Transcripts For CNBC Squawk Box 20150831

Currently, it is down just slightly, but still the elevated levels hovering at just 26. Last week it hovered at 36 which gave some investors pause. The dow is down about 6 in august. The s p is off just about 5. 5 . The nasdaq is down close to 6 as well. Year to date, though, the nasdaq is actually the only major average that is positive by close to 2 . So far, this year. Certainly, a decidedly different trade for the nasdaq on the year. Biotech, some of the highflying tech is helping that. But a 2 gain can be fixed quickly as volatility continues. If its up 100, are we going to say its unchanged . I mean, its nothing, right . It was basically unchanged. 100 points, lets get the latest out of china. Overnight, the central bank injecting 220 billion. And now beijing abandoning the chinese stock market on largescale share purchases. Instead, the paper says chinese efforts will step up efforts to find and punish those destabilizing the market. The benchmark shanghai composite closing down but well off the lows of the session. The index has dropped by nearly 4 in the day. Speaking of china, today, Goldman Sachs is slashing its forecast of the companys global for the next years. The government is targeting a number around 7 this year. Goldmans nonreturn forecast is based on labor and productivity. And to the great rate debate. Thats what im talking about, you out there, getting things straight from the horses horses deer, you say deer, elk, you say elk, horses is plural. Stanley fischer making headlines in jackson hole saying prices will likely rebound. All of these things start feeding a little bit. Fischer suggesting this will allow the feds to raise rates gradually. As to how the central bank might move when the time is right heres what the fed vice chair told steve on friday. Were beginning a process which we anticipate, and we do, it will be relatively slow. And the first move, presumably, will be from zero to 25 basis points from 25 to 50. Which means that our Interest Rate will still be below the british rate. And they are regards as doing quantitative easing, et cetera, et cetera. Right. So were not moving from a wonderfully extremely military policy, adjusting it slightly. And you probably were wear of doing something else. Im really glad hes part of the fed. Im glad youre going to be here. The idea that maybe we should not look at coincidence in inflation and decide that everything is fine. And some day it may come back. And maybe zero is not a good idea and maybe the benefits of zero are alolowed to be played out. Im not sure i want you to respond. Now, how about is it worth leaving this awful month of august because of the market that is to say, is it worth to go into september . Do you get sweaty hands in swept . When you hear that songs do you get a adread in your stomach . Which song . See you in september. See you in september the 21st of september, do you remember . No, this one gets me more. This is like from the New York Times, i dont recommend it, but a guy wrote a thing about how the end of summer and beginning of fall are the metaphor for getting older at his age. Things he didnt do in the summer remind him of things he didnt do in his life. I dont care if the market let us stay in august for a while. School started. Yeah, next week this week. A lot of folks have already started. Yeah, im good with september. You know, historically, its the worst month for stocks. I dont care about any of that stuff. You guys are like its the lowest in 6 1 2 years or the biggest decline in three days. None of that typically means anything to me ever. You guys are all into that stuff and thats cool, but it doesnt bother me. When we look at 26 and thought it was high. Do you remember the high on that monday . It was a multiple. 53 53. 29. Yeah. That was a move. That is where you think, a span of 1,000, or 5,000. I was hoping 15. You were hoping. Is it a coincidence, a few weeks before the fed may raise that its like that . Im going to talk to that. For the five bucks we pay him. Just sitting here, at some point, well actually get your thoughts on the market. Okay. Although weve had the same talk for like eight years. Not everyone agrees on what the fed should do. Franklin templeton is saying they shouldnt pull the trigger in september. I dont think they should be looking at the jobs market. They should focus on it. To stimulate the economy or slow down the economy, but they really should be focused on inflation. Which is why youre seeing debates within the fed, regarding what to do. Because the oldtimers are saying, look, lets not get away from our mandate. Hes wearing all of his white before labor day. Yeah. You did, too, right . Yeah. Labor day later than its ever been. You can go another is it labor day, not september . Labor day. All right. Im wearing like when i do wear underwear, i wear white. Go ahead. Do you have a thought on that . I dont each know what youre talking about. I think labor day is as late as it possibly can be. It is. This is a record. Its never been there . No, its been there. So why is it a record . Thank you. Its my single best idea. Well, at least its not 180 degrees opposite the option. In corporate news, Warren Buffett and Berkshire Hathaway depositing a nearly 11 stake in the company in phillips 66. It shed nearly twothirds of it in february 2013. At that time, it swapped 1. 4 billion of shares for a Chemicals Business for its lubisol units. Shares of phillips 66 have actually held up a little better than their rival. Is this buffett calling the bottom in oil . What do you think . A bottom in ibm. Thats exactly what i was going to say. He said the money he makes on the dividend there is worth enough forever him. Really. There are plenty of things that you can buy with the dividends that go down. You dont need to be Warren Buffett to figure that out. Exactly. The Italian Energy company eni announced it discovered a super giant Oil Gas Field off the country of egypt. The company said its the largest field they found off the mediterranean sea. And this mediterranean base that changes the whole game for them in things in terms of importing energy. A check on the markets. This morning, it wasnt pretty. I was gratified that the ftse was up and figured out it was closed. But Everything Else is down. Including and in this country, its affecting the dow jones. It wasnt really china so much. It was off a little bit. It was nothing that wasnt causing this. And there are the european markets. You have the shanghai. Down less than a percent. And all had a big move on friday. I think it was up like 20 or something from its lows. From 37. So all the way back to 35. Down on the day. The tenyear, i saw was turning oil again, 2. 16, actually. I dont know what that indicates. Look at the twoyear. The twoyear is the best barometer out there. Its like a quarter point, under 70 is down, 65 is no way. Look at those guys there. Awesome. 73 is you see that rampup there between july and august . Thats when people were sure it was going to happen. It started hitting that 75 basis points range. We came down big in the market turmoil. And now were back up to where we were, peter. And back towards 70. Thats, i think, what fischer wants it to be and that gives the fed i think ultimately was the point of what stan fischer was staying, the optionality or the flexibility of where they want to go. You think of being in their shoes, you dont want to go into that meeting with the market way offside so if you do decide you want to hike you dont want market turmoil. It simply brings it back to where it was to give the leaders options. Lets talk to these gentlemen in details. The governments pill report is out on friday that can happen from now and then. Here to talk about whats happened in the last two weeks. Simien, and peter a chief analyst. Peter, your contention for a while would be there would be a piper to pay for all of this accommodation. I think its interesting that you think a lot of the wealth effect engendered by the fed was artificial, and not justified by the underlying economy. So, now, we start heading the other way, and we see what a stock market collection is like. And 20 . And then you get a reverse effect. You could see that actually causing a slowdown in Consumer Spending. And then the Central Banks have nothing really left at that point to do. So this is the horrific scenario that people have been playing along with all along. And before the late 90s, recession would then call a bear market but the last two sessions were caused by asset prices. Im afraid this is the same thing. You never know chicken and egg, you never know when the economy cause the stock market to go down. Or the stock market going down causing the economy tole fade. But the fed with the assetdependent economy, were stuck in a cycle with a virtual mean that has economic implications. I believe its the same thing again. If the stock market continues to fall, well have to at least see Consumer Spending almost immediately get impacted by this effect. If youre a cbo you see the market down, that may give you cause. If youre a consumer at the upper end, your portfolio, just thinking thats going to make you reassess what kind of spending you want to do. Thats where im fearful. Im not looking at recession because of a bear 45shgmarket. Steve thinks that its gelato at times, dont you . Dont you basically think really. Its a visual. It is. Isnt it . There are so many things you say before 7 00, joe, that make me want to pierce my minds eye. You know who said that in my minds eye. Anyway, i dont think hes started the assetdependent economy and hes recognized how dependent the economy has been on our side. Thats what he used in order to then maybe he went a little bit on the other side in terms of targeting assets. But i think whats going on right now, the fed doesnt want to be hostage. They used the term volatility. That mean a decline in asset prices in order to get to better place on rates. What fischer said to me, this newly explicit commitment to hike and then rate for some time, it wasnt just were not going to do it every meeting. You know, were going do the quarter point. Is that because of the data or you said you know what, you cant be at zero now anymore . Let me get to this because we also think corporate profits do not justify the market. You think that profits are fine and the markets going to continue to goal higher . Well, i think i feel better than everybody else at this table. I havent said anything. Look, we had a great Consumer Confidence number last week. We had strong q2 gdp numbers. If you strip out Energy Materials from the s p 500, earnings where fine. So, yes, i think things are better than others. You know, after the fischer comments, people are forgetting that they came out a few days before and said were not doing anything. I do think youre getting the feds standing back and saying lets see what happens to the real economy. In the long term, tenyear yield went up in the middle of this equity crisis. Spreads credit spreads have moved wider which is interesting because even as the economy looks okay, and the spreads, you have some weird things. In the end, the biggest pieces are Energy Prices are volatile. Driving emerging equity places all over the play. And does anybody think its a surprise that wild turmoil in malaysia when the entire economy is palm oil and energy crisis. The big thing for me is energy. You mentioned credit spread. Especially when we saw that spread contract toward the end of the week that was a good sign, but it was still wider than we had had seen in recent week or months. Theres a sense that maybe volatility is brewing and its going to be here for some time. Im just wondering what sort of leading indicators were looking at within the market that tell you is this a garden variety correction that this doesnt have lingering effects for the next few months . Well, heres the weird thing that happened with spreads over the last six months or so. Theres a little decoupling between highyield spreads. That, i think, is the piece that makes this perhaps a little weirder than usual. Spreads overall are much wider than a year ago even as highyield spreads were tightens in q2, as yields were rising, investment spreads were moving out. That suggests that maybe things are a little different this time and maybe theres a little extra stress in the economy than you normally would see. Normally investment growth spreads should be right behind them. In the New York Times, but in the business, i think its easing his price earnings and with items. And two or three other times where valuations were high, a pretty significant market tops. Absolutely. But you could have said that a year ago, too. Its just whats the trigger that makes valuations matter. In the past two years its every time the fed is about to take something away from the markets they start to care. So, valuations that are excessive or a bad backdrop to the fed. And you saw brazil was supposed to be a growth. China consumed for years but for the last couple years, the paper tantrum. We had the 10 last october. And if the fed keeps getting cold feet every time the market responses. All right. Thank you. Youll be here. Doing okay. All right, coming up, squawk hits the campaign trail. A new poll shows Bernie Sanders and donald trump sumping in iowa. Plus, it wouldnt be the first time that kanye west made headlines at the mtv music awards. Last night he took it to a whole new level announcing hes running for president. His speech, straight ahead. First as we head to break, heres a look back at this day in history. