Morning, still below 2. 5 . As for europe, so much discussion over the weekend with what is happening in portugal. Markets responding generally positively that portugal will use some of the leftover rescue funds to try to recapitalize a new bank there and were seeing some credit spreads on the back of that as well. Half an hour away from the market open. Lets begin with the road map today. We take a look at markets with u. S. Futures looking for a comeback, International Tensions temper positive earnings news. Investors continually reinterpret the current take on its consumer. And in an interview with the economist, president obama telling ceos they should quit complaining. So before we get to all of that, lets start here with the market, according to a higher open, selloff with the worst s p since june 21st, in fact. Data showing growth in china sector but the shanghai market is at an eightmonth high overnight. So jim, are you bidding up portuguese paper here . So many things went wrong. You had argentina, israel got hot and then suddenly you get anything and its a relief. Particularly because i think people didnt understand that portugal is loaded. I thought portugal couldnt handle this. What happens if another one goes down . The problem is, i think we all forgot, the european banks never did the stress test. When you see what is happening in russia, i think russia is the approximate cause of our decline. I know people want to focus on the fed because its so much easier to talk about and so much accessible. But a european slow down is going to be quite evident and i think its going to hurt the banks there. By the way, you have the efo institute in germany saying that the sanctions are going to push German Growth to zero. Exactly. Does the u. S. Follow that lead or do you think people start to buy in after we have a selloff . The president not complaining to the Business People. I think the sanctions that the europeans have embraced is when it gets colder than gas prongs, i think thats when the europeans are really worried about you a he think that would dramatically cause a huge gdp growth going negative there because they rely on russian natural gas. You have to stay away from american multinationals on this idea . Thats whats happening. I think we have a certain point where we say, arent they discounting this . I dont think you can discount it until you hear more numbers like evo. And then the stocks bottom. Im not a chartist but you go over the charts over the weekend and with the exception of a handful of companies involving health care, they are hideous. All of the big money thought the rates would go higher and the reality is the rates did go higher. I find that disingenuous. 3. 2 s p off the high. Last week was a brutal week. Yesterday was a terrible week. I come back and say that russia is being underrated by the Financial News media because russia also means stronger dollar. The colgate Conference Call was not a good call and you hear that emerging markets are weaker. Yeah, a bunch of them. Proctor. Ive been going over this with a cnbc contributor and i liked proctors call. Ive been waiting for them to trim the branch. Colgates was just like, wait a second, guys, are you like kidding me . Youre the best. Dont hit me with the nonbest. And clorox, that was a really bad call. Heres the question. August is not the best month in recent history. At the same time, some talk about the second half of this year will look like the second half of 2013. Bonds outperform and then it shifts. Do you buy what has worked so far this year or do you think people need to rotate and look at sectors, include staples . I would love staples to lead but there has to be one decent number. I didnt like kimberly. Kelloggs was a a complete disaster. Kraft . The kraft call was incredible. You guys thought we were doing good. You are clueless. We are not doing well. You read these Conference Calls and anything involved with food, the commodity costs are going high, people arent eating our stuff and its really awful. And they are raising prices. Whole foods is not doing positive. I do believe that people the companies that make natural and organic are doing well. By the way, El Pollo Loco can be taken to 50. I dont think they deserve the chipotle multiple but think it does. Going back to the point of whether cyclicals, do you think these are parts of the market that start to perform better, jim, or is this a wait and see . I think oil has come down so there was a budding retail trade by the end of the week. Gasoline is going lower. I think you need to see something but that and i put that as a positive because its hard to believe that everything is going to continue to go badly. Conviction. You need some leadership. We do have to talk about michael khors, 91 cents a chair. Revenue coming in above forecast. The stock losing all of its initial gains, however, the Current Quarter is below estimates. So 24 , samestore sales, it looks good. That was last quarter. Youre just not impressed im not impressed with a company that says they have more inventory than sales and a company that says Gross Margins are contracting and anything other than beat and raise guidance. People read the headline and think cramer is crazy. You have to do more than read the headline. Less than 1 this year. Its not having a year like last year. No. But you talk about difficult comparisons. You want the kind of comparisons that mobile is giving you . Comparisons have been really difficult. By the way, its really incredible. Heres a company that puts up 17 its not impossible. Chipotle cannot be the leader in this market. I spoke with jack hart, the cfo after. Its like, wow, if what is good for chipotle is good for america . No. Under armour had a great chart and that was new technology. The technology is not just pcs. The technology that hes putting into his clothes is amazing. And you can measure how well youre doing he has a website that is just terrific that talks about how well your body is doing. For michael kors, inventory is lean, were expanding and in china its so great. Under armour delivered fabulously. I wonder if were going to hear from coach. Worst performer in the s p. They are paying out too much. Where is it now . Its at 4. The clothing stores, they are laying off workers. Maybe if they close every store, the earnings will fly. Spin out the real estate. Coach has a lot of problems and kors is better than coach. Lets see. At a certain point its like whole foods. And then the number comes out and they are still buying ahead of the quarter and its bad. Worst performer in the s p and second is whole foods. Kroger has more growth than whole foods. Crazy. Some other earnings that were going to hit, the latest Quarterly Results excluding certain items, carolina health. Jumped 41 higher from the year earlier. What does buffett do with it . I think were going to speculate what hes going to buy and its going to be wrong but its a great parlor game. General mills. What about campbell . Well, hes so clearly not going to give you any sort of heads up and i think to play that game when were in a situation where earnings might be on the decline, its a dangerous game. Where is the biggest value to be had in the market . The biggest value might be the oil and gas limited partnerships that have come down on oil and gas but many of them are toll roads. I think the independent companies are exploring spectacular growth and oil has broken 100 and they are making a lot of money and can be taken over. If you look at exxon, theres a nontakeover independent. I think oil can provide the dollar to continue to go higher. Berkshire has a couple of oil plays. Theyve got the rails and the guys making the safer rail cars now. Is this an area that you think berkshire could pursue further . I think trinity had a good quarter. I didnt think trinity would have as good of a quarter. I also didnt think the National Safety transportation board would get in this and i think berkshire has a great path to business. Hes very diversified and thats what analysts are saying, hes tied to the economy more so than the past and we saw the 4 growth number in the past week. Allstate had a good number but the travelers did not have a good number. The insurers stocks