a tricky place to play right now, probably makes traders nervous. Yes, it was. We saw bargain hunting coming down. We could well sort of see a bounce here. But yeah, the reality is we are in this kind of like lower trading range now from being between 100 to 110 now on wti. It was actually between 90 and 100. One of the main stories in the front page of the wall street journal today talks about how the sanctions between russia and the United States could have an impact on exxon at this point, that it is in the cross hairs. What do you do when you start looking at some of these big multi nationals . How concerning is it to start thinking about whats happening with the ukraine situation . Thats a really difficult one balls because sanctions have been so sort of limited and sort of tit for tat as we start to see them implemented on more companies. And theres that retaliation aspect that we could see them implemented on exxon, etcetera. But the reality is it is still at the moment involved in rhetoric rather than necessarily anything more than that. Okay. Matt, thanks for joining us. Thank you. We should start a squawk like you know how with sports tweet they do, people all talk about whatever is going on in the sports game on twitter or something. Because people are followers immediately start doing all kinds of stuff that were talking about, instantaneously. Im getting more instances of val kilmer. I guess you should just google full figure val kilmer or something. Im not going to say the word. And theres lots of websites and it all comes up and our viewers are on top of it immediately. Its kind of funny. I dont know whether id say its gratifying. Squawkapedia. Now we need to try to make some money by doing one of those things hashtag . Where people talk and its a social something. Do we advertise . Yeah. And we advertise and somehow get we have to monetize it somehow. Probably not. Still to come but the whole top gun 30 years later is something that i was laughing so hard during some periods. I have to get it together. A big new travel survey says some of the years hippest holiday spots are a long, long way away. Youve been to some of them, right . Youve been to tahiti . No. Bora bora . No. Well tell you why, straight ahead. Theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare gets simpler. When frustration and paperwork decrease. When grandparents get to live at home instead of in a home. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Z. The u. S. And eu are expected to unveil tighter sanctions on russia today. At issue is moscows role and supporting separatists in eastern ukraine. Steve sedgwick caught up with ukraines president earlier this morning. Only now we have to unhow important it was security. And i am proud to inform you that ohm our european and partners understand that todays fighting is not the fighting for independence, territorial integrity and sovereignty of my country. This is the fighting for the global security. And this is demonstration is a necessity to introduce and to create the new security structure. In this very dangerous world. And youre probably aware, a ceasefire did go into effect last week. But at this point, unclear, its still fragile at best. When we come back, want to get away this winter . We may be running out of time to get in on some of the hottest destinations in travel. And then summer snow. Fall is not even here already and some areas of the country are getting a blast of winter. Well tell you where when squawk box returns. Him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab watch this. Sam always gives you the good news in person, bad news in email. Good news fedex has flat rate shipping. Its called fedex one rate. And its affordable. Sounds great. [ cell phone typing ] [ typing continues ] [ whoosh ] [ cell phones buzz, chirp ] and we have to work the weekend. Great. More good news its friday woo [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. [ male announcer ] ship a pak via Fedex Express saver® sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Is today september 12th or december 12th . Heavy rain is falling in south dakota. This is the largest amount of measurable stuff since they started taking records in 1888. Temperatures expected to climb sfwoo the 60s for the weekend but Im Still Holding onto summer. Our next guest says you need to start booking vacations six to eight month now in advance for international travel. Data says people are heading to places you might not expect. Here with the details, matthew upchurch. He is a virtuoso of Luxury Travel advisers network. Lets talk first. Six to eight months . Has that changed . I thought you could book a good trip four or five months out. I think whats happened is Global Tourism is just i mean, its on a rampage. Its amazing whats going on globally. And so i think whats happening today with the savvier travelers, remember the science experiment which is how do you get all this in the jar . Start we the big rocks, pebbles, then sand. So people focus on their dream trips. When you say six to eight months out, is that to use miles on your trip . Miles is one element of it. Quite frankly, its availability of the best places at the right times and the best inventory. So people are kind of the hotel rooms are going. Yeah. You look at the lets go through the hottest places right now to travel to. Right now, close to the home would be mexico. One of the really hot ones is new zealand. New zealand is up 4 for the period. Love new zealand. South island over the north island. New zealand used to be the addon to australia. And its not just for no its for hobbits. Im not sure thats it. It used to be. But that did a lot. On the big screen. But theres a Tipping Point for destinations. Been in this business for 30 years. Theres a Tipping Point. I think new zealand has it all. Its a great family destination. Its great for adventure travel. Food and wine, the lodges that are there are incredible. Its the whole package. I mean, were just avoiding the issue. What at what cutoff in terms of wealth disparity, talking about income, who goes to new zealand . Where are you on that . The bottom 50 arent going to new zealand. No. Were a luxury network. Youre wondering why its exploding right now . Its the same story we talk about all the time. Wouldnt you say its the top 5 . Probably 5 to 10 . That does the international travel. That does the bora boras and the new zealands. These are the people that are flush and its the same story we talk about again and again. They should write a thank you card to janet yellen. Theres another aspect to it. You know, you have College Professors making 150,000 a year who spend a disproportionate amount. Theres a huge shift in the past 20 years about the prioritization of travel versus like i dont need another car. Id rather have an experience. Lets go through a couple of others. South africa. Very hot. Has been for some time. Uae is big. I think part of the uae is not only the inventory on the ground but the air service there is becoming really one of the goto places. What these trips were talking about, all eye end trips, whats the average price of a trip like this . Some are serious destinations. You go to new zealand, youve got to go for like two weeks. On the average yearly income. How much are these trips costing . Our average trip is about 8,000 per person. Thats on average across the globe. So for two people, 16 grand. New zealand for two weeks . No way. Im saying thats our average. But also you look at, for example, one of the other hot destinations. Go to africa, the price is going up at the type of lodges youre talking about. And the inventory is gone. Its gone for this year. Probably 70 gone for next year already. But then you also look at some of the closer like mexico, for example. People dont really understand what has happened. There are actually more fivestar Luxury Properties in mexico than all of the caribbean. Help us with this since im a cheapskate too. What is the coolest place that i could go for a reasonable price . Highest end, cheapest place. Well, the best value right now is mexico. And has been. Thats because of the headlines coming out of mexico. You know what . Thats a miss. The rebound in mexico tourism has been unbelievable. And by the way whats that trip going to cost me . Probably four. Four a person. Yeah. No, no, no. Total. At a five star . Yeah. I may have to give you a call. Matthew, appreciate it. Thanks so much. When we come back on squawk box, the health of the economy, inversions, the minimum wage debate, and the energy production. These are all topics well discuss with the president s chairman of the council of economic advisers jason fuhrmann. Squawk box will be right back. Financial noise financial noise 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. With the top speedou compare of comcastorthe top speed of business dsl from the internet. Phone company well, theres really no comparison. Why pay more for less . Call today for a low price on speeds up to 150mbps. And find out more about our twoyear price guarantee. Comcast business. Built for business. The health of the economy. Does the nation still need a heavy dose of fed medicine . Jason furman is our special guest host. Darden about to serve quarterly results. And is it time to let disney go . Let it go todays Portfolio Manager tells us about the mouse house and gives us the new pick. The second hour of squawk box begins right now. Let it go let it go cant hold it back anymore let it go let it go turn away and the slam the door good morning and welcome to squawk box. Im joe kernen. A scary moment in milwaukee last night. Baseballs home leader in home runs and rbis hit by a fastball up and in. Giancarlo stanton was taken off on a stretcher. He suffered multiple facial fractures and dental breakage. Hes out for the season, i hear. Thats the fear. Those guys are throwing heat. Theyre throwing hundred mileanhour fastballs. Some guys the way they hit, they step into it. You see some of the pitchers wearing these the hats with the helmet because the ball comes back just as fast. Lets get you caught up to Corporate News. Apple and mobile carriers, theyre going to begin taking preorders for the new iphone 6 and iphone 6 plus. Theyve actually already started. They appear, these devices in stores next week. Apple introduced new phones earlier this week, of course. They announced the apple watch although that wont be going on sale until next year. Already getting emails from some of our viewers saying youre going to be trying to get on verizons website. Its taking them two hours to get it. Youre not going to get it shipped for three weeks. Its going to be sold out before you know it. Shares of car rental giant hertz did rise this morning because carl icahn struck an agreement. He said he would push for Management Changes and boy, did he get them. Well, resigned. He said it was for personal reasons if you remember. Those personal reasons might be that he didnt get along with carl icahn. I dont know. We will see. It is a big week on the Economic Data front. Wrapping up with retail Sales Numbers that are out in an hour from now. Joining us now to give us the lowdown on all things economic related is our senior economics reporter steve leisman. Good morning. Thanks. Three pieces of data to watch earlier this week. The other two, they came in reasonably strong showing Services Strength could be as high guys in the Second Quarter as 4. 