Transcripts For CNBC Squawk On The Street 20130827

Big headwinds facing the market, and the Obama Administration saying it is ready to act in syria if needed. Secretary jack lew on squawk saying moments ago the president will not negotiate over the debt ceiling. Good news for tiffany, and luxury, in that it was boosted by sales in china. And the end of the era, bill ackman is bailing on jcpenney, and they are looki in ing to ses shares. And we will look at the new home sales to be released. Treasury secretary jack lew telling our own john harwood that the president will not e negotiate over the debt limit which could be reached in midoctob midoctober. Take a listen. We wont be negotiating over the debt ceiling and congress has authorized funding and committed to expenditures and now the question is do we pay the bills that the United States has incurred. It is the only way for that to do is for congress the act and act quickly. What we need in the economy is certainlity, and we dont need a selfinflicted wound or crisis at the last minute. Congress should come back, and they should act. Jim, they say when it rains, it pours and government is part of the equation today. Well, think ant, it syria, and taper and new fed chairman and debt ceiling and budget battle and the rates going to wrong way, and down, not because of good news, but bad news, and the gasoline prices are going up. It is like we just suddenly have a lot of things on our plate that make it so you dont want to sit there and go buy caterpillar. You dont want caterpillar . The prices are going down. Well, i think that they will spike because of what is happening. Oh, that is interesting in the suez. Well, you know. If we do something there, it brings a wider that is the negative for the consumer, but when kerry spoke, and we were having a decent day yesterday and kerry speaks, and now we have to deal with that. That is real life. I listened to jack lew and it is interest interesting, because the conversation with mark zandi and he said, jim, it is business as usual. We well, every time we have business as usual and they talk, it is down. And it is business as usual and the president and congress and sell. September has never been a terrific month. No, the dow is on course for the biggest jump percentage and points since may of 2012. We have four days left in the month. We are coming off and we may open here lower than the august 21 lows, albeit on the light volume, and yesterdays volume was the lowest full day volume of the year. Yes, the year. And we are talking about the lowest volume of the weak, the year. You can move them easily. I do. I want to watch jcpenney, because that is a big piece of business there, and kit hold . If you have buyers coming in to buy the piece of business, it will be good. Which ve to get to talking about. But do we have the go to the playbook to how the play a debt ceiling showdown again . Yeah. The playbook that we rolled out last year which is sell them, sell them, sell them, and buy them. Do i have to go over it with you, gentlemen, what to do in the situation . Well right back on the red hot griddle and boy at 39 and sit back the make some money. That is the debt ceiling play . Yes. And you break the glass on the oh, here we are again. And the emergency buy of the bmy. Well, this is to get the ax out and buy a little pfizer. Pfizer and maybe yahoo and a big turn there, and maybe microsoft when it gets below a certain yield because of the activi activism. You go back to the playbook. Dont outthink this, david, carl. And the best sectors of the month, materials and tech. In fact, the only sectors positive for the month. Materials, and look, europe and china before this happened they were tailwinds and started to get some good news and i think it can still happen, and with syria, we have to wait for the geopolitical events. This is not james baker know negotiating to iran which didnt work. And this is not a big Oil Producing country in syria, but it is back to the playbook, and the playbook is a big drag. Big drag and in some ways it is more than the debt ceiling well, you cannot measure, and syria is going on for a while, and we may attack, but nobody is expecting us to go to war there. So to speak. If it werent thin. On land. And buyers would come in and say, i will take a good read and go buy some higher yielding stocks, because the 10year is going back to 2. 5 in this scenario and we go back. That is why the playbook works. If you want the buy the housing i dont know. And today, 2. 75, and usually we are tracking the yield the other way. Well, it is going down, and interest down for the wrong reason, and we want them down because the Central Banks are stopping to selling, and they dont deserve it, and then you say, why did we talk about taper . Geez. Always something somewhere. And listen, worse, we could be in emerging markets. No thank you. Right. We will stay right here. We dont have a lot of earnings, but the caseshiller news that could be impressive. And lets get on to other news this morning in the tiffanys retail Second Quarter profit rose more than expected up 16 which is thanks to the strong sales in china. The home of the little blue box boosted the full year earnings forecast, and there you have it, luxury doing well, and worldwide net sales up 4 to 926 million. And net earnings are up 16 as i said. Asia pacific up 20, and the sales in europe rose 11 . Everywhere but home. Everywhere but home. That is where we are, the tailwind tailwinds are out from the other countries, and now we have become a decent engine, but im looking for the china turn and we are seeing somewhat of a china turn, and europe is Getting Better and this could be a setback. I look at the european prices in the market today and obviously bailing out of everything, and taking profits and my Favorite Bank are kcoming in. And margin pressure is easing a little bit. What is with all of the unnecessary warnings and the profit warnings, and issuing conservative guidance they didnt need to in the end. No. No to abercrombie, and going into the tiffany mode. Stop with the, and i mean, abercrombie with the most bull ish proje ish estimates ever. And also amf and slnr. And big solar where they got a nice price. Solar is interesting, but a a f, and eaero postal, we put togethr a big basket and just insure it. Write it up. Whatever it takes. And like subprime housing. You dont see tiffany as a proxy for luxury at large . I mean, luxury is back and you are not saying that today . Well, we are in a period, and i go back to the berman interview that you did that it is not the consumer in trouble, but the retailer. If you are selling apparel, they dont want it. Ok okay. Im not just saying this because Mickey Drexel was obviously getting his car washed in albuquerque, and he has moved on to other things with j. Crew. Hosting the oscars and small time parts and car wash guy, whatever it takes. Tiffany and best buy, and the people are buying the hard goods and tiffany, by the way, that stuff lasts. Apparently it does and you have have to get insurance for it, too. And squeeze in jcpenney with the drama continuing. The companys biggest shareholder bill ackman will share his sell in the company after his campaign to overhaul the company failed and others said that the it would be a tenb tenbagger, david. Yes, delivering alpha at 2012 it was not a tenbagger, but a significant loss for mr. Ackman, and interesting choice on his part, and not surprising that he was going to sell and the letter last week telegraphed the possibility of a sell. But, jim, doing it all at once sends the message, i dont believe what is going on here. Why not dribble it out and do the best for the fund holders instead of taking 12. 90 here. Does he need the chunk of money . Well, i would not have done it, because i believe that jcpenney was down a lot already and you let it ride. Like soros appears to be doing . Well, that is many other smart guys. And other hedge fund guys, soros or perry or my friend carl bassenhimen. They do quality work. Yes, and they believe a turn there and at 12. 90, and by the way, citi which bought the stock from ackman well over subscribe and in fact, the reverse inquiries came in and citi acted on them, and people said we want an opportunity to buy the stock, and citi had the book and way oversubscribed and some hedge funds were putting in that got pulled way back on what their allocation might have been or what they were looking for, so there seems to be a lot of potential interest at least. Well, ullman is not doing a bad job. They have the housewares business under control and they had a core business and the Balance Sheet is good and the apparel is not that good in the sense for anybody, but i just think that you are giving away the stock here. Well, a couple of weeks ago on the earnings you said that, bill ackman, you said it on the show to apologize to mike ullman did he issue that apology . Well, this is a white flag of sorts . Well, it is. And does he go the buy herbalife at 80 . Well, i would have loved carl to come in and take down the whole block. Well, that would have been poetic. But, david, because you are familiar with the queens and jack lews queens. And not just queens. And is this a situation where carl icahn would say that he is at the schoolyard and he got beat up and does he go to his mom . Did he go to his mom . Yes, to the mom, and carl said, i will take care of that. And remember when you beat somebody up and their mom called your mom . Oh, that is is that who you were, the one doing the beating . Well, i hope so. I take a beating . Well, it is interesting to note that the hedge funds long jcpenney are long herbalife. Yes, yes, yes. And listening to ackman, well to a certain extent. We will see how it plays out. He is gone. Off. Gone. No more ackman and jcpenney. And all of the jobs lost and what is that about . It is a doroefr . A big dooff . Well, here is a big headline, the u. S. Missile strikes against syria could come as early as thursday according to u. S. Officials and chuck hagel the u. S. Defense minister has told the bbc that the u. S. Military is in his words ready to go if the white house makes this call. Our own Richard Engel has been on theed boa border of syria, a is reporting that the rebels had promised to launch their own offensive to coincide with any u. S. Offensive, and finally some sources at reuters are saying that the rebels are suggesting, and giving a list of suggested strike locations to the u. S. This thing is gathering lot of team quickly. And what happened to the other guys in europe . They are like, what . France and turkey is the one who has the most on the border. It is interesting. Although we have four destroyer destroyers in the mediterranean with tomahawks to basically hit anywhere in the kun tcountry. But it feels like what are the russians going to feel like. It is a little cold war like. And russia back at them. I dont know, i think that it is a vacuum, and we are trading in a vacuum here. We will see if oil goes over 110 then i know that the situation is that you have to take action on and be a little reshuffle. Not there yet. 1. 50 away from that level. And Robert Shiller reacts to the caseshiller numbers just released and is he looking for a doubledipper in the housing. And also, we will be joined by a exclusive interview following the companys results and look at the state of retail in general. There is futures implied open down 115 and talking about the critical levels when we come k back right here. Make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you start using active trader pro today. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. Want to get back to the key housing data this morning and caseshiller report s as are shg that the home prices are continuing to climb. The 10 and 20 city compose sits rising 10 and 20 for june, and here is on cnbc, Robert Shiller, professor of economics at yale university. Robert, it is great to have you back, good morning. My pleasure. And we have the twin city up doubledigits for the fourth straight month. What do you make of that . Well, obviously, we are in a housing recovery, at least for the short term. I have always been less sanguine about this one, but housing is a market with momentum, and right now the momentum is up. Well, professor schiller, it looks like there are some, and i know in june, peaking in the rates, but i mean the spike in rates, but you do say that of only six cities where the prices were rising faster than a month last, and so is that some diminution of the game . Well, there are some, yeah, there are some weakening signs and the starts are down, and especially in the singlefamily realm. I think that there is a chance that there is weakening, and there is a all of the fear about the taper iing that is a cloud over the Housing Market right now. You seem reluctantly positive, and you have seen it for a long time. I mean, you almost feel like you want to say, ah, it is not for real. Well, none of this is for real. The Housing Market has gotten very speculative and it goes through the big cycles, and take california for example. It is and up and down and up and down and decade by decade and it does not go anywhere, but a roller coaster, and that is the way that the markets have become. So for a long term buyer the fact that they are going up now does not mean a lot about where it is going to be when you finally sell. And we have seen big disappointments and you have mentioned the starts a and the new home sales also disappointing and the soften ing in the terms of the purchase mortgage applications, do you see those trends continuing through the back half of the ye year . I think that there is a risk of a weakening Housing Market. It is a speculative market, and this has been not by research, but driven by irrational exuberance and that can suddenly change. It is a story, and evolving story, and nobody who can really predict this for sure. It is risky. Well, robert, we have seen a tremendous number of hedge funds, and private equity guys going to buy a lot of homes and fix them up and rent them. I have a feel that is the height of speculation. Is there a possibility that the homes will not be able to be staying in the hands of the private equity and they will dump them and that is going to cause the decline . Well, the right. The momentum that we have seen historically may be weakening, because theres so many more professionals in the market. It is kind of obvious to me what these Hedge Fund People are thinking. They are thinking it is a market with reel momentum, and it is going up, and i can flip something and buy it and sell ate year later,ed a it is pretty safe and i think they might right, but that means that the market going to change. Isnt this the Housing Market