look like they are rolling over but berkshire was a good number. We should mention earnings season now that were threequarters of the way done. Lets use pbg. That is the kind of stock that is why did pbg start turning around because of a big turn in europe. If you lose europe, youre going to lose a lot. I think the perspective is that europe is going to be lost again. We should mention as well, profit margins, as Companies Continue to report these results, are at an historic high. Whether they can hold up during the retail back half of the reporting season, well see. Were talking almost 10 . How about this. If you read on the tape right now, putin says to merkel, were happy where things are, we just want to sort things out, everything i just said about the internationals is going to reverse. Beware, that situation gets resolved. Youre right. And its not a everything like the big macro guys, its september of 38 and the chamberlain is giving up. No, come on. And obama is not playing that way. And they have never been so popular. Thats going to continue to be the case ahead. Straight ahead, president obama telling americas ceos to stop complaining. Well have details on exactly what he said about the countrys corner office, coming up, and well look at the futures. Still holding on to positive gains after one of the worst weeks for the s p 500 in more than two years. Live from the New York Stock Exchange when we come back. Collection is here. Ummer during the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. President obama telling the economist magazine that Corporate America needs to stop complaining. Have a listen. I would take the complaints of the Corporate Community with a grain of salt. If you look at what our policy said then, they have generally been friendly towards business while at the same time recognizing their certain core interests, physical interests. If you look at whats happened over the last four or five years, the folks who dont have a right to complain are the folks at the top where we have made less progress than i would like. This reminds me of firstterm obama banker comments. What do you think, jim . Okay. Its politics that i tend not to like to talk politics. Its business, too. The president is correct about the stock market. If you complain about that if we didnt have the rebound that people expected, too. So is the job i think hes alluding to the fact that a lot of our viewers who are not ceos would agree with, which is that ceos have done quite well during this period. Do i think hes friendly in the business . Thats a hard sell. Two lines here that i think is capturing some attention around the proverbial water cooler this morning. One is where he says the Economist Says to him, do you really think its true that ceos profess to be responsible as they say . This is president obama. Theres, quote, a huge gap between the values and visions of corporate ceos and how their lobbyists are in washington and then this line where he says, im not just trying to start resentment. Feel free to keep your corporate jet, et cetera. Im not concerned about how youre living. Im concerned about making sure we have a system in which the ordinary that is the oldest thats the fact that the hamptons thats where you raise money. He said you can keep your lifestyle just the way it is. My house is in quad. Do you think he meant the hamptons . Yeah. I think so. How about hampton whatever. Wherever you can do a fundraiser. I think hes talking about the corporate folks. I was being a little more facetious. I think this is not going to go over well and its also not that regulatory, is it . Im thinking about the highprofile ceo comments. I think hes talking about the ceos that come to the white house and complain to them. Obviously we talk about it in conversation here but can you think of a National Example of a ceo complaining to the American Public about its treatment . Recently. No, but they will complain off the record when the microphone is not on. He said, listen, executives, you do come to me more than you realize and i think that, again, thats different from what people think. The executives. Its so easy to say right now, id blast the president , hes wrong. But in spite of him, its all because of the he had if. Dont know. This is great parlor talk, absolutely. Its funny. I dont think anyone thought the president is business friend. I think the stock market has gone up because of him. Kind of the midterms. And paul krugman is defending him. Im shocked. That was a shocker. You said someone called him a and the man has opinions. You dont have to agree with him. Up next, its cramers mad dash. Taking a look at futures, we are rebounding a bit from last weeks slide, the worst week of the year. The dow is set to open up more than 20 points. More from the New York Stock Exchange straight ahead. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. 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I get it, i get it, last week they were talking about the iconic iphone 6. Its a gamechanger. On the visa call, charlie scarph talked about apple and charlie sharp is not no one is allowed to say, listen, were doing business with apple because that means apple is going to call you and say, we told you not to talk about it. We just dont like it. This note makes so much sense. Mobile payments is the way of the future. Every single retail is saying, weve got to have mobile payments. Visa had a group of retailers very much involved in mobile payments. Dont forget, visa has a fantastic relationship with almost every bank. This is something were following, watching, and sharp is dynamite. I love the guy. And both shares are poised to open higher. Well see what happens here as we bring in the open of the stock market when squawk on the street comes right back. Where the reward was that what if tnew car smelledit card and the freedom of the open road . 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Get live squawks right in your Trading Platform with thinkorswim from td ameritrade. Welcome back. Youre watching squawk on the street live from the New York Stock Exchange where the opening bell is set to open in just about 90 seconds. Jim, what are you watching . Obviously, kors, because its being discountable. That could be a negative tone. Ebola is on peoples minds and its a company that we dont talk much about, they have something that might be fasttracked by the fda. Thats why the stock is going up. Its a bit of a mystery because its early on but it could be done in connection with the d. O. D. Theres something there. I know the fda came out and said they called for an expedited process. The fda is adamant, when you have something that is lethal and you have something that could save peoples lives, they are not going to stay in the way of it. Plus, we spent all weekend reading about ebola. And im afraid of that. I just read an auto wi og bi over the weekend. I was going to be a doctor, in any case, and were gearing up for the opening bell. And here at the New York Stock Exchange, etf celebrating its recent lists and its not a merger monday. Its not the last couple of weeks. I picked some deal, just to throw them off. So i was playing faber sits over here, doesnt he . Yes, he does. Now, i would say that the only reason i like pike is because its Electronics Distribution play and thats another area that people are concerned about. I will have eaton on tonight. One of the things i dont like is where a company says its not a disaster and the stock is down big. What is a disaster, if the stock is down huge, what does it have to be, cut in half . I dont know. Well find out tonight. These things move around and im putting on my ceo hat here. The reason i put of merger monday, or the lack thereof, after the sharp selloff, it sounds like it was pretty quiet. Do you think the rest of august, similar tone or not . I think that a lot of the p. E. Firms believe the stock market moved up too much. I think that russia is just a total the ceo said something. It really kind of shocked people, took peoples breath away, which is that mh17, the downing of the plane, might be a gamechanger. A European Executive of highquality who says it may be a gamechanger makes you feel like why dont we wait until we see if