7 . And theres a debate about whether to suggest better growth and services for this quarter, the Third Quarter which is running around 3 . But the jobs report from kansas city remains at a low level relative to normal. But with momentum. Today we look to see if theres a rebound from the weak july level we have. Economists looking for a 0. 6 rise. The best since april if we get there. Heres what we know. Consumers bought lots of cars in august. But the question is whether that stretches budgets so thin they have to cut back elsewhere. Weve seen this back and forth with buying cars and not buying other stuff. Todays data also put in context of what happened since august which is lower gas prices could give a boost to spending. And the question of why more jobs hasnt really led to more spending. It seems like the job Growth Numbers are stronger in context to snending numbers out there. Steve, stay right here. Many investors still have questions about the Overall Health of the economy. Right now we are bringing in jason furman. He is our guest host this hour. Hes the chairman of the council of economic advisers for president obama. And its great to have you here, jason. Its great to be here on the set with you guys. What grade would you give the economy at this point . I would give the economy an enormously improved, moving in the right direction, and moving there faster than its done over the course of this whole situation. What did you think of the jobs report last week . It was a weak monthly number. We also got higher than expected jobless claims yesterday and retail sales last month are not as strong as anticipated. I dont look at one piece of data or one month. You look at the jobs over the course of the year. Theyre averaging 215,000 jobs a month. Thats up from 194,000 job a month pace we had last year. You look at the Unemployment Rate, its fallen 1. 1 Percentage Points in the last 12 months. As recently as last year, forecasters said it would take us until 2017 to cut the Unemployment Rate to 6. 1 . Weve gotten there three years in advance. Growth has picked up. Consumer spending actually was part of that growth pickup in the Second Quarter. So we have a lot of challenges. Theres no doubt about that. But to me it looks like things are moving in the right direction and moving a bit faster. The naysayers would say if you look at the Unemployment Rate the reason weve got there is the Participation Rate has been lousy. You could argue a bunch of reasons why the Participation Rate has dropped. One thing the Obama Administration has been hammering home is the inequality gap. The difference between the haves and have nots. The richer people have done the best over the past years. I dont comment on the feds policies one way or the other. Is that a yes . But if youre trying to look at the causes of inequality, i dont think Monetary Policy is a general economic matter that has a lot to do with it. I think there are a lot of forces that have led to a buildup in inequality. Its happened over the last several decades. But to solve it, we also want more growth. We want to grow the economy faster. Thatll help wages rise. We want to connect people with those wage gains. Corporate tax reform for more growth to a higher minimum wage. You cant blame the fed for the way that assets have been allocated among the general population. But once the asset owners already have it and then the fed, you know, goes through the last five years of sort of asset boosting, you cant help but point to well maybe they got the assets in a different way. But certainly the fed, the owners of the assets have done well because of fed policies. Right . You know, again, youre not going to get me to comment on the fed. I know. Im not saying thats how the distributions got skewed on who owns thes s assets. But certainly asset owners have been rewarded handily by the fed action over the last five years. If you bought the s p when barack Obama Took Office and sold it yesterday, youd be up over 100 . I think a whole bunch of things have gone into that increase. A lot of it being a sign of the strengthening you didnt answer the question then. Im going to put it in a different context. Okay. Another attempt to find out becky asked you to grade the economy. If you were to try to ascribe credit to the success, lets just suggest, of where the economy is today over the past, say, six years and you would say theres politics and policy issues, theres the fed, theres global i mean, i dont know how would you sort of break down the credit that you would ascribe to where were at today . Its a buildup of credit as you mentioned. Kudos credit is what youre talking about. Some things trying to put in a positive framing. Some things we can quantify. You can look at the recovery act in 2009. We came back and did about 12 subsequent jobs actions whether it was a payroll tax cut, tax incentives to invest in infrastructure, tax incentives to hire. And add all of that up and you see millions of jobs, several Percentage Points of gdp sustained over a coupleyear period. Harder to quantify is if you add in what was done in the financial rescue, what was done in the housing sector, and Monetary Policy. But you had blinder say the Unemployment Rate would have gotten to 15 without that full set of actions. Instead it rose to 10 and has come back down to 6. 1 . With all that no one would say weve had a gang busters recovery from that recession. I mean, we finally got back to the same number of jobs that we had prior to it five years later. And were almost were not much above where we were five years ago. So its not like right. And thats with all of what you said and the fed. And we only get here. Yeah. Look. When Ronald Reagan was president at his i always nod my head. When someone says that, i do this, jason. The unemployment was around 6. 1 . The same place it is right now. Pick up on this what i think joes getting at here which is this idea that its the policies of the Obama Administration that have been bad for business, that have kept this recovery despite a massive amount of monetary stimulus, that have kept this recovery from giving us the expansion that everyone expected on the backside of a massive decline. Actually, thats not what i said. Maybe its the depth of the financial crisis that destroyed so much demand that made it much more difficult. Because it wasnt a normal recession caused by the fed raises rates and then but i think thats out there. These ideas thats definitely part of the story. Regulatory policies. You know what . I would say its not what the administration has done. Its what the administration hasnt done. Thats where i saw in the notes you said the president has been the biggest proponent of tax reform. And you noted that he said it in his state of the Union Address as somehow indicating that its really a priority of his. Well, it clearly hasnt been. I completely disagree. First of all, look at Business Investment. We talked about the stock market up 148 . 20 quarters since the recession ended, its up. Business investment was up 28 . My only point is but when the president wants something no, no. But when the president wants Something Like remember the american jobs act . Every week hed appear with people standing behind him and talk about that. Minimum wage, which affects how many people in this country . 28 million. Thats a lot. Okay. 2. 9 . Some of them are working second jobs or college kids. Whether that helps that much, i dont know. But every week hes got people standing behind him. Hes pushing it. Hes never done that type of rollout for Corporate Tax reform. Do you know what the biggest investment incentive weve done through the tax code in this countrys history . It was 100 expensing. The president proposed it in september 2010. He signed it into law in december 2010. Republicans went along with that, right . Oh, republicans did go along with it. It was his proposal. So it is possible. We worked together to do it. And that was, you know, one of the examples of ways in which we thought that we wanted to increase Business Investment and it worked. But were not going to do corporate in his administration in his last two years, were not going to to do it. We could have been working on it for six years. Do you think raising the minimum wage would do more to jump start the economy than getting rid of this weird nonterritorial tax structure and not bringing our Corporate Tax rate down to a more productive i dont think its either or. I think its both. I think that would be much more than raising i think hes asking which would have a greater impact . You dont want to make me choose between two of my favorite children. In terms of overall impact, if you were to measure the overall impact over ten years, do you think theyre comparable . If you asked in terms of Economic Growth . Yeah. In the long run its primarily a policy thats about more wages. If you ask me which is going to grow the economy more over ten years, Corporate Tax reform. Which is going to generate direct benefits for 28 million American Workers . Minimum wage. Is your contention that we dont have an investment problem when you say were up 28 doing better than the Prior Administration . I think we can always do better. But given the amount of cash on the Balance Sheets of these companies, when you look at comparable when you look at comparable growth stories after recovery stories, i dont think you had companies sitting on this kind of cash with this kind of profit. So when you say theyre investing, the word is relative. I think some of thats been demand. And you had an economy where we had such a massive shock in the financial crisis that its taken a long time to work that off, the deleveraging process is a long one. What zudo you think is holdi back the investment . I think demand is a decent part of it. I think part of it was investment overhang we had going into the crisis that takes a long time to work itself off. And you have seen investment growing faster in the past year than it did in the couple years before that. Youve got a couple years left. And you do love Corporate Tax reform. And now that we know you love it, were counting on you then. If youre saying it might happen in the next two years, i hope youve got some broad shoulders. Do you have a card . An email . Will you give me his email . Ill give you his email. And you can email him. Ill do the minimum wage if you do Corporate Tax reform. Nobodies trying to do this with both sides. Thats the problem. The president put that out. He said lets make an American Economy more competitive. He hears from Business Leaders all the time. Two things they want. I think this is a peace move. Jason, well talk more about why that hasnt happened in washington yet. What the road blocks are. Again kwb jason is with us for the rest of the program steve, well see you in a little bit. Still to come, the king of inversions, Warren Buffett. Kidding. He did that on burger king. Calling on congress to do something to curb tax inversions. Really . Is that what hes doing now . All right. Were going to ask the president s man on the economy what theyre prepared to do. Plus darden posting earnings. Says its performance is improving, but it acknowledges theres still work to be done. The street reaction is next. 