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. I have decided in 2020 to run for president. Process [ applause ] that was kanye west at the mtv vmas last night. It was at the end of a 12minute rant in which he announced he would run for president. Kanye also admitted to smoking marijuana before the show. Donald trump tweeting, quote, who does kanye think he is running for president . What experience does he have . None. Nbcs Kelly Odonnell tweets just think kanyes daughter northwest already has a gate named for her at the white house. Wow. I love trumps response to that. I like that he got the drug use out of the way. Thats the main thing. No one will ask any questions, right . Can anyone stop the trump juggernaut . A new poll from the des moines today shows what are the numbers, 37, 57, i cant read that thank you, guys. Bernie is up, and joe biden. Up 6 for joe biden. So sanders governing the share of the democratic votes. Just 7 points behind Hillary Clinton. Meanwhile, trump leads the republican pack with 23 support. The chief economic correspondent for politico is here. No change at all in trump. I was asking you before, if there are national polls. How does trump see it visavis hillary and will it change the employment . Thats my theory, ultimately, when we get closer to voting, Republican Voters who actually dont like trump that much. The actual primary and caucus voters do not give trump high marks. Hes high in folks who actually wont show up at the polls. People are going to look at trump and think about him as a general election candidate against hillary and joe biden, whoever emerges in the democratic nomination. This guy is not going to win in the general election and we want to win. The summer of trump will fade. I think ultimately, hes a great candidate, compelling all of those things. I dont think hes electable. I think there will be another guy. Ben carson comes in second with 18 . So there is a great hunger for somebody other than the traditional candidate like a jeb bush or a marco rubio. I dont know who its going to be but somebody is going to emerge as the alternative to trump. Heres the fascinating thing weve been hearing from commentators left and right that the summer of trump will end. Here we are. Weve heard it after his comments about john mccain. Both of those were supposed to be the death knell for the campaign. And there was a piece in the new yorker how how he has struck a chord. Of course, he has. On mainstreamainstream. I dont think ill ultimately be wrong. But, yes, people are fed up with politicians. Its not just in the republican numbers. You see Hillary Clinton dropping precipitously. People are sick and tired to traditional answers to problems. Weve seen the economy not do that well. Weve obviously seen turmoil in the stock market. Washington does not get a whole lot done. Theres a strong desire for fixing the nations problems. I do think a guy like trump, with immigration, Republican Voters focus on those things right now, its all about celebrity. Its all about sticking the finger in the eye of the traditional stability. But when they focus on his positions and his experience, i dont think theyre going to nominate him. But, you know, is jeb bush that type of candidate, the person in this environment who gets the nomination, thats a very open question. The ides of march, thats what trump needs to be aware of. The ides of march . Yes, in a republican schedule, illinois in february. Thats right. Where its going to be stopped. I think it happens in march. I think it happens before then. If he wins iowa and new hampshire, all bets are off and could be the nominee. I think if he fades it will happen december january in the debates. I dont think so. The caucusgoers are not supportive of him. You need to have a network of people to get those people in the polls. Maybe trump develops that. He doesnt have that now. You cant say that now. But its still august, steve. But still the value of this thing it doesnt matter. Hes insulted women. Hes insulted vets, who is left . Theres plenty of people left. Who are the iowa caucusgoers going to vote for . If i had an answer to that keep an eye on john kasich. Hes a maverick, what the voters are looking for. Hes more of a powerful alternative. What do you think . Marco rubio. I think walker, rubio, kasich, maybe jeb if he gets it together. He sounds unbelievable supposedly, hes got send me the piece. People have said they have tremendous iowa organizations. You cant go from one at that time and someone on the ground he can probably find signs. Its really different to get the actual caucusgoers. You cant find that one sign out in the hamptons that says hillary how come you never go on vacation, every time i find out that andrew is gone, becky, youre never gone. I was gone for two weeks. I guess thats when i was gone. Youre clueless about trump i throw it out here. Ive been gone two weeks. They dont book you a lot here because nobody would keep me in line . Right. Its especially dynamic. Yeah, its just so imbalanced. Its a heavy weight. Coming up, jpmorgan chief argument and emerging marks equity strategist joins us. Where do you think i get this blond hair. This trump hair. Ertainly not al. Fortunately, many have found a different kind of medicine that lowers blood sugar. Imagine what it would be like to love your numbers. Discover oncedaily invokana®. Its the 1 prescribed in the newest class of medicines that work with the kidneys to lower a1c. Invokana® is used along with diet and exercise to significantly lower blood sugar in adults with type 2 diabetes. Its a oncedaily pill that works around the clock. Heres how the kidneys allow sugar to be absorbed back into the body. Invokana® reduces the amount of sugar allowed back in and sends some sugar out through the process of urination. And while its not for weight loss, it may help you lose weight. Invokana® can cause important side effects, including dehydration, which may cause you to feel dizzy, faint, lightheaded, or weak especially when you stand up. Other side effects may include kidney problems, genital yeast infections urinary tract infections, changes in urination, high potassium in the blood, or increases in cholesterol. Do not take invokana® if you have severe kidney problems or are on dialysis. Stop taking and call your doctor right away if you experience symptoms such as rash, swelling, or difficulty breathing or swallowing. Tell your doctor about any medical conditions, medications you are taking, and if you have kidney or liver problems. Using invokana® with a sulfonylurea or insulin may increase risk of low blood sugar. Its time. Lower your blood sugar with invokana®. Imagine loving your numbers. Theres only one invokana®. Ask your doctor about it by name. Welcome back to squawk box, china once again dominated the market conversation today. Joining us now is adrian mallet, jpmorgan chief agent. Good morning. When we see shanghai open down close to 3 and close down about 0. 8 . You think theres no government intervention, now that they ditched this massive statehad sponsored stockbuying program . Yeah, im not sure that ill buy that headline because as we saw last week, they said there would be intervention and in the last hour, the market starts rallying. I think what should really happen, we go back to not caring about the shanghai slump. The foreign market is only up 45 in the last two months. And that never seems to come up. The market was up 120 , no one cared what happened to chinas economy. Just a quick point, with what happened the last time the worlds second largest economy tanked which was japan in the lower 90s, the u. S. Economy surged ahead. It was a more interesting, integrated Global Economy than china is or ever will be. What really amazed me, you know, it was an enormous economy that went into this protracted funk. And it made very little difference. I think people overestimated trade leverages. Actually look at import. Importing to china is down 15 . Thats not just commodities. Its down for every single region. And thats something thats been going down for years, too. I think the reason why people care so much now, this is really spreading to the consumer. And the Chinese Consumer is increasingly buying goods to companies. Starbucks getting 10 of its says, 13 of its sales from asia. Apple getting more than a quarter of its sales from greater china. Now, theres a story in the New York Times that people are cancelling weddings and putting off large apurchases because theyve lost money in the stock market. Were trying to figure out how in 2015 whenever that actually affects anything. I would be worried about, too, about machine manufacturers. Its clearly going to hit the auto industry. Its hitting some of the consumer stocks. For a period of time, its already been hitting luxury goods. I will say about the stock market theres no evidence on the way out and im not sure theres evidence on the way down. I think what were missing there are good data points in china. Year to date, property sales are up 20 . The Property Market is significantly bigger on its impact on the economy. So there is a little bit of good news. Ill ask peter, peter, does whats happening in china seem like something that can create weaker Economic Growth in the United States . And or Systemic Risk for the United States . If chinas going to unwind through some leverage or debt bubble that seems initially to be domestic, does it have a knock on it connected to the United States . Well, small directly, but i think wider indirectly. So if china slows down and that affects the rest of asia, well, europe does a lot of business with asia. And europe is slow. I think in the big picture it does have an impact which is why global is only around 3 . Will it cause a u. S. Recession . Of course not. Its a wet blanket on wet growth. Adrian, final thoughts on what we should see in the u. S. Markets based on how china has gone through . I think it still goes back to the fed. And the fed giving us a negative feedback that they care about the market. The fed is the central bank should be leading. And i think thats the big problem and thats why we have volatility. Did fischer make sense on friday . I think he did. It matters to me, one of the reasons, so scared of buying it just before the fed move. And that made people look at 2004, if you bore emerging markets part of that is justify wanting to keep spirits. Adrian, we appreciate it. Stock opportunities popping up as a result of volatility. First, before we head to break, check out the futures. Stay tuned. Youre watching squawk box on cnbc. Isnt it beautiful when things just come together . Build a beautiful website with squarespace. I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Welcome back. Manic blues in the globe market has opportunities for many stocks. 12 billion under management. Thank you for joining us. Thank you. Were having a conversation about the yen, emerging markets being underpriced. Your thoughts on that . I think they probably are underpriced, but the question is, are they stable enough for the average investors to be looking at. Talk us through september. The fed does go a quarter, and maybe you still get the markets and you get good job support, but the fed may help. How do you want to position your portfolio with that . For us, it doesnt make any difference. This is the most well advertised Interest Rate hike in the history of Interest Rates. I think if youre not ready for it now, youll never be ready for it. Our positions have been established for multiple years. How you have done that . Lets say im at the table and im just getting my stuff together for a fed rate, are we pulling back on the market schedule . No, i dont think youre lowering the market equities. With cash youre getting but 0. 24. But im getting 0. 25 now. The earnings you got on the s p 500 is looking attractive. The dividend yield is greater than the yield youll get on the tenyear. In other words, im going to stomach the First Quarter just a 0. 37. And then another quarter, a fund rate of 1 are you still talking about an s p . I think youre going to have to be higher than that to have something meanful happen in the equity market. So right now, if youre looking at stocks that have for example, mcdonaldss a 3. 