we have got. When is tlas time there was a normal Housing Market then, robert . Oh 1960s. Hard to tell. Days of the bewitched great. And robert, we keep hearing the pent up demand and every homeowner trying to outdo each other and even though the rates went up, and are they being realistic and is the pentup demand able to carry us into a bet better starting number in 2014. Well, pentup demand is important concept and after years of dearth in housing, you would expect pentup demand. But on the other hand, other things are working. There is an increased desire to rent, and less of an interest in the disbursed suburbs and more of a desire to stay close to the public transportation, and activity, and these things are downers and longterm downers for a good part of the real estate market. Another big piece is how the First Time Buyers making up a sma smaller part of the market, robert, and you could argue that the Housing Market is catering to those with money and not those who are looking to graduate from renting. That is a troublesome thing, yes. Ideally, we would like investors, and that is the American Dream to own a home and be part of a community for a long time. It is stability and connectiveness. This idea of a lot of speculators in the market is not healthy. Right. And robert, thank you so much for your time and interesting numbers worth seeing and people in houston want to know why they are on the 20city, but that is a new discussion. Well, we will get to that. And a lot of new Apartment Units being built, and im going to step aside right now and hang myself and i want to come back after the break. After the break. Yes. And in the meantime, what stock do you want to have on the ray dor today. Well, the futures are going to look weak after the first full day volume of the year, and the squawk on the street is straight ahead from the nyse straight ahead. If youre serious about taking your trading to a higher level, tdd 18003452550 then schwab is the place to trade. Tdd 18003452550 call 18882849410 or visit schwab. Com trading to tdd 18003452550 learn how you can earn up to 300 commissionfree online trades tdd 18003452550 for six months with qualifying net deposits. Tdd 18003452550 see how easy and intuitive it is to use tdd 18003452550 our most powerful platform, streetsmart edge. Tdd 18003452550 we put it in the cloud so you can use it on the web. 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Out in decatur, the Farm Business has been terrible, right, and all of the stocks are hit and looking at the peak and then the quarter and deere has started to come back and i like agco and ubs is working and david, this is going to work even in the environment of sy a syria. You like it . Yes, because they didnt and a turn coming in the commodities . Yes, that is what i am saying and corn came down too far. I they monsanto, if you watch that, the best guy in the group is agco and had them on mad money and superior quarter and deere is breaking out and maybe a goto sector despite syria, and watch it. It is the strongest in the sector right now. And what about bmy well, Bristol Meyers is best in show, but i like this farm call. Once again, you know, it is the dod dodgers to win. Well, they are looking very good. They will go all of the way. I do, too. The dodgers okay. You and me on that one. 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But hes not. Hes an architect with two kids and a mortgage. Luckily, he found someone who gave him a fresh perspective on his portfolio. And with some planning and effort, hopefully bob can retire at a more appropriate age. Its not rocket science. Its just common sense. From td ameritrade. You are watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell is set to ring in about a minutes time, and busy morning shaping up and a potentially tough morning. We have obviously sources telling nbc that the u. S. Could launch a strike, a Surgical Strike in syria as soon as this thursday. More drama over the debt ceiling and the treasury secretary on the air this morning saying that the president is not going the negotiate. Mid october running out of the Borrowing Authority by mid october and that is not that far away, jim. You know brinkmanship and ugly press conferences and nobody is going to get along, and bad blood and that gets me down. I want to talk about designer shoe warehouse and the good guidance. And we will. With four days left in the trading month the dow is on course for the biggest drop since may of last year, but the nasdaq is higher for the month if you can believe that. Tech is relative to Everything Else. Yes, facebook and microsoft. Yes. Apple. And huge influence. Theres the opening bell and a look at the s p at the top of the the screen. Down here, nice street with tennis star mats vielander is only one of five men to win grand slam singles titles on hard, clay and synthetic. The ceo is with ringing the bell over at the nasdaq from san d k disk. That is a tire by the tail, and they are the greatest company on earth and when the cycle is good, they are the goto. Well, jim, what is tiffany on the list of tells . Well, we still get this kind of, if you like tiffany buy best buy, and if you like best buy, and there is a hard goods moment, and by the way, tjx has hard goods, because of home goods the chain and the cheap beneficiary of the apparel dumb thapg everybody has to do and you have a couple of retailers that really work and you should be thinking about those on the way down if you feel that we will discount syria ahead of what happens, and that it is going to be like what happened in the gulf war. You want the buy best buy at 35 . Well, a lot of people feel that the hard good story has leg s. Incredible move in best buy, and we vuk tad about it and richard sholtz is talking about selling some of the stock. Yes up 200 after being down 49 the year before. It has double and half of the number is where they were talking about potentially an lbo, and the financing at 17 is in question and here we are to 35. Do the fundamentals justify 35 . No, what is happening is that people are spending more on housing again, because the houses are going up in value, and we heard the kay shchiller, and you know that it could all be kiboshed because the rates soared when the rates came down, and this is always a story when they come down, and sears might be a place, and lowes where they get back to where they were before they had that one poor quarter, kind of dynamic. Selling names that have done well, facebook off more than 2 , and reminders that zuckerbergs lockups expire in september. Now worth 20 billion and just his stake alone, and the market cap of facebook is now 100 billion and twice hp and four times dell and getting close to intel, jim. Well, my Charitable Trust owns facebook and best run this year, and talked with stephanie link who comes on at the half, and we went back and forth and we kind of feel like, you know what, it has more to run. Just because it has the momentum and because the advertising is working, but yes, a huge slug of stock comes into the market right now, and unless it is jcpenney, you dont want to play. You want the buy them low and not high. Facebook with a big run. And jcpenney, that stock is above the price at which mr. Ackman sold the roughly 18 stake in the company which is 12. 90 a share in a sell orchestrated by citi. They knew it had all of the orders on the other side, and they had way more actually to be able to immediately unload what it bought for 12. 90, and the stock at 13. 22 and right where it was before we got the call back. And who got the call to c, citi. And citi, i tend to think is going to creep back. The stock is not that bad, but the merging markets are obviously troublesome. Troublesome to say the least, whether it is india or brazil and the currency devaluations in some of the countries and not the mention the performance of the markets is is it 1997, david . No, i mean, that things were much better than they were then, and not linked to the dollar and float right, and they have much better current account depths, but it is ugly. It is ugly. People in the 401 k have exposure to the emerging markets down sharply. And microsoft is in the news, but down again today, and reer ports of china cutting the estimate on one of the few bright spots the xbox 1 and the shipments are going down from 7 million to 6. 2. Then you have the third and the fourth day stories about the challenges that any successor to ballmer is going to have. Well, the stories read as if it is dire. They have a huge amount of cash, and they can reinvent tomorrow. This is the greatest job in the world to come in. Think about yahoo before meyer got in and the challenges. Think about the acquisition, and very smart, and she it is not over yet by the way. Nowhere near over. And yahoo you dont think . Well, i dont know, but i wont judge it a successful turnaround at this point though. And the jury is out for you . Yes. Is the jury still out for meg whitman . Yes. You have a lot of run away juries. Time will tell. Thank you. One of my favorite lines, carl. Mcdonalds is not a big mover, but a big piece in usa today how they are now in the chicken wing business bringing in a product they have tested in various products which is bonein breaded chicken wings spiced with cayenne and chili pepper, and they will go through november, a limited time, but you made the point coinciding with football season and right with yum and popeyes. Yes, and buffalo wild wings, and now i want to know, are they selling this part or the big part . If it is the big part, fine, im a buyer, but if not, it is this. And now buffalo wings get weight and now you get too many of the little kind. I did nont thant know that. Well, yeah, and it is unfair, you get nine of the little kind and three of the big, this is a ripoff. Popeyes is doing incredibly well, and i know i call them popeyes because it is philadelphia, and it is an o and not a u, but they do the specials to bring them in, and belchholder is a great ceo, and you have kfc and how many wings places do you need to have . And people are making the chain of the blending of the hamburger and the chicken thing that is all becoming one of a piece, right . And meanwhile, what is moving the needle . The bacon pretzel cheeseburger and have you had it at wendys . No. It is killer. They say it is the best launch in ten years. I fell, and i dont eat a lot of hamburgers and this is a gamechang gamechanger. The pretzel roll, and you can get it with chick even if you want, with, you know, a giant bacon cheeseburger. Oh, right, right. And you nknow. I have seen the ads now that i remember. Right. A doctorrecommended and found some doctors who recommend it. Just like the dentist, sure. And the products come with nine products with the chicken and if you were out there talking to don thompson trying to source it without moving the market is like gecko trying to buy anaconda steel. Imagine that. Well, this came up with belchholer, and they have the ability to move in and out of the market, and without disturbing it. They do that with the crawfish market, and i know you like that so much, but they can come in underneath and be under the radar screen, and these guys are the u. S. Army, because it is hard to put 100,000 soldiers without anybody noticing it. Once the industry knows mcdonalds is in, they move. And one more note on facebook, because it is now ranking at the tenth largest u. S. Tech company and the Largest Company not in the s p. Well, that is an interesting. People will start to play that parlor game, right . 100 billion market value, how . Well, true. And remember that buffett, and right . Some Big Companies that werent in, and i do think that i just hear more and more chatter that the ads are working. More and more chatter that the people are using the, and that the big consumer package good stories like the advisement with facebook and the numbers are big, but we havent talked tesla, 20 billion. 20 billion. There you go and elon musk and you have these kinds of stories and the nasdaq and people are excited. They are so excited about netflix, and excited about things. It is a good thing to be excited about things. Yes, it is not a downer. Although on the technologies we saw yesterday reported by the journal 660 of the ipos here have been techrelated which is not a reflection of a great deal of excitement. Well, i bridle at that, because i think that biotech should be considered tech, and b biotech is the hottest year i can remember. A lot of the Biotech Companies came public and found people suspicious saying that people will buy anything. We are not there yet. No . Really . The ipos that we have looked at, it does not appear that the quality of them has diminished anywhere near the level that we saw where you could put zseven sentences on paper and then open up public. And the perkulation of the stocks, and if you want to see some group dole we well, and tht of bristolmyers we mentioned that the nasdaq was positive on the month and it just went negative, so we did jinx that. Over to bob pisani on the floor. Oil is up at a sixmonth high, and chevron and exxon up, but 28 other stocks to the dow are to the downside. Rough seas over in the emerging markets, and indian and philippine and thai exchanges down. I know it is easy to blame everything on syria, but yesterday was the lightest volume day of the year. It is not like the sellers were stampeding out the door, but the buyers were not interested at all. And besides syria, there is a laundry list of concerns there, and i pulled a number of traders and got a long list of things concerning people. One is extent and timing of the fed tapering and the debt ceiling expiration is midoctober, and bernankes succe success, so and Larry Summers in the lead, and that is controversial, and ber lus klus being forced out in italy, and that is weighing on europe for a while, and the german elections and people say that merkel is not exactly a shooin for germany. And historic high for novato, and tiffany had the good guidance and especially strong sales in china plus hong kong, and the luxury retails to the downside, but kors is off of the historic high. And gold is up, and i want to talk about the syria, and the rally in gold stocks as well, but the bottom line is that it has to do with the weakness in india with the rupe getting crushed. I this they is one of the reasons that the rupee got crushed. Bear in mind this is not all about syria when you talk about gold. Fin finally, no word on what happened with the nasdaq security processor that, in network that processes the quotes and trades for nasdaq that went down friday and still not sure what happened. A lot of blame game going on and nasdaq said it started with the problems of the feed here at the new york stock exchange, but i have been talking with the nyse officials, and they are very unhappy with nasdaq trying to blame them for this. And they say it is nasdaqs job to build a system to interact with everyone and they had a problem with that. Here is the issue, and we still dont know what exactly went wrong and why did it continue and get worse after the arca problem was solved. We will continue to try to get you guys some answers. You have to stay on, bob. Tesla positive. All right. That with lumber lick wi quidat. And ul ta salon. All right. And pan dor ya, up slightly. I mean, why arent we down well, it is still early. Still early. Shifting to the bonds and Rick Santelli at the cme group in chicago. Rick . James. Well, nothing takes peoples attention off of the dynamic of Interest Rates having a mind of their own than war, a potential for war, a potential for the heightened activity geopolitically, and of course, we will see the yields moving down and, boy, you take a gander at oil up 2. 