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. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. Today theres a new way to work. And its made with ibm. Could mean less waiting for things like security backups and file downloads youd take that test, right . What are you waiting for . You could literally be done with the test by now. Now you could have done it twice. This is awkward. Go to comcastbusiness. Com checkyourspeed. If we cant offer faster speeds or save you money well give you 150. Comcast business built for business. Welcome back to squawk box this morning. Ebay will begin to run ads on its mobile app some time in the next few months. Ebay is hoping to take advantage of heavy usage of that app. Ebay users spend 150 minutes per month using the mobile app. Those times are three times more than its nearest rival. Darden restaurants reporting results just moments ago. Earning 32 cents a share 1 cent above estimates. Joining us now is morningstar. Where is this company right now . Theyve got new management at this point. Is this a time when the situation is improving given the economic backdrop and people should buy this . Id be cautious of this name. I think what youve got going on, youve seen improvement of the core in olive garden. Weve seen a shift in the industry. I think theyve eroded the Pricing Power the chains have had. I think to stay competitive theyre going to have to price. Id steer clear of this one. I think its an improving story, but theres a lot of caution still out there. I think the way you talk, no ones going to mcdonalds. No ones going to this. Everyones at chipotle . I think weve seen gravitation from both sides. Quick service restaurants, fast casual. They see more and more families that traditionally would have gone to casual dining go to fast casual as well. Youve seen both sides try to emulate that and copy the fast casual. For the casual dining guys that means cutting prices and margins. So how does a company like this that is doing its best just to operate its Olive Gardens as well as it can and marketing and everything. But when theres demographic shifts in consumer taste, whats it supposed to do . I think theyre doing some smart things. Use of tablets of the restaurants, you have tackon orders, takeout orders. Some of the secondary brands are interesting. Things like seasons 52. I think that can attract a wider audience and maybe get them to an audience they never had before. I think thats how you start to build this into a viable longterm story. So you diversify away from olive garden. Is there a way to fix the core olive garden experience . I think it really is critical on just driving a lot of traffic. I think theyre looking at other ways but i do think right now its going to be very tough to get back to 9 , 10 operating margins. I think youre looking at more between 6 and 8 over the next couple years. Whyd that get squeezed so much . Mainly on the pricing. I dont think they had had the Pricing Power they once had. Used to be able to charge on an average ticket. As high as 15. Thats gone away. Thats not an option for this company in my mind. Were even making it out to be a zero sum game. If it is, i dont know who the winners are. You cant okay. Panera, chipotle, who else is replacing fast casual and fast . I think weve seen a lot of players that arent publicly traded to. A lot of small chains under 50 units. I think weve also seen an emergent class of fast casual. I think that could be very dangerous for the traditional casual dining guys. But also might give them a blueprint to look at with less wait staff and operate smaller boxes. Something like that. A higher velocity model might do something for an olive garden, other casual dining players to explore. You know carbs havent helped either. The neverendsing pasta pass. All you can eat for seven weeks. Val kilmer, i think, actually had been seen in that line. Not always you can really tell it was him. But all you can eat for 99 in the never ending pasta pass for seven weeks. Anyway, rj, i dont know what they should do. Clarence is gone. Its a changing world. I appreciate it. Happy friday. You too. And guess what . Tgif today. It is today. Are those still around . They are still around. They have alcohol though. A lot of people go because it used to be a scene. Used to be a scene. When we come back this morning, one of our platinum Portfolio Managers is adding a new pick. Plus a scary moment for one of baseballs young superstars. But the beating wasnt the end of the story. Well have more on squawk next. Aflac and a gentle wavelike motion. Aahhh ahhhhhh. Liberate your spine, ahhhahhhhhh aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. Find out how fast aflac can pay you, at aflac. Com. No. Not exactly. To attain success, one must project success. Thats why we use fedex one rate. Their flat rate shipping. Exactly. It makes us look topnotch but we know its affordable. [ garage door opening ] [ sighs ] honey, havent i asked you to please use the we dont have a reception entrance. [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. [ male announcer ] ship a pak via Fedex Express saver® big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. In squawk box sports news. We showed you this scary video earlier of Giancarlo Stanton hit by a pitch last night. Based on the reaction, it seemed like he didnt mean it. Stanton was taken off the field on a stretcher. Then reed johnson was hit in the hand by the next pitch. That triggered a bench clearing. Wow. Nobody tries to youre trying to back the guy out. He didnt mean it by throwing that close. It happened anyway. And then the next guy got hit too . Yeah. Yeah. Well, thats a little bit of a melee. Coming up next when we return, the president trumping the energy. Were going to talk about it. Plus our platinum Portfolio Manager says now is not the time to let it go when it comes to shares of disney. I can listen to this song every day in my household. We love olaf. More when squawk box returns. 24 7 its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. So i get invited to quite a few family gatherings. Heck, i saved judith here a fortune with discounts like safe driver, multicar, paperless. You make a mighty fine missus, mlady. Im not saying marks thrifty. Lets just say, i saved him 519, and it certainly didnt go toward that ring. Am i right . [ laughs ] [ dance music playing ] so visit progressive. Com today. I call this one the robox. Can you start tomorrow . Tomorrow were booked solid. We close on the house tomorrow. Tomorrow we go live. Its a day full of promise. And often, that day arrives by train. Big day today . Even bigger one tomorrow. Csx. How tomorrow moves. Welcome back to squawk box, everybody. Among the stories front and center this morning, carl icahns son deciding to stay with his billionaire fathers firm. Brett icahn scrapping plans to start his own hedge fund. Icahn has credited his son for some of his best stock picks in the past including netflix. Is cash king again . Moving into money market funds. The people are pulling out of domestic equity funds while also buying stocks overseas. Again the futures this morning have been indicated relatively flat. Well see what happens as we get retail sales and some other data as we move towards the opening of trading. The line from the kenny rogers song is youve got to know when to hold them and when to fold them. Selling her topperforming stock. Sara malek joins us now with more. You had joined us with three picks back on may 30th. Our viewers follow you closely, some of you try to mirror what youre doing. You are swapping your top pick. The largest return up 30 since then. Disney is up 7 . And your last pick marriott is up 18 . But today youre sticking with disney and marriott and rolling gilead to the side. We are. And youre taking honeywell. We are. We still like gilead over the long run and the buyer tech sector. But given the price appreciation, we think theres more attractive opportunities in Companies Like honeywell. We think all is well at honeywell. Theyre doing a sweet job of producing ooh, sweet. You got all that. Keep going. Their relentless focus on productivity. They also have a great global mix of business with 23 of sales to europe and 15 of sales to the emerging markets. Because of their focus on productivity they can almost double earnings by 2018. We dont give out actual price targets but we think there is nice upside. Weve owned it for a long time. We think its a holding for a portfolio. Youre swapping it out. But youre sticking with disney and florozen. We teased it should you let it go. Weve got elsa and anna and olaf. We dont think its time to let it go. Following up the blockbuster that was frozen they came out with guardians of the galaxy which did 500 million at the box office. We have captain america, avengers coming out. Lets talk marriott. Earlier this week marriott made some major announcements of what they think their business is going to be like and major investments. Theyre going to be spending a lot of money. Uhhuh. Well, marriott has a strong cash flow story. They are still returning cash to shareholders. They bought back 700 million in stock year to date. And the hotel sector looks great. We have low supply growth, high occupancy rates. We think theres room at the end. You happy with all those . Im just reading yeah. Yeah, im happy with those. I dont know about gilead. You were a gilead fan. Whats the market cap now . Its almost as big as merck. Clarify one thing for us. Is it overvalued . We think that gilead still has a lot of strong fundamentals and catalysts ahead of it including approval of oral hepc drug coming out. 160 billion. Theres there with a major pharmaceutical company. You know why. Rumsfeld. We talked about that the other day. Yes. Some kind of conspiracy there. Thanks for joining us. Theres always people who piggyback on