is. A street. Com survey says 37 of people fear of flying international. We havent even heard of insurance rates. Just remember when the game changer talk is in the air, you tend to want to say, lets wait on that deal. We did hear a warning from adidas. That stock, if its down 17 over the week theres one where they said, listen, everyone is going barefoot. I think theres competitors in that game, too. And i know under armour sells a lot of shoes. The barefoot analogy. Do you like that . If people are wearing shoes, they are wearing somebodys shoes. Thats right. Our sneakers last forever. They are also getting hit with golf. What is going on with golf . The only thing that they are talking positive is we saw that in the old days when cal low way didnt used to have a growth stock. Have you guys met plank . I asked him, 90 times p. E. , do you watch your stock price . He said he occasionally watches his stock price. Lets take a look at some of the movers this morning. Weve been waiting to see how theyve traded. Kors initially responded positively to a beat to the year before the bell. Stock was up almost 7 and then turned negative to the tune of 3 . Wow. Its down almost 5. Swap out of kors and go into by the way, brown foreman was another stock that had a really good chart. The only group that i see really climbing, the biotech, theyve got a multiple myeloma drug. Celgene is going higher. Biogen, all still doing well. If you look at the bestperforming group, financials. Im a little surprised to see that. The european banks were strong, though. Right. Thats very good point. Whether its a bailout or a bailin, they took it on the chin. The holders of the senior debt, they remained whole, so to speak. They did not have a good number. The bank was only supposed to do well when we see higher rates. Its interesting. Lets see if that continues. It would be a leadership group. Treasury prices are stronger, yields are lower. Lets look at the social media names moving. Typically a pretty good gauge of risk. Yelp reported earnings last week. It was not a universal theme here. Yelp is under more pressure. That company is having trouble, stumbles in the latest quarter. I look at both Gross Margins and also local media on aggregate. The thing that people have to worry about when you sell or short y echlelp, they all want n you. You can short it until the cows come home. Hes a smart guy. Yelp is the yellow pages with qualitative commentary. And theres speculation that is going to be taken out. Look, lots of people are smart open table and that turned out to be crummy and be careful. Another group that we really like, the drugstore chains. They have done really, really well. They are holding up well. What about the control express scripps has . Manager excluding costs that are more but dont provide additional benefit. I dont know. I would not i would be caref careful. Forget about it. Dont bet against amgen. They paid a fortune for onyx and i think its starting to pay off. Theres someone who knows why Cardinal Health is down and it makes me inefficient. Well, one reason we can point to, walt disney is one of the best performers. Did you see guardians of galaxy this weekend . I know someone who did. They say, wait a second, why dont we see what they report. Dont forget, one of the biggest buybacks has done a pretty good job. Its held up better than almost any other stock in the dow. And lets get to the buyback for one second. This is always a hot topic when were talking about the increase in earnings, people say, yeah, but theres been a lot of buybacks. True. Apple, for example, has seen net earnings grow 12 , earnings per share, 17 or 18. The point being that buybacks are down from q1 to the tune of 30 . So again, the fundamentals in this and this is the irony of the backdrop right now. Earnings are pretty good. The economy story pretty good. Geopolitical story, terrible. Right. They can say, i did this, did i that. Rates have flat lined. Its russia, okay . Its russia. And the ceos are very worried about russia. I talked to dudley, the ceo of bp and hes like, listen, we have ross net. We have a Million Barrels coming out per day. Are we worried . Its our job to worry. And then he named four other places and i said, wow, i wouldnt want to go to these places. Unlike the rangel ceo called me a sissy. He said, listen, this is where the oil is. Youve got to do it. I said, have you talked to putin . Not lately. 20 stock in rossa. You cant be clip. Either all of the companies was exxon exxons quarter was so bad. Product growth guys, im not slamming you. You know that the Production Growth was not good at exxon. But i just think that we have to be careful about russia because russia is a wild card. I do want to mention one thing. You said buybacks are down. Ex spend turs are up 8 from last quarter. Weve been waiting for it, right . Yes. And thats part of why revenues are up. Its spotty. Some spent a lot of money and some did not. Well see. Lets go to bob pisani who is on the floor. Hi, bob. Hi, guys. Happy monday. Were being helped by europe. Portugal is leading the way. They like what is happening there. Portugal, germany, france, russia is to the downside. About the spanco bailout, it is progress. The own citizen bailed them out at least were getting progress. They are going to be stuck with the bad bang. Eventually, they are going to lose a lot of the money. And the government is funding money for that. If you take a look here, is that a loss of your shareholder, its 12 cents. In the last week or so, it completely collapsed. They are up a little bit here and most of the european banks are trading to the upside. I think theres Real Progress being made. Im not arguing, theres still not a moral hazard. There is. What happen if they cant borrow any money from the central bank . They go to the European Central bank then. Its obviously not done yet but well see how this plays out. Its progress. Thats my main point. Let me move on to two companies that are darlings. They missed technically on a gap basis but closed sides down 4 . They didnt have as many sides that were closed. Sales prices were up 6 . The amount of money that they made, that was up 3 . That was better than most people expected. Thats why the stock is trading up right now. What really matters is mortgage availability. Folks at 4. 2 mortgage rates, if we go to 5. 2 in the next three months, forget it. Thats what is going to matter right now. Theres michael kors. The stock was 100 a short while ago. Now its down 20 since then. Margins were under pressure due to the markdowns but the earnings sales beat, up 20 , those are fantastic numbers overall. Stocks are down 20 . The market has already corrected for the idea that michael kors may be a brand that everybody is getting used to. Finally, i want to note, earnings, we are 76 through the earnings season. Right now, 9. 7 Earnings Growth. We may hit 10 . And revenues, 5 . Guys, weve had a very good earnings season so far despite a few highprofile misses. Back to you. Bob pisani on the floor, lets get a check of things on the floor. Nasdaq leaving us higher today, leaving us lower last week. Seema mody is joining us. They are worried about a larger correction and nasdaq finished its worst week since april. Russell 2000 was brought down. This morning, bargain hunters are seeing the drop in price as a good buying opportunity cht at least for now. Youve got to go back to earnings. The Tech Companies that have projected earnings, 73 have beat expectations. One of the higher beat rates for the quarter and actual Earnings Growth, not blended but actual Earnings Growth north of 14 for the trek sectors. Some of the traders i speak to say youve got to come back to the fundamental story and that is earnings. There was a notable drop in the large cap names that offered a dividend, perhaps being seen more vulnerable. On the other hand, many on the social media space, better than expected earnings from facebook. The groupon is reporting earnings. Ipos from july, El Pollo Loco gained 14 . And after a strong listing last week it continues to move higher. By the way, 11 companies expected to ipo this week. All right. The idea continues. Now lets go to rick santelli. The lower yields part has been with us all year. The stronger dollar, im going with its a weaker euro. Now, if we look at the yield curve, we all know its been nothing but flattened since really thanksgivings of last year. So lets start with a 13month wide angle of tens minus twos. You can see that it is definitely a flattening trade. But if you just look at it over the last several weeks, a couple of things should jump out at you. You see that drop, that was the fed meeting. We did get a flattening there. But weve basically been lightening and steepening. Things are changing a bit. Lets look at a tenyear on a twoday. Were well off the 258. As sarah referenced, here we sit at 247. Three basis points off as the next chart shows, the lowest yield close of the year which was on the 20th of may at 2. 