5 yield. People are still buying hamberg hamburgers. I want to get two names and one from peter actually four names. The first two names i dont want to hold my nicose. Ill give you mcdonald and faberge. They just made a spectacular akwa condition. Energy is on its rear end. I dont think theres any secret. And there are two that really stink right now . Really stink. Really stink. Out of favor is solar city. Theyre basically promoting the acquisition of solar power. Ive got to hold my nose. Right. And then a railroad, kansas city, thats looking at moving into the northern portion of mexico. Had you one during the breaky. I want to be a major contrairian and like brazil. How do you buy brazil . The market outright . Etf. I think just this was the last phase of the end of the commodity bill market. You think thats done . No, im not saying its done here. Im saying i think the commodity price is bad. I think brazil still. Stinks. Again. Coming up, wes craven. We just should read a few things. Died 76. Wes craven died at 76. All the great movies. Promising Study Results on the new cholesterol fighting drug the ceo of the company cue the crickets, please we check out all prices. Stay tuned. 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Contact your health plan for the latest information. Competitions for cholesterollowering drugs are fierce. And about to pour more fuel on the fire. A cholesterolfighting drug shows of its partners the Medicine Company joining us now. The ceo here and also with us former reporter meg carell. Amgen did this on thursday. And its approved and we havent had amgen on. And this is for humans . For humans. Theres a problem, theres cholesterol in all, obviously. All right. So, in this case, and john, this would be different than the other drugs in that they are injectable, because i think you cant do this in pill form. No one likes to do that. You would have less frequent injections with the product . Yeah, thats in our initial clinical studies. Its showing a remarkable durability. So it looks like we can achieve once quarterly dosing with this drug or possibly once every, twice a year. So twotofour times a year compared to the antibodies that have just been approved that are out there with 26 injections every year. So we think that can be a big game changer in the management of ldl cholesterol, partly because one of the big issues in this seting is its adherence. Patients you know sticking on their drugs and getting the adequate level of ldl lowering that they need to ultimately have the benefit that ldl lowering can achieve. Were very excited about the data. I remember getting allergy shots as a kid. Getting one every other week, that would be tough . Would they do it, themselves, with the other one . With yours, you can go to a doctor once a year to do this . You wouldnt need to inject yourself, which ive never done . Joe that, brings up an interesting aspect of our data, if you give it twice year or four times a year, can you get it done in the doctors office, you can actually have it done right when you are having your ldl measured. So there can be a sin chron vaigs with the ldl with the actual treatment. We think that goes a long way to help from a physicians standpoint and a payers standpoint. So, john, what is your modeling about the market for regeneron and amgen drug look like now if you still see a market for you and the Medicine Companys drug maybe five years down the line . Oh, yeah, this will be a major market. Ldl management is certainly Major Health Concern and these drugs are remarkable agents. Theyre going to make a big impact for patients and so this drug you know five years from now, there will be a robust market where we can compete and participate if that market. We feel good in terms of timing. Lets not forget lipitor took over medicore. So its common to see drugs with better profiles emerge as market leaders. We think we have a potential with this drug to do that. As you know we are doing it with the medicines company. They will move this ahead and get this to markets as quickly as we can. Expensive, right, all of these . Theyre priced at 14,000 a year for the ones on the market. Not compared to, john, some other drugs we have seen. But you are talking about if you had everyone in this country that could benefit from there on this and it was going to be medicare based or something, we almost break the bank, wouldnt we . Well, i dont think. I think there are some big scary numbers that have been thrown out there. I dont believe anybody thinks those numbers will emerge with these types of drugs. These medicines make a big difference in terms of improving ultimately outcomes. This will be tested in larger trials that are being done right now t. Costs of those complications are themselves very significant. So the focus ought to be on the value that these drugs provide. We think these drugs, not just ours but obviously the antibodies are to provide significant value for the patients at the end and to the Overall Health care system. John, you are working in a new area r na interference, have you drugs closer to the market. Maybe you can tell us the next analysis we could be looking at . We got an amazing pipeline at this point. We have several drugs in the clinic. We have eight by the end of the year. Most of our drugs are in orphaned disease settings. We have a drug for a rare genetic disease ttr amylodosis and ped sins for hemophilia and complicated diseases. And so the types of medicines we can create with rnei are quite exciting. I think the pcs k9 data, we shut down the production of disease causing proteins and the result is is that we get very durable effects and thats why we can achieve a profile of a drug that can be given twice a quarter or twice a year. How are you guys doing with delivery of drugs that have to go places in the body outside the liver . I know some folks say when you have a target in the liver, you can target that well. If you have to go elsewhere in the body, it can be more difficult with your technology. Yeah, meg, we got research that we are doing in that area. But to be pretty candid, were drinking from a firehose of opportunities with liver and express genes. You couldnt find a better tissue in the body where you know disease proteins are being made. So that gets us a powerful tool and a very wide range of opportunities, i mean, look at our pipeline, we go from hypocholesterol to hemophelia all with the same technology. Thank you, john. We appreciate you joining us. Thank you. And thanks to you, mech, for joining wusz that interview. We appreciate it. Final thoughts from our guest host. Peter, we have a relatively light data today. Chicago pmi out in a couple hours. What should we expect from jobs this week . I think the jobs number will be okay. But jobs is a lagging indicator. So we cant look at the jobs number for a guide to where the economy will be the next three months. So if the rumblings in china create a broader economic slow down, the jobs market will be the last to respond to that. Thanks very much. Thanks, for joining us this morning. Coming up, this mornings top stories the latest move to support stocks. Plus a big Berkshire Hathaway bent on energy. The first as we head to break. Check out the future, still down. The stock is still down 100 points. You are watching cnbc first in Business World wide. When you get up to 50 off hotels with travelocity, it means you can also afford to get up to 50 swedisher swedish massages. Making it the place to find a place for labor day. Go and smell the roses without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. Its jobs week. The final employment report before the feds much anticipated september meeting is due friday. How will the data impact the feds decision on Interest Rates. Former bucket director weighs in. China says it will stop buying stocks to pump up the market. Instead, regulators are now cracking down on those accused of destabilizing the market. Reaction in overnight trading coming up. Warren buffet making a big bet on energy, rebuilding a position on philips 66 before the dropoff in oil prices. Details straight ahead. The second hour of squawk box begins right now. Live from the beating heart of new york city, this is squawk box. Welcome back to squawk box here on cnbc. First in Business World wide, im joe kernen. Becky and andrew are off. U. S. Futures arent pretty. The dow you can see now about 108 points, continuing some of the downward pressure. I know its been volatile up and down. For the most part, weve lost some ground in the last month or so in the equity markets around the world. Its worth noting the ftse is closed for a bank holiday. The Financial Times is reporting that china will abandon large scale share purchases that have previously been used to boost the stockmarket. According to report, chinese officials believe they mishandled the stockmarket rescue efforts by allowing too much information to become public. Regulators are now intensifying efforts to find and punish those suspected of destabilizing the market. Worth noting that they have asked some stateowned news corporations to not public reports on the stockmarket performance. Separately, gold man sax is slashing its forecast for chinas growth over the next three years t. Bank now expected chinas gdp up 6. 4 down from a free of estimate of 6. 7 . Growth expectations for 2017 and 18 also lowered goldmans economic and political uncertainty. And the shanghai composite paired session losses to nearly 4 overnight closing down less tan 1 lower. You can see how the rest of asia faired. Hong kong was up slightly, japan more its part down 1. 5 . Berkshire hathaway, previously held a large stake in the company, but it had shed nearly twothirds of that steak in february of last year as part of its deal to buy a Chemicals Business but it is doubling down on philips 66 now. Since then, crude oil prices have fallen by more than half but its share price has risen slightly up about 5 . Joe. This friday, we will get the latest read on employment the central bank will have to consider this is the last one before the much anticipated september meeting. Here to kick off a jobs week, two Powerhouse Fund managers, the global head of investments at city private bank, he oversees 60 billion. Seriously. Seriously. I dont want that job. Its a good job. Its a lot of responsibility. Are you all right today . Its been a rough month. All right. Regular investments, bill irving, 40 billion across several Fidelity Investment funds, you sleeping at all the last couple of weeks . Its been a Challenging Market environment. Weve weathered the storm fairly well. All right. David, from a nutshell, looking at your thoughts on this, its a buy on weakness issues that youd want to own long term is basically what you are telling a lot of clients . From part. Whats the other part . The other part is they should stay invested, which of course is temptation. Its kind of saying buying the dip, stay with you are . Except ultrahigh net worth clients have a significant amount of resources to buy on the dips. Theyre doing so. We see that in our asian client base and to a lesser extent in america they buy the energy and mineral sectors in the market. If you counted the last five years the times you bought on dips, are we at a point yet where its just become too engrained to work . Well, i think we have to realize, this is sort of the last you know 18 to 24 monthss of a very, very long growth cycle. So the actual time period that you have to buy and hold has become much shorter. What were seeing is clients are holding the main portfolio and ten buying and selling around that portfolio. You see what i mean, if you are conditioned to buy on the dip, sooner or later you will get burned away. Thats correct. But not this time though. I think largely because of the question of what is the growth story, right . You saw the goldman numbers of chinas growth. We saw a growth scare is what we talked about in the last couple of weeks, people are concerned about growth. But all of the data continues to point to a continued but very mild expansion globally over the next year or two. That gives us fundamental confidence to be overweight in equities. A troubling piece, bill, in the zombie factories, again in the New York Times the zombie factories in china. Its a growth scare in xoin. But that implies its just a scare and might not be fundamentally based. When i see factories churning out concrete that has nowhere to go, they kept running by, by the state, a misallocation of assets finally happening in china. That itself not going to be serious, long term . There is the potential that that could be serious. I mean, certainly, weve seen market turbulence recently and i dont think that that should be surprising given that the Federal Reserve, whether they like it or not, basically sets Monetary Policy for the rest of the world. If you look at the United States, i think the fundamentals look pretty good. We have fairly strong income growth, which puts the consumer in a good spot, falling Energy Prices and very low Interest Rates. So certainly from the Federal Reserves perspective the outlook looks pretty good for the United States. David, clients must call, when they see market stuff, dont they . Mark to market . They see where their account is. Absolutely. Absolutely. Slients watch it all the time if not every day, thats right. Principly what theyre doing is checking on the Overall Health of their portfolio. When does it go, geeze, im down 10 to 12 , how much worse does it have to get before you tell them, all