these trades. Exactly. Thats why we do this. Well have you back and see whether you should have swapped out on gilead for honeywell. Lets get back to our guest host, jason furman. Chairman of the council of economic advisers. The president s job is not just the economy, jason. And given recent developments and watching the speech the other night, can you tell us whether theres can you see a little more back burner type at this point . Is there any indication that maybe hes got a lot on his plate. That maybe when you call him now and say i want to talk about something economicwise, he might say im sorry im meeting with my syria or ukraine people . I think probably like every president hes got to multitask. We talked to him about Economic Issues this week at the same time he was dealing with his National Security issues. Hes youll see him out there talking about Economic Issues. Youll see him continuing to push thats kind of theres no rest there. Youd think he feels like talking about the economy at this point given i find it amazing he can walk out of life and death decisions and walk into another room where were talking about trying to improve college and make it more affordable and hes just as focused on that. But thats what he does. So you at this point, i mean, no ones perfect in terms of being able to allocate time. I just would imagine that maybe some of the stuff might not become, you know, as pressing as it was three months ago before everything happened. Do you know, one thing he alws tells us is you stay focused on your job. Im not going to meetings on our policies related to isil. Im continuing to focus on the economy. He expects us to continue to do our jobs. Its not like weve done a lot anyway with congress. If you could give us an idea of the next couple years that remain. What are the priorities . What can get done . What would you like to get done in the next couple years . Weve talked about some of it. Investing in our infrastructure. You always have that on there. You never get it. Well, we got an extension. Both parties think we should do it and theres no rewe cant do it. We talked about Business Tax Reform, talked about raising the minimum wage. Immigration reform is something the president is going to act on on his own. Hes made that clear. Just like he did when it came to climate and the emissions of our power plants. So where he cant get congress to act, youll continue to see him finding places where he can act. Were going to talk about tax inversions in the next in the next segment, right. But when you say tax reform, when you think about the way to get it done, there was doddfrank that was kind of written in the treasury and made its way over to congress. Are you going to write a tax reform bill and send it to congress . We put out a tax reform framework, did it at the beginning of 2012. It called for 28 rate. It talked in a lot of detail about the number of ways youd pay for that rate. The way youd overhaul the International System to have a hybrid thats more competitive. And the cut and simplified taxes for small businesses. We put out a lot of detail and importantly hes put out his mantra behind it. But youve been criticized for not putting out a bill. Thats been where the criticism has been. I dont think thats the issue. I think the people know exactly where were coming from. And its just a matter of taking the time and effort to do it rather than, you know, 50 votes to repeal obamacare or other waste of time like that. I think were going to have a deeper dive here on tax inversions in the next segment. In fact, up next, Warren Buffett and senator orrin hatch talking about tax inversions. The Administration Says its working on something, but can anything get done before more companies leave the United States . Plus living offline. Is the latest sign the days of being unconnected are over . Well plug into that after squawk box returns. H startup. An Unprecedented Program that partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. See how startupny can help your business grow at startup. Ny. Gov in a we believe outshining the competition tomorrow requires 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. Whenwork with equity experts who work with regional experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. Welcome back, everybody. Senator orrin hatch says he spoke with Warren Buffett recently about tax inversions. Joining us now to tell us what the administration is planning to do is our guest host jason furman. Also joining us tony fratto. Jason, this has been a huge issue. Its one that has stirred up a lot of controversy on both sides of the table. What is the administration going to do next . First of all, lets understand why these inversions happen. They happen for three reasons. One, our tax law is very permissive about the address you have for tax purposes. You buy a Smaller Company in another company, youre allowed to change your address. Two, our tax structure isnt attractive enough for companies to be here in the United States as it should be. And three, our Tax Structure Makes it too easy for you to ship your profits overseas, not pay u. S. Taxes on them. Ideally and we do pay a much higher rate. Thats number two. The United States needs to be more attractive. You just said you ship them off shore because you dont want to pay profits here. But the profits are less there. If they were more there, you wouldnt ship them over. Ideally well be dealing with all three of these. You look at the leading republican proposal for tax reform is 25 rate. Thats still higher than a lot of nations arounded the world. We wnt compete with a rate of 0 . We are going to need to do something of people locating overseas to pay lower taxes. Even as we make our tax code more attractive. Wed love to do all of that. Congress was unable to do all of that. We want to legislate just on inversions. Congress looks incapable of doing that. The treasury is reviewing the set of options it has. What do those options look like . Thats something that youll have to hear from the treasury. Its something that theyre reviewing right now. But theyre very close to a decision. You cant speak to any of just at least explaining what theyre thinking about . I can explain the general issue is one, the tax code is too pervasive about your address. And even the options that the white house would have to unilaterally end these inversions at least on a temporary basis. Right. Its the treasury thats working on these options. And i dont i wouldnt want to get ahead of them. You cant compete with zero if you go to zero. You can compete with zero if you go to zero. But youre not worried about our deficit . Its 10 of we can make up the 10 other places. And the Additional Capital inflows and the number of jobs that would be created here and all the positive things that would happen from that just doesnt work. The math doesnt add up. Itll work if you tax the individuals that are you dont want to deal with one issue and then make your long run deficit a lot worse. Theres a lot of scope here. And the business community, by the way, is broadly united around the idea of a 25 rate. Weve proposed a 28 rate. This is something that we can do. Can we go to zero, fratto . Why cant we go to zero . Id love to go to zero. Ive always felt that the best way to tax is to tax people and not if you think about the cost of people talk about the cost of tax inversions or tax avoidance. And i think the cost of Tax Compliance which is outrageously expensive for a lot of firms right now. A lot of these efforts that are populous in nature right now, they dont get at the real problem which is we have this really inefficient system. And trying to create a berlin wall around the United States and keeping companies in here and demonizing the companies who have to compete globally isnt the way to do it. We have to make this system just a lot more efficient so these companies can compete. This isnt a radical idea. I dont think its demonization. You look a decade ago and it was a bipartisan consensus we needed to deal with this issue. A month before the election in 2004, Congress Overwhelmingly passed and president obama signs antiinversion legislation and people are using similar language to now. Jason, im not saying its partisan. I said populist. You noted the date correctly. It was right before an election. And there was a lot of attacks on u. S. Corporations for, you know, for some of the tax avoidance efforts they were doing. And nothing has changed since then. Actually, thats one of my points is we shouldnt even if we wanted to do something about inversions, doing it as a one off kind of effort isnt the way to deal with it. We have to deal with it in more comprehensive way. We are not able to get comprehensive tax reform. That was one of the reasons. Jason, one of the things that concerns me the most is what it means for competitiveness. Not just on inversions but companies here look much more attractive to companies overseas. If they come in and buy a company, theyre dealing with not having to play by the same rules. And it worries me that American Companies are going to get picked off by foreign competitors. How do we stop that . Theres no debate i think among of us that the best thing to do here would be a broader Business Tax Reform. Treasury cant do a broader Business Tax Reform under its administrative authority. Treasury can do something about this problem. Doing something about this problem would put us in a better position to reform our tax code. Wed have a more robust tax base when it comes around to reform. I also think this isnt just about the money we lose, and we lose a lot of money through this. Its also about inefficiency. Do you want our businesses spending their time figuring out companies that may or may not make sense to merge with just to save money on their taxes . Wed rather our businesses spend time about innovation and growth. The problem with loopholes in the tax code is they lead to too much tax planning. But i did doing a oneoff solution like this, a bandaid solution, does it make it much more difficult to get both sides to come to the table to agree to an overall comprehensive tax code . I think it puts us in a better posit to reform the tax code. I very much disagree. These oneoff efforts make it very difficult to cobble together the kind of coalitions you need to do comprehensive reform. I would love to see comprehensive tax reform including Corporate Tax reform, but the administrations opposition to territoriality is the biggest obstacle to that. You know, its profits are taxed no matter where you earn them. Not just the United States. Why not give up on the territorial issue . We support lets understand the system we have today. We have a hybrid International Tax system. But its a pretty stupid one. We pretend to tax you, but in fact most Companies Keep reinvesting overseas