50 and lets look at the twoday charts. You look at the fiveyear to move down in yield as everybody is grabbing the flight to safety trade. Not as aggressive as it has been in ts pa but it is certainly occurring. 7 3, july 3rd, the key level is 159 and we are below. We are at eightsession yields here. And look at the twoday, and looking at the significant day of 2. 74 on the left side of the chart. And looking at the dollar and the boon, and think boon, yesterday closed to 1. 90 and today off of the 1. 80s and it is, too, paying attention, and the dollar index on the twoday chart is sarcastic and jumping around and certainly not looking like a flight to safety there, and as a matter of fact, it is what part of the world you are in and how hot it is. And jim was talking about the rupee, and how about some yen . Looking at the twoday, you can see some flight to safety there, and the dollar on the losing side of that trade, and even the euroyen and the same dynamic in place, and Pay Attention to the Foreign Exchange cross trades. Back to you, carl. Thank you so much, Rick Santelli. Tiffany up 40 so far this years, and the question is can the momentum continue . We will show you how to play that later on. And later, a company with a stake in every part of the tech world from smartphones to tablets to digital cameras, the president and ceo of sandisk will join us momentarily. We will take a look at the double and the triple digit movers. [ male announcer ] its time. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. She loves a lot of the same things you do. Its what you love about her. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. 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Welcome back to squawk on the street, im Jackie Deangelis reporting from the nymex, and the fear premium is coming back into the Commodity Markets as traders are on the lookout for some sort of military strike on syria after word from washington that there is evidence that chemical w weapons were used on civilians. This is impacting not only oil, but the metals markets as well. We are watching the gold and the mome momentum continues. We broke out above the 1,400 mark and a key psychological level and the traders are saying that the next stop is easily 1425 and gold is up 20 as it hit the multiyear low on june 28th at 1179. Quick check on the oil, and we are watching wti prices and up nearly 3 which is the highest levels we have seen wti in nearly five weeks and the best performing commodity on the day. Watching brent prices as well and the concerns for the commodities is that a strike on syria could potentially disrupt supply in the middle east, and the u. S. Military is ready to go if president obama is ready to take action and of course, we are watching the prices carefully, carl. Back to you. Thank you, jackie for that. A new study finds potential link between earthquakes and fracki fracking. There is a study by the earth and planetary letters says that removing oil and rock from the ground does contribute to the tremors, they do not say that manmade efforts are causing the earthquake earthquakes by themselves. Tough one, jim. Well, in england, there is a big debate of the uk and the greens dont like it and in germany the fracking that could go on in the far east part of germany, and there the greens have not had it, but we have been very responsive to fraccing in the country, and i think that that there are environmental tradeoffs no doubt, but they seem to be able to if you can quantify them, many would say it is worth it and the benefits of the jobs. Able to be energyindependent, and Everything Else and if you can obviously make sure that you are not poisoning the environment or causing small earthquakes. May i be so bold as to say that any time you extract anything from the ground for energy, it is a problem. There is not any time whether it be coal, natural gas, oil there are always problems. That is what you have to live with basically if you want to be able to get the energy. And the article points out that in california back in the boom days in the old ways they took out oil and the ground used to sink 30 feet. You could sip it, remember. Jeremy irons and a good movie. And mog . Yes mr. Eagleford and you have a. I dan ti you have a gigant holding, and he said that you could hit wit a straw there is that much oil in the eagleford and also talking about the delta basin with a permian, and we are in a major renaissance and continue to underestimate how much oil we find in the country. You look at the Companies Taking the oil and the gas budgets and moving to the United States, because there is so much here. And we have not talked about hess in ages, which we have talked about after the huge brawl there with elliott. And the Board Composition has changed dramatically, but they are have assets as well . Yes, and a remarkable job to monetize the assets and 52week high, the only company on the 52week high yesterday. And fracking, halliburton has a big fracking arm, and i had fracking fluid and i have to say it tasted a lot like the mcflurry. What . It tasted like mcflurry and not so bad, but if we had chicken wings for the midsection. And yes, mcdonalds is taking note. And the nine sauces. And the mcflurry of the hall bu burgton, and said, drink this flacking fluid, and sure, consistency that is not great. Better with the or oeo crumbd in . Yes. And everything is better with the oreo crumbled in, even the yogurt. Much more of squawk on the street on the street ahead. Coming up, are you having trouble paddling through the market . Well, you are certainly not alone. Kr cramer is here to help you stay afloat with six stocks in 60 seconds when squawk on the street returns. Urday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. The dow bouncing off of the premarket lows. First six stocks in 60. And be careful, because they report later this week, but the second half is going to be good and be careful with with crm. And what about pet smart coming back . I think they are terrific. And what about this one . Well, 19 of the production in egypt and the stock has been slammed over and over again, but ep jipt is not a great place to have a stock with apache. And what about eagle . Well, people thought that since dicks reported bad numbers they thought it would be bad for nike, but it is strong. And what about directv . Well, it is going higher. And goldman on pxd . Well, pioneer is a permian play, and you would think that we were back in the houston or the dallas market for real estate and a lot of them think it is the permian. And what about what is coming on mad money tonight . Well, a stock that is turning into a pretty good market. This is a guy who used to be at chipotle, and this is a great stock that fits in with the Healthy Eating rap that goes enand this is first public interview since they came ipo. Are you impressed with the first hours action . Pretty steady, but i like that on jim cramer twitter 100 of people who write bring up everything that i did badly including the game that i scored for the other team in the 12th grade and knocked us out of the playoff, but i do believe that things are not that bad. Story, but the haters shame on you. See you tonight, jim. 6 00 and 11 00 eastern time. Simon, over to you. Two big conversations in the next hour, syria and the debt ceiling and tiffany and two other stocks who are up this year. And big box dsw who continues to hit it out of the park, and sandi sandisk, and can they continue to hit it out of the park . Hour two of squawk on the street is coming up. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. 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Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. August read on Richmond Fed Manufacturing index jumps to 14 and much better than we were looking for and that follows a minus 11 read. As for the Conference Board 8. 15. What . 81 81. 5. 81. 5, and that is significantly stronger than the 79ish we were looking for. This is of course, a august read and how does it play in at 81. 5 . Well, consider junes read at 82. 10 was the best read since june of 08 at 87. 3, and this is going to slip right into the envelo envelope. Carl, back to you. Thank you, rick, very much. There is no negotiation over the debt limit and strong words from the secretary treasury and exclusive interview this morning with john harwood who joins us live in washington with more. John, good morning. Good morning, carl. A clear distinction in my c conversation with jack lew and what the administration is willing to bargain with congress on and what they arent. On extending the government funding and the sequester, yes, absolutely. On the debt ceiling, absolutely not. Here is jack lew. We are not going to be negotiating over to debt limit. Congress has authorized funding and committed us to make expenditures and we are now in the place where we are going to ask are we going to play the bills that the United States has incurred. The only way for that to occur is for congress the act and act quickly and what we theed in the economy is certainly and not another selfinflicted wound or crisis at the lastminute. Congress should come back and they should act. Now, what is behind this dance of the administration are bad memories of what happened two years ago when they went right up to the brink and resulted in a credit downgrade and president obama even congressional leaders on both sides of the capitol hill do not want to repeat that again. Here is liu on that issue. I dont think that the leaders are in a place where anyone wants a repeat of 2011. I dont yet see that they have a plan to avoid it which is one tof the reasons that it is so important for them to come back in a couple of weeks and get to work on getting this done, and trying to make the debt issue different from the other debates that we have. No plan yet to avoid it. They dont have much time to fo formulate one, and congress is coming back, on the 9th of september. They go out on the 11th of october. Right when we are supposed to hit that debt ceiling by the treasurys current projections, and so, carl, a lot of the pressure on the members to come back from the town meetings and get to work in a few days. John, simon. Did lew bring it up to bring up the republicans fire and if they bring it to a standstill, they will have less public sympathy to do it again at the end of october when the reg ula question comes up about government funding . Well, there is speculation that they got a little bit more aggressive in setting the deadlines to try to roll it together with with the debt limit fight, because the date is about a month earlier than many had expected and what the treasury says and i have no means of refuting that is that mid october is when we get down to the balance of 50 billion, and the treasure it sounds like a lot of money until you realize that some months it goes out on Social Security payments. John, thank you for the nice work this morning. John harwood in washington. I want to bring in Jared Bernstein on the panel of budget advisory, and also a texas senator Kay Bailey Hutchinson. And senator, how big of a fight are we in for . Well, the next six weeks after Congress Gets back is going be a huge, big negotiating time. I do think that the republicans dont want it to be on the debt ceiling either, but they are going to insist on the funding cuts and the sequestration and the funding of government issues to be a addressed. Do you think that we keep hearing about the demands regarding obama care, and repealing the elements or all of that. Is that for real or more about reform . Well, it is more about reform. You have to shoot with real bullets and the real bullets are the spending levels. I think that is where they are going to draw the line. That is where the majority will be. Jared, we have been down this road before and does anything leading into october seem d different this time . Unfortunately, no. I do think that they will qui quickly pass a continuing resolution, and that is a budget patch to keep the government open and then the real fight starts over the debt limit. I completely agree with the senator that any repeal of obama care is not going to happen. Ultimately, this probably comes down to whether representative john boehner, the speaker of the house is willing to violate something called the hastert ru rule, and that means is he willing to pass an increase in the debt ceiling without a ma jorer ti of the caucus, and majority majority . That is the way that every one of the bills has passed before in the house with republicans, but enough democrats to get over the line. And yeah, you say jerry, that your crystal ball is cloudy on this one, and senator, what do you think . Once again, talking about the relationship between the speaker and the base. Well, i think that the real leverage that republicans have, and that they are going to insist on is the spending levels. I do think that he is right, they are going to have a short term continuing resolution, but it will be at the spending levels of today. It will be under the sequestration top level. Then the question will be, can they get some flexibility, but still have the cuts in spending going forward. Well, i think that is right, but i think it is right visavis this continuing resolution, this budget patch. When you then get to the debt ceiling, the fight isnt so much over the spending levels of all of the appropriation bills, the thing that keeps the government lights on, but it is more about the demands to for xexample cut vit elements and here the democrats have been very clear. The president has offered significant entitlement cuts, but only in exchange for more revenues, and there you have the republicans saying, no, we want the cuts, and we dont want to give you