right, we need to take a step back . Well, really, thats not. You never no, thats not true we wouldnt do it. I think you have to do everything in portfolio context. We are significantly overweight in equities, the first thing we move to neutral and negative to underweight. I think thats still 18 to 24 monthss away. To answer your question, what i that do is to call in and check on whether or not the data has changed or they should as you mentioned be buying on dips and specifically what they should be buying. Right now were interested in the energy space like Berkshire Hathaway, there sa a lot to buy these energy companies, Large Companies that are strong and able to buy assets at these prices. So i treed you bill with the jobs report. Will it be Strong Enough to allow the fed to do it in september or not . I think the fed doesnt want to put too much weight on any one data point. They keep emphasizing again and again, its more the expected full path of Interest Rates not just the starting point thats important. I think it was lockhart who said over the week, look, its not a life or death situation whether we go now or pause a couple month itself. I think the fact is, theyre going to go quite likely be i the end of the year. So the era of near zero Interest Rates is probably coming to an end. But i dont think the era of low Interest Rates is going to end any time soon. What would your forecast be then by the end of 2016 where will the fed be . I think that it would be likely that theyll raise rates once there year. My guess, going ahead, it would happen in december. Then they will pause and see how things shake out. Theyre very concerned about financial conditions and two of the important components of financial conditions are equity valuations what is the level of the s p 500 and what itself the strength of the dollar . So i think those are two important considerations and more broadly inflation, which is certainly half of their mantate where theyre farther from meeting and an important component of that expectations, so it will be keeping an eye on the tips mark and so forth. And what do you think, david . You think december too . Yes, more likely than not. Definitely the year. The fed is sort of bent on having rates go up this year and next year to try to come up with normalized policy at the end of 2016 and earlier . Potential rates up between 75 basis points and 1 next year. What is in the futures markets based on the end of 16 . Something like 1 . Thats going to, were going to go through four rate increases, three rate increases next year . I dont know if i can stand that excitement. Every time they meet they have to raise it. They have to say will there be a hike each time . They arent saying the same policy we saw before. Leasemishman, are you man en to go september . Im not quite sure, joe, that would be the ultimate test of my manhood. Lets hope we dont check. I have two buys 15 and 17, that does a better job and im with you on september. You are . I think if markets are stable, theyre good the interesting thing to talk about is you know what is that bottom number of jobs . Looking for 220, i think that may be a little bit heavy for whats going to happen. August is a weird month there these guys manage money. They dont ever want the fed to raise rates, do they . They got 40 and 60 billion effectively. One guy is from fidelity. These guys are not going to call him and a quarter between september and december, i think the other thing we havent talked about i think the fed wants to get the machinery of maintaining a higher rate. I want to get the cobwebs off of that. They havent had a chance to do that. The idea that you got to get prepared to charge an Interest Rate. You do, you charge an Interest Rate on money. They have new things in place that havent been tried live. I think they want to get that stuff going. Look, you sort of said it, yourself. No way. I did . Whats the big difference on a quarter . Lets say they do the quarter and hang out at 37 basis points with three months or six months, its the same difference as being at 12 dates. Dpoed. I think the feds in a top spot. On the one hand, they want to project confidence, one way is to spur investment in the real economy, we get started on raising Interest Rates. On the other hand, i really dont think they want to tighten broad financial conditions and as we see, every time the rumblings start, they will raise rates, thats exactly what we get. Poorer financial conditions in the form of lower stock prices and the stronger dollar. So thats the pickel that theyre in right now. I think theyre in on that pickle on the other hand, the u. S. Is in terrific shape in terms of the world. It led to the actual recovery coming out of the 282009 period. Its leading now on the Economic Health of the financial system. So its not surprising that theyd want to normalize it as you said. I was surprised fisher used that term, very impressive. I think it might have been a little exuberant. A hero. Thats just great. Thats just great. Very, very focused and she has her point of view. Its a cool thing to be an essential banker amid 1,000 point drops on monday and say you know what, thats not my job. No it isnt. To react to that stuff. Its a news flash. There were guys that said, you know what. Thats the third mandate i fully think they all have taken on. Its a joke. The stability. Yeah, stockMarket Movements. Well, i think what they would say is they dont want a Systemic Risk. Look, when you orchestrate or recover you are going to braham them if you goes down again, arent you . Oh, boy, if you orchestrate an economic recovery through inflateing asset values, obviously you have taketh away and giveth away. Marty. Ill do that next time. Anyway, thank you, appreciate it. Thank you. A long delay. Is that me or reading the thank you, joe. Thats why it says steve, thats what that means, coming up, a read from the trade expert, what the shipping indicator tells us, next, citigroup vice chairman peter orszag is here. Austin texas, the city known as silicon hills, the city of top u. S. Entrepreneurs. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Making headlines, facebook is adding tools to protect content. It has been criticized by media creators that lets videos posted without permission. Sounds similar to struggles youtube faced years ago. It will identify duplicates of those uploaded directly by their creators, if a match is found the creator can then report the clips to facebook, steve the sense is that facebook will then be cracking down on content where the user is not the primary source of it. Hmm, interesting. We want to do other stuff with more of a power house on the web. The market on china, investors around the world fear their economy is in much worse shape than we realize. We have the quote unquote shipping indicator. Joining us now tbs Ocean Logistics chief financial officer. You have a lot going on there. Tell us what your shipping indicator tells us about whats really happening in china. Chinese demand is at its worse since 2009 its well below the 15 year averages. Not as bad in 2009. Global demand has been worse than it has been since 2009 and the fleet is also very over supplied. So when you look at the baltic dry index, we spoke that as an indicator. Got too many ships. Demand is low. Teams can you have a low baltic and not have low demand. We have both right now. When you say low demand. Are you looking at the actual shipments . Or the price of shipments . Sure, we look at the volume of shipments as well as pricing is down as you note a lot of that is dollar drimpblt i think the dollar is dollar driven as well. You have a stronger dollar. Everything is getting repriced. There were significant inventories around the world. Those have to be eaten down. Can you differentiate between commodities and goods . In other words, there is a huge commodity down when it comes to prices, how much of that, good shiping is a result of lower Commodity Prices and perhaps less shipping there or goods, a sign to consumers . If you look at finished goods, its much more industry indicator and i actually have not looked at that specific indicator most recently. I will say though with the stronger dollar, will you have better exports from asia to the United States and so those goods should be moving up, things stabilize. The same with commodities. A it is price of the dollar stabilizes, commodities will stabilize, then you will have an ability to see better growth. When you see these numbers do they speak to you of world recession, global recession, are they that bad . I would say part of that, a part of my optimism is largely driven by the United States strength at this point in time. The dollar is getting stronger t. Chinese are acting like a company and being very aggressive in devaluating and stimulating their economy. Its still an exmortbased economy in many regards and europe is in the doldrums. So im not at all worried on a systemic level yet. There is a big piece in the journal today thats inside the front page that says warning signs, china drop. It basically says if you look at the data from the ports of los angeles and long beach, ie shipping containers going the other way, did we ignore the data within we saw it . Why wasnt there a bigger focus . Exports to china should should fall with the dollar. That doesnt surprise me. We also have had a balance for a long time. This imbalance is going to get worse with the stronger dollar and a weaker yuan. I dont think thats a warning sign a stronger dollar isnt necessarily good for u. S. Jobs, but it is not necessarily bad for export from asia, support volumes should be increasing over the next six to twelve mont monthss. Great rates, historic lows, the ordering of ship versus come down to a 20year low. Let me ask about greece for a second. Theyre supposed to put a tax on their business, the shipping business. Too believe thats going to happen, whats the effect on the Global Shipping industry if greece actually taxes its ships . Well, i have a lot of friends in greece. Most of the shich oship owners,i would be surprised if not all of the ship owners have located their assets elsewhere, or are in offshore company. Yes, if you have a house there, a pool there, they might be more aggressing in taking that. Taxing the shipping business, which they havent done . There isnt much there to tax. There is a significant greek flag. Right. You are easily reflag ships an leave that flag. Thats what theyll do . Its very easy. Thanks for joining us this morning. Thank you. Coming up on russias state news Network Releases video of president putin, its usually pretty good. The latest does not disappoint. We will show you that next. Later the Vice President peter orszag is here to talk jobs and market volatility. Stick around. Can you spot the difference . The wind farm on the right was. E ft are waiting, ft are waiting, the ones on the right are pulling power out of thin air. Pretty impressive, huh . Now, two things that are exactly the same have have never been more different. Ge software. Get connected. Get insights. Get optimized. No students ever been the king of the campus on day one. But youre armed with a roomy new jansport backpack, a powerful new dell 2in1 laptop, and durable new stellar notebooks, so youre walking the halls with varsity level swagger. Thats what we call that new gear feeling. You left this on the bus. Get it at the place with the experts to get you the right gear. Office depot officemax. Gear up for school. Gear up for great. A special Vladimir Putin and the Prime Minister had a nice sunday t. Pair hit the gym in sochi and then sat down for a nice breakfast. Later attended a russian martial arts tournament. The yuan has been declining lately. It seems its an attempt to shore up the strong man image. Look at that. Nice muscle tees. 16 candles. There is that part. Theyre doing that like that, then they pull back. Theyre both standing on the ground, because you remember, i think that might have been what putin. I dont know, hes got a lot going on there, though. Peter orszag will talk about the fed and the markets. President obamas budget director and now a vice chairman at citibank, squawk box will be back from a minute. Without the internet i would probably be like a c student. Internet essentials from comcast has brought lowcost high Speed Internet into the homes of hundreds of thousands of lowincome families. It lets students do homework and study at home. So far more than two Million People across america have benefitted. Internet essentials is going to transform the lives of families. I see myself as maybe an entrepreneur. Internet essentials from comcast. Helping to bridge the digital divide. [ music playing ] welcome back to squawk box on cnbc, first in Business World wide. Among the stories front and center this morning. Hulu will be new epix, hulu is owned by npc universal, Fox Broadcasting and abc and meanwhile apple is expected to hike the price of the next generation apple tv. Thats according to a report on the blond 9 00 to 5 00 mac. Of course, thats much higher than the current 99 price tag on this new version. Apple in the spring lowered