44. The selling was much more aggressive last week but it didnt stick. Lets look at a year to date of the dax. Its not down much today but its certainly not bouncy. Euro versus dollar, the pound versus the dollar, it explains what is going on. Back to you. We have meetings later in the week. Coming up on squawk on the street, Berkshire Hathaway reporting a rise and the biggest cash hoard since 2008. Well talk to industry insiders about what is next for the oracle of omaha and where he can put that cash to work. And then, president obama telling ceos to stop complainingful carl fiorino will join us to talk about that. Find yourself. In an accomodation where you get to do whatever it is that you love to do booking. Com booking. Yeah in a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. 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Its one thing if youre an American Company and they say we dont know if were going to let you operate because you might be spying but its another to worry about the legitimacy of the food. Its aggressive News Coverage of the story and making consumers aware of it more so than they would perhaps of a local company. Maybe they have a First Amendment . No. The Chinese Government tells you what to say. People dont understand, the prc, the supreme court, nothing gets written unless the prc checks off one. Let me ask you what you do with the mcdonald sz on the backdrop of that. And crimea, they pushed mcdonalds out and started their own russian version of it. I was calling this the high water market of globalization. People didnt believe me. People keep waiting for mcdonalds to change around. I think the idea of eating healthy is such a powerful trend that mcdonalds is such the irony. I think mcdonalds is going to be challenged based on what they serve. I think overseas they have gotten wise. Cocacola and other companies that they are getting wise to, people all over the world are getting wise that maybe this stuff is not good for them and thats playing a role in their bad comps. And theyve had a decade runway where it takes time to catch up with the evolutions here in the u. S. Or simply realize from the getgo that these items are not as healthy for you. The world is not as stupid as it used to be. The salt content is all bad. At some point you throw up your hands and say, youve got to eat something in the u. S. You sound like the people from zuetes. Cat food . No, its the company that makes growth hormones. Hey, listen, youve got to eat. All that is is the industrial let me put it this way, when im with my grandfather on a saturday afternoon, hes more inclined to go to one of these places. What, mcdonalds . Yes. They used to call me panera sarah in high school. I call you eisenhower but now you have another nickname. 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So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Welcome back. Jim, gasoline . Yes. It was only a matter of time that people would Start Talking about consumers having more money in their pocket. Thats the chatter. Kors is getting hit. Thats why kohls is doing much better than expected. Do i like this trade . I dont know. We waffle. We have the early back to school that you mentioned. Atlanta kids, i know because i have family down there, today are back in school. Unbelievable. They must be smart kids. They do get out in may. But thats a tough start. Thats early. This is a new theme youre going to be hearing, which is that gasoline down, maybe the consumer is going to start doing better. The lowest gasoline prices start in august in four years. And then tonight, ive got eaton on. Etn. Jim cramer is going to be speaking with sandy cutler from eaton. Recent losses on the concern of profit margins. Find out what that says about luxury buyer. And then later, Robert Mcteer is going to join us. Squawk on the street will be right back. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Welcome to squawk on the street. Our road map begins with the markets in rebound mode after last weeks selloff. Have we seen a correction . Michael kors out with a correction. Now its down more than 3. Well have more on this reversal. And president obama says ceos should stop complaining so we picked up the phone and called ceos and former ceos speaking out this hour on squawk on the street. Were going to start with the market. S p was down from the highs after last weeks selloff. As you can see, we are in rebound mode. The nasdaq is in the lead. Here to talk about what is moving stocks onset at post 9, chief strategist. Good to see you, john. Great to be here. Thank you, thank you. Joining me here, john, all of the cross fronts, portugal, you name it, higher Interest Rates. Is any of it enough to make you rethink the trajectory of this market . No, because nothing has really happened yet. All of these things could happen. They are conditional. But things could work out, too. Id rather see something concrete and something that interferes with our energy supply, something that relates to the energy. So what was last week . Last week was a classic bull Market Correction in my mind. Like summer storms, they come out of nowhere, they are nasty, hit hard, and then it is over. The fed exit eventually this fall, even if you believe the bull market will continue, the fact that money is coming out of small caps, out of high yields, what does that say to you . That is a little bit disturbing. These are known unknowns. I think they are less danger rouse. We never know what is going to happen. Those things are technical indicators and they always get my attention because most times i dont think technicians are a lot more than smoke in mirrors but they spot trends. I still think the fed is lining the company with ample liquidity and as long as that is the case, im going to default to positive. Just looking at the commentary here over the weekend, we have jpmorgan saying, lets see, dont count on a correction any time soon. In other words, people here dont seem to bother. I think its 4 to 7. Thats what make as bull market. People may believe that they get knocked over real quick. Thats why it goes down so quickly. People change their mind very, very quickly. So i may be with them and its always nice when youre alone on wall street. Seldom get to do that. When i think it through, sure, you could have 5, 6, 7 any time. More than that, i find it really difficult to get there. Do you think theres less tolerance for bad news now that valuations have run up and have finally come up to historic levels that are higher than the historic average . I dont think things are expensive but thats a god way of putting it. Theres less tolerance. Im paying for a nice vacation and want things to be nice and we want things to be nice. Its so quick and so sharp the way it sells off, i think that precludes the need for a real deeper selloff. So then what is the optimal valuation for the market . Because for the first half of the year the conversation was the dow and s p and nasdaq as indexes were not overvalued as a multiple of earnings. Right. Now were getting to a point where were in the 17 range and people are starting to say, okay, maybe that is fair. What do you think is fair . I use the forward up and bottom number. And i think were closer to 16 and 17. So what . Its not extreme. Valuations in and of themselves matter at two times. When they are really, really low, like 1982, or really high like they were in 2000. Otherwise, they are a nonfactor. Do the yields work in the back half of the