the revenues, and that is where you see the real heads knocking. Jerry, curious after the announcement, your read on the dropdead deadline to be agreed upon for the debt ceiling. The only people who know that are the accountants buried deep within the treasury, and if they tell you that the extraordinary measures they are take and for example not contributing to the Pension Funds and using that to temporarily offset the debt creeling that has already been hit, if they are telling you that midoctober is the deadline, we all should believe them. Finally, senator, we have seen some of the Credit Rating agencies, specifically s p put the United States sovereign debt back on stable outlook as opposed to negative, because they saw signs of nascent cooperation on the hill. When you come right down to it, netnet, are you more bullish about some of the compromise than you are bearish . Yes, im more bullish on the debt ceiling, i think, because i do i think that when you start to messing around with the Interest Rates which the Credit Rating would affect, then, i think that the republicans will go for where they have the leverage. They do believe that you cant increase spending with entitlement reforms. You just cant do it, and get the deficit down. I will also have to say that im a little skeptical of the october, midoctoboctober dead being set, but i agree that you cant argue with it, but i do believe they are trying to get it put together in a package and that is where the negotiation will begin. Good point. Senator, jared, great to have you both. Thank you. Thank you. Shares oftyny are rising higher this morning after beating earning estimates and beating forecasts, the company did miss on the revenue sides and now what did they say about the state of luxury retail. And joining us is retail analysts. Good morning, guys. Good morning. Good morning. Stacy, first to you, what is the takeaway here for tiffanys specifically and luxury more broadly here . Well, you know what, tiffany first of all last year guided down four times. This year, they have guided up, and this quarter and last quarter, and so number one, it is an expectations game. Two, as you said, sales did not exactly beat the expectations, because the u. S. Has a little built of a challenging time, however the gross mar jens were well better than the street expected, and they have been down for the last four quarters and that is the upside here. Tiffany is increasing prices and passing it on and that seems to be working for now. And ed, this is almost the opposite of what people might have expect frtd the company to where so much of the market lately is about u. S. Strength, and the international weakness, but with tiffany, it is the complete opposite of that . For sure. One of the bright spots in the quarter was the strength in Greater China and those are stories both in china and surrounding china called out for a strong sales area for the business and also called out sales of the new York Flagship focused on the foreign tourist consumer. Where that weakness was, was in the domestic u. S. Consumer in the malaise for the past couple of quarters. Quickly on the china point, do you get a sense from the higher traffic, higher prices, because of the consumer there perhaps on the high end is holding up better . Well, i think they a couple of things. I this they first, you know, clearly the tiffany consumer, the tiffany brand continues to grow in china and continuing to, you know, focus on the luxury goods, and also, that Chinese Consumer is starting to visit other areas around china which is benefits that Greater China region. Stacy, why all of the dramatic profit warnings from this company when in fact in the end, they didnt need to be so conservative and why are they putting the investors through the ringer on that front . Well, you know, last year, it was very volatile obviously, and the companys expectations was too high and it is the guide down year, and they have take even the opposite approach, and we have beaten in q1 and didnt throw it into the annual guidance and beat q2 and they did not throw that in. As was just said, the flagship and china is holding up to the tourist, and also in the new York Flagship store, so a lot depends upon the consumers and the conservative approach makes sense. Justin a word with the shares here . We continue the like it. It is one of the best longterm stocks. Thank you this morning, ed and stacy, for your views as we look at tiffany rallying in the difficult market, simon. All right. After struggling at the beginning of the year, big box shoe retailer dsw is hitting it ou of the park. The stock is up 30 yeartodate as you can see. The president of dsw will join us with an exclusive look for the next earnings beat after he had previously twice raised the guidance in just three months. Squawk on the street will be right back. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Well kp back to squawk on the street, the largest sharehold over best buy is taking the largest gains. The owner has said that he is going to sell 20 of the company as part of asset diversification, and as part of the buyback, he said he will be able to sell his stock from october of this year and 2014, subject to certain conditions. Best buy stock has tripled in 2013 allen aone and maybe you c expect him to take some of the gain gains. Watch best buy shares. We stay in the big box shoe retalter dsw trading higher again as earnings were 17 cents above the estimates and the revenue beat what the analysts were expecting. Shares of dsw up 33 so far this year. Here for an cnbc exclusive is michael mcdonald, president and ceo of dsw. Welcome to the network, sir. Thank you. Good to be here. Not only did you beat the guidance and what the street expected today, but you have raised full guidance twice in the last three months and you did so last time in the beginning of the month. What are you able to do in your space in fashion that others clearly failing at in other parts of the business landscape . Good question. It relates to the formula which we are continuing to execute over and over again which is giving a breathtaking assortment of footwear at great prices in environment that is convenient and fun for the customers. The more customers who get to know us, the more they like us, and they return to us. So we are trying to execute to the formula, and on a consistent basis every single day. Yes. And it is dish mean, this is how susquehanna put it coming into the todays earning season, it was moving from basic sandals to seasonal booties in july and hanging on to fashion sandals in august and those are are the decisions that work or dont work and is that a hostage to fortune of getting it wrong in the future . Perhaps. But we think that we are really just reading the customer, and what she is telling us by how she is behaving in our stores and on the dotcom channel. For example last year we ran out of sandals before the customer was done buying them so we extended the sandal season. Similar as we think about the boot and the bootie business, we think that a stronger emphasis on the booties and shoeties is one that will help the customer. Shooties is one i have not heard before, but you are in the same way as tj maxx might contribute getting merchandise from the wholesaler, and is the space stronger or you are able to do better because it is weaker at the other places, and you are getting more inventory as a result . I dont know. I will be able to tell you after all of the earnings reports by the footwear retailers coming out. So, i really cant tell you per se. I can tell you that we focus on a fashion customer and try to give her or him new and Different Reasons to put footwear in the closet. As long as we fresh en the look and update the fashion trends consistent with what is being offered in the apparel zone, we give her a reason to shop with us. When you combine the assortment and the newness with the compelling everyday values, and our unique store formats that lets the customer be in charge of their shopping experience, i think that it is a compelling shopping opportunity for our cu customers. And you have got 26 new stores, of course, that will be included in the figure, and maybe the comps are more difficult moving forward and let me ask you before we let you go, michael, the two for one stock split that you announced at the beginning of the month. The controlling family is going to voluntarily reduce voting control from 65 to 55 , and what ultimate is their plan for c control of the business . You have have a market cap of 3 3. 6. Billion, and do you see yourselves as a takeover target in the future . Absolutely not. As you say the controlling family has a compelling interest and more than 50 of the vote. They love this business, and they started this business. They are enjoying the benefits of this business right now. And they see lots of opportunity ahead of us. A lot of runway ahead for dsw. Michael, it is good to see you and thank you very much for seeing us. Michael macdonald, the president and ceo of dsw. Have a great day. Thank you. The u. S. Military is ready to take action against syria coming directly from the secretary of defense. Nbcs Richard Engel is here to tell us exactly what that means when we come back. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . U. S. Is drawing closer to military action against syria, accord t according to reports u. S. Missile strikes could come as erl ly as thursday if president obama decides it is time to act. Richard engel is outside of syria in turkey. Good morning, richard. We have been speaking to the rebel leaders and they want the this attack and they say that timing is important, and they say that people are dying e everyday and they want the attack to be significant. They are worried that the United States is talking up the proposed incidents and trying to build an International Coalition to give the appearance of action, but they are concerned when the time comes that the missiles are launched or more likely cruise missiles from the ships from the mediterranean it will have a more or less symbolic impact on the regime and not change the course of the battle. What the rebels hope is major strike strikes to follow up with, with a campaign of their own and topple the regime, and that is of course has its own consequences, because the rebels are divided and some of the rebel factions are very sectarian and very radical. So you will also have to start to think that what happens the day after the strikes. The rebels want to see a regime collapse, but not everyone in the region or in washington wants to see that. That is for sure. Richard engel in turkey, and thank you very much, richard. With the tension in the region rising, we want more insight of someone monitoring the situation in syria, and joining us on the line is ken timerton, and expert calling in. Thank you. We want to know what you recommend that the u. S. Do here . Well, clearly if the chemical weapons have been used and that is a big if i believe, the United States has to do something and the president in the United States has drawn a line in the sand and for the United States to have any credibility in the region, there has to be a military response, but now the u. S. Is calling on the United Nations to stop the inspections and without those inspectors the collect the evidence and to find out exactly who is carrying out the chemical weapons attack is kind of military strike is the premature and fraught with danger. Ken, the wall street journal editorial says that the real problem in syria is not the chemical weapons, but the leader who has used them bashar assad and the primary goal of any action should be regime change in damascus, and do you agree . Well, the problem is who is going to come afterwards . Right now we are seeing that the rebels are dominated as they were in libya by islamist group, radical Islamist Groups infiltrated by al qaeda and a civil war going on inside of the civil war where you have one faction of this front declaring war on other factions of the loyal group. So what you will have is replay of libya with Islamist Groups taking over, and you will have a slaughter of christians and a other minorities inside of syria as a result. So be careful what you wish for. The point that the journal is making is that iran behind a lot of is attempting to establish a shiitebased alliance through syria and then it will put israel in a more vulnerable position at any time since the 1960s. Do they have a case . Well, it is clear that iran is trying to form a shiite triangle if you wish in the region. I dont agree, however, that this is going to pose any additional threat to israel. Israel is already sufficiently threatened by a Nuclear Capable iran. Iran is already Nuclear Capable, and we dont believe at least the assessment that we have heard in the Public Domain and do not lead us to believe that they have nuclear weapons, but the capability. I dont see an additional threat for israel, but i see an existing threat for israel and one that israel is able to contain so far. And what you are saying right now though is that caution is warranted here. Yes. Caution is warranted. I think that we need the facts. I am very worried that we have somebody at the United Nations, representing the United States at power who actually invented this notion of responsibility to protect. That is an idea that western nations should intervene militarily in situations where civilians are being threatened by their regime. Now, there are cases where i would go along with that, and i this they iraq was certainly one of those cases, but here, the facts cannot be apart from the facts that the u. N. Has found out on the ground and why they are saying to stop the investigation. Okay. We hope to get the answers soon. Ken timmerman joining us on the phone. Thank you very much. If you own a smartphone or tablet, the chances are that you own a piece of sandisk, and they have a hand in every modern device. The sandisk president and ceo will join us, and the stock is up 30 so far this year. [ indistinct shouting ] [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. From td ameritrade. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. About an hour into trading and 7 30 on the east coast and 10 30 on the east coast. Nordstrom is spending money to buy more real estate for its flagship in new york. When it is finished it will be taller than the empire state buildi building. And according to all things d, microsoft will lay out the meeting with the analysts on october 15th, and no members of the press will be invited and members of the public can watch via web cast. And according to reports Bryan Cranston has signed a deal to play lex luthor to play the man of steel. And that is the best news of the day bar none. And meanwhile, the breaking news out of the white house, reuters saying that president obama has not made the decision, not made the decision to take mi military action in syria. Of course, we will be following this amid that the reports that the u. S. Could act within days, carl, and right now, reuters is telling us no decision has been ma made. And a real debate on what the aim of the military action should be. Purely symbolic or go for the regime changes as the hawks will arg argue. Clearly, not the message that the white house has telegraphed so far, and everything that we have heard is that it is surgical and punitive and may not even directly attack the chemical weapons cache that they believe in existence just to send a message to assad this is what we are trying to do, and meantime, Richard Engels reporting is astute from the border of syria saying that the opposition there are trying to build and coincident attack to whatever the u. S. Does if and when that happens to the point where they are giving a list of suggested strike targets to the United States to trying to get the u. S. To move. I cant believe that the u. S. Doesnt already know those strike targets. I am sure that is true. And the allies. And still ken timmerton says you have to be careful to what you are wishing for, and to your point, is this about regime change, and how can you send a message to assad when you say that you wont force him out at the end of all of this. The dow is down 108 points, and we are trifling lower. It is not what the markets want to hear. We want more certainty with the debt ceiling as well. What a year for tesla though, because the stock is up almost 400 this year, but is it getting too far ahead of the company, itself . In a moment, we will take a closer look at teslas stock and where it may be headed. Plus, the luxury lockup, the cover of the New York Post this morning and i loved the headline raj ma hall and a story about some of the conditions that he is enduring now that he is in confinement. We will talk about those and his new man servant as well when we return. But not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy increases testosterone when used daily. 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Change your number. Turn it up. Androgel 1. 62 . To experience the precision handling of the lexus performance vehicles, including the gs and allnew is. This is the pursuit of perfection. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back. Chances are if you own a tablet or a iphone, you own some sandisk. They rang the opening bell at the nasdaq this morning and we join the president and ceo of sand siss sandisk and our own john ford. How strong is sandisk in the mobile space . First of all, yes, thank you for having me on the show, and 25 years at sandisk has been amazing. It is everywhere in the smartphones and the tablets and the flash and the digital cameras and the u issb drives a flash. And flash is starting to change the cloud applications and the data center and it is exciting for flash. Sanjay, good to see you and it is john. You have driven this new era of stability at sandisk and we are used to seeing the demand prices all over the place, but as you have moved from pcs into the data center, we are seeing the stability, but are you confident that is going to continue despite all of the bumps we are seeing in the global gdp, because a lot of the big tech names are starting to get squeamish. Well, flash memory, and at sandisk, we are entering the sweet spot of the global trens s in Consumer Electronics today. It is the deslices that we talked about the smartphones and the tablets and the notebooks and the enterprise and the cloud storage, these are the trends that we are absolutely focused on continuing to drive a sandisk solutions, and innovations and the word higher value segments of the market space, and flash is doing well, because of the demand and the drivers are vibrant as well as the flash bit growth has been moderate and the supply growth has been moderate, a and that industry is a strong industry backdrop coupled with the valueadded solution, and really solutions where we add through the system level expertise value to the flash memory, and create a value propositions to the cust me, and this is really working out well for sandisk and im very optimistic about 2013 as well as 2014 time frame for sandisk. Sanjay, in the ipod era we saw every year or so a big bump in the capacity of the ipods which is nice, because we wanted to store more stuff, but in the past few months in smartphones and tablets, we have not seen the bumps, but is it because of the stability on your end pricewise or are t price wise the apples and the samsung pocketing the profits instead of giving us more storage . What is going on . Well, the flash, and the average capacity of flash content inside of smartphones and tablets is expected to double or maybe even higher in certain cases. So flash capacities are continuing to grow nicely, and in mobile devices and of course, the industry devices are e healthy, because the supply growth is moderatementmoderatem. We are in terms of expanding the of all portfolio of the business, and keep in mind that last year 7 billion smartphones sold worldwide and this year it is approaching 9 billion and soon over that. And so strong average capacity as well. And sanjay, can i ask you, a kind of cut to the chase if youd like, and ask you specifically about the margins in the second half of the year. Goldman sachs downgraded you at the end of the month last month, because they felt that the margins were going the peak, because you say that the capacity has been constrained so far, they believe more coming through in the second half of the year than they have predicted at goldmans at a time when you can no longer accelerate the cost cuts. Is that right . You know, the guidance we have provided for the year reflects very strong margins. For 2013 we have said that the Gross Margins would be upward of 45 . And you know, this is because of our shift of portfolio of our products and solutions for the customers to valueadded solutions and the backdrop of industry and demand and supply and volume. And the capacity, we have to look at the consideration of the Industry Environment this year as well as next year. I do believe that industry fundamentals will continue to be strong over the course of next several quarters. Sanjay, are you glad it is a nasdaq listed company . Yes, absolutely. We have been a partner over 18 years with nasdaq, and access to nasdaq in the Financial Markets has been key to en ablging sand sisk to drive the growth, and become innovative giant in the space. Thank you so much Sanjay Mehrotra and john ford, thank you for your time as well. Moving to the east coast. Are you going to be wearing a tight . I am going to fight it tooth and nail. And now your own cook and man servant and private balcony and tv, and it is not a tv, but it is rajs prison cell apparently. We will talk about that coming up. 03452550 and the better i am at them, the more i enjoy them. Tdd 18003452550 so im always looking to take them up a notch or two. Tdd 18003452550 and schwab really helps me step up my trading. 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Tdd 18003452550 open a schwab account and learn how you can earn up to 300 tdd 18003452550 commissionfree online trades for 6 months tdd 18003452550 with qualifying net deposits. Tdd 18003452550 call 18882542600 today. Tdd 18003452550 here aes questis a questio getting too expensive for investors . After a fivefold increase, they have a share earnings of nearly 260, and here to take us through the analysis is mark newton from greywolf. Well, it is a mom and pop and i would say wait for the pullbacks instead of buying the shares here. You cant pull out a move to 180 or a touch above . Well, you havent seen any sign of real technical deterioration, and commonly in stocks like apple last fall and the stocks with the biggest percentage move like netflix, and the stocks are still hitting new high, and you havent seen the signs of the technical dee tearation, but you want to see a move to threemonth lows to a closing basis which is initial warning signs of a pullback, but for the people who invest for a longer term perspective, it is difficult to buy, tabecause the risk reward is not high. And you have to tell us where your forecast has been, because you cant tell that it is going to fall . Well, there are prospects in the forecast to see if it is going to go in yourfare, but you see that with apple, you can see the momentum waning and the volume less and lez less, and you do need to see the break of what they call trend line support where the stock causes more technical dee tearation, and from the technical deterioration, i could go the 180, but i want a pullback of 135 before stepping in to buy. And you have note d that wit regard to the broader market, the charts are not great and that is bearing down here, and we are down 100 points here, and what does that tell you about what is happening today . Is. Well, today is important technically, because we have taken out 1650 and it seems that we will challenge the august lows and probably get through that which is near 1622 and that is a shortterm. If you look at most of europe, things are much worse, and you look at the eurostocks, and 50 has breached those levels to da. Seeking a flight of safety to treasuries for first time showing a little break in the correlation before we saw the treasuries and the equities moving together, and now we are seeing a bid to rtreasuries anda move up in the yen, and also an increase in concerns and crude oil. So right now, equities is a place that you dont want to be and a seasonally weak time when they perform subpar. And we have a survey showing that the majority of the economists do not believe they will taper until the fourth quarter. Right. Despite that we are chatting about it and reporting about it imminent in september. Well, the move in the last couple of days in treasuries believe it is right. The Economic Performance has certainly not gone by the fed standards in giving the forecast of the gdp growth or the unemployment which is still a concern. Im not an economist, but the bottom line is that we are not there and even though it is baked into the market at this point, treasuries are of bought, and we see a sign of it pulling back. Thank you, mark newton, great insight on tesla. And ow over to Rick Santelli with the cme group. Well, carl, a lot of things are going on and what is going on with syria, of course, and it is difficult to know exactly any time line or significant facts so making the markets have some flight to safety shish, and not so much in the Foreign Exchange, but i found it fascinating today that as we are hunkering down of course and glued to cnbc for any updates, i looked at the Foreign Exchange markets, and what i see is not so much the dollar doing better, but the yen doing better. While im speaking, i want to throw up the oneyear charts. Whether it is the dollar yen or the euro yen, it is the same. Grant it, a lot of Foreign Exchange and cross trades that are hovering at the levels that are looking extreme, and in those cases it is going to look like the end is going to improve at the expend pence of the dollar or the ur row, a about debt and taxation. No, there is a commercial like that, but this is a little different. About a week ago i said they reached an important but sad milestone in japan. They reached a thousand trillion yen of debt. About 10. 5 trillion equivalent which is about 225 of the gdp. But here is something even more important. Theyre at a crossroads with tax policy. And what theyre looking at is the same thing that the u. S. In many ways had to grapple with or is grappling with, and that is on one hand servicing of the debt is starting to ramp up. They have to procure 250 billion to service the debt which is about a 14 increase over last year. While all this is going on, their Interest Rates on the jgbs are moving down. The reflation trade hasnt really caught. Lets switch gears. Theres a couple days i want you to remember on technicals for treasuries. August 22nd and july 5th. These are the extremes. If you look at the fives, it looks kind of double toppy with these dates. But the further down the curve you go, the steeper it gets. If you look at 30s, it just looks like a 45 degree staircase still. If we continue to trade and close below 2. 74 in tens, you want to be careful about the momentum switches that are depicted by some of these curve implications. Carl, back to you. Thank you very much for that. Were keeping our eye on jcpenney this morning as well. David faber is here with some more news on jcp. Of course, as we know, bill ackman, you wont have him to kick around anymore when it comes to jcpenney. The Hedge Fund Manager who had been in the stock for 2 1 2, almost 3 years at this point of course decided to sell his entire 39 million, roughly 18 stake in the retailer last night in a transaction orchestrated by citigroup in which apparently there were reverse inquiries, in other words interest from potential investors in jcpenney. So much so that citi was able to do this very quickly overnight. 12. 90 a share. As you see, not really impacting those shares which are up. Some who wanted to get a nice chunk of stock as a result of this offering it marks the end of a very distressing investment for the Hedge Fund Manager, one in which, of course, he installed a ceo of his own choosing when he was a member of the board up until two weeks ago when he stepped down. That former ceo, ron johnson, went on to try to remake jcpenney and did not succeed, to say the least. The company suffering significant samestore sales declines over a terrible year. Finally culminating in the dismissal of mr. Johnson, his replacement with mike ullman, something mr. Ackman was not really that keen of either. But he has now departed and hes departed the stock as well. In the summer of 2012 i had an opportunity to speak with ackman. He was extraordinarily positive then on the prospects for this company. Its the only thing in the portfolio i own where we can make 15 times our money in the next you think you can make 15 times your money on jcpenney . Its trading for nothing. People think theyre marking it for dead. If ron turns around the business, starts growing sales, starts hoping shops with high levels of sales he was a genius when we hired him, now people think hes an idiot. A year or two again, theyll think hes a genius again. That, of course, did not happen. Unclear why now at 12. 