prices as a way to move that inventory t. New models is expected to include support for siri, a new Remote Control and the new user interface and an analyst call to tell you about this morning. Mike mayo of clsa sounding off on banc of america. In a new note, bac he noted should separate the chairman and ceo roles. Mayo says a yuck vote coming in late september would consolidate board power but increase the industrys reptational rafk taking the poor oversight and making it worse in a hurried vote and at a time of increased political sensitivities, in short, it could have the effect of putting a larger regulatory target on the industrys back. We are now seeing some thoughts for shareholders and analysts coming out ahead of this vote, which takes place in late september as i mentioned, for some background on this, in october, 2014, b of a amended the bylaws to lallow the shareholders to put this to a vote. It has become a very vocal issue. The labor group put out a note saying that it viewed this consolidation of power as a shocking sign of lack of self awareness on behalf of b of a. So we could see moves proxy advisory firms, show, more shareholders coming out with their views. Didnt they separate it . And put it back together . It was separated. They put it back together. They had some excuse they had no time or candidates, what was their reasoning . It was a way to consolidate and centralize the thinking of the board at the time. And that it was a very small adjustment to the bylaws at the time. Investors did not like being consulted and, okay, they have been saying the b of a, its returned to better banks. Thats one thing they have been pounding their fists about. Peter orszag with the latest jobs report. As you know, the Federal Reserve viet chairman fisher spoke on a likelihood of a liftoff in september and what the fed is looking for. We will take data into account. Those are the only things we have, that and our economic analysis. And its a decision is close, it will be influenced by data that come in recently. Peter orszag is vice chairman of Corporate Investment in citigroup and a former director of the office of management and budget and they said at the top of the show, peter, there is two things, china and the fed. Yep. Weve kind of talked about the fed a lot in the court appoint and when i saw you, i wanted to talk to you about china. They put a sound byte in, you know from fisher. So im supposed to go that way. I think steve and the rest of the commentary is right that you cant argue that 25 basis points is going to change the world and so the fed has been trying to mover thereafter. One point is if you wait until december, you are running a risk there is some risk. I dont think its high, of a debt limit showdown in december or january. It is the political season. I dont know when it isnt. You are hearing a lot of more hard liners on the right say look the only thing we were able to do is to use the purse and you know to say were not going to do it anymore. Even though they didnt, maybe some lessons should have been learned last time you heard it. I think the risk of a sloft shutdown is actually well over 50 at this point. The house has passed six but half of the spending bills and it hasnt done any and even the corporateing resolution, where you kind of punt the ball is harder because of this planned parenthood thing. There is some policy risk coming out of washington in addition to the stuff around the so the, just like we have people that some people think its crazy to think about raising other people think its crazy not to. You have the same sort of bifurcation with people that follow china. Have you people that say these guys are masters at what they do, never count them out. You got other people that say, this is it this time. The allocation of capital is going to come home to roost, i read this piece yesterday, zombie factories in the new york sometimes i times of china, across china, theyre churning out stuff. They cant lay off the workers, making all the cement. There is no place for the cement to go at this point. You seem to be a person that says say that will be able to handle this because theyre so talented at a staterun we said for a while, we should be expecting a deceleration. To what, 7 . To 5. A real 5 . To 5. The problem for the chinese economy is so much of the growth came from working agriculture to manufacturing. That works when you have in the late 1970s, twothirds of the work force in agriculture. Now its down to a quarter. So that gain is harder to play, theyre reaching a turning point. The point at which that no longer adds productivity. Growth becomes harder thereafter. Then you have to invest from r d and boost consumption rather than shifting workers across sectors. I think thats the context here. Fundamentally, thats the problem that they face. What about you moved manufacturing, you manufacture things that in a slowing Global Economy arent going to be used. When do they need the lay off . And say a lot of this stuff will be built. You are getting the chinos store. There is the biggest risk. Fundamentally, china has been a highly leveraged bet. The slowing from 7 to 6 or whatever it is, a lot of Capital Investment, the risk is the political backlash that comes. Do we wind up with a pag the dog scenario where the chine eads leadership finds it attractive to have tension. Arent we seeing signs of that . Its not hard to imagine how that could play out. Any chinese scholars are much more worried about slowing growth in china for global stability than rapid growth in china. How worried should the global worth be, something that changes what they plan to do in raising Interest Rates . I dont think so, as long as markets remain relatively kaim. The iony of the statement that bay the odds of september have gone down, stabilizing the markets, is it pay have made the feds more likely. Looming in the distance is this visit by the president to the u. S. To visit with president obama, so, of course, all of these economic worries are sort of coming to a head ahead of that, now the Washington Post is saying the u. S. Is reportedly crafting sanctions on carolina over Cyber Security. So what does the picturing will like as the visit approaches . Well, obviously, one of tension. So its not just the cyber story, there was also the story that appeared in the media about the counterespionage efforts and whether there were agents in the United States pressuring native chinese to return and so on and so forth. There are clearly many flash points in the Cyber Security is high on the list as is that espionage story. You write about russia, everybody isled o. Not great growth prospects. Brazil is missing, are we missing something globally on the horizon that maybe we cant continue to be the only decent house in a declining neighborhood . And we have no Central Bank Intervention possible this time around around the world. Well, thats the broader issue. We have the scope for policy intervention is large. If we were hit with another serious a physical stimulus is hard to pull off politically. We arguably have substantive room to do it. Politically, Monetary Policy is also constrained and so the risk we run is lord forbid if a crisis were to develop, our tool kits is looking pretty limited at this point. Right. And so shouldnt that be something that were owe. To get over that. Doesnt murphys law happen, boy, what a terrible time for a global slow down, we cant do it. Doesnt na mean its going to lap . Not necessarily. Wooer in a bad place if it does. This comes back to the point of Political Polarization not getting anything done. I think actually there would be widespread adpraemt on a pack only of additional Infrastructure Investments and deficit across the political spectrum. We will not get that. The two side are so far apart on the details and basically everything. Well see what President Trump does. Thank you. Good lord, thanks. Coming up. Financial times u. S. Managing editor wants to help you avoid tunnel vision. Its the subject of her new book. Shes here to explain. 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Because the more data you have, the better. And right now at at t get 300 credit for every line you switch when you trade in a smartphone and buy any smartphone on at t next. It turns out expertise in a certain field could lead to tunnel 56. Thats a risk described . A new book by Financial Times u. S. Managing editor. The silo effect looks at how breaking down barriers can make for more efficient business and policy, policy making, julian, its great to have you here. Its great to be here. How did you get the idea for this book . Back in 2006, a lot of people in the media were saying bankers were mad, dpreed greedy, whatever. I realized the crisis happened was because the world is marked by silos, the big banks have so fragmented, the left hand doesnt know what the right hand is doing. Its not just the banks, its right across our modern world. The terrible paradox we think were hyperconnected with cell phones and airplanes and supply chains but actually our minds and our lives and our organizations are as fragmented as ever. Do you think this is relegated to trading desks, they live in their own bubble, subprime bond packagers had met a submime borrower they would have understood the credity worthiness is spotty . The problem is china, how many people put money in china stocks, walked around in the delta or Something Like that and looked at whats happened on the ground in china . We have a very fragmented world. If you look at banks today, theyre very fragmented often. The debt goisd, the people tradings, in thailand may be looking at another part of the world. So what my book tries to do is not just describe the problem. I tell stories about groups like ubs or the federalry serves to illustrate problems and sony, i try to offer solutions as well. Give us some examples. Who is doing this well, who is doing it poorly, for example . Some of the people that had real problems in the past are ubs, merrill lynch, citigroup, sony, classic examples. You want to know why sony never invented the ipod, it was complete fragmentation that paved the way for apple to come in. From the companies that managed to think about how to break down the silos are groups like facebooks, facebook is known for changing how we interact in the outside world outside facebook. Theyve done huge experiments internally about how to break down silos, too. Cleveland clinic in ohio, fascinating example. There are hedge funds as well, really interesting in terms of breaking down silos. The other point in my book is that if you can break down silos and tunnel vision in a world where everyone else around you is marred by silos and tunnel vision. You can actually go out and make a lot of money. Facebook has the benefit of being founded, not every company can become facebook and instill that culture. They have to get over 100 year legacies in some cases. That is absolutely true. You can look at ibm. They broke down silos inside that group. There is a hedge fund i write in my chapter called Blue Mountain which made a virtue out of buffet bucketing. They say most Financial Institutions are so trapped in tunnel vision, they cant see the real opportunities that come from jumping between debt and equity or different types of products. So they go forth and try to bucket buff as they say to try to make money. One persons silo is another persons opportunity. Thats the really exciting issue here. I love the term bucket busting. Can we ask you about china . Absolutely. Yeah. You equated whats going on in japan to the 1980s i was recently in china the comparisons that i heard were from Chinese People and they equated it to what the Federal Reserve and treasury were doing in 2008 the ban on sort sell tag we had here the buildup of a Balance Sheets that, eventually they have to unwind, similar to what the Hong Kong Government did after the 1997 financial crisis they had to four or five years deal where this giant Balance Sheet problem. The problem theyre trying now is a mixture of some of the worst of the subprime crisis and some of the worst of japan. If you think back to 1990 and after the japanese bubble burst, for several years the japanese government could not believe their miracle was going wrong. They kept propping up prices, proping up the banks, prong up the stockmarket in all kind of ways and guess what, it didnt work, clearing prices matter. If you dont get clearing prices, real genuine prices that concentrate on the market. People dont have faith on finance and the system. Unfortunately, carolina is in the worst of both worlds. People are losing faith in the government as a source of value and a reason to believe in the system. They dont yet have market prices either that really can be trusted. And nor may they for some time it seems. Well watch how this plays out. We watch a lot of it playing out on the front page. You guys have been breaking a lot of news. Its a huge story for us and all the media right now. The u. S. Managing editor, author of the silo effect which is out tomorrow. Coming up, profiles an incubators for startups if austin, the, one that allows kids to design a fort and receives an easy to assemble version of that fort by mail. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . I was going to the library to do my homework. It was a little bit of a walk to get to the bus stop. I had to wait in line to use the computer. Took a lot of juggling to keep it all together. Whats possible when you have highSpeed Internet at home . The Library Never closes. It makes it so much better to do homework when youre at home. Internet essentials from comcast. Helping to bridge the digital divide. Welcome back to squawk box. Austin, the,s that ranked the top u. S. City for startup activity in a recent study. Kay rogers has details on what makes austin ideal for entrepreneurs, besides being a fun city with great weather. Often, it cemented itself as a startup city to watch, breeding 550 new entrepreneurs this month, this year. Now one of the big factors that contributes to the success are a slew of incubators around the city, a Capital Factory which is fun rolled in one. At any point they have between 300 and 400 startups right now, hoping to bring their business to the next level. There is a lot of overlap in what has historically been the live music capital of the world has a lot of creatives. We have been blessed with extraordinary successes that have created an ecosystem with Angel Investors willing to invest in our early stage. For startups like cardboard cutouts that their kids create, being surrounded by up and coming talent helped propel their own business forward. The energy from other startups going through similar sort of stages in their business, certainly with we feed off each other, everybody you know provides everybody else with advice and a meaningful connections in health and things like that. Its often famous for live music, barbque and driving startups. Very interesting fun city to travel to for sure. Very hot in the month we decided to go, its 95 degrees, it is good nonetheless. Kate, thanks, so much for that story. They john taylor says the feds should raise the Interest Rates and Richard Weiss has the list of sectors to buy and avoid. Squawk box is coming right back. O chatter ] [ male announcer ] andrew. Is these two oil rigs look the same. Can you tell what makes them so different . Did you hear that sound . Of course you didnt. Youre not using ge Software Like the rig on the right. Its listening and learning how to prevent equipment failures, predict maintenance needs, and avoid problems before they happen. You dont even need a cerebral cortex to understand which is better. Now, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. The country to countdown is on, is main street ready to buy or bail right now . New details this morning from individual Investor Sentiment. Straight ahead, plus, how important is this weeks jobs report for the fed as we try to read the Interest Rate tea leaves . We will debate with the global chief economists. And local buzz about the mtv music awards, mileys mishaps and kanyes big announcement. New ways to stay relevant in this fragmented viewing world the final hour of squawk box begins right now came in like a wrecking ball i never live from the most powerful city in the world, new york. Thisis. Welcome back to squawk box. I think there is music award inflation. I think each award is worth. Which one is there . Vma. So many of these, is it not . Awarded mishaps, crazy speeches. All kind of stuff. There arent that many where you can be just totally unbuttoned. So to speak. Thats a good way. As a millennial. Is this a part of the culture . I made it through the whole show. Im trying to understand the culture. I thought we decided its a mindset. Have you looked at viacom. Lisa, you are purportedly someone that knows about music and stuff. Are you focused . No. I used to watch. Its a cool thing when it came out. You watch as People Living together arguing and stuff . All right. Futures up, real world. Glad i have an eye for this. I get up there. Hey, look at that. Knock down triple digits. Down 90 at this hour. We have been down, i saw at 110. The ftse. Those improved a little bit. Yen we have degrees as a european market. Theyre helpful. Take a quick look. It had a big week, higher, regaining ground. Down today i think hayley has the stories of millennials. Not just millennials, every investor. China injected 22 billion into banks through short term lending. Beijing will abandon its attempt to boost the stockmarket through the large scale share purchases they have been undergoing for months at this point. Instead, the paper says now chinas government will step up efforts to find and punish those suspected of quote destabilizing the market for shanghai down just about shy of 1 in trading overnight. In corporate news, warren buffets Berkshire Hathaway, a stake in phillips 66, a nearly 11 stake in the company. Its notable, because we talked about maybe warren buffets calling a bottom in oil. He sold a stake last year. Finally, a new report by banking analyst make mayo warning against the possible consequence of a yes vote at a september banc of america Shareholder Meeting that would essentially combine the chairman and ceo rules, they argue such a vote would represent a risk for the industry at a time when b of a has poor oversight practices. You see that stock down threequarters of 1 this morning. Worth noting there were several upgrades last woke in the face of this looming vote. It locks like it has been at 16 for a very long time, right in that range for r forever. Other stocks on the move, j. C. Penny to boy from deutsche bank. They have approved the mix and is moving towards better pricing and mark downs, suntrust updated twitter noting the significant pullback in the share price they say the risk evaigs equation now appears compelling now, kayla. All right. Thank you, steve. An article in barons meanwhile over the week suggests paypal could rise 40 to 46 a share if it succeeds with investments tied to Payment Systems innovation. Since being spun off from ebay, they say paypal is now clear to do deals with big vendors like staples and move into back Office Operations and other services. Thrift noting that stock is down about 9 in just the last month. Still at 3520 and so significant gains from them. Apple expected to hike the prie price of the next generation, apple tv t. New price, pecked to be 149 or 199, higher thatten the price tack on the currents version. The new model has support for siri, a few Remote Control and user inteface. A veteran fund man is offering thoughts on whether the feds should raise rates in september. I dont think they should be focusing on the jobs market. Thats the mandate. So theyre getting it confused with growth, with what they can do to stimulate the economy or slow down the economy. What they really should be focused on is inflation. Which is why you see debates within the fed, regard whack to do. The old timers are saying, look, lets not get away to our mandate. Lets go to squawk masters inside the fed, from Stamford University and a senior fellow ought the Hoover Institution and a former under secretary for international affairs, john, you want to do there rules based thing with the fed. Last week, one week, we got to listen to dudley and kick that around. Then we got to listen to fisher and kicked that around. Yellen didnt go. So there is some intrigue about that. And then we had. Aryan na, george and other organizations. All these different people have different opinions an mandates. Why would you want to simplify this or make it rules based within we have so much fun with this . No one has any idea what will happen . Why would you want to ruin that . I think it will be better for the economy. I call it get normalized. Away from this, back and forth. Simplify a bit. Remove uncertainty. You cant help but think that would be good for the markets. As i read through all the chatter, it seems to me theyre basically thinking of continuing with their plans to renormalize in september sometime. But well see. What the rules based system we should put into effect will have us at what level right now . I guess thats the devil in the details. Absolutely. These guys and gal need to feel like they can respond to god knows. I dont think there is anything they wont respond to. Which i think is a flop. If they cant do it subjectively, they feel like, you know, theyre so good at this, you know, the little ingredient here the ill ingredient there. Theyd be handcuffed if there were rules. What would the rules be dictating they do right now . Quickly a bends on the rules. I think any reasonable rules suggests the rates should be getting up there, moving back. I think of it as more normalization we had many years the economy worked well in the 80s and 90s until recently. So they can do ut. Its been done in the past. Its not really rocket science. It does get away looking at each and every little move and really overreacting sometimes i think it leads to better performance. No country too small worried about systemic. No currency too obscure. No market break too minor for them to take into account on how they move Interest Rates. Thats what bothers me is that, god, what did we do without them before . Howd we get by . Howd the economy get by before this micromanagement . They are talking about it being a possibility t. Truth is, theyve done it in the past t. World is different, more integration lets you think of stan fishers remarks, even if inflation somewhat below the target doesnt mean we should be easy forever. We start getting back to normal so that seemsz to me the sensible kind of way to think about this. Its not saying just because the inflation rate is slightly before two, we got to step on the accelerator. When i heard that, i cant believe thats news, maybe we ought to be looking ahead for inflation instead of coincidence leishman. There you go. No you are not actually a member of the fed, right, are you . No. Okay. Would you like to talk to yellen . I would ask as a policy maker how he would process the 2 target . The comments on our air here the other day was that if we move and we raise when the rate is at is. 2 at 1. 2 were embeding the inflationary jump. How do you deal with that inflationary jump . I dont think thats correct. Your target is 2 . That might mean are you a little easier than normal but theyre so easy now, you know, half a percent, 0 Interest Rate. There is room to move but still be on the easy side. So i think he misses that when he says 1. 2 less than 2 lets go for it. You have to start moving. Stan fisher put it well. I think stan fisher put it well, the strong dollar, whats happening in china, i will get numbers that will be going the other way over the next several months. I guess your point you didnt answer sprefl joes question, which is where would your formula . I believe its around 1 smr its the 1 or a little better at this point. You know, the economy is not as good as wed like. Its moving ahead. So you plug in the numbers. Thats why i say, a 1. 2 inflation, it might mean it should be one rather than a 2 Interest Rate, 1. 5 rather than 2. 5. It doesnt mean 0. Thats the confusion people have when they come to these numbers. Go ahead. It comes down to making a judgment calm. I know, right. Despite the rule, you say you know what, all the things you talked about, the market moves, i got to look through those things, john, go ahead. If your doctor told you, its art too as well, dont you wish there were some things would absolutely do it . Because you might be subjectively in error or affected by something, you know, that affects only you. Its not good for the greater good. Its not just one person, although it probably is yellen. You got to hear from so many different people, every waking thoughts. Better than living in china and having one guy make the thoughts. Speaking of china, john, the point the yuan overvalued or undervalued relative to market forces, do you think . Well, i think the central bank has been intervened to try to prevent it from moving a lot. Since the initial, i calm eight regime clang and in earlier august. They first had the depreciation about 3 in two days. Then it hasnt moved at all. There has been a lot of pressure. So they must have been intervening quite a bit to prevent it from moving furtd. Its quite like what happened in 2005, where there was a deappreciation. They held it steady for a few weeks. I think theyre in that mode at this point in time they are intervening. Again, its only been a 3 clang in the currency over the whole period. What were hearing, the Political Class is mad about the devaluation. But they could, theyre supporting it now, right . They have to sell further to buy so that it should actually be cheaper in the real world, shouldnt it . No, there is definitely dollar pressure on the yuan. I think people forget. Its been a small movement. It is. They are attempting to let the Exchange Rate be more flexible, but i think also just so i could add, a lot of there is brought on by other currencies. You know, we had the qe. On the dollar then japan got it and they drove up the dollar a bit. Then down the europeans did the same thing. I tend to