year, do they not work . Im asking this against the backdrop of what is happening with rates right now. I dont think theres a real rush to sell them but i like yields but i like lower yield with strong cash with a chance of more cash down the road. Such as . Retirement. I like high quality companies, the sort of things that have low payout ratio that have strong cash flow, high quality. Those sort of things draw baby boomers for the next ten years. Can you name names . Stuff like ibm and hewlettpackard. Those sort of things fit into what im talking about. John, if you see a 4 to 7 type of move on the downside here, can you be in russell stocks, smaller momentum players . Well, i work for a funds group. I think its good because im not really good at it. You can do it. Some people are really good. Some people have a gift. I dont have that gift. I view the 4 to 7 . Unless i see a change in the fundamentals. What is your strategy given all of the headwinds from overseas . It worries me but these things have a way of working out and so far nothing is really cutting off the oil or gas to western europe to the United States. All right. John manley, thank you for joining us on a monday morning. Now lets head it over to dom chu. Good morning, dom. Good morning. The fda granted amgen an approval for multiple myeloma. Back over to you. All right, dom. Thank you. Coming up, why were set for a 20 correction in the market. The three indicators that could be pointing in that direction. And why kors is down more than 5 . 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E me, but you dont need to camp out til labor day to reward yourself. Mattress discounters labor day sale is on now rest those tired bones on a queen size serta mattress and box spring set. Right now, theyre just 397. Get 48 months interestfree financing on the entire tempurpedic cloud collection. Not to labor the point, but this sale wont last long. Mattress discounters welcome back. Theres shares of michael kors dropping after it beat relative expectations. Lets bring in stacy for more on this one. Jim said i dont like the fact that inventory is higher than sales here. What do you think of this report . Yeah, thats a nice 20point swing on the stock there from top to bottom here. But i think the real thing that we talked about, even the last couple of quarters, is the fear that Gross Margins are coming down. The company has told us this quarter after quarter. Dont expect this level to stay where it is. Expect it to come down. Guess what, their guiding dropped in operating margin percentage, much longer than the street expected here. Thats really why the stock is dropping here. Stacy, there is a piece in the journal over the weekend cautioning that kors could become the next coach and the reason is that kors is discounting, doing so much of its business at the outlets. Do you think, given the increase in outlet real estate and inventory on the discounted side, that theres a real risk of that . I think what they were looking at is wholesale and Department Stores and the company came out and they were incredibly defensive and said, hey, guys, we are not marking down or changing strategy here. Theres a fear that the brand will become a bit overexposed. They are growing very fast. Weve seen what has happened to coach. So there is that fear there. And, of course, the outlets which really have hurt more the equity at coach are at risk here but the real fear again is in the real priced stores is there is something changing there. And as you expand aggressively, you lose the cache of your brand, whether it stays trendy. Is there anybody that does this right, expand at top pace to drive top line growth but hits the nail on the head with the consumers and the people coming through the stores . In all fairness, kors is doing it right and they are nailing it here. But again, the problem is that in north america you sort of feel like you are seeing their bags everywhere. There is that fear that they are going to get overexposed. For them the bigger opportunity is actually in europe because of the price points and because they really are very fashion forward and competitive in europe. So theres a huge opportunity. I think that they are, from a fashion perspective, really hitting it. They just have to be careful that they are not overexposed. And obviously they are in investment mode here. So while the sales equation is maintaining itself, were starting to see all of the investment dollars take place and thats really, you know, whats making the street a little nervous here. So where do you see kors, stacy . 54 samestore sales growth in europe in the last year. Is that sustainable . You know, i actually spend a good portion of my time in europe in stores and it is here. They have not even scratched the surface, particularly in germany, in italy, in spain, in the uk. They have a bit higher market share. But you go to the Department Stores in germany and they are the only game in town for a lot of the Department Stores. So they are really getting out in front of the consumer and leapfrogging a lot of the other brands and making that statement at the accessible luxury price point and thats an important thing because they are in this middle ground thats still affordable but still cool and, you know, certainly the price points are not nearly where the true Luxury Brands like gucci and the rest. Its still affordable and still cool. So youd recommend shares of kors at 76 and change in. I think youre going to have to be patient with the story. What is sending the stock down here is the gross margin issue and theyve warned us quarter after quarter but when that actually happens, the street is never prepared for it and they he even said on the call today that they gave the analyst a little bit of a lecture, which is probably not serving them well here, saying, guys, you are just shocked at the reality of the Gross Margins coming down. Weve told you about this and youre not focusing on the right things. Again ah, yes. The street is going to have to get used to the gross margin reality but probably elects turing investors on what they should focus on is probably not the best thing to do on the call. Sign of tension for sure. A little tension. Shares are down 7 . They were up more than that this morning after that call. So almost a 20 swing. Makes a difference year to date as well. While were talking about the consumer and were threequarters of the way done with earnings hes son, theresea trend. Across the board were seeing companies raising prices. Lets look at some of the names. Hersheys is raising 8 a pop thanks to comedy prices. Mars which makes m m and snickers, raising prices First Time Since 2011. Kraft has raised prices on cheese because of higher dairy costs. Weve been talking about chipotle. Higher prices for the menu. First time we saw that in three years thanks to the rising beef, cheese, avocado prices. The bottom line is, janet yellen may say that its noise, pci, pce, but if you read between the lines of what these Consumer Companies are doing, prices are going up. When you look at this on a company by company basis, theres always a reason for the increase. Our own food commodity costs are going up, our content costs are going up, Even Airlines raised prices this summer because of tsa squurt feecurity fees but d even matter . A company is raising prices around innovation and thats what companies are giving for higher prices. Nike, for instance, are coming out with new products. They point to the new frito lay snacks, salsa, they are on my desk back in new jersey. Seriously, they say that the innovation is driving growth and it allows us to price things a little higher. Do you bet on these from a macro point of view. You bet on these price hikes feeding into ultimately a pc measure or whatever measure you want to pick. They are broad. Well see if the income growth, the higher wages follow through, which is where a lot of places are watching. The consumer is healthier. They can sustain these increases. Thats the thing. Companies are not citing demand for the reason. Well see if nethey can actuall do it. Interesting stuff, sarah. Thank you so much. Into wh. When we come back, Berkshire Hathaway reporting a strong second quarter. What is Warren Buffett waiting for . Well discuss on squawk on the street when we come back. Yeah, im married. Does it matter . Youd do that for me . Really . Yeah, id like that. Who are you talking to . Uh, its jake from state farm. Sounds like a really good deal. Jake from state farm at three in the morning. Who is this . Its jake from state farm. What are you wearing, jake from state farm . [ jake ] uh. Khakis. She sounds hideous. Well shes a guy, so. [ male announcer ] another reason more people stay with state farm. Get to a better state. Then boom. What happened . 