Transcripts For CNBC Squawk On The Street 20130830

It will be the worst month since may of 2012. Europe still in the red as well after german retail sales unexpectedly dropped. Road map begins with markets in a Holding Pattern on this last trading day of the month. While deliberations by the u. S. And allies over intervention in syria stretch on. Meantime, a new nbc news poll finds roughly half of americans are against military action. They are kicking off that iphone trade i told you about earlier. And ge reportedly set to spin off its Consumer Lending business. Well talk more about that, too. Futures pointing to a slightly higher open on the last trading day of the month as fears of imminent military action in syria ease. The uk voting against joining any military action. The white house says the president will decide on a response based only on u. S. Interest and nbc news poll shows 50 of americans believe that the u. S. Should not intervene in syria. Never the less, guys, all the papers this morning, the journal, the times, the ft, saying that the u. S. Is prepared to go it alone if thats what they think they need to do. Yeah. It looks like to me the takeaway marketswise is because thats the case its probably more likely to be eliminated, more likely not to be a twomonth bombing campaign. I doubt if investors are going to be talking about syria as a swing factor in a big way one way or the other month from now. That said, we have to get into september which is historically the worst month but also an incredibly volatile month. Not since 2005 has it had a sub2 move in either direction. Wow. This year you have many excuses why it might still be jumpy. What i take calm for the is the market attitude, the psychology has gone a long way towards kind of coming to terms with that. Were seeing the volatility index has not backed off even on up days the last couple of days. Youre welling up the clinching up in advance of all of that. Doesnt mean its not going to be continue to be jumpy but i do think that everyone is on the lookout for it at this point. It does seem to be the case when you can identify the risks out there its probably not the risks that have identified. Theres a little bit of this. T it has to be priced in, carl. All months, you know, the dig dow stocks kind of let us down. They were for sale all month. Emerging markets to me is the thing that is not predictable. Theres not a date that says heres when its going to be figured out or not figured out or a decision is going to be announced. Headlines this morning that a story from reuters saying that there are about 12 currencies or so countries who are struggling with Peoples Trading basically out of their surns currencies. India may be trying to rally support with all of these different countries, why dont we act together. This is going to be one to watch. Volume today will be interesting, especially after we get into the middle of the day. Well get chicago pmi and michigan. Theres some stuff going on. I just wonder if theres people around to trade on it. We already had some interesting reports this morning. This july consumption report is an important one. People want to know what the Third Quarter is going to look like. We had better news in the Second Quarter. Are we still in a period where good news in one quarter sets the bar higher for the next no, the threshold of surprise goes up a little bit. I do think right now the market doesnt want to see real soft data even though its now being july consumptionwise was not great. Theres a expectation that the fed wants to do less in september. Almost certainly than you want them to be doing it because theyre reacting truly to better data and not just because. Yeah. As we said, the dow is on track for the worst month for more than a year. How syria and the latest impact data. Michael jones, chief invest ms officer with Riverfront Investment Group and westbury. Good to see both of you. Are you ready for september . Do we need to buckle up . I dont think we really need to buckle up too much, carl. I think were living with a case of almost hypocon degrkocohypoc. Theres always been things to worry about. Yes, theres been things to worry about but pretty consistently weve come through this with the stock market up and the economy growing, 2 growth, roughly. And i expect that to continue. In fact, i expect the economy to accelerate as we get toward the end of the year. So, sure, it could be a little bumpy but i think investors should look through that and be investors. The stock market is still cheap. And just hold on and everything will be okay. But, michael, its precisely that acceleration which has alluded us here. Why do you think that now, if you think that now is going to be a turning point, the second half will finally see, you know, what has so far not happened, which is couple of quarters back to back where we get upwards of a 3 print in gdp. Keep in mind how much damage the economy has absorbed from washington this year. We started off with big tax increases. Then we went right into sequestration budget cuts. The Third Quarter, you know, hours work i believe is coming down because employers are adjusting hours work to avoid obamacare, that 30hour thresho threshold. Off had something pretty big coming out of washington that has impeded economic growth. As we move into the Fourth Quarter youre finally kind of unshackling the private sector from what washington has been doing to it. I think thats where you see the acceleration. Curious, as well. Youre talking effectively about a policy thats coming out of washington, obamacare, et cetera, that could be having an impact. I dont know if people are focused enough on how much of a fiscal drag there is out there. If you were to take that out of the picture, the growth that weve seen so far might look a little bit better. Unfortunately it doesnt look like theres going to be any end in sight for that. Doesnt that argue, again, for a little bit more caution here among investors . I really dont think so. I think with that weve absorbed the higher Social Security taxes. Were getting used to whats happened with sequestration and it wasnt the disaster that some were predicting. And were now adapting on the private sector to obamacare. Were getting hours work where employers feel good about what their Health Care Costs are going to look like. All of those adjustments are happening and have happened. I think as we move through the Fourth Quarter here youre going to see the real underlying strength in the private sector. Remember, its miraculous when you think about it, that weve gone b from trillion dollar deficits as far as what the eye can see at the beginning of the year to now the cbo is saying the deficit is going to be less than 2 in 18 months. Weve made that transition. Still growing at 1 1 2 , 2 . Thats really a testament to the strength of the underlying economy. Brian, you mentioned that stocks still look cheap. If they look cheap in the early in the year when you sad sub 2 treasuries and junk bonds under 5 . Are they still observably cheap now now that you have a lift in rates . Yeah, i think they are, mike. And the reason is pretty simple. And that is if you look at corporate prompts and we just got a great report on corporate profits for the Second Quarter. Corporate profits alone justify higher stock prices. Even at current multiples. And in our models, weve already incorporated a higher interest rate. We always have. For the last couple of years, when we put the tenyear treasury into our models weve been putting in a 4 1 2 tenyear treasury. We did that even when the tre treasury was 1. 6. Were doing it today when its 2. 8. We believe the market can absorb these higher rates. To michaels point, i go back and look at the last couple of years, gdp has been running about 2 but if you take out government, if you just look at the private sector, private business investment, housing, consumption, weve been growing closer to 3 . So this economy has been doing better than most people think. And you can see it in these profit numbers. Guys, on that note, well see how we fair throughout the month of september and certainly today. Thanks a lot, guys. See you later. Thank you. Meantime, apple is a story today kicking off an iphone Trading Program at select stores today. John ford is live at one of the stores with more on that story. Hey, jon. Hey, carl. Good morning. Im here at broadway and 67th. The apple store here. They opened up just about ten minutes ago. I called them before they open. They said you can come in with the iphone. Theyll check the serial number, the physical condition of the phone and give you a credit toward a new one. There have been rumors about a program like this floating around for a while now. Its not clear how long until apple launch these widely or if it just is a storely store thing. One way or the other, old phones are kind of the new thing. Based on the fact that smartphone saturation has just become really high in this market at this point. And if you can trade in your phone and get a discount toward the new one, a lot of folks are thinking you will be more likely to buy the new one. Best buy also launching a program this weekend where you can come in with an older phone and get a discount toward an ipho iphone5. I dont know how much that is worth when apple is probably going to be announcing a new phone or multiple new phones in less than two weeks. So what is the older phone worth and what did you pay for them . What would you pay for them right now . The iphone 4s is worth 450 at this point. The, i phone5, 550. A new iphone, 650. Historically thats where its been. Youre probably to probably get a little less than half of this trading these things in. Kind of the car dealership model. Carriers launching new options for early upgrades based on the idea that you turn in your old phone. They like to resell these things into Corporate Accounts. That could boost margins for carriers, guys. Im curious because pricing is going to be so important for what consumers do here. Do you have any sense of how much theyre going to give you for these devices . Totally depends on the condition of your phone and which model you have. So its sort of the car model that weve all gone through and you into the dealership. You want to see the new models they have. They walk around your car and get a price. You probably wont get as good a price as if you sold this yourself on craigslist or ebay. But its convenient. If youre in there to buy the phone, they think you will take the money and go. Jon on the upper west side. May be selling them his own iphone. Well see, jon, thanks very much. True, you probably can get a little bit more if you do it person to person but theres the hassle. Other news, General Electric is planning to spin off the Consumer Lending unit of the ge capital division. Ge would reportedly get an ipo and it could come early next year. Big story. A continued decon glomization op ge. Its probably not a bad time actually to go out and get a value on this type of business. If you look at how, you know, the discover testimonies and cant tpital ones have done, th knit it together and made it upscale. I do think its probably one of the things thats easily kind of sellable as one unit. I had a lot of discussion about, for ge, they have their own reasons to do that they try to unwind part of what jack welch put in place. But others say it would park the end of sort of this three decade long consumer boom and what does that portend for the consumers in this country down the road . I see it a little more through the ge prism. Although the idea that ge no longer qualifies as a longterm Growth Business that probably does speak to that issue. Ge used to get a higher multiple back in the boon because of ge financial which was contributing the le ing thi share profit of the company. Consumers were acting different back then if you recall. Back then, ge was a aaa credit and could borrow cheaply and made it work, the math. Its a discussion of whether they find a buyer or spin it off. Finding buyers though has been a challenge for ge on a number of units. By the way, if it does an ipo, keep an eye on the index. Corporate spinoffs have been a bright spot in this market and so has the etf. Well try to get a chart up. Ge has been hanging in there. Might be csd. Still hanging around 23. 40 or so. When we come back, tensions still high in syria as u. N. Inspectors help to finish their investigation. When we come back, a live report from the area where w. The latest. Later on, the ceo of a company which was started in syria to see how his business is being effected and how hes dealing with the situation in that country. One more look at knfutures as w look at nont of august. The dow to break even only needs 658 points today. Back in a minute. Of august. The dow to break even only needs 658 points today. Back in a minute. Of august. The dow to break even only needs 658 points today. Back in a minute. Moof august. The dow to break even only needs 658 points today. Back in a minute. Nof august. The dow to break even only needs 658 points today. Back in a minute. Tof august. The dow to break even only needs 658 points today. Back in a minute. H of august. The dow to break even only needs 658 points today. Back in a minute. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. As the u. S. Debates wlorcht to take military action against syria, questions are arising about israels involvement. Nbc is joining us now live from tel aviv with the latest there. Hi, atia. Hi, there kelly. Well, the israelis are preparing as well as best as they can for a possible attack by the syrians in retaliation to any kind of u. S. Air strike. That being said, the israelis officials here do not feel that there will be a retaliation by the syrians but theyre preparing. They called 1,000 reservists to duty up in the north where that border with syria is. They also deployed various iron dome antimissile batteries up in the country, including in the north and including two here in tel aviv where weve seen missile t attacks before, primarily from gaza back in november. Also Israeli Citizens are in a bit of a panic right now. Theyve been going to various Distribution Centers throughout the country trying to get their government issued gas masks because they feel if the syrians Syrian Government does attack israel in response to the u. S. , possible u. S. Air strikes they may attack with unconventional weapons including gas and chemical weapons as weve seen being used in syria. But that being said, israelis had polls in various newspapers. 66 of israelis say that they support u. S. And european air strikes against syria but if they dont happen, 77 of israelis say that israel should not intervene. Kelly . Atia in tel aviv for us this morning. Atia, thank very much. The dow is on track for its worst month in more than a year. 