think a lot of this has to do with the extra currency movements affected by the subject we are talking about. A very interventionist Monetary Policy. Of course, emerging Market Companies use depreciation aside from china and so there is a lot of International Aspects going on here we node to sort out. Thats one of the reasons id like the fed to get back to a normal policy. I think it will cause other Central Banks to do the same. It will generally be beneficial. Are they generally gone in december, john. I would think so. Ill recommend it. Thank you. All right. See you later. Coming up, when it comes to making money, how are investors feeling about this market . Do say that have bulls looking for opportunities . Sentiment physicals are just ahead. Later, a big jobs report later on this week, what you can expect from the numbers and the fed in september. Vanguards global chief economist and former Council Chair Austin Goolsbee will join us, squawk box will be right back. Welcome back to squawk box, futures right now, well take a quick look at the dow down about 12 and change on the s p. A little over 22 on the nasdaq. Speaking of the dow, United Technologies has been downgraded to equal weight to overweight. The analyst citing a variety of negative factors, including questions about china and the negative impact of currency fluctuations. Goldman sachs and Morgan Stanley following recent market pull back it said barclays, i couldnt help but thinking about jason day, plan we havent mentioned that. Six strokes, count them, six after that great performance at the pga. This guy looks like he can win everything. Another man crush of yours . Totally, totally. Its beginning to get a long list. It is a long list, he is definitely on will. Lets get a check on Investor Sentiment in the wake of volatility, optimism and pessimism, sentiment taken to a ninemonth low. Here to discuss is charles rockledge, journal editor and Vice President of the American Association of individual investors, charles, good to see you this morning. Good morning. What do we make of what happened last week . Its still too early to tell the forward reaction. The sentiment runs from thursday to wednesday. Not a whole lot of last weeks corrections priced in. Some of it, we did see bull sentiment rise, some saw the correction as an opportunity. Some people were fearful it might lead to a bigger downswing. Its important to realize, this happened quickly. Ten days ago, the s p 500 was off its record highs by 1. 5 . Really, if you werent buying on monday or tuesday, you really missed a chance to buy on the bottom. This happened very quickly. But this week, were asking our members, what did you think of the volatility and very mixed responses, some were positive, said it was a buying opportunity. Some were negative. Some were more neutral. So a lot of the answers were varied. There is no clear consensus on the part of members as to how they are viewing the correction. To see bullish sentiment up 132. 5 , assuming thats the number. In a bullish period that cap cured the crazy volatility of monday and tuesday does tell you something about the individual sentiment in this market right now. Yeah. Its important to realize, bullish sentiment was at an unusually low little. Some people were looking for stock to pull back. The general feeling stocks were over valued. It run too long without a correction. They were happy to see the market pull back. We probably did have members who tried to boy on monday and tuesday. I think that increase in bullish sentiment came off a really low low, its important to realize that bearish sentiment is above average. It has been above average in the last 12 weeks, prior to that, if we look past june, we really only saw bears above average nine times over the past 52 weeks. Low levels of pessimism. We saw it shift. I think there are some people that werent bullish simply because they were concerned stocks run too far too fast. They were happy to see the pullback. Why do you think we saw in the same period equity outflows at 15 billion, are you saying we should infer that that was mostly institutional selling . No, i definitely think there is individual investors. We seen the ici, mutual fund flows out of the domestic funds, they have been negative every week for a seemingly long period of time. And i think it really, this was a shift. There are some people who are selling, also institutional side as well. But i do think there were some individual investors who were looking at this as a buying opportunity and certainly from the standpoint of our members, we try to breach longterm investing, not trying to tie the market. Really think long term in terms of how you invest. In past surveys, charles, what has it that ento really see a market influence in individual Investor Sentiment . Is there usually an effect from global crises or is it more the mostically oriented shifts . It depends on the individual investor. We certainly see during periods where the markets are running really hot, bull sentiment is running high. As we go back to 5th 2009, we saw bullish sentiment hit a longtime low. We do see the Market Movement affecting our sentiment on a week by week basis. I think on the longer term, they are paying attention to valuations, to price movement. Theyre also paying attention to whats going on with the economy as a whole. I know during times of volatility, charles, surveys like the aiii becoming increasingly important as we gauge how the individual is thinking about this. We appreciate your time this morning. Sure, thank you for having many e. Charles, thank you. Steve. Thanks, kayla. Coming up, paying homage to bill dylan in minneapolis. Should the fesd raise rates in december . We will talk policy predictions. Squawk box is coming right back. For the second time this month, the dodgers were on the wrong end of a no hitter. Jake arrieta struck out to complete the first no hitter of his career. He allowed one walk during the win over chicago t. 21yearold leads the majors with 17 wins. Its the first no hitter for the cubs since car loss sambra in o in 28. He will probably want to be a 20game winner. Not a lot. Joe. Yeah, i hesitate to bring this up. Uho. Well, your kids play baseball, right . Yes, they do. Do you see any Little League . I did see some of it. Okay. Crickets again. Yeah, those kids are 12, arent they . Theyre like 16 some of them throwing at 90 miles an hour. The pitcher hitter lewisbury, cole, whatever, did you see his swing . It looks like a major leaker. His father is a major leaguer, a big pitcher with all kind of heat. I would be afraid to stand at that against him. Theyre pitching at 80 miles an hour. Actually the equivalent of 90. Its closer. You see the poise at like 3rd base, fielding some of the hot and the second. That was 12yearolds. I did. I could not believe the talent that these kids had. Coach steve leishman. Its not every day a mural featuring a hometown artist gets painted on the side of the building. But thanks to an internationally acclaimed muralist from brazil, thats exactly whats taking shape in downtown minneapolis. Eduardo cobra and his fiveperson team have been painting this five story mural of bob dylan since wednesday. Although, thats incredible progress for less than a week t. 50,000 mural project is a part of the trust effort to revitalize and pri art to the downtown area. Dylan actually coowned the ortheium theater in the 80s. The mural is expected to be finished september 8th. I think hoo es the greatest songwriter after owl time, he was picked. I think so. A great poet of our time. A pillar of the culture. Your next live shots should be in front of that. Thats an awesome idea, kid,ly do that. Coming up the jobs data, Richard Weiss manages more than 25 billion for American Century, find out why he is looking at Consumer Staples and health care. Squawk box will be back from two. This just in 50 million customers data was not compromised this morning in a Security Breach that didnt happen. Wall street. Not rattled. At all. No. Not at all. Not at all. I mean, look at the day. Sir. Sir. What went right . What went right . Everything. Thank you. With threat intelligence, behavioral analytics, and 6000 experts, ibm security will help keep you out of the news. My dads company wasnt hacked today. Cool. When youre not confident you have complete visibility into your business, it can quickly become the only thing you think about. Thats where at t can help. At ts Innovative Solutions connect machines and people. To keep your internet of things insync, in realtime. Leaving you free to focus on what matters most. Youre got to read. Ill tell you later. Welcome back to squawk box. Heres whats making headlines this morning, joe says dylan is not the number one songwriter of all times. Meanwhile. Which i dont understand. I will get if trouble, joe, if i keep talking. United continental plans a revamp of the scheduling procedures to reduce delays, united is trying to narrow the gap with delta airlines, which has the best record of u. S. Based airlines, straight out of compton, topped the Weekend Box Office for the third consecutive week. The film took in 13. 2 million in north american tickets. Its over 134 million. That a big number. Rumors of Ashley Madisons demise may be greatly exaggerated. According to company t. Parent site issued a statement saying it continues itsdaytoday operations and this past week hundreds of thousands of new users signed up. How great. Yeah. Its a heavy week for data leading up to fridays job reports. Which could be a swing factor. Here we go. Lets bring in joe davis, global chief economist and Austin Goolsbee, economic advisers, chairman and professors at the Chicago School of business and strategic partner. You got a list here. Austin, let me start with you, what did you hear in jackson hole about what the feds will do in september . Well, i think there the a lot of uncertainty now from whats happened in china and you saw bullard saying if the vote were that day, they would wait, but he was hopeful it sounded like conditions would smooth over. I think its not true i think there are a lot of people at the fed that want to raise rates, i think it doesnt make sense. Lets wait and make sure at least the u. S. Recovery is going to be sustained and Strong Enough to keep it going. Austin, lets leave the debate a second for what they should do. I want to get to jodi and hear what he heard out of jackson and what you think is going to happen next here, joe. I think its actually now postcall. I think the fed was clearly leaning as our view was the fed will move and begin their normalization process in september. I think the china weakness is weaker than expected. You think the Federal Reserve is starting to see that, more importantly, i think they will be reasonably confident that core will stabilize as quickly as they would like. You dont think it will happen in september . I dont think so. The labor market will continue to tighten in part because of the number of americans the feds are anticipating returning to the labor force will not materialize. At the same time i dont think the Federal Reserve will raise rates above 1 in part because its a funds rate. Also, what has the fed gained by waiting until a later this year . I think one thing you gain is you take away the danger of again undermining your credibility. If they do what basically happened in europe where they raise the rates and after a few months, conditions are worse, they have to cut the rates. You again undermine what has been a persistent problem for the fed. They announce that they think the feds forecast thinks that the economy is about to get really good. Then it comes in, its not. And you have to reverse yourself. I think that would be damaging. Then the other thing is, you dont have to experience the deterioration of the job market or any of the things that might happen from overtightening. So whats your call on the effect of whats happening in china on the u. S. Economy . Well, i think the direct impacts are actually fairly minimal. I mean, its as you well know, steve and others, the direct linkage from a trades channel is about 1 . Exports percentage to gdp. I get concerned about indirect channels. We are seeing that on the financial market, volatility. Broader act. Emerging market demand exchina has been a persistently negative headline and disappointment for growth this year and we are increasingly concerned perhaps the markets dont fully anticipate the slow down we are seeing in china. I heard fisher saying we are grown ups here, we wont overreact to the way the market is overreacting. I think fisher at least wanted the optionality the flexible to hike was that your take also . Yeah, i think are you right that he does. I guess my view is, if china is in this negative lending cycle, they had a huge lending a and the collateral goes down, they could easily put themselves in a 2008 style situation or some major credit crunch situation. If china goes into full blown recession, i dont think its realistic to expect the rest of the World Economy to avoid going into its own recession. Thats the weird thing is that in this post28 environment, every