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Were going public [cheering] the fastest inhome wifi for your entire family. The x1 entertainment operating system. Only from xfinity. President obama has an Important Message to ceos. In an interview he said that they should quit complaining about regulations and show greater social responsibility. Have a listen. I would take the complaints of the Corporate Community with a grain of salt. If you look at what our policies said then, they have generally been friendly towards business while at the same time recognizing theres certain core interests, fiscal interests. If you look at wa hhat has happd over the last four, five years, the folks who dont have a right to complain are the folks at the top where we have made less progress than i would like. Pretty scathing comments from the president. Joining us is bill george, professor at Harvard Business school. Bill, thanks for joining us last minute. Thank you. So does the president have a point . Were seeing the longest stretch of monthly job gains since the 1990s, the stock market is at record highs. Are you offended . Well, i think the president is not leading these days. Hes not in a god mood and he showed showed that in the press Conference Last Week and as my mentor who passed away last week tragically at the age of 89 used to say, its a leaders job to communicate passion, hope, and inspiration to other people. Unfortunately, the president is not doing that and is playing the political game. I dont think you find any ceos that i know and i know a lot of ceos, who would say that this president and this administration is friendly to business. I think business has coped very well in spite of a white house thats had no fiscal policy and has been quite negative towards business. Well, thats partly congress. Congress is to blame as well, bill. Two of the topics that come up is obamacare and dodd frank. Are those actually strangling business . Well, clearly theres no question that dodd frank is constraining the Financial Community but we needed to make a lot of changes in the Financial Community and some regulations are definitely necessary and were still working through those. But we need great Global Financial corporations. As far as the obamacare, i think the jury is still out on that. We havent faced the fiscal consequences of it. I think were coping pretty well and exchanges are working better than everyone had feared. I among them. And i think thats a wait and see. Whoever thinks they are booming, we need to take the lid off. Look at the i. T. Industry. We wont let people higher master and ph. D. Candidates and who educated in the United States and are getting sent home. If we cant resolve immigration at the border with the illegal immigrants, lets solve the Legal Immigration so we can continue we dont have much time. I wanted to say, he did say that he thanks the Corporate Community for drawing interest in that issue in a positive way but one of the issues raised is he says he thinks theres a disconnect between what ceos say about how much they care and what they are privately lobbying for. If you say you care about the environment and education and immigration reform, get your lobbyists working on those issues. Its not just lobbyists. I think you have to Work Together with the ceos directly and most ceos are very discouraged. Theres a lot of talk about nothing gets done. Weve got to resolve the issues like pat tree ating cash overseas. 140 billion earning less than 1 . Weve got to resolve these issues and get on top of the tax code issues and the fiscal issues and free up companies. If we could free up the Energy Industry right now, we could solve a lot of the geopolitical but shipping liquid and natural gas to germany, canada and mexico are willing to do that. Why cant we open up a free flow . Ill say this about business. Its done a brilliant job of globalizing its businesses and being very productive in the u. S. And figuring out how to win. Look at the automobile industry. In spite of all of the problems that mary barra has had at general motors, their revenues are up. I think business is booming right now because of the leadership in business and i just wish the president would work with those leaders directly, not through the lobbyists. Yeah, in spite of that. Thank you so much. Thank you. Warren buffett is sitting on his largest cash hoard since 2008. Here with some insight, jay gelb and jeff matthews. Welcome to you both. Jay, first to you, is there some discussion about where this cash might be put to use . What does buffett have his eye on . Our sense is that with 50 billion in cash on the Balance Sheet, 26 million of that is available for deployment in acquisitions. Even so, if berkshire were to raise more debt or sell down equity investments, he said at the may investor meeting, i was on a panel asking questions, that Berkshire Hathaway could fund the 50 billion acquisition. They are still in the market for a large deal. Are you surprised that they havent done one yet . The biggest one we saw last was several years ago for Burlington Northern railroads which worked out extremely well. Yes, were still waiting but our sense is that unless they see a compelling deal, berkshire wont move to buy anything substantial. Because jeff, Warren Buffett knows better than anybody, why dont you think he hasnt done a deal here . Not seeing Something Interesting out there . What do you think is going on . Those two points exactly. He hasnt seen anything that is compelling at a price thats compelling. Youve got to understand, Warren Buffett doesnt buy stuff just to buy stuff like a lot of companies do. Hes not in this for a short term. Hes not in this to make next quarters earnings look good and hes not in this to get cash in the Balance Sheet like a lot of guys do. Hes in this for the very long term. Hes looking for things that are going to satisfy Berkshire Hathaways need for great businesses in the long run. So i would expect when he finds something hell jump on it. If he doesnt see anything at the right price, hell wait. In the meantime, it seems that he sold out nearly 3 billion through equity sales and only bought 2 billion in equities. I know hes choosey but do you get the sense that hes holding back for the moment . On the equity side, his equity portfolio, thats a function of where the stock prices are and how those have changed relative to what happened with the individual positions. Gm, he sold off a bit of that. I dont think gm is a sustainable Berkshire Hathaway investment for the long run and i think hes seen that and they are selling stock in gm, for example. I wonder sorry, jeff. Go ahead. No. Its fine. I was just going to ask, if were all supposed to be doing what Warren Buffett does, what should Retail Investors be thinking, jay . Well, you know, for Berkshire Hathaway, what we tend to focus on is operating Earnings Growth and book value per share growth. In the second quarter, both those metrics were strong again. 10. 