so we end up not taxing you. And the money stays over there. We have a territorial system today but its stupid. The reason theyre leaving it over to wed like to move to a hybrid system. It would have a minimum tax. And the reason you want to have that is one, you want to make sure your base isnt getting eroded. Because when your base is getting eroded that means you need higher tax rates on companies here in the United States. And that hurts things. And number two, you want a tax thats more neutral. Are Companies Going to locate here in the United States or overseas . Wed like taxes not to be a consideration there. Right now they are and theyre pushing overseas. A territorial system makes it more tax advantage to invest overseas than here in the United States. Wed like more neutrality between the two of those. You want have zero tax if you invest overseas and a higher tax in the United States . I dont think that makes economic sense. We do want our companies to be globally competitive. We want them to succeed around the world. We can do it a lot smarter than we do it right now. The overwhelming number of companies all the other countries japan has a minimum tax. A number of European Companies when you look at the number of companies not investing overseas as a tax avoidance scheme. Theyre taxing overseas to get closer to customers. I completely agree with that. We want to encourage that type of investment overseas but some of it is for tax reasons. Thats what we dont want. But overwhelmingly its for business reasons. There are occasional reasons that might be for tax reasons, but overwhelmingly its for business reasons. And we shouldnt penalize those companies for doing that. When siemens does it here in the United States, they get mentioned in the state of the Union Address. This isnt a bad thing to see them being competitive. I completely agree with you and you want a tax system that respects that. But at the same time protects your tax base. Even dave camp has a hybrid tax system that takes seriously the fact that you dont want to make it easy for companies to locate profit and production overseas when it would be more economically efficient to be here in the United States. Thats the conversation we need to have. Itll be a long conversation. I think we have a couple years ahead of us. We will continue that conversation. Tony, thank you. Youre going to be sticking around for a bit longer. Coming up, president obama is calling on congress to raise the National Minimum wage but others call the idea a job killer. Top white house adviser jason furman makes the pitch when we come back. Take a look at futures right now. We have green arrows. The dow looking 14 points higher. We are back in a moment. Whenwork with equity experts who work with regional experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. Take a look at the stocks to watch this morning. Netfl netflix upgraded to equal weight from underweight. The gains have been smaller than peer groups. And now more balanced. Shares of conversant. Its being acquired by cash and stock. About im sorry 2. 3 billion. President obamas made it clear he will continue to push for an increase for minimum wage. He wanted to do a 10. 10 per hour to take effect next year. Jason furman is chairman of president obamas council of economic advisers. Jason, as you know, mr. Kernen i dont know where becky stands on minimum wage. I feel like youre in the middle on that. I can guess where joe is. When you think about i said id give it to you if you do Corporate Tax reform. Truly add to the Economic Prosperity of the country. Where does minimum wage really rank . 28 Million People would get a raise if we raised the minimum wage. President first called for it in the state of the union in 2013. Since then youve seen numerous states and cities pass increases. Because of those that have already passed, 7 Million People are getting a raise. You get another 21 million with federal legislation. To me thats a big deal. Right. Youre an economist so challenge is a big one. We have to do a lot of things. How far can you go with it, do you think . Before a Business Owner says thats one employee too many for me now. Im very comfortable at 10. 10. I think its within the range of types of increases that economists have studied in the past. Youve done models for the president. What does it look like . The curve. I think where we are right now, its somewhere between a zero and very small impact of raising the minimum wage. And a number of unemployment. In some ways in the short run it will help because that additional demand and purchasing power from those consumers in the economy right now which you were talking before about Business Investment. One Thing Holding back Business Investment has been from a policy perspective why not let the states do it . I think the states have a role. And were encouraging them to do it. Businesses have a role. The federal government as you said is playing its part by raising wages. But, you know, ultimately this has worked well at the federal level setting a basic floor for a country. We think the idea of 20,000 a year doesnt seem like a princely sum. But 22,000, if there was a way to create jobs where people make 80, 90, and 150,000. Thats where we want to get. We dont want to take the very lowest levels of compensation and raise them by 8 . I think we want to do both. We make sure we dont hurt the other you saw that well, there was a study you saw the study that the 28 million get the raise, there was a study that maybe 500,000 whatever, their salary goes from whatever theyre making now to zero or there arent jobs created. There are arguments on both sides. And it seems like were just dancing around the edges again. Were talking about a lot of people where they may have a second job. They may be just getting into the workforce and theyre 19 years old and theyre eventually going to be a manager of wherever it is. I mean, it doesnt seem like the big to be talking about it every week when weve got these other big problems, i mean, it just seems like we have an election coming up. Its always popular, jason. Its popular for a reason. Because i think it makes sense to people. But its not going to solve the big problem. If you work fulltime year round, you shouldnt have to raise your children in poverty at 7. 25 an hour. In general wage price controls dont make sense. Im going to take you both to lunch and we will try to hash this out. But thank you for being here. Steve, thank you very bringing him. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab 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. Its in this spirit that ingu u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. I make a lot of purchases foand i get ass. Lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Being online all the time. Is the apple watch the beginning of how wearables will change our lives . Whats keeping the consumer up at night . Isis. Oil prices. Interest rates and more. A look at the key drivers for shoppers. Plus retail sales data. And bobby bacala talks business. 25,000 cash. Actor steve shripa talks as the final hour of squawk box begins right now. Welcome back to squawk box right here on cnbc. First in business worldwide. Im Andrew Ross Sorkin along with joe kernen and becky quick. Say it aint snow. The earliest snowfall for this area since 1888. Find out where in just a bit. In headlines at this hour, yahoo says the u. S. Government threatened to fine it each day until it turned over data to intelligence agencies. The company lost the fight. Tech experts say this paved the way for the governments prism Surveillance Program. Jpmorgan says it has not seen unusual customer fraud related to a recent cyber attack on the bank. The bank making the comments in a new s. E. C. Filing. And crocs accused by monopolizing behavior. Saying they sue smaller competitors and puts them out of business. Smaller competitors who are knocking them off, im wondering . Theres a lot of people trying to knock off crocs. I have you know, i wear those dorky crocs that are youve seen mine. Theyre like canvas with white soles. I get endless grief from everyone in my family. But i dont care. Were going to get a better read on it was a show on. I remember. Gilligans island. Yes. Used to wear the bucket top. My little buddy. Thats right. Someone said that in my ear. Are you the professor . Who are you . I think i want to be the skipper. Youre the skipper. Okay. Anyway, the question is, is becky ginger or mary ann . You have the best combinations of both. Thank you. Youre welcome. We know who you are, i think, what was his name . Mr. Howe. I guess retail sales are going to hit in less than 30 minutes. Lets get more on the markets ahead of those numbers. Joining us now, were going to squeeze him into the gilligan. Richard bernstein, ceo of Richard Bernstein advisers and a cnbc contributor. Never had a middle name until he got his squawk box middle name. A rich, you still think its a fairly friendly overall environment. You see there are some drum beats of overvaluation and impending disaster that you see on you know, on websites that maybe make a living being more sensational. But is there something wicked this way coming . Or its pretty good still . Well, you know, i mean, first of all, i think when you talk about valuation, one has to consider what is the correct valuation when you have 1. 5 to 2 inflation here in the United States. The pc deflators about 1. 6 had inflation about 2. What is the right multiple . And our models seem to say given the rate of inflation right now, were roughly at fair value which also fits our notion of being in a midcycle environment. In the early cycle, youre undervalued. Midcycle youre fair valued. To answer your question more explicitly, i think if youre looking for a recipe for disaster, what you want is deteriorating fundamentals and a drying up not a reduction a drying up of liquidity nap is a recipe for a bear market. Neither of those things are actually happening right now. No, theyre not. Jeff, youve been on and i try to remember each thing you said. We have not had the correction, and i think you thought we might at least the games might slow down to some extent. Do you think weve been through a rolling correction where we can move out of this trading at some point soon . Or do we need to shake out the complacency at some point . Its an interesting question. We pursed our Research Universe of over a thousand companies. And found the stock in Raymond James research is down 23. 3 . Now, our sweet spot is small midcaps. I have been i think were in a secular market. Markets have grown by 6. 15 per year since 1989 on average. If you extrapolate that out to 2020, you come up with 183. 