over valuation is a bubble. Every asset decline is a meltdown. Isnt it possible china was running at 10 and cooled down and below 6 . It doesnt end up being a crash like 2008 . It is possible. I hope that thats correct. Now, there was an epic runup and a lot of it as weve gotten to the tail end of this runup was in Capital Investment and the thing about either investing in residential houses like we did in our bubble or investing in a whole bunf of Capital Investment projects. Thats the type of thing, if you get overcapacity, it drops to zero. It sends to have a bang, bang kind of a look rather than a soft landing look. Joe, real quick, not you, joe. I jump every time you say that. The other joe from vanguard, give us your jobs predict from this friday. I think we will see steady, more of the same. We are looking for a modest uptick in wage growth which is key. I think around 200,000 is reasonable expectation. Joe in austin, texas, joining us this morning. I have to be here anyway. You dont need to thank me. You are welcome, though. When we return, with 25 billion in assets under management, youd think this guy might know what he is talking about for American Century investment. Where is rich weiss putting money for clients now . Find out why the market dislocation like this creates great opportunity. Thats coming up next. trader vo i search. I research. I dig. And dig some more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. We have a shot at this. Patriots Quarterback Tom Brady and nfl commissioner Roger Goodell meet in court. Once again you are looking at a live shot at the courthouse in new york where theyre expected to be later there morning. Brady is pushing for his four game suspension to be overturned. The patriots first regular season game is september 10th against the steelers on nbc. I would like brady to be there. Both sides hope to receive a final ruling. The Steelers Leishman and kayla. Thats a big thing. A very big thing. Yes, brady needs to be there. I want to watch it. Im done with, you know i was up in the cape. I heard a guy on the radio talked about what a horrible sports summer its been in boston the red sox are 14 games back and every day there is brady news. It was the worst sports summer for boston in years. Following the worst snow. I would give anything to be 14 games back anything to be. I stopped checking. I saw that their average, theyre winning. While you are looking for that. The winning percentage is 40. Thats not the worst. 30andahalf games. Really . Oh my god. Lets take a quick check of the market. We seen slippage in the oil futures. We see oil down by about 2 and chevron and exxon are feeling some of the losses in the futures markets. That will hurt the dow. You can see the dow futures are down. Wti down 2. 5 . You see the dows implied open would be 136 for germany and france in negative territory. Ftse is closed in the u. K. You are looking at chevron and exxon. Chevron is down 1 . Exxon down a little more than that. Red sox are in last place. At 14 still . Theyre 462. A couple came below 400. Miami and philadelphia. There is another at 406. Markets may be shaking. That doesnt mean your portfolio needs to be. Our next guest runs 25 billion for global asset, American Century investments. Hes here, how to tell you to put your money to work in this environment. Ly ask you this question rich weiss, weve asked a lot of people. That is everybody has been conditioned to buy the deficit has been working for six years buy the dips. It just, and everybody is saying it again and thats when people get a little bit nervous and think that maybe this time you should be selling strength. Have you been conditioned just to buy the dips . You are a guy that you know could have been conditioned because its worked for so many times . How do you know its not the time to sell on strength . By anybodys estimation, this recovery, this bull markets long, so what may have worked over the last five, six, seven years, fought likely going to be the winning Investment Strategy over the next one or two years. Right at transition point here likely with whats going on in china the fed trying to reload, earnings decelerating as opposed to act sell rating as they have over the last several years. Were not seeing a lot of top line growth. Market valuations at levels that we havent seen in several years. Are you making your case or may case . You are telling many tow sell on strength then, arent you . Well, if i have a very longterm investment arising or you have a high tolerance for risk, certainly, you can buy on dips. If you are looking out one or two years, its really hard to see where we will get a shot in the arm for the recovery or the bull market. And then as you talked about, i dont know, not everybody uses the Robert Schillers pe multiple. If you did use his, there have been many times historically that its been this rich then you got rates possibly headed up. Then you got important profits possibly peaking then you got. One thing you have is oil prices giving a tax break for the whole world. That right there might be enough to change things. By itself, its unlikely. Certainly, its a boone to the consumer as we all know the consumers are the largest part of the domestic economy, but you dont have the rest of the globe behind you. Chinas clearly likely to disappoint further. Europe is still languishing. So were all by ourselves here and its going to be really hard for the u. S. To prop up the Global Economy just based on lower oil prices. So are you raising cash . More than you normally would . Well, where we adjust to portfolios, wed certainly never suggest people knee jerk react to market volatility. I think now is a great time to reassess your Asset Allocation based on your risk tolerance and investment horizon and possibly reposition your equity and fixed income portfolios. The types of equities the sectors, the types of strategies that have worked so well over the last several years again are not likely to be the ones that will work well over the next year or two. So perhaps looking forward, strategies like Equity Income funds is one of the best where we protect the downside but getting most of the upside or in your fixed income portfolios, the multisector bond funds which have done so well are really equity funds in disguise. You need to perhaps reposition over to core diversify bond funds so again, we say take the time, not necessarily to sell stocks in a panic, but reposition the types of holdings you are in. So, rich, are you recommending Consumer Staples . Health Care Technology . A lot of the names in that space, heavy dividend pairs. Im wondering at what point everyone piles into those names . Its crowd itselfed, two expensive, too little upside. There is a risk. Its not necessarily we are in those sectors for the upside. These are what are known as late cycle or defensive sectors, so they perform very well in bull markets, more importantly, theyre buffered on the downside. We saw tech well here given the recent volatility. Tech, consumeer staples and health care have been three of the best sectors over the last weeks and months and are likely continue to be as the economy continues to drift and the bull market continues to wane. Waning, a lot here, you are more negative than most of the people we had on today, its tough. Because you know most places you dont have the about to short market. Have you the ability to stand aside. You dont have the ability to get other way in the American Century in your fund, do you . We do. In our global allocation fund. We as most Retail Investors can essentially bet the other way without shorting and you can do that by use of the vix futures or etf or vix futures. Ly use that as a little assurance between the potential downdraft. Thank you, i appreciate your time today. See you later. Up next, jim kramer from the New York Stock Exchange on the week ahead. What investors need to watch ahead of the opening bell and later miley and kanye providing big moments for the mtv video awards last night. Big announcements from both. Details just ahead. As we go to break, in negative territory t. Dow opens down 133 points. Squawk box will be right back. When you get up to 50 off hotels with travelocity, it means you can also afford to get up to 50 swedisher swedish massages. Making it the place to find a place for labor day. Go and smell the roses check out these dow components which are largely responsible for some of the 90 point loss you saw in the average itself. Chevron, as you can see is down. Exxon down. Both of those, at least chevron, had a great move on friday. United technologies trading a little bit lower, a downgrade, and you can see boeing down 1. 64 . Thats hurting some of the dow. And utx and boeing usually react to some of the negativity out of china. Other stocks to watch this morning. Planet fitness started off with a buy rating at jeffreys. The analysts calls the fitness chain a well managed company that continues to expand profit margins. That stock up in the premarket. And this company which joe pronounced protectly earlier and now i have forgotten. Alnylam. Trying to fit in here. A pharmaceutical and Medicine Companies announcing favorable results from a cholesterol drug. It might need to be given only every three to six months. That stock up about 6. 25 . Medicines co. Up also. And syngenta, some of the major shareholders are upset of the rejection of a takeover bid from monsan monsanto. You can see what thats done. They are facing some calls. May seek to replace some board members. Joe, youre not the only one who can mispronounce things. Lets go down to jim cramer. Every time i try to go onto my internet, i see your picture. Did you see that on the nbc . You got a huge writeup that we have highlighted. Every time i go there, its a good shot. Good shot of you. Well, always try to do your best. So proud. Today is another day where i dont think its linked necessarily to china at this point. Maybe it is. But the percentage loss wasnt much there. Is this more fed angst or just sort of a directionless move . I think theres fed angst, because there are just people who simply are too willing to bet that there will be nothing going on with the fed, and i think steve did a fabulous job with dr. Fischer, and i know he speaks this weekend. It was in sync with being pragmatic. If you dont think they will be pragmatic and thoughtful, you should sell stocks. I think they will be. I am concerned about earnings. When i saw the oil stocks rally big when i know their quarters are going to be bad, it was an opportunity to lighten up on those. Most of the drug stocks are doing badly. Most of the tech stocks and financials are doing badly. You have a bear market setup that i think people ought to realize has already occurred. We talked a lot about a lot of guys say buy the dips. Do you think its a sell on strength market . What dips have been worth buying . Facebook, netflix, amazon, those have worked. Electronic arts worked. I guess some of the drug stocks, biotech, but dip buying has been horrible for months. I dont know where the positive septemberme sentiment comes from on what to do for the market. Some stocks are up. I think thats bull irish. I listen when people say there are so many stocks down, and i always listen when people say we could have a big sell off. Weve had one. Well see you in a couple minutes. Happy monday snch. Coming up, miley cyrus makes a splash and kanye west announces hes running for president. Check out stocks of viacom. Isnt it beautiful when things just come together . Build a beautiful website with squarespace. I have decided in 2020 to run for president. That was kanye west at the mtvvmas, it was at the end of a 12minute rambling rant about his career. He also admitted to smoking marijuana before the show which, steve, you think is actually a possible precursor to a run for president . Thats the way it works. Admit to your drug use and then youre able to run. Donald trump tweeting who does kanye think he is running for president . What experience does he have . None. Kelly odonnell also tweeting. You think trumps response was tongue and cheek . I think the president s take from a couple years ago on kanye. Not safe for cable . Jack ass, i think is okay for cable. Its an animal, isnt it . Yes. And its a show on mtv. The host was none other than my miley cyrus. She was a whirlwind of interesting costumes throughout the night. Before the show, miley knocked off the buzz on social media by posting a nude selfif i and during the show by flashing her breasts. She closed the night by announcing a surprise album, miley cyrus and her dead pets. Shares of vie. Com down. There are some selfabsorbed individuals in the music business, arent there . Is he me . Just a couple. All right. Make sure you join us tomorrow. Squawk on the street is next. Good monday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer at the New York Stock Exchange. David faber is off today. We put the month of august to p bed. Busy week ahead including the jobs number on friday. Oil is giving back some of the Massive Gains from friday. In our road map, twitter gets an upgrade from sun tres bob