5 operating Earnings Growth year over year. 3 book value growth versus the prior quarter. Our outlook is for roughly 8 to 10 operating Earnings Growth over time and 10 book value growth. So when you look at Berkshire Hathaway shares, buffett said hell buy back billion of dollars in stock and we think theres a strong support level for the stock going forward. Okay. Jeff, just last thing before we go, same question to you. What do you think the Retail Investors should be thinking . Well, hes the smartest inreceive stoi investor in the world. If he doesnt see things to rush out and buy, i think its a signal for the market as a whole. He already said its fully valued. Thanks very much, guys. Appreciate it. Meanwhile, plenty of headlines in the middle east. Jim maceda is in tel aviv. A bus was attacked by a bulldozer in what can you tell us about that . Reporter thats right, sarah. The driver of the large bulldozer died after being shot repeatedly by jerusalem police. That, after ramming his vehicle into a large, though empty, bus. Israeli police say the bulldozer also crushed a pedestrian nearby who later died. Seven others, we understand, are still in the hospital, ard coulding to heal coulding according to officials. They believe this was palestinian involvement, especially at a time of ongoing conflict. Minutes ago, in fact, at the top of this hour, a humanitarian unilateral ceasefire ended. Israel allowed food and medical aid to come into gaza and to encourage the displaced gazans to return to their homes, though few were trying that. Of course, palestinians and militants rejected it outright calling it, quote, a diversion from ongoing israeli massacres. Gaz g gaza officials claim that a house was shelled wounding 29 and killing an 8yearold girl. On its side, idf claims that four rockets were fired at the gaza strip. Another attempt at a ceasefire. Jim maceda, thank you very much. Well follow the headlines out of the middle east, israel, and gaza. When we come back, over the past 45 years, the stock market has lost more than 20 . Each time youve seen these three warning signs. Guess how many are flashing today. Some bearish advice on the other side of squawk on the street. Dow is up 13. If you have moderae Rheumatoid Arthritis like me, and youre talking to your rheumatologist about a biologic. This is humira. This is humira helping to relieve my pain. This is humira helping me lay the groundwork. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for ten years. 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Call today for a low price on speeds up to 150mbps. And find out more about our twoyear price guarantee. Comcast business. Built for business. Following last weeks selloff, our next guest is warning three signs that are flashing that could predict a 20 stock tumble. Lets bring in a senior columnist with market watch. He joins us live now on the cnbc news line. Mark, good morning to you. Good morning. You say the three warning signs are excessive bullishness, significant over valuation and divergence of different sectors. First of all, why do you get the sense that there are too many bulls . Couldnt you have said that at the beginning of 2011, too . Yes. I should say, before i discuss that, im relying very heavily on Research Done by hayes martin who works at market extremes and his sole focus is on market extremes, turning points. Hes found that any one of these factors alone does not end of increasing the probability of a decline all that much but when you have all three of them together, that is what triggers the expectation that it will have some sort of pullback. And youre quite right, weve had too much bullishness for a few months in a row now. What defines this . Is this anecdotal . You feel like too many people are positive . He looked at a number of indicators and the survey of advisers and indeed it was above the danger level on their survey by the end of the december. Weve had eight months now in which the market has been at or close to the dangerous level of sentiment. That really makes his point that sentiment alone, though it is a dangerous signal, is not reason enough to give up on the bullish trend. When you have all three together, that according to his work, suggests that theres a higher probability of decline. When does his Research Show the last time that we saw a convergence of all three of these factors and what was the result . Well, in fact, there has only been six times over the last 40 years and theyve all been bear markets. The least decline, in other words, the least bad of any of the declines that have fallen in the wake of the simultaneously flashing of all three of these signals was 1998. You may recall we had a very short, a very deep bear market i think it was 22 on the s p intraday from earlier in the year, march april period through early october. He thinks that of all of the bear markets hes looked at, the one that most likely is to be the closest analogy to what were going to see now is Something Like 1998. I just wonder what the tenyear treasury yield was doing during all of these periods. I feel like you cant look at the stock market without looking at these low rates which have been low all year. How much can you rely on this Historical Information and i know you also look at seasonal information, which is what august does, in this strange world of quantitative easing where they are all in it . I asked that very question of mr. Martin when i was writing the column and he said he definitely is in awe of this bull market which has been beyond what you would expect by the Federal Reserves low Interest Rate. He said its because of factors like that that he thinks that the upcoming bear market will be near the less bad end of the extreme. Some of the bear markets that have occurred in the simultaneous firing of these indicators has been at the 50 decline. Hes not calling for that but he thinks well see 20 in the coming months. Mark, if hes wrong, hed add to the growing list of those that have been wrong about this for the last five years. I think a lot of people are fed up from hearing over and over again im talking about the retail market, people that are worried about these corrections that they keep reading about. Why do you think this is important enough that joe public or joe investor who might be on the sidelines now as opposed to saying, okay being sentiment got extreme so why should that be the end of the world . Thats a very fair question and its an approach we should take to any stock market prostig prostignaton. It was confirmed to be done in a disciplined and rigorous way and he looked at only the weed out the werelatively minor events where you have a blip in sentiment. Hes looking at a number of extreme events in concert with each other and found whenever they have been there simultaneously flashing, thats been a big warning sign. Does that guarantee that the market will decline . Of course not. On the other hand, now the phenomena is saying now im not going to believe any of the bearish evens. Thats true. You cant take that too far. Mark, its Provocative Research as everyone is trying to predict when the correction will happen. The dow went negative just a couple of minutes ago. Now down 8 points. Nasdaq and s p holding on to very slight gains. Talking down the markets. We will see. Stop complaining. That was the president s message to ceos. Thats right after the break. We never thought wed be farming wind out here. Its not just building jobs here, its helping our community. Siemens location here has just received a major order of wind turbines. It puts a huge smile on my face. Cause im like, this is what we do. the fact that iowa is leading the way in wind energy, im so proud, like, its just amazing. The ca illac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. E financial noise financial noise financial noise financial noise president obama has made it clear he wants ceos to quit complaining. That was a message in an interview with the economist magazine. Listen to his tone during the interview. Oftentimes, you know, youll hear some Hedge Fund Manager say, ah, hes trying to stir resentment. No, feel free to keep your house in the hampton and your corporate jet, et cetera. Im not concerned about how youre living. I am concerned about making sure that we have a system in which the ordinary person whos working hard and is being responsible can get ahead. And are seeing modest improvements in their life prospects, if not for themselves, then certainly for the next generation. Steve is the ceo of auto zone and office depot. Also, hes the president and ceo of the committee of economic developments. Steve, sounding a little populous there. It reminded me of the bankers comment which he had toned down. What do you think . I think theres frustration on the part of the administration and with congress that the economy is not growing faster and jobs are for the being created. Look, after the economic crisis of a few years ago, you would expect a much bigger rebound. But our message is back to them that businesses right now are very uncertain. If you look at the number of regulations that are being passed daily, the tens and millions of dollars of fines being levied on businesses but more importantly the uncertainty about washington policy. Weve got 17 trillion in debt today and the policies that are in place will lead to very high gdp. Steve, can i stop you there . Everything is always uncertain. Its an executive job to lead during the time of uncertainty. What is really the problem . That is not a canard. You need to know what the level is. Look at dodd frank. 