36 as an earnings estimate. The medium historic multiple on that, youve got 2 842. I think these pullbacks are noise. Do either one of you gentlemen worry about the notion it cant get better than this in terms of Profit Margins and profitability . Have we squeezed everything out . Margins have been extraordinarily wide. We all know that. I think Everybody Knows that. So one would have to wonder if thats in the market already. But number two, remember profitability is a function of two variables. Its margins but also the number of units sold. And whats unfathomable to people is that margins might contract, but as the cycle begins to mature, you might actually sell more units. So overall, profitability might not be as much a risk. Okay. So thats the Revenue Growth we finally get thats been missing for years. Jeff, true . Im on the same view. I dont think theyll regress to the mean. They dont expand from here, but i think they continue to stay wide for a multiplicity of reasons. A lot of the ceos i talk to, they like their gadgets. To support the new gage fetes they tell them we need to buy new servers. And they say we can outsource this to the cloud. I think that allows you to save a lot of money on i. T. I think it implies that margins are going to stay wider than most people think. All right. So rich, instead of just big caps, what are you dont have individual names. I mean, do you buy stocks yourself . Can you tell us what is in your own portfolio . Im not going to tell you what i invest in personally, but i will tell you what our funds are focused on. Thats easy. We still like small and midcap industrials. Jeff and i have probably been the two biggest cheerleaders for the industrial theme. These companies are gaining market share. Again, how many units are you selling . Small and midcap industrials are gaining market share. I have to be honest with you, a lot of the small cap universe has gotten pretty expensive. Whats interesting is if you want sensitivity to the market, youll find beta is actually very cheap within the s p 500. You know, if you go to what you call the disrupter stocks or if you go to a lot of small caps, youll find valuations that are quite stretched, in some cases ridiculously stretched. But large cap is ridiculously cheap. Jeff, last word. Quickly. The one thing you need to know is is were in a secular bull market. Thats the only thing you need to know. I like it when some of these websites say Financial Experts say were in for a huge crash and stuff and then people ask me about that still. And as long as they keep asking, it makes you think maybe well hang out a little longer. Exactly. All right. Thanks, rich and jeff. You bet. When we come back, is the apple watch just the start of how wearable tech will change your life . A look at our completely connected lives right after the break. Later, whats going to be the key driver for consumers for the rest of the year . Is it cheap gas . Cheap money . Or fears about isis . A pulse check on spending when squawk box returns. The world has gotten you far, 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. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. That corporate trial by fire when every slacker gets his due. And yet, theres someone around the office who hasnt had a Performance Review in a while. Someone whose poor performance is slowing down the entire organization. Im looking at you phone company dsl. Go to comcastbusiness. Com checkyourspeed. If we cant offer faster speeds or save you money well give you 150. Comcast business built for business. Live shot of the windy city there, chicago. Apple customers can take their First Step Towards owning the new iphone 6. That can happen today. Check out, though, time cover story called never offline. Its pegged to the release of the apple watch and the idea that putting such powerful technology on our wrist is going to literally handcuff us to our computers. Here to tell us how wearables will change our lives, time editor matt vella. Good morning to you. Good morning. Let me start with this. Im going to look at joe for a second. Joe is not a fan of this watch. Doesnt think he wants this watch and is not so convinced ta the rest of the world is going to want one either. You say that we are on a steady march towards every one of us wearing something. Thats right. You know, a lot of people have tried to do some kind of Wearable Technology and most have failed up to this point. This is really the first time that youve seen one of these devices that you could imagine people wanting and a lot of people wanting. And to you its clear that this is the Tipping Point. Is it possible this isnt the Tipping Point but in the future we do get there . But theres several it rations before it becomes a mainstream product . Tim cook said he felt they were finally at the beginning of something new during his presentation this week. And whether or not this particular model is an offthechart hit or not, its pretty clear that theres a new platform here and that apple really has a new line of business. But people continue to ask the question, what is the killer app . Meaning if im going to wear this on my wrist, what am i going to get for it . Hows it going to change my life . You know, people said the exact same thing about the iphone. They said why would i want to read the internet on my phone . I dont think many of us could imagine life without that now. You know, the nice thing about the watch is that it does all the things your phone does, but theyve added little features. Being able to send each other snapchatlike messages. Theres a lot there that, you know, makes it feel special especially compared to but you need your phone. You have to carry both, right . The other night i watched someone say i can feel her heart beat in my phone. Its like i mean in my watch. So somebodys wearing a watch and somebody elses heart beat was and its like, i had a good idea her heart was beating. I didnt understand it. Why is that something, matt, that id want to do . I mean, its you know, its these little touch points that apple puts into its products that make them feel a little bit special. I mean, you know, they are a little gimmicky. They are a little, you know, flashy. If i could do the phone if i didnt need to carry the iphone around and i could do or even just text. If i could text people to phone numbers on my watch without carrying the phone around, that way you could go somewhere where you dont want to carry the phone. But you have to have both, dont you . Yeah, you do. So theyll get to that though. Then i might change my mind. Yeah. I think this is the first step down a long process. If you think back to the first iphone, its practically archaic compared to what we have now in terms of speed and capability. The first one didnt even have apps. So this is the beginning of a long process for apple and for all the tech companies. But this is the sort of first one. What kind of watch do you have on, matt . I have a jawbone. It doesnt even have a watch face. It tracks my movements. I wear a jawbone too, but in terms of battery life, yo i can wear it for a week. Are you not concerned that this watch, youre going to have to take it off every day and probably while youre sleeping charge it . Absolutely. The battery life is probably the biggest, you know, unanswered question mark. They kind of hedged that during their presentation. The people who were showing them to us out here didnt really want to talk about that very much. You know, it will get better. You know, they will sell 10 million, 20 million of them and the technology will get a lot better. Theres already reports this morning of what the Second Generation is going to be able to do that the first generation cant. Tell us about that. Well, you know, i think a couple months ago the wall street journal reported it would have ten sensors and it never really said whether that was the first generation or the Second Generation. But you can see, you know, talking to the people at apple, you can see they believe theyve got an iphonelike innovation on their hands and it will continue to get better. It will continue to improve as long as people buy them. Your article did a beautiful job of laying out all the corporations of the companies that have tried to do this in the past, how no ones been successful. Why is it you think apple will be successful, why they will be able to sell 10 million to 20 million . This is what they do. This is the what apples success has been built on. Its been a process of looking at places where you have technological carrying whether its tablets or smartphones which had sort of practically died by the time the iphone came out. They looked at what didnt work, what didnt click. And they dont do that. They do what they think will work. Matt, will we carry devices five years from now or just be wearing all of it . Google glass and watches and who knows what. Will a phone disappear . The actual handhe would device . Its hard to say. I dont know if itll be five years, but i think thats coming. I dont know that itll be a google glass kind of situation. But the thing thats really striking about this watch is that it doesnt look like a piece of technology. It really looks like a you know, a piece of fashion and accessory. A piece of jewelry. And i think thats the key difference here. And thats why itll probably start to take off now. Matt vella at time magazine, thanks so much. Check out the cover story today. Todays big apple rollout started just a few hours ago. Demand seemed to overwhelm the system a little bit. Josh lipton joins us with that and the prices coming in. A huge ad today from at t talking about how you can buy any iphone for 0 down and get 200 off an ipad to boot. Yeah, becky. We are seeing these reports that, you know, apple, sprint, tmobile were suffering problems because of the demands for the preorders. The phones are bigger, theyre fa faster, better camera. And financial analysts who are covering apple are expecting very Strong Demand for these next generation phones. I think if you look at the market theyre going after, the bigger screen samsungs, it has a different feel to it. I think the thinnest and the battery life, the combination of all three of those are going to power this product cycle. Apple priced the iphone 6 starting at 199. Larger 6 plus at 299. But some are looking to get you a better deal. So walmart, for example, will sell the iphone 6 starting at 179 on a twoyear contract. Iphone 6 plus for 279. Carriers are offering trade ins to attract customers. So verizon, 300 credit card when you trade in your phone and purchase a new one. For its part starting today, at t is letting customers get up to 300. Credit they can use to pay off a bill. Tmobile is offering customers the best price for a trade in. If they can find a better offer from a carrier, they will beat the offer, give them the difference back, and top it off with another 50 bucks. Not to be outdone, sprint is offering what its calling its iphone for life plan. So for 70 a month, users lease the iphone 6 and then upgrade to a new version every two years. Starting next week on september 19th, these iphones are available for purchase. And analysts saying they think apple could sell 10 million phones that first week. And that would be a new record. And actually, 1 million more than when the 5s and 5c went on sale last year. Before you go, i got to buy one today. Is the iphone 6 plus, is it too much phone . Thats all i need to know. Youve played with this thing . You know, its going to be i guess up to you, andrew. Youve got two choice. 