90 he felt the need to sell the entire position instead of working out of it over time. Interesting to note significant hedge funds, whether it be perry or Soros Capital Management or heyman are all long the stock. And im theres a trader i talked to who said hes been interested in the long time of jcpenney, points to the kitchen sink quarter. Your point about ackman is spot on, why now liquidate the position when a lot of people are starting to like it . Hes been somewhat emotional. He might argue with that characterization. Some would say erratic. Well see. Perhaps he sees bad things coming. David faber. We were down 120 points on the dow. Weve just come back very slightly. Simon, blackberry is working to revive its once dominant messaging service even as it pursues a possible Strategic Review that could result in a sale of the company. The company is considering spinning off blackberry messenger into a subsidiary called bbm that would operate with more independence. A dow jones report. The move signals they are trying to value in as a single asset. Maybe blackberry could be buting bbm up into its own company. Interesting to see the shares lower on that report. Interesting. Convicted inside trader, back in the news because of his cushy sell and man servant in prison. [ male announcer ] its time. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. The new blackberry q10. announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Dinner was always a big thing. We had a pasta course and then we had a meat or a fish. Pauly did the prep work. He was doing a year for contempt and he had this wonderful system for doing the garlic. He used a razor and he used to slice it so thin it used to liquefy in a pan with just a little oil. It was a very good system. That seems especially appropriate this morning. Raj raj rat nam is taking quite well to prison. Hes, quote, reigning like a king with a prime cell and his own cook and man servant apparently. Raj apparently has a private bathroom, shared balcony, television, an Adjustable Bed and a servant who cooks for him. Currently serving a conviction for insider training. No word if the man servant has a razor and a clove of garlic. Nothing would surprise me at this point. Hes a very large guy. Supposed to be pushing the wheelchairs around. Instead, hes just looking after him because he wants a job when he gets out. Microwave cooking . Those who are angry have be frustrated at the lack of orange jump suits at large after the crisis but certainly the way theyre being treated is important, too. I can understand i remember when Martha Stewart was in prison for a time. There was all this focus on how cushy that was. Im surprised in the case of raj given where he is theres still all these privileges extended. Maybe they have to protect him. I think hes claiming a medical condition, and theyre acceding to that request. Dow continues to struggle here wavering below the triple digit loss and above. David, well see you a little later on. Well talk some europe. If youre just joining us, here is what you missed earlier on. Welcome to squawk on the street. Here is whats happened so far. Were now in the place where the only question is will we pay the bills that the United States has incurred . And it is just the only way to do that is for congress to act, for it to act quickly. What we need in our economy is some certainty. We dont need another selfinflicted wound. We dont need another crisis at the last minute. Congress should come back and they should act. Do you know that every time we have business as usual and they talk, we go down. Its not like its business as usual, its congress fighting with the president. No, this is congress and the president sell. Does he need that chunk of money . I would not have done it. I think jcpenney was down a lot already and that maybe you let it ride a little. I think theres a risk of a weakening Housing Market. Its a speculative market, and this has been my research, its driven by irrational exuberance, and that can just suddenly change. There is the opening bell. I do think that they will quickly pass a continuing resolution, that is a budget patch to keep the government open, and then the real fight starts over the debt limit. More customers who get to know us, the more they like us and they return to us. Were just trying to execute to our formula on a consistent basis every single day. Good tuesday morning. Were live at post 9 at the new york stones. Lets see how the markets are doing here. The dow holding on to some relatively significant losses, down 89 points. We were down lower just a few moments ago. S p has lost 41 points im sorry. Reflipped the board, 14 points. Nasdaq is down 41. Oil rising on concerns over syria and a potential strike from the u. S. There. Investors looking for some safe havens. Gold prices on the rise as well after crossing 1,400 just a couple days ago. We kick off the road map with geopolitical unrest in syria. The latest report suggesting the president has not yet decided on a missile strike but it could come as early as thursday. People get the latest details straight from the region. Also things not looking so great back home either. The debt ceiling deadline is looming. The treasury saying theyre not negotiating. Our john harwood sat down with treasury secretary jack lew for an exclusive interview. And could it be the return of the safe haven trade . Gold now up 20 since hitting a multiyear low on june 28th. Well go straight to the pits to find out. Youre not invited. Thats what microsoft is telling the media ahead of the Analyst Meeting in november. Treasury secretary jack lew sitting down with john harwood this morning for an exclusive interview. John joins us from washington with more. Hi, john. Good morning. Weve had let diment fighdebt l years and years and jack lew has been a part of a lot of them beginning with when he worked for tip oneill. He was trying to get out front of the debt limit fight this fall because he senses a different dynamic than weve seen in the past. Here is jack lew talking about the dangers of the debt limit now. It used to be that the zet limit was treated as a deadline to force action to come together. In 2011 we actually saw the specter of default raised as something that was an affirmative position that was better than the alternative. That was dangerous. We cant go back there. Republicans say they need additional spending cuts in order to achieve the debt limit or raise the debt limit. Jack lew says he wont negotiate, but they are negotiating over the budget and over the sequester. One place to get new cuts is entitlement programs which have barely been touched in the budget cutting thats going on over the last couple years. The Administration Says its open to changes in entitlement praments but only if the cuts are balanced. The president made clear he was prepared to do tough things on entitlement programs, but those tough actions on entitlement programs require balance in terms of revenue both for fairness and because for economic results. Thats what we need. There is a difference though. The administration makes between a big deal, the socalled grand bargain which would require big entitlement cuts and a lot of revenue, and a smaller deal. Jack lew wasnt willing to say that he needed to have tax revenue increases in order to get a small deal. So thats one thing to watch after we get a continuing resolution to keep government funding. Then well get into the negotiation about maybe replacing part of the sequester, maybe a small deal there, guys. John, a couple people on wall street asking this morning how syria might affect the calculus around the debt ceiling, how it might affect the gop position. Of course, the amount spent potentially on the situation not being that large, but the impact in terms of how that all plays out. Very difficult to know how the market is going to respond, but i dont think thats going to be a central part of the calculation either for president obama in deciding what to do about syria or for jack lew and the legislative team and how to deal with congress. Jack lew made this point today, its likely to move on a separate track and the two not spill over too much. Meantime, john, its been a day twisince you tweeted you he from a source on team obama that he will name Larry Summers to run the fed, although summers apparently still being vetted. How comfortable are you going out on that limb this early on . Well, i want to be clear, this is not a source saying that president obama has decided this. This is what the source expects to happen, and there were two yesterday who i talked to who both said, yes, i expect Larry Summers to be the pick. But its different from these people who are outside the room of the people with the president actually making the decision, make talking to some of those people, but this is different. This is not a fact at this point. This is where people who are pretty well informed but at some removed think this is going to hit. Well, the summers pick, john, being closely followed around the world. Thank you very much for reporting on that this morning. More now on the situation in syria. The u. S. Military ready to act in syria over a chemical weapons attack if asked to do so by the president. Lets bring in helena kroft, she joins us at post 9. Thank you for having me. How important is it is the time line of what happens over the next couple days and whether the white house does choose to pursue this missile attack . This is a huge deal, particularly for the oil markets. Everyone is closely watching, do we have military action that potentially inflames the situation and puts the region at risk for more violence. I think part of the as were following this, part of the trouble almost is that there isnt a direct Market Impact for the moment. That seemed to change a little bit yesterday. We saw the market turn negative after john kerrys remarks. Peo an excuse for selling. We see brent at a sixmonth high because of whats happening in syria. Do we have violence spilling over to key producers like iraq, opecs second largest producer . They have seen a run up in violence. Some have tied that to syria. Were watching for broader regional fallout, particularly on the oil side. We have heard from iraqi officials, iranian generals in the past couple days saying there will be severe consequences if a strike takes place. Is that a threat aimed directly at the suez or not . Its not really aimed at suez. What we really should be watching is key regional facilities. Look at iraq. We have the critical pipeline thats been repeatedly attacked. The concern is do we see more attacks on key Energy Installations . Iraq is what you want to watch. Its the neighboring country. If we have a big outage there, that could be particularly serious. What kind of upside risk to brent . We have 3 Million Barrels off the market because of unplanned outages. If we had a significant attack on a regional facility, that will put significant upward pressure on prices because theres so much volatility in the middle east, egypt, syria, people are very unsettled about whats going on there. Is that already bleeding through to have an impact back here at home . The Higher Oil Prices . Clearly the administration will be watching that. What you want to watch for, if we do see broader instability in the middle east, will they consider potentially tapping the Strategic Petroleum reserve . Does that kind of thing really make a difference . I think it does in terms of how people feel about market sentiment. Then i think that will potentially filter in. We want to watch for do we see a significant supply disruption. The timing just when we got that spread between brent and west texas between zero. Well see this on the brent spread absolutely. Why is wti responding to your point . I think its providing a floor for both, but really in terms of where youre going to see any type of real movement, we would still look to present for that. Thank you. Thank you for having me. Lets get more on syria from the middle east region. Ayman mohyeldin is a correspondent for nbc news. He joins us from cairo. Ayman, good morning to you. Reporter good morning. It seems all indications are the United States is considering a military operation to strike targets inside syria. That could happen as late as this week, perhaps as early as next week. The syrian foreign minister struck a defiant tone. He held a press conference, spoke to foreign media saying his country was defiant in the face of military aggression. He said any strike on syria would result in a regional war that would not end favorably to the United States. He also blamed all of this talk of war rhetoric on israel and the United States for trying to weaken syria and to try to increase american control over the region. Nonetheless, the syrian foreign minister said his government was cooperating with u. N. Inspectors on the ground. They have delayed a second day of inspections in that area. They are expected to return for another round of interviews and perhaps collecting samples as early as wednesday. They have not made clear whether or not they will make their findings public or not, but all indications are that they are planning at some point to release their initial findings. Here in cairo the arab league held an emergency session at the ambassadorial level. Theyve condemn the chemical weapons attack and have called on the International Community to hold syria accountable. Carl . Ayman mohyeldin in cairo. Thanks so much. Shares of tiffany hovering at a flat line despite a nice beat today. First, Rick Santelli, what a day to talk some housing, rick. What a day to talk some housing. You know, even robert chiller didnt convince me i should go out and buy a second house. You think he was a little pessimistic . Mark hanson coming up. He may be a little bit more pessimistic but i dont care. Realistic is the point, and he has the facts to back up his pessimism. You want to tune in. When, when, when . Bottom of the hour realistic is the point, and he make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you start using active trader pro today. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] welcome back to squawk on the street. Im dominick chu. Shares of goodyear are standouts in an otherwise down market. The positive momentum is being helped along by a new Labor Agreement the company has signed with workers. The contract affects 8,000 employees, six facilitiefacilit will last for four years. Reps said the deal will help guard against plant closures so, kelly, an upside standout, Goodyear Tire and rubber in an otherwise down market. Benefitting from the auto sector, dom. Looking to tiffany whose report Shows Consumers still want their luxury products. Courtney reagan is here with more. Earnings from the iconic jeweler giving investors some hope the highend consumer still has an appetite for bling. 