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Oil, eased back down. Gold, eased back down. You didnt see any major flight to safety in treasuries. Youve got to play detective here and put all of the pieces together and see if it makes one complete story. I think what happened late yesterday dlfs some anxiety. While it didnt get wide coverage he said some important things. First, the labor market had met the condition for tapering but far more important, he said were going to taper the first thing we should do is end the mortgagebacked supports. With the housing looking like it might be getting weak, it troubled the market. What hit me over the head like a two by four is he said his view of future growth was no better than 2 for the foreseeable future. And thats just above stall speed. So its going to be dangerous to start tapering if youre going to be just above stall speed. It seems like, if you want to get behind why the market seems to fear tapering. This is about all we can do or this is as good as it might get under this plan. And the other thing is, while you havent heard directly from bernanke on this, although he is somewhat of a lame duck, the other fed governors when asked about the emerging markets and whats going on in the currencies, said, let her mother worry. You know. Thats their problem. So that does not reassure markets. Thats why were a little volatile. Obviously emerging market is going to have two sessions after today before we get back. Amen. Right. We were just talking about september seasonality. But also the events we got to get through over the next five weeks, the fiscal year end, obviously. Obamacare enrollment, debt ceiling, taper, if theres going to be one, german elections. Yes. Luckily we get an iphone introduction in there somewhere. Its at new orleaot all bad. I think you said earlier while it leans toward the negative in september what weve seen recently is it leans toward the volatile. And you know, we had 2 or greater moves either way. So this is the time to keep your seat belt on as we go into the misnamed month of september, which means the seventh month of the year. Interesting. You know, what people still chatter about though is the number of ipos that are supposedly on the way. Word about pot belly today. Chatter about amc entertainment. You see a lot on the docket . Yes, i do, but i think thats the idea, people trying to not seize the day but seize the dollar. This is my chance. The market is moving along before things really weaken. Let me get my firm public. Seize the dollar. Seize the dollar. Seize the weekend. Thank you. Art cashin, thank you very much. Have a good one. How will the markets finish up the week and the month . Were back after a quick break. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. 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Now you can get all the online Trading Tools you need without any surprise fees. Its not rocket science. Its just common sense. From td ameritrade. Live from the Financial Capital of the world. The opening bell set to ring in just a few moments here as we close out the month of august and a lot of people, believe me, are glad to do just that. The only things really positive for the month to date, the vix, the nasdaq 100, thanks to some names like apple, silver, gold, oil. Only one dow component is positive for the month. That is microsoft. And thats yeah, that sort of says a lot. Worst performer, hp. It says there was a fair amount of pent up selling coming into august. For me internally t it looked like it was getting sketchy at the beginning of the month. I dont necessarily feel like you have to back off that much from here stockwise, doesnt mean it wont. You say anxiety is not deep enough to create a fat pitch. People have been pointing out that even though the vix is elevated and people flock to these vix futures whenever things look a little dicey. The put call ratio, a lot has not lined up. Still saw inflows in the last week. It seems to me not that you have to have an out right panic before the market stops going down. Three times earlier this year you had pullbacks. I dont think you had outright panic. But you know, unless the news flow cooperates i think its i think youre going to be able to buy the s p with a 15 handle on it at some point. Interesting. It would imply more weakness. I wonder as well if you look at the out performer tons nasdaq, facebook e it , netflix, do the winners here get narrower and narrower . They have. I faltered a little bit. I think you have a growth starved economy. And you kind of funneling into these same names who seem like category killers and they work. Anything that smells like social meetia people are trying to get in a very small door to get exposure to it. Were seeing names like zillow and yelp. Netflix. Best buy, the names that have managed to hold on to their gains, the cult stock, the teslas. Theres the opening bell and the s p. Big board Tallgrass Energy partners. Trading under the Ticker Symbol tep. Over at the nasdaq, the tennis channel celebrating the years u. S. Open. The action in flushing has just been incredible over the past couple of days. Depending on what happens with cbs and time warner, the tennis channel may be where they catch the action. New york post today suggests the dispute could go well into week one of the nfl. And at which point time warner will gauge how many customers are switching to other users, cutting the chord completely. Its remarkable how little i seem to hear about this from friends, people who live in the city, just no ones talking about it. And that cant be a great sign. Bond fire of the cable business. At least it might save me from having to watch the jets. I dont know weathhether to h or weep. 10 move getting up to almost 48. Rbc raises the tarkt up to 57. Revenue beats. They raise the fullyear forecast. Talking about stronger corporate customers. Churned down for the 16th sfrait straight quarter. Theres a sense its becoming more critical to the clients than it was before. There were some concerns about sales force going into this quarter. I think thats partly why youre seeing such a big response because people were starting to worry about the Growth Drivers and managed to come out and shake that off. They are on track for the first 1 billion revenue quarter. Acquisition is a big help. Take a listen to this. We have r. Number one now in sales. That is our sales product is number one in marketplace. And that is a huge and critical market in enterprise software. Were also number one in service. So in Customer Service solutions were number one. We bought exact target last quarter which makes us number one in marketing. Cramer, of course, knows the company very well. Knows benioff very well. Revenue growth, 30 . 39 in europe where we continue to we see some companies leveraging. Not a lot of top line there. The bold case is that its actually growing into this towering valuation. Really, the stock has done barely anything before today this year. Its underperformed the major indexes going back two years. Obviously you had this big frontloaded bit of returns and now proving it out. 1 move on ge is nothing to sneeze at on a day like today. Spinning off that Consumer Lending unit. Just, i think, the general idea that lets just, you know, narrow the strategy and get more focus on that benefit. Another another stock that is underowned. I do find it interesting. Part of the bear story on ge is that it was being wrong not wrongfully but that it was being punished for having the sizable financing business. Might expect a bigger move. Many people would expect to ultimate will do this. 1 , not a huge pop. Well, on a name that big. I mean, thats something. Its statistically significant. Big lots, 31 cents does beat by seven cents. They lower their fullyear outlook. Samestore sales down 1. 9. Down 2. 2 in the u. S. Looking for 2. 80 versus 2. 35 in the prior year. You couple that, even though the stock is getting a move up today, spending and income this morning was nothing to write home about. Seemed like kind of a consumer stall in july. I mean, the one thing you do get out of it, you didnt have the savings rate go down anymore. People had been pointing to that. How much exactly is still in the well for the con sumzer. They dont give quarterly guidance like they normally do and they say theres some difficulty in moving the high margin segments like furniture which sort of flies in the face of what we heard from other housing related names like a restoration or whirlpool. I wonder there is some Competitive Pressure thats hurting at big lots but it might just be a question, again, of consumer preference. If people are choosing now to invest in furniture they may be going for that big ticket item at restoration hardware. Gold is down nearly 20. A lot of discussion about what that means, whether or not it really signals the market does not believe a strike is going to happen in syria. September though historically the single best month to old gone. Mike . Flip side of everything else. Risk assetwise, right . I think the emerging markets nervousness is probably underappreciated factor in how gold has gotten this bear market rally going. Just because the currencies obviously under assault and seems as if it might be one of the beneficiaries of that as well. All right. Seeing a lot of miners move here downward after having a nice bounce as gold got back above 1400, back in bull market territory. Talk about names that were not beloved for most of the year, mike. They needed a little tlc. More than a year. The whole story has been even when gold was near the highs the gold miners did not participate fully. All right. Lets get to bob pisani and see what else is moving on the floor. Hey, bob. Weve got Energy Stocks moving to the upside, carl. Industrials moving up. Salesforce. Com at a historic high. I want to look at 2013 and the summer of 2013 because ive been pretty impressed by what weve been doing here overall. Heres a key point. Going in to memorial day, im going way back to may 24th, s p 500 was up 15 on the year. And since then, memorial day to labor day, we have done nothing. We are precisely flat today essentially. I know some are disappointed were flat here. I dont think thats bad considering the fact we were up 15 going into labor day and look at what we have had to deal with in the summer of 2013. The short list. The fed taper warning coming on. We had abenomics in japan and the tempering of those expectations. Emerging market outflows and currency crisis. Were still dealing with that, particularly in india. Other ones, egypt and syria causing problems overall. Put up that list again. Uneven growth in china. T thats been a major problem. U. S. Joe growth here in the second half of the year. Considering that, i think the up in bers have been pretty good overall. Now, if you would have given me that on may 24th i would have given you a laundry list and said this is what were going to deal with in summer of 2013, you wow have predicted that we would be flat . I think most people and the ones i talked to this morning as i put together this list came out and said, no, i would have thought we would have been down for the summer of 2013. Okay. So where do we go for the rest of the year, conduct some informal obviously nobody things we thinks were going to get gains but some people think we can eke out some numbers. 5 gain from here, about 17. 19 on the s p 500. Thats where it would get you. Bottom line is, thats not a bad number, 17. 19. 17. 09, by the way, guys, is the historic high we had on the s p 500. That was, what, august 2nd or so . The one big problem i do think you can have, carl, is youre not going to be able to argue for much of a multiple expansion anymore. Not with rates going up like this. I do think its going to be hard. Were going to be stuck with maybe 15 times forward earnings. Guys, back to you. Bob, thank you very much. Lets kick it uptown and get a check on things at the nasdaq with seema mody. A lot of big movers in tech. Nuance communications. Carl icahn upping his stake in nuance to 16. 9 . Another big mover on our radar, arm holdings up 0. 08 . Deutsche bank upgrading from buy to hold, writing that fears of the company losing market to intel are overblown. Other big movers. Salesforce. Com. One of the big movers in tech, earnings and revenue beat street consensus. It is the last trading day here in august. The winners, facebook shares up. Netflix, apple. Those three stocks the big movers on the nasdaq 100. Seema, thank you very much. Bonds and the big dollar, currencies. Rick santelli at the cme group in chicago. Rick . Yeah, you know, to counter intuitive because the dollar seems to throw on the after burners at times many dont expect. Lets start at the fixed income. Twoday charts starting with the fiveyear and moving down the curve. Fives, tens, 30ss. Look at how were getting choice to testing yesterdays lows. Fiveyear already getting below there. The further down on the curve you go the less damage with respect to enter effect issing towards yesterdays lows. So theres a lot of curve wiggles. But the biggest wiggle we want to Pay Attention to outside of the Holiday Market move is the fives to tens. Affectionately known as the fight on the store. Look at the chart since the big runup started may 1st. It doesnt take a Rocket Scientist to see when the curve flattens the rates go hot. Might not always be that way but technically keep on eye on the fives for your signal to tell 10s and 30s. Dollar index, we were talking about that. Look at these twoday charts. Really starting to move. As a matter of fact, open the chart up month to date on the last trading day of august, how cool is it that this looks like to be the first day were going to set with an 82 handle because the last time we did that was the very first of the month. Kelly, kelly, kelly, back to you. Thank you, mr. Santelli. Now, we want to check on energy and commodities back here with jackie deangeles at the nymex. Were watching oil prices closely. They are easing a bit after the news that the British Parliament struck downey involvement in syria. That means the u. S. Would have to go it alone at this point if president obama wants to take action. The threat of that right now seems to be lessening a little bit. Plus, of course, it is a friday before a Holiday Weekend so things are going to typically be quiet here. Traders say before everybody gets back next week and the news flow really starts again. Now, whats interesting though is we are seeing a little bit of a shift. The positive data out of the United States. That gdp number is keeping the dollar near a fourweek high against the major currencies. Of course, we are watching gold prices while we are under 1400, that critical level still hasnt been a bad month for gold. The second b consecutive month that we are going to see a gain for it. Kelly, back to you. All right, jackie. Thanks very much for that. Straight ahead, big lots seeing some big gains this week and spiking after reporting earnings are the big box retailers the best way to play retail . Well talk about that. Plus, the government says it will not stop people in colorado and washington from smoking pot. Well find out what kind of profit they stand to make from all the marijuana businesses. As we go to break, dow is off 11 points. Look at early movers with salesforce at the top of the list. [ 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. 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. 