4. 7, 5. 5. Depends what youre looking for from the new phone. Obviously a lot of people there today on this preorder looking to pick up that new phone. Even reportedly overwhelming some systems in the effort. Okay. Josh, thank you. Appreciate it very much. I dont know what im going to do. Coming up, hot stuff. A spectacular display of natures raw power. Volcano. And its only september, but the flakes are flying. Find out where after the break. Dad,thank you mom for said this oftprotecting my future. You. Thank you for being my hero and my dad. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance could 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. Welcome back to squawk box, everyone. Some dramatic images from an erupting volcano in iceland. It continues to send plumes and lava out into the surrounding glacier. And at home its beginning to look a lot like christmas in september. Heavy snow . South dakota. You heard that right. A storm has dumped up to two inches of snow. Temperatures are expected to climb back into the 60s by the weekend. Coming up, breaking news on retail sales. And a pulse check on the strength of the consumer. And later weve got an actor and small Business Owner whos here. His special organic sauces are a hit at whole foods and other markets. Were going to talk business, movies, and much more. Are we going to eat some of this stuff . I hope we do. Take a look at u. S. Equity futures at this hour. We have red arrows now that match the marinara sauce. Youll have to just eat the sauce no pasta. While every business is unique, everyone is looking for ways to cut expenses. And thats where pg es Online Business Energy Checkup tool can really help. You can use it to track your Actual Energy use. Find rebates that make equipment upgrades more affordable. Even develop a Customized Energy plan for your company. Think of it as a way to take more control over your operating costs. And yet another Energy Saving opportunity from pg e. Find new ways to save energy and money with pg es Business Energy checkup. Welcome back to squawk box this morning. More problems for General Motors this morning. The company has stopped delivery of 2015 corvettes. They need to fix two potential problems. One with an air bag and one with the parking break. At this point gm hasnt issued a recall. The corvette was designed for the 2015 model year. Sales were more than four times what they were during the same period last year. Just another problem and headache for gm at this point. Yahoo also spilling the beans on its fight with the government. We talked about this earlier. Its fascinating. Saying that uncle sam threatened to fine 250,000 a day unless it turned over to data to agencies. Yahoo argued it was unconstitutional but lost that fight. Tech experts say this paved the way for the governments prism Surveillance Program which was exposed by mr. Snowden. Your hero. Not my hero. We are just a few seconds away from retail sales data for august. Weve been watching the futures ahead of those. Right now the dow futures indicated down by about six points. This is all coming after five weeks in a row of gains for the markets. The s p and the dow are within a little bit of question as to whether they can pull that off. It looks like we may end with a down week unless we see Massive Gains today. The nasdaq is on track for its sixth week in a row of gains. Also been watching whats happening with the tenyear note. This morning, that yield sitting at 2. 58 . Jim, why dont you take it away with the numbers . This is fairly significant data. Retail sales advance month over month which is as expected. Revise, though, however from the last one is plus. 3 which is better than expected. Import prices came in at negative. 9. Thats a Big Reflection of king dollar over the last month that. Retail sales auto and gas plus. 5. Export prices down. 5. Import prices being down. 9 is a big deal. Were in this special place right now where we can have a fed thats arguably wild and still rallying hard. Markets should like these numbers. The stock market relatively ignored. Still down one in the futures. 10year yields came in at 2. 58. They have gone up a little bit. 2. 583 right now. All right. Jim, stick around for a just a moment. We want to get a little bit more. Mr. Leaisman sitting here. Consumer showed back up through revisions. The july number was. 04. Came back to be revised. 3. August. 6. Im looking at the control group. Maybe. 4. But the revision of july, i think what were talking about here is an upward revision of the Third Quarter. Cant be sure. Overall im looking at general strength. We dont always get that. A lot of times we know the vehicle sales number was strong 37 this month it showed. Up on autos. Im looking at other places like miscellaneous retail stores. Furniture up. 7. Electronics up. 7. A lot of discretionary stuff looking good. There were negatives in general merchandises in department stores. Before we let you go, jim, with what has been happening with oil prices is that something people are scratching their head on the floor . No. Its just a reflection of the strong dollar. To put it in perspective, when gas goes down 40 cents a gallon, everyone uses about 400 gallons of gas per year in this country. So 40 cents is like adding another 160 bucks into the economy per head in this entire country. Its enormous. Were sitting in a nice spot with the strong dollar. Keep in mind how good this must feel to the fed. Outside of labor we thought we were on the verge of going gang busters. In this last week we saw numbers that seemed relatively soft. This has got to make them feel better from changing to wildly dovish to just mildly dovish next week. I suppose theres a question here about how the fed is going to feel about falling import prices. Down 0. 9 . It looks like its all petroleum down 4. 4 . And i dont think theyre going to be too worried about it. But certainly you have two factors that are going to keep a lid on invasion the strong dollar which shows up among other things, down nearly 1 . Thats two months in a row here negative import prices. No doubt about it. But they cant compete right now with the ecb and bank of japan. They have to stay their course and enjoy the good part of the strong dollar and ignore all the bad parts of it too. What are they going to do . If they pull the lever and try to depress our currency more in comparison to those, that could be disastrous. Right now we just kind of whats that . Really quickly, consumer goods autos unchanged import. Imports of consumer goods not counting autos, unchanged two months in a row. The lack of inflation is also outside of the petroleum sector. Jim, i want to thank you very much for all your help this week. Youve been wonderful with the numbers. My pleasure. Thank you. Have a great weekend. Were going to broaden this conversation right now and talk more about the risk factors that could impact consumers. Joining us is a veteran in the retail industry. What do you think of these numbers . Theyre better than expected. The revisions to the last month numbers, is that tells us that the consumer is feeling good about things . This is all good news. The consumer is seeing a lift in wages which we havent seen in forever. Weve got more people working which is good. The import prices are doing nothing if anything a little deflation. When you see an increase in wages and you see deflation in the input, this is always good for retail. I think this is all good news. I dont see anything here that would be concerning to retailers going forward. Weve got a better calendar than we had last year. We cant have as bad of weather as last year. Weve got more people raising its snowing already. Last year was the worst weather for retail in 50 years. It could happen again, but if youre a statistician, were going to say its not going to be as bad as last year. So there was a mystery out there how could we have this number of jobs out there and more people working and retail sales in the month of july . The market got a spook from that number when it came out. 04 pretty much 0 when you start to do the rounding there. Does that solve this mystery when you revise up july and now have a decent number for august . I think this is what we thought should happen. We all knew august was pretty good month. The question was how will it show up in official numbers. If youre looking as a retailer at apparel, home goods, all that, we knew we had a pretty good month. So spin it forward. Back to school, lower oil prices, and then the christmas season. Whats your expectation . Well, you know, if gas really goes to 3. 20 a gallon and we put money in the consumers pocket, were going to see good sweater sales. If they dont spend it all on cars and that doesnt look like its slowed down really in this report, but we all think cars are starting to top out from the point of the interest of the consumer. If thats true, were going to see a strong back half of the year for the discretionary retail. And were going to see that happen at the right time. The Fourth Quarter is all that really matters. Thats happening right now. So i think were going to see the strongest back half for apparel sales in the last five years. Consumer confidence is good. But does apple suck all the wind out of retail sales . And the thing that blew me away was the idea that if the watch doesnt come until january. So the extent i wanted to buy all the squawk anchors for their stocking, i cant do it. Im intriguing by the watch. You think its a bust. I didnt say a bust. Its not going to be a big deal. Last year 100 of the retail sales, the growth in retail sales came from a. Samsung, appl and amazon. Apple is already selling the 5. Think it it was available for christmas and didnt sell anything. If steves buying, i want one. If its free, ill take three of them, right . What do you make of all the cash that consumers are spending on all the subscriptions that have to do with these devices whether its spotify, your phone bill. Thats been the biggest issue. So much more of your money is consumed with ongoing payments. But the iphone 6 is not going to really change that. Were not going to see a bunch of new people take on smart phones because of the iphone 6. Its all replacement. Do you have any hair left here . If you