83 cents earning per share beat consensus. But the revenue did fall sort of estimates. The jewelry retailer is increasing its full year forecast to a range of 3 3. 50 t 3. 60. Tiffanys total comparable sales increased 5 for the quarter. Samestore sales in asiapacific gained 13 with especially strong sales in Greater China. Comps improved by 8 in japan, 7 perfection in europe. In the u. S. Samestore sales are unchanged. On the conference call, executives say they remain cautious on the u. S. Growth prospects in the near term. The retailer noting particular strength in fine jewelry or that gold, platinum, diamond, and gemstone jewelry and highest end statement jewelry that retails for more than 50,000. Company executives expect its aspirational Fashion Jewelry growth to lag. Not all upscale retailers seeing strong quarters. Many reporting weaker than expected sales. Michael kors and now tiffany seeing the stronger sales. Further proving the theory that consumers are more willing to spend for higher end accessories than at apparel at various price points. Carl . They continue to throw investors for a loop. In this case good finally. He has done it again and hes back to tell us all about it. The man, the profitt, marcus la mow ne lemonis is coming up next. , mar lemonis is coming up next. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. To appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. Hey ray, my uncle wanted to say thanks for idea hub. O well tell him i said youre welcome. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. Yea, and these ideas are across the board bullish, bearish and neutral. I think you need a bigger desk, pal. Another one . Traders love our trading patterns, now with options patterns. Whats not to love . They see what others are trading like the days top 10 options trades by volume and get ideas yea i have an idea how about trading that in for a salad . [ male announcer ] so come trade at the place thats all about options and futures. Optionsxpress. Open an account today and get a 150 amazon. Com gift card when you call 18882800154 now. Optionsxpress by charles schwab. Its okay. Youre frustrated, right . Yes. Just tell him how you feel. Hes not going to get mad. Im listening. Its our livelihood here. And its never been considered. Emily, what does that we work so hard. Explain whats been going on so marcus understands. I understand. You dont understand. No, you dont understand. You dont understand. What do you mean i dont understand . Because you dont know the history of whats going on here. The history is the people that work here dont [ bleep ] want to do it anymore. Thats what wamatters. Thats the easy way out. Do you know what the easy way out is for all of them. Whats the easy way out . To leave. Whats the easy to leave. To quit. Totally up eir easy way out and [ bleep ] creek. Thats a sneak peek of tonights episode of the profit. Marcus is invading a Doggy Daycare faciles in los angeles. Marcus la mow neemonis is the s. Is invading. Invading . I read what im told. You have called this management volatile. When we were kids we saw bullying in the classrooms. Suicide rates are at their high nest this country because of bullying. I never thought it would enter into the workplace. Its here. Its been an undercurrent of several episodes you have been involved with. A lot of people feel like they cant communicate, cant stand up to their boss and ultimately they wind up suffering. This is maybe a bad correlation but i tie it to whats happening in some boards across the country. And i look at ackman, and its my opinion only, when we start bullying the management, similar situation here. We need to let people do their job and treat them with respect. If theyre not the right person, find different people but dont abuse them. You make the point that you need to understand if youre a Business Owner that the business is bigger than you are. What do you mean by that . Why do you say that . So often times business open verse a couple disciplines they fail to keep in mind. One is they stick their hand in their cookie jar. Yes, its their business but you want to have respect for the money. The second is youre there for a reason, to provide a service or product to the customer. You have employees who are following you. When you start to disrespect both of them, you start to believe youre bigger than the business. Its like thinking the quarterback is more important than the team. Do you think the worship thats accorded to eccentrics like steve jobs makes every eccentric ceo across the country think he can behavior however he sees fit because thats his vision. Its more about imposing their own personality to some extent on the company. I think bad behavior is often disguised or an excuse is that its vision, im creating. Nowhere in this country is there room, i dont care who you are, how smart you are, how great your business is, theres no room for that in this country, and the board rooms of this country and the employees in the businesses cant stand for it anymore. They have to go. Finally, youre dealing with a business here that has dreams of going national. And im wondering had. Had. What are the differences between how you manage a Regional Business and one that you really want to take all over the country . So in my case when i find good businesses, you really have to find a good underpinning of people, and i hate to get back to the product and the process thing, but the people is really the foundation. Pick their best practices, scale them across the country. In the case of the business you will see tonight, i thought it was scalable. Great business you seem to be pretty hot on the model. Real bad guy. Cant scale bad people. Isnt the point of scale you get around it. All you need is the model. You open a couple branches outside the guy and you neutralize the problem. With the power of the internet and twitter, you cant hide from bad behavior. If one location misbehaves, it leaks across the whole chain. One bad hamburger, one bad chicken wing, youre not selling chicken wings. Good day to bring up chicken wings. I did it for you and for cramer. The profit airs 10 00 p. M. Eastern time on cnbc. You can apparently get chicken wings with a bone in hem at mcdonalds. Thats a different story. Bell is about to sound across europe. It has not been a pretty day over there. A lot of red. Well have details and the impact back here in the u. S. When we come back. Stay with us. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back. Were keeping a close eye on gold which has been rallying over the last three months. Take a look, if you will. Were almost 20 off the lows, but the precious metal entering a bull market after breaking through 1,400. Sterling smith is joining us now out of the pits of chicago. Sterling, good morning. The question on everyones minds is how much further might we have to go . Well, i think gold is coming into an area where we should see some resistance around the 1,480 area. I think the market may have a little trouble there. But the good side for gold is, one, momentum has shifted in gold. Gold is very much momentum oriented market and after months and months of downward, were finally seeing momentum turn positive. I think thats the first good thing for gold. The second good thing for gold is were coming into a good seasonal time of the year. Along with this we should see some good buying from india and i think were going to see improved asian buying. The physical market should be able to improve a little bit. I think we can probably take the market above 1,500. If we can get above that, taking the market to 1,600, 1,625 by the end of the year is not out of the question assuming we dont hit any bumps in the road. A lot of people trying to sort out the correlation to understand what gold is trying to tell us. Are you seeing appreciate metals broadly rally. Are the Industrial Metals joining the fun or is this more of a gold move that could point towards weakness and a risk aversion trade . Well, i think were actually seeing some better perform nens copper. The Copper Market is beginning to wake up. Iron ore movement coming into china is beginning to show signs of improvement. Gold does a lot better when silver and copper are moving along with it. I think what were seeing more is an improvement in the economy, albeit slow, but some improvement and that will lift gold purchases and it may give raise to some Inflation Fears in assorted locales. Thats pishl to gobeneficial to. We have to look at currency problems in indonesia and brazil. That should lead to better physical demand as well. If im in india where a lot of physical demand typically comes from and the rupe is weakening, what does that mean . It will put a little fear in their pockets. Typically with india, we see their harvest coming in in the next six to eight weeks. That brings a lot more currency into the economy and they should see fairly good gold purchases, so the weak currency in those countries should be beneficial to gold, although its small and incremental, it is a positive, and a positive in the physical market should help the futures market. 4well keep an eye on those markets. Thank you, sterling. Simon, what are we looking at . Okay. So this is a big day for europe. The first thing you need to note is how deep the red is. Many of those losses today are over 2 , a far worse Performance Today in europe than you have had here. The fact german Business People were saying in surveys through august they were the most optimistic for 16 months, totally irrelevant on todays trade. The issue is syria. You have got the Prime Minister of the United Kingdom recalling parliament to join in some sort of strike forrepresumably against syria. Have you seen how the rupe e has moved. If the price of oil is rising for net importers, they have potentially Serious Problems ahead. You see some big multinationals in negative territory. Certainly the beg banks in europe in negative territory. Can we have a look at those . World bank of scotland. This is a form of profit taking on a rally. If youre going to go into geopolitical urn certaintncerta temptation may be to take some money off the table. Europe against the United States recently and you will see that actually today obviously is a bad day, but up until now you hadnt seen the same profit taking in europe as you had seen in the United States. Therefore, to a certain extent its a catchup there. Theres a selloff notable on the italian bond market so the yields are moving in the other direction. You see the italian yields spiking above where you are on, for example, spain. Thats as berlusconis party threatens the stability of the party there for his own, of course, potential disbar from public office. An important deadline on that tomorrow. In fairness, the italians are trying to clear 18. 5 billion in euros in debt. One more thing to mention, tomorrow is the day that mark carney, the new governor of the bank of england, the guy from canada, actually does his First Official speech. He is going to go to Business People in the United Kingdom. Hes going to attempt to convince them they will have rock bottom Interest Rates for the next three years. Really . Back to you. Thanks, simon. Well talk to you soon. Lets bring in bob pisani. Im guessing with a couple intraday charts here, pretty interesting. Syria is a major issue. Overall rates are down for a third session. Rates and stocks sort of moving in tandem today. Look at emerging markets. I know, youre tired of looking at emerging markets. So am i. There are the dow industrials. But look again, this is today. Down another 6 in all the maimer markets. Thailand is weak here. Airlines are among the worst performers. We got oil at a sixweek high here, so ual, u. S. Air, those are notable declines, 3 , 6 , and 7 . Banks are bruised as well. Problem with rates down. Wells fargo, morgan stanley, all down more than 1 . Gold stocks up. This isnt a hard one to figure out. Obviously on concerns on syria, but also i want to point out the rupp pi has been getting crushed for several months. The indians are the biggest buyer of gold in the world. It drives up the price of gold overall. There were moves in the parliament to provide subsidies for food in india. It dropped ruppee almost 3 . Its a contributing factor in gold moving to the upside. I want to talk a little bit about this continuing little tiff thats going on between the nasdaq and the new york stock exchange. Recall what happened on friday. The s. I. P. , security information processor, that is run at the nasdaq, the network that carries quotes and trades for nasdaq went down for several hours. Theres an argument over the time line and who is to blame. There it is at 10 57, nasdaq declared selfhelp against arca. Remember, declaring selfhelp means youre having a problem with the feed. One of the matching engines at the nyse went down briefly. When it went back up it had connectivity issues with the s. I. P. Then at 12 15 nasdaq shut down the s. I. P. The question is very simple. What happened in that period between 11 09 and 12 15 . They are implying nasdaq has implied that the problem with arca might have been a contributing factor. The niyse is very unhappy about this. The only thing everybody seems to agree with is something used up all the resources on the s. I. P. And caused it to shut down. The question is why didnt the recovery system work Police Report properly. Nyse says the s. I. P. Is designed to work properly. If theres a connectivity issue it should come back up easily and that should be built into the system. Something possibobviously wasn working right at the s. I. P. Any implication the nyse caused the problem is wrong and a lot of smoke screen. Theres a little ill will about all the finger pointing going on here. Mary jo white, the head of the s. E. C. , has called a meeting for september 12th to sort out this whole mess. The only thing everybody seems to be agreeing on is something used up all the resources on the s. I. P. And i will have a little more to say about this a little bit later. Guys, this shows you how complicated things are. The bottom line here, carl, i said this last week and i stand by it, these are legacy systems. They are very complicated systems that are built on software where old software is built on new software and the system has trouble interacting with itself. When you put in 13 exchanges and 40 dark pools that everybody has to interact with the wonder is the system doesnt go down all the time. I agree. My favorite analogy is like trying to put a jet engine on the Wright Brothers plane. Very good way to understand it in a simple way. Now, here is a bigger problem. This is a low margin low profit business. The stock trading business is lousy. They are cutting head count at the new york stock exchange. Theyre cutting head count at the nasdaq. Cutting head count at