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Of course, we have alice which means chicago purchasing manager survey day. Were 40 seconds away from her sharing it with me sharing it with you. I guess what im most interested in is the employment index. Still cant get it out of my brain that it wasnt that many months ago that we were under 50. Right. I look at that and think, if we were under 50 and in a couple of months we move much higher. Cant we move back under 50 . Id like to see these things trending. And the fact that i have an anchor my mind to a sub50 level to me is a very difficult thing to deal with trying to get optimistic. Now, here we are. Eight seconds away. I want to make a big deal because, of course, were going to do it exactly on the dot. Three, two, one, and the survey says. All right. Here we go. Chicago barometer is up. 7 to 53. Expectations nailed it. New order, 57. 2. Up 3. 3. My favorite, employment index, 54. Minus 1. 8. Interpret for me, great alice. Sew with have this. 7 gain for the month. That is exactly the gain we got last month. The big deal is is that thats the second month in a row of gains. We have noted a had back to back gains in 2 1 2 years. I kind of took that as positive even though the monthovermonth changed what we already know, slow mo growth. Is there any questions or special issues like inflation . Well, lets back up here a little bit, rick. The new orders component was the one that carried the barometer higher this month. Even though order backlogs were up 3. 6. The fact of the matter is that new orders have a heavier weight in our barometer. We are getting word from the Manufacturing Sector that new orders continue to come in but, in fact, it is the backlogs that are carrying companies forward. Now now, in terms of server ise i have talked to a lot of them this month. The gist was that they were hit hard. You remember the beginning part of august was rainy and cool. Wheth weather had a lot to do with that. They got stuck with inventory. Sports related, food, all those kinds of things that didnt happen because the weather left them with inventory. Let me throw you a curveball. Shipments on the durable goods number had a couple of months in a row negative. So we dont see that in this report. They seem to be at odds with each other. Quickly, your thoughts . Well, were hear that lead times are length thenning out. Reason being were having trouble with transportation. Its lent thgthening out the backlogs. Alyce, isnt she terrific . When it comes to the survey, i follow it. In the end, inventories raise gdp. Huge topic to Pay Attention to. Important detail there, rick and alyce. Thank you this morning. We turn now to more good news in the Discount Retail space. Big lots trading higher after Second Quarter earnings beat estimates. They did lower the fullyear earnings outlook. Matthew boss joining us now. 32 price target. Matt, good morning. Good morning. Thanks for having me. Thanks for joining us. What did you learn from the quarter, firstly . I think the main thing here it was ceo, really first real call. And he talked about some of the forward looking initiatives. The cooler tests which are in 75 stores appears to be off to an encouraging start. They have a furniture financing test which also seems to be competing plans. The story here is about the next couple of years and can they stabilize the ship. Right. Theres a question about this strategy, i guess, matt. Theyre going to move more into the furniture space, is that right . How did that space perform for them in the quarter . The space performed very well in the quarter. They were up mid single digits. The real story here is the consumables. What theyre looking to do over the next two years is drive in the food stamp customer to give them really an underlying driver of traffic. Volatility in the model has really been the construction of their issues. What theyre trying to do is level out the top line to drive a sustainable traffic driver and stabilize the earnings here. If they can do that over the next two years, it could be a pretty interesting story, especially with the stock very cheap on next years numbers. They obviously bring in some guidance from their may levels. They do talk about some more challenging conditions on the high margin segments. How much of that is a concern . Theres definite concerns here. You know, i think the biggest thing is the big lots has a bit Larger Stores than some of their competitors. They have struggled again with the top line volatility. I think the most important thing to watch here is these test initiatives and how they play out over the next couple of quarters. We upgraded the stock on monday after seeing some of these initiatives in stores and they do seem encouraging. They did talk about it today. But again, i think its too early to make that to make the full call whether theyre going to be successful or not. But there does seem to be some stability at the low end. Youve seen it from dollar tree. I think well see it next week from dollar general. So there does seem to be it does seem to be the right space to be . At the same time, if theyre going after the consumable space, in other words, doing a lot of the food and beverage and Household Items that might keep people coming back to the stores, thats where weve seen the dollar chains doing well and stealing share from walmart. How the big lots going to compete in what is becoming a very crowded space . Yeah, its a great question. What big lots offers is similar to what dollar tree does. Thats the Treasure Hunt spend. Then the real key to it and what they talked about this morning is being able to locate key items in adjacent seats so that customer just doesnt come in and pick a lower item of the of the cooler but they cross shop the store and the entire store gets the halo. Thats the part that is too early to call right now. Were going to have to see how it plays out over the next year. If theyre successful i think they will stabilize the ship. But if not, youre going to have a structural gross margin decline and i think that would be the flip side. Matt, we got word from walmart that theyrele radioing back prices on smartphones, tablets, televisions, i mean, apple, iphone 5 with a contract, 129 to 98. Ipad, 50 off all ipads. Big screen tvs, samsung, 60inch goes for 1149 to 998. Is that a market share grab or are we looking at a consumer setting up to be weak in the back half . I think the competition just remains very fierce. Consumer electronics, big lots talked about a download double digit this morning. That area is extremely fierce from the competitive standpoint. I think the back half of the year will be competitive. I think pricing is going to be key. You have six fewer days between thanksgiving and christmas this year. I think the retailers are going to be gunning for that share of wallet. Thats an interesting point. Six fewer days. Ill have to explore that one next week. Matthew, thanks for your thoughts on big lots. Thank you. Thank you. Coming up, krispy kreme not so sweet today. The shares are dropping sharply after the companys quarterly results. Look at that. Down 12 . Krispy kremes ceo is live with his firstry action will bit later on. Building animatronics is all about getting things to work together. The timing, the actions, the reactions. Everything has to synch up. My expenses are no different. Receipt match from American Express synchronizes your business expenses. Just shoot your Business Card receipts and theyre automatically matched up with the charges on your online statement. Im john kaplan and im a member of a synchronized world. This is what membership is. This is what membership does. And this is my home team. This is my large lecture hall. This is my professor. And also my coach. This is my booster club. This is the guy whos graduating ready for a great career in technology. [ male announcer ] in 2012, 90 of Devry University grads actively seeking employment had careers in their field in 6 months. Join the 90 . Learn how at devry. Edu. Interesting day setting up. We just got through chicago pmi. First backtoback gains in a couple years. New orders was a nice component. Im looking to see if the dow can turn positive. Just about less than a point away from that. Yeah. Not the only data point, too. University of michigan here. Rick santelli, take us away. Yeah, were looking for our final read for 82. 1. I have number spotters. 82. 1. The final read for university of Michigan Sentiment survey. Its preliminary read was 80. So 2. 1 of improvement. And it beats expectations. So i guess if we do it tombstone on both of these numbers, purchasing managers survey and confidence were good. Fly in the ointment of purchasing managers survey as alyce was telling us, inventory issue. It was in the 30s with respect to inventories that jumped up 7. 3 to 45. The key is, when we see Third Quarter, all these widgets that help boost Second Quarter gdp, will they be purchased . That is the key. Back to you guys and gals. Yep. Rick santelli, thank you very much. Carl, just going to say its interesting that we see that improvement in the last couple of weeks despite the additional concerns weve had. The lift in gas prices as well over the last couple of days. Thats going to continue. So consumer still stalwart. See what it means in the days ahead. Speaking of days, its a big birthday today for warren buffett, he turns 83 today. Born in 1930. Gives us a good chance to look at buffett names. The one that is that gets talked most about these days, michael, is ibm. And to what degree he has patience with the name that has lost some steam. Totally. And in many ways didnt really fit the profile of the buffett stock in the first place. New ceo in there and how long a runway does she have. We know the nice coupon hes getting out of a naik name like bank of america and his relationship with brian. Very much committed to the housing growth story with, i think, wells is probably still the biggest holdup. Single biggest holding. Went up at last report a little bit. So i do think he obviously is looking through a lot of the noise and feels like, you know, america is in relatively decent footing. Where do you get a buy for the 50 million for his birthday . Big cake. Bridge cards. Something he can use. Always good to have you. Sticking around . They tell me no. All right. Its good to see you, as always. Thank you. Have a great weekend. A look at what is coming up in the next hour. Food morning, kelly. Were going to take very different business perspectives. A businessman who fled syria as a result of what was going on. Take his well have his take on the potential of military action over the weekend. We are also going to talk to the ceo of krispy kreme. Weve been talking about this. If that wasnt enough were going to look at the business of marijuana now that the feds say they will not intervene in Washington State and colorado. Hour two of squawk on the street heading into the weekend, guys. 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. 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Its time to do everything better than before. The new blackberry q10. Its time. Welcome back to squawk on the street. The dow and the s p on track for the biggest monthly drop since may of 2012 amid concerns of possible intervention in syria. Meanwhile, apple is piloting an iphone tradein program this morning in select new york stores. Well go live to one of those locations to see how its kicking off. Meantime, the department of justice saying it will not challenge colorado and washingtons marijuana laws. Well find out what that could mean for the state and purveyors. Also ahead, perhaps on appropriate transition shares of krispy kreme falling this morning after annings missed expectations. Well find out why when we talk to jim morgan the chairman and ceo of krispy kreme in the first on cnbc interview. In the meantime, the dow is on track for its worst month in more than a year. In fact, the dow is down roughly over 4 . John merrill is the founder and cio of tanglewood wealth management. Thank you. Thank you. What do you think it will trade in september because september is oftentimes a rough month for the markets. What do we take through from this month into the next . Well, youre exactly right. Historically september and october are the most volatile for the markets. And typically that doesnt mean that were going to take any action. But this year as we go into the fall we think there are some specific reasons to be cautious and so weve raised a little cash. The biggest one of those is simply the rise in the market itself since the fall of 2011. A 45 rise in the market without a 10 correction along the way is fairly rare. If it were to go up another 10 from here without a meaningful correction that would be almost unprecedented. So we think theres good odds that we will see a correction before we see a significant advance vance in the market. John, its a great point because as we move through the rally, the rebound here that weve had in stocks, it does become more and more remarkable from a historical point of view. I woender what you think about this with the fed not looking at that with almost a little bit of concern here. It certainly could be. I think the fed has so many things on its plate, so many people is trying to please, but obviously the effect of what theyve done for the markets is, theyve caused a jolt in the race and seeing how so many assets are priced off Treasury Bonds that the markets reaction is to reprise basically all the assets. Youve seen sovereign bonds around the world where their yields have gone up and prices are gone down. But it really is affecting the whole yield structure. I mean, take reits or mlps. Theyre in the middle of a reprising, too. And once that gets started you really just dont know where its going to end. Another reason for caution going into september and october. John, i want to bring in David Sieberg here, head of sales and trading. Joins us. Just changed the tenor of the conversation and talk about how the market is likely to react to the possibility that the white house or president obama actually does order strikes on syria. I know in the week, david, you emailed kenny and myself. You have quite strong views on this. Yeah, i mean, i do. Back up a little bit on the volume perspective. Weve had extremely light volume. Feels like the entire world is on vacation on wall street. I think that, you mow know, the flow that weve seen is 50 50 buy and sales. There hasnt ban real difference as far as order flow that weve seen. The hedge fund volume is definitely up. Whats interesting the is the amount of short orders were seeing is definitely down. So, you know, another thing on our options desk they indicated theres really no Downside Protection. If there were something to come out newswise, i would say that the fact that theres really no Downside Protection in place, theres really not that Short Covering bid in place, theres a good chance that this market unlike volume could actually slide down a lot more than people anticipate. Interesting. Because i thought that you were more focused on the fact that usually when conflict is announced and you cite the 1991 strike on baghdad that theres actually a strong rally in the markets. Youve obviously reconsidered that position. Right. I mean, i really believe that, you know, look, were in a position right now where weve seen a nice move in the market again with light volumes that theres a really good chance that if there were bad news that we would see we would see a pull back. I think the buyers and the dip would probably be best apt to work those orders down and sort of take a little bit more of a slower approach to taking those positions, being more aggressive. Okay. Again, the pullback could be a lot more drastic. John, Deutsche Bank did some analysis of the 12 significant postcold war air strikes since 1985. It concluded the afternoon pull back, it was a correction, was officially a direction but a pull back was 5. 