have it left, do you leave it here . Yes, i have some hair left. Whats caused you to say youre going all the way . And you look bad ass and you would look like lex luthor if you do it. I did it because i wanted to look like lex. Thats what i mean. He looks like a bad ass. I consider these the sacred relics of a once thriving civilization. I didnt. Weve got to go. This is going to be awesome. Thank you. We appreciate it much. Coming up, is it sauce or gravy . Sopranos actor Steve Schirripa is going to settle the controversy once and for all. Hes making his way out. Were going to pour marinara sauce everywhere. Were back in a moment. This is a burrito made with chocolate, soybeans, and apricots. What kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. In a 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. Welcome back to squawk box, everybody. Take a look at the futures. Theyre a little bit weaker this morning. Dow futures down by 12 points. S p down by 1 point. Virgin galactic taking flight for an dperz. It looks like two planes with two fuselages. Its designed to carry shuttles up to be launched into space. Theyve now been pushed back to february or march of next year. Hes best known for his role of bobby bacala on the sopranos. You got it. Hes a New York Times best selling author. Now pasta sauce expert with his signature tomato sauces called uncle steves italian specialties. You sent me some after we had dinner together. Yes. Had some mutual friends. Joining us now steven schirripa. Nice to be here. Ive done you know, i started late. You know, i didnt start acting until i was in my mid30s. Got on the sopranos when i was 40. For the last 15 years ive squeezed a whole lot of stuff in there. And what were you before . I was an entertainment director in las vegas. I was a maitre d for many years. Born in brooklyn, moved to vegas after college. Became a bouncer. Then an executive at the riviera hotel. Its like a whole other life, you know . I would see him before i knew him at a great restaurant. Its a good restaurant. Great place to go. And theres some connected dudes in there, i think. Yeah, sure. But a lot of places in the city. Have connected people. I dont know and i dont talk about it and i would never point them out. But theres connected people and theres ones that want to be connected. They want you to think theyre connected. But there was one time honestly i dont know if im allowed to tell this story. You know, sal whos great. And i said is there anyone connected. He said theres never anyone connected here. And he turned around and Victoria Gotti was there. He said the right thing. Yeah. He didnt want to give it up. Thats why he stayed there so long. You got to keep it quiet. Thats right. Gravy or sauce . Sauce. Theres always sauce in my house. Thats g1. Thats where we get it from when hes there with mikey. Listen, thats exactly right. But people my grandmother used to call it gravy. To me its more like the sunday sauce where you have meat balls and sausage. Thats kind of gravy. Its a whole meal. This is just pasta sauce. Its just sauce. All organic, gluten free, kosher. We covered all the bases. You did. When i put it in, its got a little spicy thing. One of them does. Then we have the tomato basil. You tasted it. This is the first jar sauce ive had in my life. Honestly. How long ago did it start . We started about six, seven months ago. Is that it . Its a new company. We hit whole foods any week now. Really . So that now makes it suitable for your household. Right . Hes a snobby guy . No no gmo. This is all clean. Jersey guy just because i live on the island the thinks open up the jar and stick your finger in. This is really good. This is delicious. Its really good. Everyone has loved it. Like i said, its if i made a big dish of pasta forfantastic. You would never know. He trashes jersey all the time. I work hear every day. You got to be careful going home, man. I am. I dont know what is jerseys great. What did i get into. This is the best stuff ive had all day. Wow. So its a new company. It started out with my mothers recipe. Made it better. You must have friends. I do have friends. Whats the latest and god rest his soul, one of the greatest actors. I used to say and people say he couldnt be on a tv show and be one of the greatest. But i watched gandolfinis range. One of the greatest ever. Not only that, he wassed eds good a guy as he was an actor. Really good guy. Ive told the story before. One year he held out for more money. He called every one of us, 16 people, and gave us 33,333 a piece. Another time i was at vegas when we were doing something together and we were having breakfast. He said last night you did the work, he told the Business Manager give him 10 grand. I said im fine. Have you seen the drop . I have not. That looks pretty good. That was his last movie. He did a movie with me. I wrote a kids book and he came up to montreal, flew up for one day from l. A. It was a movie for nickelodeon and he shot all day and then got back on the plane. That was a complete favor. He didnt have to do that for me. He was a good guy. A terrific actor. When you worked with him and you were supposed to be scared, you didnt have to act scared. He made you scared. He was a big guy. Did the character tony sparano, what happened at the end . I always said he was alive and nothing happened. What you saw is what you got. You know . Nothing happened. All the conspiracy theories, all the this guy with the members only jacket, nothing happened. He was alive, well, with his family, and life marches on. Thats my opinion. You owe a lot to the sopranos. I mean, it was the first time you realized that you could have the greatest i mean, theres no movie where you put it together all the episodes of the sopranos and you have that experience of living Something Like that. And it could do it netflix, all of a sudden. It changed tv. It did. Billions. It was at times like people said it was an 86hour movie. Right. You could sit down and listen. Its seven years later, its off the air, everyone still talks about it. Theres not a day i dont get stopped. You know, all of us. It was Ground Breaking tv. Did you know that at the time in the very beginning . I came on the second season. And no, i did not know. And the guys who were there from day one had no idea. They said, you know what . Were going to come in. Well do this pilot. Even jim said well do the pilot, it probably wont go. Well make a payday and ill move on. It became the bikest thing where parties and every sunday people were watching this. Monday morning everyone was talking about it. How did you get into acting in your mid30s . I was working with a lot of comics at the riviera. One said im doing this thing in l. A. , would you want to do it . I never even read a script and i flew to l. A. And i did it and i got to tell you, it was it was one of those moments where it really im sweating over here. And you know it was one of those moments where i literally was high on the way home. I went, this is great. Never an acting lesson . Never a lesson. Then i the funny thing is i got on the show. Then i started taking acting lessons and started getting into it. I still do it now. I started learning more and more. I kind of did it opposite. I got the job and then i tried to learn to see what i was doing. You are such a Perfect Entertainment director at the riviera. I would that is something you could be cast in as well. You played yourself. If in a movie called welcome to hollywood when i was first starting out. I would fly to l. A. I had money. I wasnt a struggling actor. I was lucky. Fly to l. A. Go on auditions. Get bit parts here, there. At one point i did a movie in toronto. I said, they were real actors. I called my wife and i said, i think i can do this for real. I think i can really do it. Why dont we start a chain of badabings. They had one in vegas. Youve got to come up with another idea. How much is this . Most places, it retails 7. 99. Go to the website, uncle steves ny. Com, you can buy it there itsi its rolling you the. This tomato basil, im not lying. I said i read the Richard Branson book yesterday. This is different. This is great stuff. You can cook for your inlaws. Pretend i made it . You have no idea. I wanted to be italian. For a while i was okay. After sopranos i wanted to be italian. Thank you very much. Coming up, jim cramer from the New York Stock Exchange as we get ready to wrap up the week on wall street. Well have to get him to have this tomato sauce at the hotel. With universities across the state. 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Phone company well, theres really no comparison. Why pay more for less . Call today for a low price on speeds up to 150mbps. And find out more about our twoyear price guarantee. Comcast business. Built for business. York stock exchange. Youve run into him before . Yes, i have. Great man. Fellow jersey man. Nothing better than that. Nothing. I agree. Youve got to try the sauce. Its going to be in whole foods. It really is pretty good. I canned 30 ball jars last night of my stuff with my tomatoes. I wanted to you sell this. Is it gravy or sauce . Im from philadelphia, its obviously gravy. It is gravy. I did gravy. I did sauce the other day. This had no tomato paste in it, no wine it in. I did a creambased one saturday. Got about 100 jars. Ill be serving. Wow. Im serious. A lot of plums, beef steaks, early girls. I make each one. Way to go. All right, my friend. God knows what youre doing. Youve got a bed and breakfast, restaurants, sauce. Got to make a living. Youve got a farm. Gravy. Not allowed to invest in anything. What do you do with the proceeds here . Right. You dont have an apple watch yet. No. Apparently theres not enough the apple watch needs a few more apps is what im told. Its what . Its not as ready as id like to think. Really . Yeah. Thats the call im getting. Lets see what happens. See you in a couple of minutes. Okay. Coming up, never underestimate our audience. Today weve been talking about joes crocs and gilligans island. My what . Your crocs. A new picture settling the debate which characters wed play. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . 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I think anyway. Makes you wonder if you were on that island lost for days and days, who do you think paired off . Any idea . I mean the professor . Ginger, marianne . He always hung out with marianne. Think of the brady bunch. I mean we had no idea. Its time for squawk box. A good friday morning welcome to squawk on the street. Made it through the week almost. One more to go. So far the nasdaq is the only index up for the week going for six straight weeks. Thats the most in 1 1 2 years. Our road map will go like this. Retail sales good, raising in august. Hesing some concerns about Consumer Spending as we look ahead to a more hawkish fed