500 regulations and they are nowhere near being done. 50 new regulations and they havent even started. These add costs to businesses. Youre making capital decisions for the next 20 years. You dont know your costs and so youre sitting on 2 trillion with the cash on the Balance Sheets. You also have the highest tax rate in the world and, yes, a lot of people dont pay it which leads to an unequitable situation. This causes businesses to hedge and that cash is not being invested. Is it fair to blame the president for that . Because in his voice, you heard his frustration and that congress is not working with him, the house of representatives is not working with him. Dont you have to blame that . Listen, i think washington is not working with each other and this is something that we keep encouraging and they are frustrated with each other, they are frustrated with the state of the economy. I think what Business Leaders are trying to do quietly behind the scenes is we cant run debt up to 80, 85 debt to gdp. When that p has, investors will invest the 2 trillion. Until then, were going to skate side ways so it comes back to government policy and government and business need to Work Together. Steve, what the president seems most upset about is he thinks ceos say one thing publicly and then either push for another in private with him or have their lobbyists pushing in another direction on capitol hill. So what would you say in response to all of that . Is that just status quo . Is there something new or different or is there a specific example that comes to mind these days . No. Look, i think its a real issue. You have businesses through lobbyists and their own washington staffs trying to get tax breaks for themselves and their industries. This is why i think all Business People need to rise up in the name of sustained capitalism and advocate for business as a whole and say, look, we feed to lower the tax rates but we need to eliminate a lot of the tax breaks and level the playing field. These are the kinds of things that i think businesses need to do in order to stage people in the u. S. Interests, not just their own interests. Steve, thanks for weighing in on the topic that everyone is talking about. Good to see you, steve odlond, former ceo of office depot. Now lets send it over to dom. Dom . A couple of companies are working on experimental ebola treatments. Its tekmira. It opened strongly in hopes that a trial of its ebola treatment would be reviewed by the fda. It was put on a clinical hold last month. And then theres biocryst to treat a Broad Spectrum of viruses, including ebola. You can see the shares are still up 3 . Still, interesting now the ebola trade, a lot of traders trying to find a trade or view, if you will, kelly, on what is happening in west africa. D ochl m,om, thank you. Coming up, formmcteer. And thank you for your bravery. Thank you colonel. Thank you daddy. 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The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Welcome back. Lets get over to the cme group in chicago. Rick santelli with the santelli exchange. Rick . Reporter thank you. Id like to welcome robert mctier, served on the fed from 99 to 2004. So 13 years, bob. What do you see thats different with the janet yellen and even ben bernanke fed versus the fed you left before the crisis several years before the crisis . Yeah, it will be almost its almost ten years since i left, rick. Back then, if you had told me that we had 4 gdp growth and 0 Interest Rate policy, i would have not believed you. Its sort of like the boiling frog. We made this transition so gradually, we dont quite realize how much has changed. Reporter i love your boiling frog analogy. Lets leap forward 20 eyears. Do you think that the books written about the Federal Reserve from the period of 07 to basically 2014, maybe 2015, is going to be a story about an institution that was a bit out of control with regard to the power that it saw, it needed to take, and its opinion as an institution during the credittight years of 07, 08 and part of 09, or is it going to be basically a manifesto of how the fed turned into an aggressive and stayed aggressive franchise . I think it will be more the latter. The fed was late recognizing the seriousness of the situation in 2007. But i think mr. Bernankes actions in 2008 and 09 probably saved us from another great depression. Im very supportive of that. I think the question is, are we staying a little too long . Staying too easy too long . But i think mr. Bernanke will get very good remarks marks for what he did during the crisis period. Reporter well, you know, we could argue about the counterfactuals of whether the fed should have done everything it did. But lets stick with the point of maybe outstaying the weakness and crisis with regard to the economy. I know that the tapers going to continue, and were not going to see any more quantitative easing. But zero Interest Rate policy as you referenced, just boatloads of unintended consequences. But it must be more nervous for the fed to acknowledge a balanced approach. Do you have any reason not to see them in a more flexible balanced approach . You raise rates maybe close to 1 , 1. 25 and then the watch the economy, tweak it. Why cant they be more fluid . Actually, ive never quite understood why the quantitative easing had to come to an end quite a while before Interest Rates could begin to normalize. I think Interest Rates could begin to normalize last year. It probably should never have gone to a quarter. A half to one or one to one and a quarter is very low. And i think then soer we get to that, the better. Reporter last week everybody was talking about Milton Friedman had a birthday. And you were a big advocate and follower of his teachings. My final question, the final 40 seconds, i know inflation to deflation is always a monetary phenomenon. But that doesnt mean we cant mislabel it. Im sorry, i look at europe, and i think that Central Banks have caused the downward pressure in prices. I dont think its labeled as correctly. Your thoughts . Well, europe may be entering a triple dip recession. And ive heard you talk recently about the dollar versus the euro. And you think it may be more Euro Weakness than dollar strength. I urge you to look into the wadings of the dxy. Europe is way overweighted on that index. Yeah, it is. Listen, were out of time. China and mexico arent even in there. Reporter youre right, its very, very euro centric. And on that thank you for taking the time this monday morning. And sara, kelly, back to you. All right. Ill take it from there, rick. When we come back on squawk alley, former hp ceo Carly Fiorina joins us. You wont want to miss this. Back in just a few moments. Good morning. It is 8 00 a. M. At disney headquarters in burbank, california. 11 00 a. M. Here on wall street, and squawk alley is live. Here i am doing everything i can moving on to what i am pretending im a superman im trying to keep the ground on my feet it seems the worlds falling down around me good morning. Im kayla tausche. Carl quintanilla is off today. That was superman by goldfinger, some late 90s. Joining us, jon steinberg, jon fortt is with us. Guys, we have a busy hour to get to. First up this morning, president obama has an Important Message to ceos. In an interview with the economist magazine, he says they should quit complaining about regulations and show greater social responsibility. Lets take a listen. The complaints of the Corporate Community with a grain of salt. If you look at what our policies have been, they have generally been friendly towards bes