9 from the prior threemonth high. Its worth noting, john, weve already fallen 5 . I wonder to the extent to which that may already be factored in to where weve traded given the remarks that you made earlier. Thats just one factor. I think you have to take the whole collage of factors into play. I think theres a lot, you know, for the market to digest here. You know, one that we havent talked about is emerging markets. Theyve been going down all year long. Every time they try and rally its quickly the concern to me is that it was the emerging market decline that led us into the 1988 bear market. Also a decline in merging markets that led the 2008 financial crisis. Its very hard in this world today to stay that decoupled where major markets like the emerge ing markets can go down strongly and sdefy the odds. Its labor day weekend. Enjoy the time off. Thank you. Thank you very much. Meantime, a new nbc poll out this morning finds that 50 of americans oppose the u. S. Taking military action in syria. Nbc joins us live from the region in beirut. Aym ayman, good morning. Good morning. Its certainly a concern here, including officials ive been speaking to on a government and humanitarian level. One of the Major Concerns obviously if there is a u. S. Strike or International Strike of sorts is whether or not it will have any type of legal basis. Obviously the u. S. And others that are considering it are making the argument that intervention. They are concerned it could only worse the human teariitarian situation. They have seen an influx of refugees within the last 24 hours. A lot of concerns among syrians. Inspector theres have finished or at least are finishing up their last day t in the country. Theyre expected to leave on saturday before sending some of the samples they gathered to laboratories in europe and perhaps starting to give their initial findings to the United Nations secretary general as early as beginning of next week. But for some that may be a new point. They already believe that it was the Syrian Government that made the order or gave the order rather for that alleged chemical weapons attack and they feel the Syrian Government needs to be held to account. But the concern, if, in fact that does happen, is that it could lead to regional wide violence. Already some of syrias closest allies including here in iran, hezbollah, have come out and said any conflict would be a disaster for the region. And that it would looead to a regional war. Some of egypts some of the u. S. closest allies including egypt has expressed their reservations about any military strike that doesnt have any international consensus. Ayman for us this morning. Thanks very much. As we get word that secretary of state kerry is expected to make a statement on syria in a little bit, lets continue with our next guest. He joins us now, steven, good morning. Good morning. So a couple of significant things happening in the last 24 hours. But, you know, what britain said which seseffectively, no, in principle, we dont accept this strike. How much of a setback is that here . It certainly is a setback. The uk has been a strong supporter of u. S. Action in the middle east in the past for obvious reasons. And it is complicating the effort to cobble together a broader coalition of the willing in order to undertake the military strikes that the administration is currently contempla contemplating. Without the british, the United States going it alone or perhaps with the french, although its hard to imagine the french coming along without the british, is going to isolate the United States and make it just that much more difficult for the United States to respond to what the syrians have done. And steven, it doesnt help here that what is spurring this respon response, the agenda in the first place, the use of chemical weapons. Whats not set in stone yet. Who it was the Uk Parliament or even back here at home there are a lot of people wondering if this is still completely determined. I guess were waiting on the u. N. Report. To what extent can we trust or can we know with any certainty that it was assad using the chemical weapons here . I think the questions that have been asked in the British Parliament and questions being asked here in washington are essentially what 2002 and 2003 brought. The head long rush into war with iraq without clear indication that Saddam Hussein possessed weapons of mass destruction. Thats why people want to wait. But i dont think that theres really any significant doubt in the minds of most american officials that this Syrian Government did use chemical weapons. They have the capability. Something that the Free Syrian Army and rebel factions dont have. And this is something that they had used before. So i think that it will ultimately be the case that the regime used chemical weapons but i think that the effort is to have as much evidence as possible before contemplating military strike, which has its own unintended and marginally negative consequences. The view seems to be, the argument seems to be at the moment that obama needs to demonstrate that, one when the United States lays down the red line it has to be observed. Not just for syria but also to signal to iran that is the case. The danger here is if it is only a limited strike, people inside the country that would want to side with america, the secular rebels, if you like, will think, well, thats all ware goiere g get now from the United States. Weve got to sort our own positions out and they may side with the extremists. When we talk about unintended consequences this could backfire, some say, quite badly for the policy of this country. Would you agree . I couldnt agree more. I think that the president will look back on using the term red line with a significant amount of regret. If he does not follow through, he looks factless. If he does follow through he looks as reckless as george w. Bush seemed to be in going to iraq. A limited type of strike that the United States is talking about is unlikely to alter the balance of power on the battlefield and help the pFree Syrian Army all that much. What it might do is accelerate violence, accelerate the process of syria ripping itself apart. Steven, just to put a period on it, given the calculus as we know it at this moment, do you think there will be a strike or not . I think it is unclear. I think its 50 50 at this point with the british saying no and others saying that there needs to be International Legal writ in order to do it. Ill be interested to see what secretary kerry has to say. Of course, the administration is speaking bravely and saying that they have the capability to do it alone, which the United States certainly does. But just because you have the capability to do something doesnt necessarily mean that you should. Surely the consequences are clo climbing down at this stage are huge. Indeed. Thats the corner that the administration has painted itself into. Now theyre going to have to determine whether the cost of climbing down are greater than the likely consequences of even a limited strike in syria. All right. Steven cook with his views this morning as we head into an important weekend. Steven, thanks. Thank you very much. On that note, dow is off some 35 points. Lets get a market flash with dom. Carl, check out shares of us airways. Federal judge says she wants to see a trial sooner than march regarding the justice departments efforts to block the proposed merger between us airways and American Airlines. The government has requested that march date but the Airlines Want the case to be heard in november. The judge did not give a specific proposal but says that march is, quote, too far off. Simon, back over the you. Thank you, dominic. Well find out if promotions like this could help apple stock and help sales of the new iphone this fall. Squawk on the street will be right back. 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. Breaking news on this tradein program at apple. Jon has details. Jon . Carl, apple just called me moments ago confirming that they are launching this program nationwide today where you can come into an apple store and trade in your used iphone. Now, i asked, is this just for previous generation iphones or can somebody come in with an iphone 5 today and trade that in as well . They said, yes, anything from iphone 5 and down, you can trade it in. They will check your serial number. Check the physical condition of the phone. Much like they do at a car dealership with a used car. And give you a value, a tradein value based on that. But in order for you to do this, you have to leave the store with a fresh contract. If you are already on contract that means reupping your twoyear contract in some way. If youre not on contract, that means you have to buy a phone on contract. You cant get an offcontract phone under this. Now, this is interesting in particular because old phones hold much bigger value right now because smartphone saturation is so high. What is the likely tradein value . Iphone 4 likely to fetch around 125 bucks. 4s, around 200. The 5, 250. All of this contingent on what apple does the next couple weeks. Always affects the value of older phones, of course. Carriers are also launching programs trying to get people to reup more lickly. That involves turning in old phones. Best buy is launching a program like that. Walmart dropping the price on apples a well as the companys products right now. All of this in advance of the biggest launch season for smartphones. Guys, back to you. Jon, stay right there. We want to bring Scott Kessler into this discussion. Scott, good morning p. Good morning, kelly. Forgive me because im a little bit confused. But what jon seems to be saying that is that you can do this tradein program with apple but you have to have a new contract. Walmart is going to offer you the iphone 5 at 98 with the 16 gigabyte version with the contract. Theres only people only have one contract. These things are very difficult to move around. So how much of a Sticking Point is that going to be for people to take advantage of this new opportunity . Look, i think theres a lot of interest in the notion of tradein program in store, right, because, look, apple 4 a couple of years we we think has had a recycling program in place where you could mail a device in to them and you could get some type of credit. You could have actually over the last year or two, i think, also brought an ipad in to an ipod into the store and gotten another ipod. So this is basically just apple kay ciaing, look, if you have an iphone you want to trade in, you can physically come into our store. Its going to help drive traffic and we think more transaction activity to the store, which is something that theyre looking for. What lets just say this works and a lot of people say, all right, now is time that i want to take advantage of it. What is this going to mean for apples profit margin, scott, and ultimately for top line growth . I think the way to think about this is number one, its going to get more people into the stores. Number two, its going get more people to upgrade to the newest generation of the iphone. Those are boths positive for apple in terms of growth and financial performance. And we think overall, especially given the fact that, as jon referenced, it seems like a lot of other companies are going comparable things. This is just apple leveraging one of the biggest strategic assets and that is its over 400 retail space around the world. Jon, youre views here . I think this is particularly important for margins. We dont know how exactly its going to impact them yet because of this. We need to see how little apple can aford forafford to give he order to get them to to sign up for these new contracts on the new phone. In between there theres the margin. I talked to a few people on the street here, our producer, brad quick, about what they would expect to get for their older phones and a lot of people really didnt have a good idea. Lets just kind of see what i can get for this and what i have to pay for the new phone. Chances are thats a pretty good spread for apple. And then they can take that older phone, sell it into emerging markets or into Corporate Accounts where theres a lot of demand right now for older phones. Its a great point. Im sure a lot of people are going to be doing their homework now on that. Thank you for this morning. Did he just say Corporate Accounts . If i get an iphone i could get an iphone that is recycled from cnbc . 