a time when they need to spend more on resources like technology. This is a major problem. I think this is something the s. E. C. Will have to address. All of you, not nasdaq, nyse, everybody has to spend more to make sure technology is working at a time when their budgets are actually shrinking. How do you deal with that . Bob, thank you. The s p caseshiller index showing home prices rising a the a slower pace in june. Earlier on squawk on the street we talked to index coauthor robert schiller. Well, none of this is for real. The Housing Market has gotten very speculative and it goes to big cycles. I think theres a risk of a weakening Housing Market. Its a speculative market. And this has been my research, its driven by irrational exuberance. And that can just suddenly change. Its a story. Its an e voluming story and theres nobody that can really predict this for sure. Its risky. Using a phrase he himself came up with. Lets get to Rick Santelli. You have some thoughts on this, rick. Yeah. Not only do i some thoughts but maybe more importantly i think mark hanson has some thoughts. Welcome. First time with me as a guest. Can you react to Robert Schillers comments . I think thats right on the nail there. I was surprised to see June Caseshiller actually not increase as much as we even estimated. Thats from april, may, and june closings which means february, march, and april contracts, right in the middle of the spring busy season. I was expecting it to be a lot up a lot more than it was. And you brought up a great point. Sometimes the simple things elude many. I was passing your little note around what you were saying, that prices come before contracts and these are very old. Lets go to another area. You know, the who, wont be fooled again. Stimulus, how did it affect housing and how does it affect the psyche of the housing players . In 2003 when house prices reached a level, they became unaffordable. The banks and investment banks created leverage in structure, interestonly arloans. House prices collapsed to reset to the going 30year fixed rate mortgage. Then again in 2011 on operation twist, qe3, q esme4, rates crea 20 more affordability out of thin air. Over the last 20, 22 months, house prices have responded to that. Now thats gone again. Were back to 5 . I dont know exactly how its going to go forward, but if new home sales in july were any sign of what were going to see, demand has fallen off a cliff and house prices have to again reset to the new levels of finance. All right. Inventory. That seems to be the big bullish thread that many are still clinging to in the housing industry, all the analysts. What are your thoughts on current inventory and current irntory levels . One house is too much inventory in a city of dead people. If demand drops, which i think it already has given the Interest Rate surge catalyst, and we see people listing their properties, even at the same level they were, but i believe its going to come increasingly as investors get out, as retailers always late to the party list their houses in bigger numbers on the rise in Interest Rates, we could wake up 24 days from now when the existing home sales number is released and find out we have more supply than we have had in the past 24 months. Mark, im going to have to cut it short. Coy spend another hour talking to you. Thanks for being here today. Kelly, back to you. Rick, thanks a lot. A quick market flash. Dom is watching some transports here. Some 69 bof the biggest lose are the transportation stocks. Were hovering near multiweek highs. All 20 members of the dow transportation index lower. Pisani mentioned the airlines. But check out fed ex, u. P. S. , theyre both down, trucking with ryder. All of them are getting hit on the worries about oil. Kelly, transportation is really one of those leading indicators, at least thats what some investors say, leading this plashth lower. Its a big move for fed ex. The countdown is on. Come midoctober our debt ceiling will be breached and the battle lines are already being drawn. Were not going to be negotiating over the debt limit. Coming up, well debate how bad this battle could get. Squawk on the street is back in two. Make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you start using active trader pro today. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. Coming up on the half, markets orrare on edge today wia possible strike on syria. And is there any more room to run and can the biggest name in burgers rule the chicken wing world . Carl, well see new a bit. Thats going to be a good debate. The battle lines over the debt ceiling have now been drawn. Here is what the treasury secretary had to say about the administrations stance on the debt ceiling. We are not going to be negotiating over the debt limit. Congress has already authorized funding, committed us to make expenditures. Were in the place where the only question is will we pay the bills that the United States has incurred. It is just the only way to do that is for congress to act, for it to act quickly. What we need in our economy is some certainty. We dont need another selfinflicted wound, another crisis at the last minute. Congress should come back and they should act. However, the speaker, john boehner, had a different perspective when he spoke to Maria Bartiromo back in june. I can say the sun will not come up tomorrow, but guess what . It is. The president can say im not going to negotiate on the debt limit. Get over it were spending more money than what were bringing in. We have to deal with this problem. If were going it raise the debt limit, then we have to do something about whats causing us to spend more money than what we bring in. So guess what . Were going to have a debate and were going to have a negotiation. Joining us this morning, bob cusack, managing editor of the hill and tony frato, a cnbc contributor. Guys, good morning to both of you. Good morning. Tony, here we go again. Is it a little early to start this game or not . Its never too early to run to the brink, right . Maybe if we start early, we can get to a solution more quickly, but i tend to doubt that. I think we kind of need these deadlines to actually force some kind of action. Its really unfortunate. The debt ceiling is a construct of congress. And, unfortunately, were going to be dealing with it for a long time. Walk me through what treasury is thinking here. The timing, the way theyve constructed the rhetoric, the way theyre rolling out the secretary. What are they trying to accomplish. The white house has been fairly consistent on this from president obamas reelection saying right after it, im not going to negotiate on this. And hes willing to negotiate on the Government Shutdown possibility, but not on a debt limit. President obama has failed to get a grand bargain. Hes met with a lot of republican senators as well as house members, and there is no grand bargain. So this is going to rattle the markets. Theres not a lot of type between now and then. We thought this was going to happen earlier this year but then they had more tax revenue so now its pushed to midoctober. Thats not a lot of time. At the same time, a lot of people on wall street are getting kind of blithe about it. Because weve been through it before. People just kind of rolling their eyes and saying we have heard this one before. We always resolve it at the last minute. Is there any reason that that somewhat cynical view is going to be wrong this time . Look, i think theres a greater chance of it being wrong, kelly. Ive spent a lot of time talking to investors over the last couple months. Im hearing the same thing that, you know, that weve been through this before, its a little bit of a vaudeville act, and we know how it ends, and so were not going to worry too much about it. I think theyre wrong for a couple Different Reasons. One is that, you know, in particular republicans, my party, they keep doubling down on some of the ideas here. They keep doubling down on building the box which constrains them to be able to act, and the second is the problem that in the past when we would deal with the debt ceiling, we also had issues like the bush tax cuts that were set to expire which gave added pressure to come to solutions. Thats gone. Were kind of running out of ingredients to try to work, you know, try to work our way out of this mess. Horse trading is running thin on horses. Brings up the question how obama care changes the equation. We had kay billy Kay Bailey Hutchinson earlier. The president is not going to go for any type of change or defunding to obama care, certainly not major change. Their leverage is the debt limit. We saw that in 2011. They got some concessions. They almost reached a huge grand bargain. So these issues had been debated before whether its medicare or Social Security, a change to thec pi index. The president has indicated hes willing to negotiate but theres a lack of trust between Speaker Boehner and president obama. Bob, a lot of economists are frustrated because they say if it werent for the sequester this year, there wouldnt be any question about the strength of the u. S. Economy that were starting to see now. What are the prospects for additional cuts to the budget at this point . I think everything is on the table. Whether its adjustments to sequestration in both directions or some major entitlement change or at least significant entitlement change because theres no way that house republicans, at least right now, are going to schedule what the president wants. He wants a clean debt increase, and so republicans said, listen, you negotiate on this in 2011. You cant say youre going to do that in 2013. You have to shut down everything. Tony . I think he can actually say that, bob. As someone who has when i was at treasury and the white house and we had to deal with congress or both parties on this issue, im envious of the administrations stance theyre not going to negotiate and i think its actually a Winning Strategy for them because this is a construct of congress. Congress needs to deliver a bill and theyre going to have to negotiate with themselves on this. I think theyre going to be able to do it. I like the optimistic tone there. Tony, bob, thank you as we follow the latest on this round of the debt ceiling negotiations. Buckle up. We have heard the tech bubble and housing bubble but what about the farmland bubble . Jane wells keeping an eye on this one. Shell be here to explain when we come back. Welcome back. Corn and Soybean Prices may be suffering lately, but Farmland Values continue to hit record highs. The question is whether were looking at a bubble in farmland prices now . Jane wells is live at the Farm Progress show in decatur, illinois, with more. Reporter i want you to guess what kind of machine this is. A clue, its not a tractor. All right. Well, i guess you wanted to know. It is a combine that im sitting on. Here is the deal. Farm Balance Sheets remain strong. Farmers have cash. Land values at record highs, but lets unhusk the truth. In iowa good farmland is up 65 . Some of it selling for well over 10,000 an acre. The president the says corn prices in the belt have not budged in two quarters. Even though farmsers haers have. Its been an accident couple years and the 41 years, the last 2 have been my best. Reporter dave stewart farms in illinois where values are up 17 in a year but down 1 from last quarter. Listen. Most people i know arent even participating in farm sales anymore right now. Its just you dont want to buy it on a historic high. And i think in a couple years you will see some reduction in that price. Reporter now, equipment manufacturers are wondering when farmers may start to pull back spending on new tractors and other pieces of equipment as corn prices come down. Case ih is releasing the largest number of products right now in its history. Theyre kind of at a point where buying machinery, they can if they want to. But they dont have to. And so i think it really puts the pressure now on the manufacturers to supply them with technology that means a difference for them to want to buy new. Reporter yeah, and theyre all pushing new technology for precision farming. A lot of farmers dont actually own the farm they land, they rent it. Rentz are up 50 in three years. Those rents arent coming down even though corn prices are. Back to you. Yeah, interesting. And it really points to some of the down grades, jane, that we have seen on deere other the past few weeks. Great story. Jane wells. Dow is down 103. Weve been just hovering around the levels here and it doms on top of the dow on course for the biggest drop since may of 2012, both points and percentage. Kelly, best s p stocks of the month . Best buy and netflix. That mirrors whats been happening for the year. The worst abercrombie and first solar. The dow is outperforming. Look at the nasdaq, its down 1. 3 . Were talking about it almost doubling until this morning it was higher for the month, went negative after the opening bell. No, youre not invited, thats what microsoft is telling reporters about its Analyst Meeting next month. How does jon fortt feel about that . Hes going to tell us after the break. E some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Suddenly, faraway places dont seem so. Far away. Nascar is ab. Out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. Thats why we partnered with hp to build the new nascar fan and media engagement center. Hps Technology Helps us turn millions of tweets, posts and stories into realtime Business Insights that help nascar win with our fans. She loves a lot of its what you love about her. 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I have been getting disinvited from thing for a very long time. For other reasons. Yeah. Its interesting. Microsoft is saying this has nothing to do with ballmers retirement. Theyve been setting up smaller financial Analyst Meetings where press havent been invited. Ive managed to sidle up a to a couple of them anyway, but they dont have a ton of exciting, big news to announce these days. If they were unveiling a new iphone, maybe theyd want everybody there, but i think they i keep thinking back to when they were rolled out the surface with you. That was a splash. Thanks for stopping by. Lets get to headquarters, scott wapner and the halftime. Carl, thanks. Welcome to the halftime show. Four hours until the close. Were off the lows of the day but were still pushing a nearly triple digit loss for the dow. Theres the s p and the nasdaq negative as well. Crude reality as a Syrian Strike looms. We head to the pits to find out how high the commodity could go. Just wing it. Is it time for to you super size mcdonalds stock . A tasty debate is just ahead. Global markets on edge today following reports that u. S. Military action syria could come