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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. The department of justice announced yesterday it would not be challenging colorado and washingtons marijuana laws. Joining us now with more on what this could mean for the businesses in that sector, danny danco is the senior cultivation editor of high times. It seems like a lot of people in your community did not expect this. No. To be honest, its really the First Federal acknowledgement of the failed war on marijuana. And so we werent expecting it and the other alternative was that they were going to sue the states or go through a process by which they would fight the decision of the people in those states spop were very excited. Does it mean there arent federal laws that they still wont enforce . Oh, no, absolutely. There are eight guidelines they will still enforce state to state trafficking, trafficking to minors, money from sales going to criminal organizations or cartels, and that sort of thing. So, you know, were hoping as long as the companies in colorado and washington stay within those parameters they will not be attacked by the federal government. Well talk about some of the Business Owners in those states in a moment. In terms of other states whom might be on the cusp of following suit, how many are there and which one would you look to first if. Theres dozen of states that theres theres over a dozen that have passed medical and now many looking into passing recreational including massachusetts, i believe oregon is looking into it as well. So the dominos are falling very quickly. It would seem the weak economy and pressure on budgets across the states and National Government is probably the biggest gift to the pot industry it could have been. Is that a big part of this . Absolutely, kelly. Theres a tremendous amount of job creation happening in this industry with these businesses as they grow. Theres positions for growers, bud tenders, people who are trimming the pot and drying the pot. There are hundreds of jobs being created in colorado and washington. Presumably they have to produce locally. Absolutely. They have to keep the marijuana, the edibles, anything that they maybe from the cannabis, they have to keep that within the state. Undermine contract law across the United States, whats legal in one state should be legal elsewhere . Produce in california and transport . Thats what were hoping for in the end game is a federal rescheduling of marijuana. Right now its in schedule one, no medical value. And in there with some very, very harsh drugs. So we want a rescheduling or even an unscheduling of marijuana off of that list. At what point will big business come in, the Tobacco Companies at the moment its kind of mom and pop. Is that the future, do you think . Absolutely. Big business is looking into our industry in a big way because its such a growth industry right now in the midst of, you know, an economy thats kind of questionable. So, yes, big business is coming in but they are going to need the expertise of the people within our industry. The bud pickers. To help them. Exactly. Im just thinking, if were talking about, if your gold is a return to interstate commerce, any kind of interstate commerce with regard to marijuana, thinking about how far the policies have already come, do you think you might be getting a little bit greed difficult trying to climb that hill . I dont think our goal is interstate commerce. I think each state as it changes its laws can produce the marijuana that its citizens need and voted for. So were not necessarily looking for california to expand into selling all over the states. Were looking for the government to recognize states rights in this issue. Which is a bipartisan issue, i believe. Interesting. Its amazing how far its come in a very short time. Danny, thanks for coming in. Thank you. Well, haze to glaze. Krispy kreme doughnuts is struggling after the results after the companys ceo a little bit later, ask him what he thinks and what he sees in terms of business. [ 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 ] about an hour into trading. Some of the stories that were talking about the 10 30 on wall street and more confident in europe. Soaring to a twoyear high this month. That confidence does not extend to the job though. Still sitting at a record high of 12 . Consumer spending slowed to 0. 1 . Below estimates. People are trimming expenses after spending more earlier in the year. Americans are wary of action in syria. According to a new nbc poll almost 80 think president obama should get congressional approval before using force in syria. The poll says 50 favor intervention when its limited to launching missiles from u. S. Navy ships. The turmoil in syria has also taken its toll on businesspeople in the region. Quite clearly the next guest was a syrian entrepreneur who fled the country next year on jordan where he raised half a Million Dollars for his own internet startup, shop go. Were joined by mo who is the cofounder and ceo of shopgo. Moe, welcome to the program. Hi, how are you . Im very good. Were concerned about what is going on in syria though. Remind us of what you were doing in syria. What you attempted to do as a businessman and when. Basically ive been doing services for u. S. Markets, starting from late 2006 until late 2011 when the revolution started and we started to see short internet and electricity in syria. And that prevented me from being able to deliver my services. And then my partner and i reached the conclusion that theres no time for us to remain in syria and do business. And we had to let everyone go and set up elsewhere as things started to take place for our businesses. So you obviously made a decision to leave. What was that like to leave, and what did the other people in the Business Community around you say to you as you said, you felt that it was time to go . It was a very difficult decision back then. Things were unclear. It was pretty much people of the revolution right then. But we didnt know what was going to happen next. It was a very tough decision, to be honest. Starting from tomorrow we no longer are doing business and i cant promise them anything. I had to leave the country. We had to leave the office and to start over. From srnding the business, the people curious about what was going to happen but maybe with so many businessmen waiting to see a few months later what was going to happen in the revolution and the market. I mean, moe, this weekend there is a momentous decision for the president of the United States to make as to whether or not he orders strikes on syria. What do you think about that decision that he is facing . What are the people, the businesspeople around you in jordan think about that decision and what should happen . Its very sad to see that things are getting very bad shape in syria and blood everywhe everywhere. The regime is everywhere. The revolution is getting more and more violent. And other countries are going to attack the country. I dont see i dont see us going anywhere. Its getting worse and worse. And people inside syria i know from my friends and other businesses are no longer doing business. We are trying to help them and try to relocate in jordan or lebanon. But for theyre t not doing anything. Moe, its good to talk to you. Thank you for your time. Moe ghashiim, ceo and cofounder of shopgo. The Financial Times this morning says this may be Barack Obamas trickiest hour if author of that business is the u. S. Columnist with the f. T. And he is joining us now. Good morning. Good morning. Thanks for having me. Thank you so much for your time. Really made a lot of people stop and question to what extent the u. S. Can and should move forward here. If the uk has said no. Whats your view on all of that . I think operationally theres no difficulty with the u. S. Moving forward without the uk or france. This isnt about military capabilities. That was always going to be 90 or more american. Politically and diplomatically this really deepens president obamas loneliness on this issue. Were going to await the u. N. Inspectors who come back from syria tomorrow. And then presumably the Obama Administration is going to have to make a fresher and stronger and more detailed case because the lesson from the Uk Parliament is the highing governments, trust us, weve seen the evidence. Doesnt work in the postiraq era. I think thats really thats really what best explains yesterdays vote in london. And i think is the challenge facing obama. He needs to present a watertight, very credible case. And that hasnt yet been made. Ed, the politics here perhaps havent been the best. I mean, certainly, but theres also the other issue of what has happened to people in syria. You know, 100,000 deaths. Theres still or is there still an argument for moral intervention here to kind of separate the two issues with regard to the latter, what should the International Community do . Oh, i think theres a very strong case for moral intervention. Having a dictator gas people in his own backyard, is unacceptable in any context. The question is what will be the most effective action, what will be the one that will least split the International Community so the action can be sustained and followed up if necessary. And i dont think the Obama Administration has yet got to that place. I see secretary john kerry, secretary of state is going to be making a serious statement a couple of hours from now here in washington. So we might learn more then. But the way the administration had been selling these strikes up to the uk vote yesterday as a oneoff selfcontained punitive measure that would not be followed up necessarily, i think was was and is pretty misleading because theres going to be a response, theres going to be a repurr cushion after any strikes are made. And the americans are going to have to respond. Ed, on the one hand the president is getting criticized for telegraphing his intents his intentions too much. Assad now has had a week to move his material to a place where he thinks they are less at risk. At the same time, the president does have to sell it as youve argued. What was he supposed to do . I think if he is still seems likely going to go ahead with with tomahawk or cruise attacks on syrian assets, hes got to come clean with the American Public and, indeed, with congress that this isnt necessarily selfcontained or oneoff. This is a potentially dynamic situation. And that if assad, for example, scatters his stockpile of chemical weapons much, much more secretly and widely across syria, then theres going to be a question of whether these become vulnerable to al qaeda taking them or hezbollah taking them and what the american s do then. Theres got to be a backup plan for a more dynamic situation. And i think thats a place the administration hasnt got to. It is this sort of military intervention like following a period of diplomacy. And i fear its going to get heavy and we need a little bit more or quite a lot more explanation from the administration about what it stands ready to do. Great point. Edward is joining us from the Financial Times this morning. Thanks. Can i just make one point. William cone was on power po t point yesterday. Punitive strikes are not allowed. Such a thorny issue. General electric is prepared to spin off one of the most important financial asset, ge capital. The ge capital unit issues store credit cards for 55 Million People including retailers like walmart and banana pep blik. Today ge is divesting from the business. Dominic chu with more. Kelly, General Electric is looking to get more leaner, more focused. The conglomerate planning on spinning off the Retail Credit card business. S that according to a wall street journal report. Citing people familiar with the matter. Now, any possible deal could be huge given the size and scope of the Consumer Lending portfolio. That Consumer Lending business, simply put, is the part of ge capital that issues the store cards. Other than Banana Republic and walmart, if youre shop for mattresses, golf smith for a new set of irons, a host of other businesses and you open one of those store credit card accounts, thats ge capital behind the loan. Now, their cards are used by 55 million americans out of the 274 billion of outstanding loans that ge capital has overall, 50 billion of that is from the Consumer Finance business. And the report says the groundwork is being laid to spin off that unit in an ipo but the size hasnt been decided on yet. For General Electric, this is the latest in a campaign to get back to its Core Industrial operations. Ceo jeff immelt has been at the helm of the company for 12 years me took over as ceo just days after splerchth terrorist eptem attacks in 2011. Ge has fallen by 40 . Honeywell have more than doubled. United technologies has tripled in value. And immelt has been focusing on becoming more of a global infrastructure, energy and transportation type company for ge. He shed noncore businesses like nbc universal, the Parent Company of this network. Overall for ge this could be a big deal if it does come to fruition that Consumer Lending business, carl, is a huge part of ge capital. No question about that, dom. Not a sweet quarter for krispy kreme. Its down after a miss in Second Quarter earnings. Were going to talk to the ceo and ahead of that cueing, what else, a little g and r. Back in a moment. 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. 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Carl, i would. I think that the estimates for the quarter had risen this last week or so. The truth is we were pretty excited internally. The july quarter is always our weakest quarter historically and it was the best july quarter we had had in ten years. So i think youre probably right. A combination of the stock had moved up and moearning estimate had moved up. What does the what is the coming quarter and the rest of the year look like to you . Because everything we hear from other players in the Restaurant Business is that pricing is tough, the consumers discrimina discriminating. The pressure to create a truly breakthrough product has never been more fierce. Carl, my understanding is all thats true. One thing i learned here at my time at crispy cream is we are fairly defensive. Were short of an affordable indulgence. And we really did not our consumer and our guests dont move in line with the typical consumer of spending patterns across the board. Why is that . You know, weve tried to figure it out. I mean, id love i think the product and the brand have a lot to do with it, but i think when things get tough, family of three or four can go sit down at krispy kreme and have a dozen doughnuts for 8 or so and have a family outing and its probably an inexpensive way to do something that really is a street. A lot of people are going to look at the cost structure of your business. General is up 19 mrs. Health care expenses unexpectedly higher. What are you going to do to address that Going Forward . Kelly, were going to have to watch it another quarter to see if thats a trend. We think those onetime rise in there. But were watching it carefully. We also made some investments in the future. One thing we shared with the street is were going to continue to invest in the future. Year not going to approach this thing quarter by quarter. We believe were laying a foundation which should result in bottom line double digit growth for many years to come and thats where our focus is. You talk about being a defensive kind of player. Everybody is talking about these cronuts. I have not had. I know kelly has. I havent tried one. No. Are you do you feel like some need to chase these trends in the hopes that theyre something more than a passing fad . Thats a great question. Trying to determine whats a fad and is a trend is difficult. Ive heard great things. For right now we feel we have plenty of opportunity with our core menu, which is the doughnuts and beverages. Well keep an eye on that. Ic were capable of doing that. Right now were satisfied. Expansion from that core and into the higher cost beverages, Smaller Stores almost a starbucks like model that is exactly what people are wondering about, if you should be doubling down on that strategy right now. Are you going to . I think in time we will, kelly. I think right now we are not yet fully taking advantage of the doughnut occasions that we think we can help create. I think that will be a little ways down the road. We have been really busy working on some internal projects such as small store model. I think well get to a broadening of the menu but i dont think we need to do that the next couple of years in order to have great performance. Im feeling a donate occasion coming on right now, jim. Thanks a lot. Good to have you. Great to be with you. You have a wonderful day. Jim morgan, chairman and ceo of krispy kreme. Who knew there was so much to discuss with doughnuts. Doughnut occasions. Wow. Tough august for stocks. Dow on track for the worst month in more than a year. But september, of course, the month in prospect is historically the worse. Stay tuned. Well take a closer look at how to ride out the rest of the year. How you should position now for the second half. 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At the same time the secretary of state john kerry still scheduled to speak about syria at 12 30 p. M. Eastern time, which is just a little more than an hour and a half from now. For the time being market close to the lows of the day, down almost 50 points. Lets get to the cme group, rack s Rick Santelli in chicago. A nice threeday weekend coming up. I talked to a lot of traders on the floor who are technicians and theyre trying to get a handle on these quiet markets on whats going on with Interest Rates. You heard me talk about the significant set of high yield tops we made on july 5th, whether it was the five year at 1. 61 is or the tenyear at 2. 74 . The fact that on the tenyear we took that level out on the 15th. Basically it was six weeks. Time gets really overlooked. Most people look at price. Many people look at volume, open interest, but time and price are linked. Well, were going to oversimplify but youll get the idea. I was amazed at the sixweek time period because the market really hung in there. Well, if we go six weeks ought from this, i would think we can consolidate Interest Rates to the 26th before things get nasty unless the tenyear closes below 363. We have heard of american exceptionalism but what im not fond of is american exceptionism. Theres a great oped in the journal. This one was titled test of gop resolve on obama care. I just have one point. Im not an authority on obama care because i just cant read that tall without getting a really big ladder because it stacks up so high but here is the deal. Lets say we have tax policy like at the end of the last year that was passed by congress, signed by the president , moved into law. A couple weeks later we get an agency out or the president comes out and said, you know, my staffers really cant afford that tax increase so i think we need to find some money for them, an exception. Its all about exceptions. When it comes to obama care here is what kim wrote. The office of personal management announced with no Legal Authority that congress could keep receiving its giant subsidies. All i know is im tired of exceptions and whether its the rule of law or how obama care is different for people that arent hooked in or dont work for the government or dont belong to a union, i think weve had enough exceptions. I also want to know why Congress Gives its right to the purse string away to agencies and why none of this seems to be challenged by, what, they call them extreme republicans . Well, if theyre extreme, why dont they take some of this to the Supreme Court and find out exactly who is extreme and who isnt. Back to you. Rick santelli this morning fired up. Thank you, rick. Like markets, its been a rough couple months for detroit, but superman is on the way. Well explain what we mean by that when we come back. 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Meantime, dow continues to waver in the red. Seeing some pressure i see jcpenney at a fresh 12year low after the walmart price cuts earlier today. Theres a look at whats going on. If youre just joining us this morning, here is what you missed earlier on. Welcome to squawk on the street. Here is whats happened so far. Every time the oil price spikes, the economy gets weaker. And thats the real outcome here that the Global Economy suffers the high price of oil and if we stay on this path, were not going to have a very good decade. Increases half expectations, up 0. 1. Spending up 0. 1. Thats about a third of what we were looking for. Theres some stuff going on. Just wonder if theres people around to trade on it. Are we still in a period where good news in one quarter makes it a little more of sets the bar a little higher for the next . Yeah. The threshold of surprise goes up a little bit. I think were living with a case of almost hypochondria here where if you look back over the past four years, theres always been things to worry about, and, yes, theres things to worry about, but pretty consistently weve come through this with the stock market up and the economy growing. Theres the opening bell. Chicago barometer is now up 0. 7 to 53. That means expectations nailed it. New orders, 57. 2. Thats up 3. 3. And my favorite, employment index, 54. 9. Minus 1. 8. Good friday morning ahead of a long weekend. Were live at post 9 at the New York Stock Exchange keeping an eye on the markets. Dow trying to weather some of this low volume territory. Closing out the most of august which has been the most challenging since may of 2012. The dow has lost about 52 points. Shares of apache rallying. The Energy Producer announcing it will sell a Minority Stake in egypt Oil Operations to a Chinese Company hoping to reduce its exposure amid all that political turmoil in egypt. Then crm rallying. The Business Software company beat the street. Sales force also raising its full year earnings forecast looking at its first billion dollar revenue quarter in q3. It has been a rough month for markets. The dow is on track for its worst performance in more than a year. Tensions are also still high in syria. The president meeting with the National Security council right now about the United States next move. Well get the latest from a live report on the ground. And breaking news in just the last hour. Apple rolling out a nationwide iphone tradein program today. Well go live to see how shoppers are responding. Also facetoface just got more expensive. Some major banks want to charge customers just to speak to someone in person. Well tell you where you might have to pay more. First up, the market and the economy. The dow is on track for its worst month in more than a year. Want to bring in charlie and diane. Happy friday to both of you. Thanks for having us. Diane, not a bad chicago pmi number, new orders pretty good on the back of that revised gdp. Are people underestimating what were going to do in the back half . I dont think they are. We have had the chicago pmi do better than the national pmi, and part of that is because the Auto Industry is on track to do better than the overall economy. Weve seen actually it was interesting, the july numbers on wages and salaries saw weakness in manufacturing wages despite strength in the auto sector. You really see this breakdown of the auto sector and exauto sector. Some of it is hidden losses were seeing in defense. Defense Manufacturing Activity and defense in general, were seeing furloughs, unpaid pu furloughs being taken. And thats weighing on the overall salary and wages number. It sort of explains the negative attitude weve seen. Charlie, you do think perhaps the market is having some trouble getting out of its own way. Yeah. The answer to your question is we think the economy is going to be better than people think. We think the combination of auto production and energy jobs and housing recovery and a more confident Equity Investor is going to bring better consumer spending. The Consumer Confidence levels are at very good numbers. And then, frankly, we think europe is bottoming and there are a lot of companies that have exposure to europe. Thats going to be better over the next 12 months. Were looking for gdp in the mid 3s, maybe even 4. How nervous are you about things in september we just dont know about yet . The german elections, whether theres a taper, how the debt ceiling fight is going to go . You know, you just mentioned all of those things and the nice thing is we think theyre factored in at this point. We think the market is already factoring in a taper. We think the german elections will go fine. So those things dont really bother us very much at all. Obviously something can come out of left field that by definition we dont know yet, but right now we think there are a lot of things lining up positively. Diane, you think a 4 quarter is possible . Not in the near term. I certainly would like it by the end of 2014, but thats still a long way to wait. In the near term the Current Quarter looks like about 1. 6 with the data we got out today, particularly on consumer outlays which was not terrific. Going that the Fourth Quarter, it still looks like 2 , 2. 5 . Thats nothing to pop champagne corks over. The Housing Market has really hit some bumps in the road. Not only has affordability taken it on the chin, but investors are no longer in there playing the role that firsttime buyers once g z and thats going to be a critical issue as we move into 2014. Still bullish on the Housing Market but have some caution given whats happened to rates and also the refi boom not giving consumers that extra cash. When they dont have a lot of wages, thats really important. The fed s own house view is closer to what charlie has laid out which is corroborated by what we saw in the figures this morning. If we dont hit a 3. 5 rate in the back half, where does that leave them . It leaves the fed in a very difficult situation. We know that the fed is sort of split going in about the taper. I do think that tapering is more likely than not, and i think that the markets have priced a lot in. I agree with charlie on that. I think thats important for the fed because they would like to start this process. Ben ber thnanke would as a lega move. Uncertainty over the fed will be very high, however, not only about who takes over the fed but also who fills the positions of the people who are leaving on the Federal Reserve board and Federal Reserve president s which had established the core of the fed for a long time. Those are all happening in january and february. It leaves a lot of uncertainty for markets Going Forward. Its something that ben bernanke really needs to try to stake out some certainty about. Charlie, one last point about september. We were looking back at just how volatile its been. These are dow stats, percentage gains and losses. Last year up 3 . The year before down 6 . The year before that up 8 . The year before that up 3 . It is big swings. You got to go back a long ways before you get a sub 2 move. Do you think its going to be that volatile . Yeah. We dont tend to spend a lot of time on the monthly issues. I think you can get in a lot of trouble on that stuff. So we tend to take a much longer perspective. But, sure, at this point anything obviously can happen in september, but at this point theres such a consensus that Interest Rates are going to go higher, that, frankly, thats a little disconcerting. We have a lot of higher rates built into the market and that gives us a fair amount of comfort that weve got a little margin of safety. Charlie, diane, good to see you. Well talk to you later. Thanks for having us. Meantime, the president meeting with his National Security council at the white house right now. The United States next move is now unclear after the Uk Parliament voted against taking military action. Ayman mohyeldin joins us this morning from beirut. Good morning once again. Reporter good morning, carl. As the president has that meeting in washington, syrian inspectors who have been on the ground in damascus, u. N. Inspectors remember, who have been inside syria for the past couple days trying to determine exactly what happened, are expected to conclude their findings. They are expected to leave the country tomorrow and head back to u. S. At some point to present their findings to the u. N. Secretarygeneral as early as monday. Now, for some, some are making the argument thats already a moot point. In the case of the u. S. , they say they have all the intelligence and evidence they need to confirm that it was the Syrian Government that carried out that alleged weapons attack. Why its so important is because we are seeing some ripple effects among the International Coalition that was as early as this week pushing for possible military strikes. The United Kingdom will not be a part of any military operation and that leaves the United States and france to go it along. Among the arab countries there are concerns this would only make the humanitarian situation of the Syrian People that much more difficult, particularly in countries like lebanon and jordan that have seen an influx of refugees. Not only that but the security situation in countries like lebanon here are very much concerned over the spillover effect. This country has already seen some violence as a result of what takes place inside syria. Their concern is if there is a military strike on syria, one of syr syrias closest allies, hezbollah, could retaliate on behalf of the regime. So, too, can iran and that would lead to a regional confrontation that many people dont want to see. Its not a popular discussion point across the middle east. The middle east is very much opposed to the possible idea of another military intervention in an arab country. Kelly . Its a good point. Thanks very much for that. As we await remarks in secretary of state kerry in just over an hours time, lets bring in bill spindle, the middle east bureau chief with the wall street journal and joins us at post 9. Good morning. Good morning. How surprised are you by the turn the events have taken over the last 24 hours after britain has come out with a youre going this alone . Its been difficult for obama to put together a coalition on this. Its just a really, really tricky challenge hes got to try to send a message thats beyond symbolism but one that doesnt that allows them to hold a coalition together and at the same time i think they really dont want to unleash sort of uncontrolled toppling of the regime in any way as well. Its a really tricky balancing act hes trying to pull off. People saying that red line rhetoric once again sort of marks an unforced error. Is that view widely held around the world . Well, he certainly got himself into a box, and in the region, theyre looking for the u. S. To do something, but then again they dont want to endorse too much. I think the other really interesting thing thats going on behind the scenes is the way theres been a lot of talk of how the opposition has changed from a nonviolent, a religious movement, to a sort of violent where the movers and shakers are often militants. What we havent talked a lot about is the are jet stream itself has really transformed from a government that was pretty vulnerable in many ways trying to protect its whole country to something really closer to a sectarian militia thats much less vulnerable to this kind like hezbollahization of the government . In some ways. The government has really transformed itself around its close supporters into a much tighter, cohesive block thats going to be very difficult really all they care about is their own survival. How do you send a message thats beyond symbolism to a group like that. Youre going to be in a plane in a couple hours heading back. What do you think awaits you this weekend . What do you think is the likeliest scenario of what happens . I think a lot of that depends on what president obama decides to do here. Does he really go for something more than really a symbolic statement, in which case then forces will be unleashed in a lot of ways, and thats what people are really concerned about here if he only goes for the symbolic statement . If he goes beyond that. I think theyre try everyone is trying to keep this problem contained within syria. Thats really the big challenge here. Come on. But its already turned into sort of a proxy war with much of the region involved. Still taking place inside syria. The big concern is things get out of control, it starts to spill outside of syria in ways that have gone beyond what we have seen. Israel gets involved, jordan becomes stabilized. It could even go to the persian gulf if it moved into iraq and down. So theres a lot of ways this could become a much larger problem. Is the arab league saying, come on, guys, you have to do something . Are they pressuring the United States . Well, you know, they want to condemn this, but on the other hand they dont want to endorse intervention. The arab world is very shy about that sort of thing and very concerned about that sort of thing. Theyre not willing to call for it publicly even though behind the scenes you see some of the u. S. Allies encouraging it to go ahead. Just a difficult situation, bill. A real quandary. Thank you so much and we hope its all safe for you guys over there, of course. Thank you. Bill spindle from the waunl. Big news for the apple faithful today. The companys new tradein program is launching nationwide. Were going to take you live to an apple store. See how consumers might be responding. First up, Rick Santelli watching the markets on this friday morning. I want to end the week talking about emerging markets, and i want to tap into some of the anger. Bank governor Augustine Carsten basically said secentral banker could not ignore the effects of their policies on the rest of the world. Im going to channel ira harris to get into the mindset of emerging markets. All at the bottom of the hour. 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. And choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Buy a tempurpedic mattress set and get a free twin tempursimplicity mattress. Find a store near you at tempurpedic. Com. Some breaking news in the last hour. Apple rolling out this nationwide iphone tradein program. Jon fortt is live outside an apple store in new york with more. Good morning, jon. Morning, carl. Its big news because this is an absolutely huge market in smartphones, and apple is in effect legitimizing kind of a newer market in used phones. This is launching nationwide today at apple stores. The iphone, of course, is apples highest margin device. So this isnt something to just be messed with. Analysts peg iphone Gross Margins in the 40 plus range. What are the pluses and minuses here . Well, this program could be a win for apple if, a, iphone users upgrade sooner because they know they can turn in their old phone and get the new one even if they have to move in on a carrier contract and take a little bit of a hit. Perhaps the used phone can cushion the blow. If the used iphones go to people who would have bought android phones otherwise. Its a loss for apple, however, if the used phones end up going to people who would have bought new iphones. I tried to go into that apple store and get them to value my iphone. But they saw me out here on tv and said, no soup for you, press policy. Now that the cat is out of the bag, i can go back in and see if theyll tell me how much this thing is worth. I just have to ask as well, the strategy, im used to apple announcing new initiatives with power point presentation and fancy graphics and the ceo on stage, and this one almost seems to have been a secret that we accidentally discovered. Is that strange in your view . Not really that strange. Apple likes to announce products from the stage. When theyre announcing a retail policy or Something Like this, often we do get it in a kind of release or rolled out in a soft way. I think they really want the crowds of people coming when theyve got a new product to sell because what they really want you to do is sign up for a fresh contract, renew a used phone here, buy your new phone here. Thats when they get the most margin. I guess its not really power point they use. Jon, thanks very much. Really appreciate it this morning. Well have to see, carl, if its a success with the consumer. A big quarter for splung. Well talk to the companys ceo when we come back. 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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[ 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. And this is my home team. This is my large lecture hall. This is my professor. And also my coach. This is my booster club. This is the guy whos graduating ready for a great career in technology. [ male announcer ] in 2012, 90 of Devry University grads actively seeking employment had careers in their field in 6 months. Join the 90 . Learn how at devry. Edu. Now to a Software Producer that is making a very big splash. Take a look at a chart of splunk today. Sharply higher after Second Quarter earnings beat estimates. The Big Data Company surging 211 since the ipo in april of last year. Here for a cnbc exclusive is godfrey sullivan, the president and ceo of splunk. Quarter not too bad, guidance not too bad. You have to go back to the ipo to see level this is high. Good morning. Its a nice place to be. Thank you. You added some 400 customers in the quarter. Im not sure how much you have given on the call but can you talk about customer churn and why you see some more enterprise deals in the second half of the year . Most exciting thing at splunk is were making machine data sexy. So we used to just index information from servers and networks and things like that. Now were being asked to index information from cars and elevators and this yaur we talked about train sensors, one of the largest north American Rail carriers is indexing all their train sensor information so they can have better controls on speed, safety, and compliance. So its just an exploding market in terms of the machines of the world got smart and learned how to communicate and we indexed and analyzed that information. Every day is a new day. You did raise your revenue forecast for the year. I havent seen any similar forecast raise on earnings. Are you giving guidance on profitability . Yes. We tend to run at about break even on a nongap basis, but with positive cash flow and as long as we can grow at this rate, our investors are very happy with that model. Speaking of da tashg the amount of it, there have been some glitches with stock exchanges, the nasdaq last week. Do you work with exchanges . Do you see an opportunity to do so in the future . See a big opportunity there. I think the nasdaq needs to buy some splunk. What in particular do you think your company can add to what already exists with regard to how information is traded . Well, from what i read this morning, it was really a Software Glitch in terms of them getting a 26 times spike in traffic from one of their partners. And thats something that you probably dont plan for or program for or load balance for, so its not unusual that they had that kind of a fail. But, you know, now that they know what it is, they can probably plan better for it. But we can work with Companies Like that because splunk is able to analyze all that Network Server application log activity and we can usually pinpoint the failure and show them exactly when, where, and why it happened. Its that radios cause analysis that helps them put a fix into place. When you start looking out over the next few years, godfrey, you talk about running at a break even model and how investors are happy with that given the growth rate. When does that equation change . When do you start looking to put some money to the bottom line or returning cash to shareholders in some way . Last year even though we ran at roughly a break even nongap pace, our cash flow was equal to 24 of revenue. Clearly the business is pretty healthy. We added almost 80 million to our Balance Sheet last year. So business is good. We choose to run the business at that level because our customers need for us to invest heavily in products, in field and services and all that sort. So we will aggressively expand and invest in our business. If the growth rate slowed down, then our investors would expect us to start improving our operating margins. Its a careful balance between growth and profitability. You have some big players like vmware interested in data analytics. I wonder if theres a feeling that you have awoken some sleeping giants . Theyre all awake. But generally theyre worried about their own stack. So we fully expect for the large players to do is better job of analyzing their own data, and splunks advantage is we look at everybodys data all across the enterprise and our ability to index and correlate that and give customers a view of all their stack is really one of our core differentiators. Obviously the street and investors clearly interested in how youre seeing corporate di mand shape up. We hope youll come back. Thanks so. Thanks, guys. Godfrey sullivan of splunk. If you want facetime at your bank, now it might cost you. Well tell you which banks could start charging you just to talk to your teller in a couple minutes. Plus, the bells are about to sound across europe. We saw a lot of red on the map earlier. Just a couple minutes left to go. Well get you details on the close and the impact back here when we come back. Well get you details on the clients are always learning more to make their money do more. 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. The european markets are closing now. Welcome back. Its been a tough month for u. S. Markets, also, simon, for european markets. Obviously theres no Public Holiday in europe on monday for most of these markets so they have a shorter weekend to shut down for, but it is the end of the month and theres a bit of a catch up on some of the profit taking. You will see the periphery of europe is down much more were down a third of 1 on the dow at the moment. You can see the losses percentagewise are much greater towards the south of europe. Overall for the year, yeartodate, actually u. S. Equities have done much better. Theyre up 8 better than european equities. For the month the United States has done worse because you have this better belief of growth in europe which has meant the profit taking on the previous rally is not as austere in europe. A lot of talk obviously about deals that might be done, vodafone is up 8 , 9 for the week. 130 billion and take it back less the tack. Theres some talk if that happens, vodafone could be a takeover target for at t. Carlos slim could walk away from his attempt to take over kpm in the netherlands or alternatively buy it. A 9 move. The brazilian assets of telecom italia. The guy at the helm of loreal has been making headlines suggesting it might buy the 29 stake in loreal thats owned by nestle in switzerland and they could sell the stake they have in the drug company sanofiaventis. Hermes has done very well in the last five years. Overtaking its larger partner which has a controversial 23 stake and as regular viewers will know, for hermes, its all about the bags. The highest priced you can help me out. The highest priced bag ever sold was 200,000, a red crocodile bag sold in texas. You probably buy these. I think these older models. Youd id have to promise a first born to get one of these bags. Its not even the price, but often there will be waiting lists for weeks or months to get one of these. Mrs. Quinn tha nhat nkne already on the list. Its a big deal. Shes got a Big Christmas coming. Right. Well see you on power in a few minutes. Lets get a check on energy and commodities. Jackie deangelis is live at the nymex. Seeing some pressure continue here. Down across the board. The declines were seeing in the crude pits, of course, coming on the back of the Uk Parliaments rejecti rejection of military action in syria. That would mean the u. S. Would have to go alone if we were going to strike there and it seems like the probability of that is declining a bit at this point. Now, also keep in mind that we had u. S. Inventory numbers out this week. It shows the market is fairly well supplied. So it doesnt seem like prices need to continue to rise. West texas intermediate over 108 a barrel. Brent just under 115. Some traders are saying you have to keep an eye on opec and libyan protection. Opec declining its production because of what were seeing out of libya. Thats something to keep an eye on next week. A quick check on the metals. We saw a stronger dollar pushing gold under 1,400 earlier. Were hovering around those levels. Traders dont want to make too many decisions before the Holiday Weekend. Back to you. Thanks very much. Lets take a closer look at what might be the impact of a more protracted perhaps conflict. Theres a lot of discussion. I want to note, today is the last trading day of the summer. I pointed this out on the open. We had done pretty well this summer consider ling all the stf we had to deal with. All the gains we have had this year occurred up until memorial day. We were up 15 at memorial day. From memorial day to labor day, we are essentially flat which i think is pretty good considering we had to deal with the fed taper talk, with the issues in the United States. Not bad. Put up the s p 500 and ill show you what i mean. Were basically there we go. Right like that. Thats exactly on the flat line. Lets talk about syria. First, the issue is short term versus long term. Everybody agrees on what happens on a shortterm conflict. You get stocks down, bonds rally, the dollar rallying and gold rallying. Theres universal agreement on what thats going to look like. Here is a bigger issue, a protracted conflict. Here is what the issue is. Cyclical names at this point because there will be worries about Global Growth going on. You see oil stocks rallies and defensive stocks, health care stocks, utilities, stocks that pay a dividend, they would rally. Precious metals would rally. Commodity stocks and i mean base metals, the copper, steel group, they would all move to the downside. Consumer discretionary stock, retail and Home Building stocks, they would move to the downside as well. So you can see that the situation gets a lot different if you deal with a short Surgical Strike and the u. S. Is out than if you have a much longer conflict. I think this is whats really worrying the street overall. If you get protracted things, you have concerned about Global Growth slowing down. Oil goes through the roof. We know what happens to corporate earnings growth. And if its bad enough, this could even affect the fed taper potentially. I know this is really sticking your neck out a little bit, but the traders are really trying to figure out the protracted one is the hard one. Short, surgical, thats easy. The protracted is where everybody is trying to put their bets right now. You have a long weekend to figure it out for us. Thank you, bob. Lets get to Rick Santelli in chicago looking at emerging markets today. Rick . Yes, we are. Before we get to emerging markets, ira and decided that barring a double digit nonfarm jobs headline, meaning under 100,000, or negative number, what do we agree on . That tapering will start in september. We agree the tapering will start in september. Now, my question to you is how did you arrive at that conclusion . I know you have a good reason. Well, as weve talked about, its the february 7th speech of jeremy stein, and i think that jeremy stein is a Strong Enough academic to convince a fellow academic, ben bernanke, that the feds creation of these 3. 5 trillion of reserves has created the risk of financial instability. So they want to pull back for that and get risk somewhat surprised in a normal fashion. I think that the whole purpose of this, nothing more. Now, thats a perfect segue. Lets take the opposite role in this. Lets pretend were an Augustine Carsten or any of the central bankers around the emerging markets. How would they respond to what jeremy stein said . They cried and cried about the fact the fed was creating the reserves. Now that theyre pulling back and theyre seeing the ramifications. I would say theyre another vus again, this is theyre certainly not help. Theyre hot money flows that have been created, and now youll see the flows as they get a little nervous, money gets nervous and starts to return. Theyre not wrong though because dont forget, ben bernanke Still Believes that the reason we had a housing bubble was because the Chinese People saving too much. Wait a minute. When it came to this side, he pointed at them. Right. Now that the emerging markets are pointed at him, his response pretty much seems to be youre on your own here. So you cant have it all ways. Don coen at jackson hole, and i have a lot of respect for him a lot of people wanted him to be the next guy. Right. He said, listen, you guys made your mistakes, you have to sleep in that bed, but theyre a little peeved about that because this didnt happen you created these excess reserves and there was no investable place to go so it started bleeding out over the International System and now youre pulling back without asking anybody else. This is creating a little heat for us, but i dont think first of all, i think youre all judging it wrong anyway. I dont think this is going to be a big deal. Right now we have that correlative effect where everybody runs together. The bricks are all seen as one entity. Doesnt exist. Its going to break down and everybody will go their separate ways and those countries that run current account deficits will have to find a way to finance those deficits and those who are running balance current accounts or surpluses unless somehow the fed changes their mind and they get washed with another spray from the fire hose which i think really hurts their rentatiputat. You said and i think that the next thing viewers and listeners need to watch out for is more information on this issue of what the new york fed put in the fomc minutes about that special reverse repo desk and the importance its going to be for the recreation or the need for collateral in the repo market because you can taper, but if you make a lot of collateral that the fed is sitting on now available, youre going to get some velocity. All the people that say theres no inflation, maybe theyre right. Theyre just not looking at the right month or year on the cal dwer yet. Have a great holiday. Thank you. Everybody else, too. Back to you. Thank you, Rick Santelli. If you want to talk to your bank in person, well, get ready to pay up for it. Coming up, well tell you which banks are now charging you to talk to your teller. Stay with us on squawk on the street. My mother made the best toffee in the world. Its delicious. So now weve turned her toffee into a business. My goal was to take an idea and make it happen. Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. I hav e low testosterone. There, i said it. See, i knew testosterone could affect sex drive, 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. 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Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. In a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Coming up next, secretary of state john kerry speaking on syria within the hour. Well have the realtime Market Reaction to his comments. And it may be the worst month for stocks in a year but two tech names are rallying. Well debate if that momentum can continue. Plus three stocks that can help you ride out the volatility. Its going to be a busy hour for you, scott. Scott mentioned some tech names rallying. Look at crm. Leading the s p after reporting strong earnings after the bell last night. Raising their full year outlooks. Shares hitting alltime highs on that news. Mark did speak with cramer last night on mad money about whats driving growth. We are number one now in sales. That is our sales product is number one in the marketplace, and that is a huge and critical market. Were also number one in service, so in Examiner Service solutions, Customer Engagement solutions, were number one and as you know, we bought exact target last quarter. That makes us number one in marketing. Well, you can see market rewarding that performance. If you want to talk to a teller at your bank, if youre a customer at capital one or pnc, now it could cost you. Kayla tausche explains back at hq. Kelly, with branches closing and more people banking online, tellers are becoming a premium service. Banks have been rolling out accounts where you dont incur monthly fee as long as you do all your banking by mobile, by web, or at an atm. Visiting the branch though, that will cost you. Pnc launched its virtual wallet account five years ago. An account that syncs a customers transaction onli onlineoonline and with apps. If the app is down and you want to make a deposit, the website says you can mail it in. Capital one inherited the e account from Internet Bank ing in a merger that closed a year ago. Once that is fully integrated, the account could change. Big banks though, they have been really cautious about upcharging consumers for services viewed as a necessity. Bank of america was the only big bank to offer one of these accounts but its pulling its e banking account after only three years. Sources say fewer consumers were signing up for it, likely because the bank with the biggest Branch Network carried an 8. 95 charge to walk into one. A spokeswoman for bank of america said, quote, over the past couple years everyone has become an e banker. Its much more behavioral attribute than a product concept. Customers said the products did not give them enough options even if they only visit a teller infrequently. I took to twitter to ask people whether they would be asked in an account like that. Michael stone said i only need a teller four times a year. Chris says, yes, because i rarely need to go inside my bank. And just join a credit union and tell those feehappy banks to get lost. Kayla, some bad news for people who are sick already of bank fees but thanks very much. A little breaking news here on us airways and amr. I think were looking at a november 25th trial date for amr and u. S. Was airways. That merger challenge coming from the department of justice even though we heard talk theyre open to gosnegotiating e settlement. Cramer said if us airways gets th th this cleared, the stock goes up 50 . Think of it as private luxury villas for the 5 as opposed to the 1 . Up next, the company thats making exclusive vacation homes a little more accessible relatively speaking. Well be right back. Ive been doing a few things for a while that i really love tdd 18003452550 playing this and trading. Tdd 18003452550 and the better i am at them, the more i enjoy them. 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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 now you can vacation like the 1 while only spending like the 5 . Departing from the traditional industry model, Luxury Destination Club insparado is making vacation a little more accessible. Here is explain is bret handler. Hes the founder and ceo. Good morning. Good morning. Thank you so much for having me. Thank you for joining us. Just want people who arent familiar with the concept to know what you guys do. People basically pay these initiation fees of about 17,500, an annual fee in the 3,000 range but then they get access to your portfolio of luxury properties, is that right . Thats correct. We serve two markets. We have a Consumer Product that is a membership and we have a business product that really caters to offsite rewards, company meetings, et cetera. On the consumer side it is a membership. Folks pay 17,500 one time to join and then its 3,000 annually and for that they get access to our platform of homes and experiences around the world, and the pricing and the value that they receive is very, very competitive for what they might be able to find on their own, and the Service Level is also really bolstered up because of our unique business model. Im curious as well. Getting into this business and the way in which youre not just facilitating matching people to these kinds of vacations but actually owning these properties, is that right . We dont actually own the properties, so its very interesting, the business model. We actually long term lease the homes which allows us to manage and control this inventory. So for a member, its the same as if we owned it because we control them through long term lease and we control about half a billion dollars, just under half a billion dollars of inventory. So in my past life, i was involved in a company where it was really a fractional ownership, and it was hundreds of thousands of dollars in order to get that same benefit, and now weve really democratized that and made it available to a much larger audience for only as we had mentioned, 17,500. Looking through sort of the list of destinations and the number of residences in each des t tin nation, some of them youre only looking at one or two. There must be some bottle necking if you want to stay in a place like beaver creek. We really have quite a bit of scale. I think we have 22 homes in that market, but there are certain markets like costa rica which we just released last week where we currently only have one residence but were actively adding new properties on a monthly basis. We really started january 1st, 2011, and have built a portfolio to over half a billion dollars. So were continually growing that platform and the club runs at an occupancy of only about 44 projected this year. So availability is really not an issue at all. To give you an example, labor day weekend, a big travel weekend, just even in the last couple of days we had members travel to veil and to aspen and to many other places and just to give you an example of that great value, our veil home, which is worth over 4 million, we have members staying there for only 295 per night. Thats not per bedroom or per person. Thats per night. It comes with daily housekeeping, a personal concierge. Theres really a lot of value in joining and thats why over 4,000 members have chosen to do so. But does it come with a birkin bag . Not to my knowledge. I dont believe so. It probably comes with a really cool amenity, and if youre interested in it, id be happy to have you visit one of our homes. Brent, i am not the 5 or the 1 , but, you know, ill be thinking of them this weekend tweekend. Thank you very much. They say money cant buy happiness, but can it buy championships . The l. A. Dodgers now have the highest payroll in the league. Will spending more money bring the team from worst to first . Jane wells is live at dodgers stadium when we come back. 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. Otherworldly things. But there are 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. Welcome back to squawk on the street. Im phil lebeau with breaking news. A federal judge has set november 25th as the start date for an antitrust hearing as the federal government tries to block the merger of u. S. Air and American Airlines. This is a win for u. S. Air and American Airlines because they were pushing for an earlier antitrust hearing. The federal government, the department of justice wanted the hearing to start in march. The judge said waiting to march is way too far in the future. This will begin on november 25th. Keep in mind, thats three months away. I would not be surprised if we have a settlement negotiated by both sides before that. Thats what were lo on the lookout for. Its one of the oldest questions in sports, if you spend more, will it make you better . For the l. A. Dodgers the answer so far is an emphatic yes. The jane wells has more live in los angeles. This Legendary Team hasnt been to the world series in 25 years. Don mattingly says dodger fans got embarrassed to wear dodger blue. Not anymore. Since the Guggenheim Group along with Magic Johnson paid over 2 billion to buy the team, spent hundreds of millions acquiring the team, the team is way out in first. Ticket prices have jumped from 40 to 6 p0 bucks. They have the highest payroll, more than 220 million. Well, its dramatic. Its never reckless, and its always thought out, and, again, remember, were the dodgers, and we play in l. A. We needed to get this franchise back into a great place and do it as fast as possible. Theres no excuses for sure. Id rather have it this way than the other way where theres no expectations because we dont have a good team on the field. You know, if were going to take one or the other, wed definitely rather have it this way. All right. But two months ago it looked like a colossal waste. The dodgers were terrible until puig joined the team. He lit a fire. A lot of players got healthy. Hes young, suddenly rich, likes to enjoy himself. While he may have saved Don Mattinglys job that hasnt stopped mattingly when necessary from pulling him. The game is meant to be played with fun but within that there has to be a structure of we have to be on time, we have to be ready to play, we have to do our work. All those things you bench players. I think we have a responsibility to the fans and to the game itself. Later on power lunch, dodgers president will join us to talk money and yankees fan, how does donny baseball feel about wearing dodger blue . That is a great live shot, jane. Thank you so much. Jane wells in los angeles. Before we go, do you want to do a little quiz as to what stocks have done the best in the month . Best s p stock . Best buy . Very good. Up 21 . Worst s p stock . Abercrombie. I was going to say teens. Be aer kronl abercrombie f. Best nasdaq name tesla. I think you gave up on me there. Were running out of time. See you all on tuesday. Lets get back to wapner and the halftime. Carl, thanks. Welcome to the halftime show. Right on the wall is where we currently stand on the street. There is the dow down 54. Nasdaq and s p are in the red as well. Here is what were following on the half. Syria strike. The secretary of state speaks in washington at the bottom of hour. We go there live for the latest developments. The september question. Will the worst month for the dow since 1950 stay true to form or can a pick up in the economy spark a rebound . First, our top story today is the dynamic duo. August may be the worst month for stocks in more than a