Transcripts For CNBC Squawk On The Street 20140818

Different alarm. Often a critic, Rupert Murdoch takes a shot. Google with harsh tweets about privacy. Family dollar at center of a bidding war. Dollar general announcing an offer to buy rival discount retailer for 78. 50 a share in cash, total transaction valued 9. 7 billion, counters dollar trees 74. 50 a share, cash and stock bid. So much, jim for not everybody working in late august in the summer. Somebodys working here. This is interesting. This was what we first thought would happen. Exactly. Surprised that dollar wasnt involved because its a better fit. You can tell from the stocks reaction, people agree. I like allcash bid. Lots of overlap in the two, youll be able to take out more cost. Thats what we like about takeovers, consolidation and cost taken out. Even icahn in Family Dollar and precipitated all of this at least public conversation we know discussions with Family Dollar and dollar tree had been going on for some time before icahns involvement. He himself thought that Dollar General was going to be the best suitor from the getgo, they were having a ceo issue, a guy who was retiring. And that sort of threw the other dollar in the mix. I keep hearing that the guy was a ham let figure, like to be or not to be, you know carl. This made so much sense, was it kind of an extension crisis or new ceo coming in so dollar gen caught unaware . When i look at whats happening in retail, theres a vast middle, walmart, target, targets thinking about opening up more hours, i mean, no it aint more hours, its more people. I mean this is the segment that you want to be in. Some people believe, people ive been speaking with, that the Dollar General ceo said he was going to retire, hoping to put off the deal with Family Dollar. So confusing with dollar, dollar, dollar. With Family Dollar, hoping to come back maybe and get it for a lower price. Thats not going to happen. Now obviously dynamics have change a little bit. Even with this new offer, its far from over. Far from over. Even because its a higher price does not mean its a done deal. Dollar tree comes, makes its bid all cash. What if someone else lurking. What if dollar tree comes back . What if Dollar General, which says it has is going to divest 700 stores, maybe thinks it has to do more than it doesnt want to to that, it can walk. Lets bring in david faber on the phone who has more insight into all of this. David, based on who youre speaking with how you know the story, your thoughts, putting into context here . Good morning, guys. You know, day one, jim and i were sitting there talking about and i reported of course that Dollar General was surprised by the dollar tree deal. Very important than confirmed by rick in a conversation with high had earlier this morning. Given that, and given the last few weeks under which theyve heard from so many of their shareholders expressing their desire to see Dollar General make a bid, benefits they believe considered upon Dollar General if they did so, they have moved from what seemed to be a rather slow pace, as you pointed out, scott, to a potential deal to deciding they had to come up with the top here. My guess, it gets rejected by Family Dollar. I dont know that to be the case but that would be expectation i have though dollar wise its above the other deal. In fact, i think the lack of cash, the lack of stock in the deal may be something that we see change. There is a desire on part of Family Dollar shareholders, i believe, to be able to participate in the synergies that will improve as a result of the combination. Therefore my expectation might be if you see a higher bid which will need to happen to actually carry the day it may have a stock component down the road when Dollar General, i think, will ultimately win. Well have to wait and see. Dollar tree, highly levered Balance Sheet. For them to compete here, i think they might, jim, need to find a partner in some way if theyre going to move up significantly from 74. 50. Great call. I think that dollar gen, again, you can make a case when you look at what the two companies, well, why is dollar gen up . Wall street said this was the natural. The whole time almost as if Dollar General was saying, its lets see these two guys, maybe they duke it out, maybe we come in. But this combination has been one i never thought dollar tree was going to be involved to begin with. Natural, Dollar General, weve talked about it so long on the show as you know there were rumors. But oftentimes i was in a position of saying, no, theyre really not talking. But they always thought it was there for them. And the decision, as scott pointed out to step down, came into the mix here i think. But when you read the proxy, which was just out, we were talking about last week, you see Dollar General did not know. Of course dollar tree was in advanced negotiations and kind of believed eventually the deal would be there for them. As we pointed out last week when we read that language i said to you, only get one shot. If you lose this opportunity, youre not going to get another one. The other david, i love your insight, too into this other issue that seemed to emerge from the filing the other day, and that is that while Dollar General may have been considering making some kind of bid, they may not have wanted to negotiate whatsoever with carl icahn involved in the mix at all. And im sure you have thoughts on that topic as well, because i found that very interesting, and im sure you do as well. Yeah. Listen, you know, i kind of you know, scott, has made a lot of money quickly in the name as a result offing size in Family Dollar, sole down the position as we also know, choosing not to play the juror here, deciding to use capital elsewhere. I dont know how much, if any, Dollar General he owns or whether hes a beneficiary today, as we watch that stock most likely go higher, as its Investor Base response p positively to the prospect of acquiring Family Dollar. Pelsto the original name in 2011, still in there. Theres a lot more to come, would be my sense. Family dollars not going to say anything at this point. There is no shortage of i guess tension between two companies to a certain extent, the best way to view it. I did bring it up with the phone call this morning. He says its all water under the bridge and want to leave the water under the bridge. Well see what happens in terms of him and the family, of course, Family Dollar. And that will be continuing to be jim, in a management position in the combined company with dollar tree. The guys got nine lives. Ever a moment where walmart sits back and says, or target, this is the area amazon cant kill you this that is price point amazon cannot afford to play. We have to just instead of spending billions on websites, lets just go, game, set, match, own the dollar segment, not justify the 7 to 10 segment . You know that would be a departure for walmart to enter into a hostile, contested bidding situation, not to mention they have time and again they want to develop the business organically. Dollar general, given the synergies available, isnt in a position to pay a high price. Not that they dont have the need perhaps, jim, but they seem to be going about it in a different way. My sense is this is where the thing sort of ends. Well see what dollar trees capable of doing, given levered on the Balance Sheet for the original deal. One think i question, do deals happen like this because youre away . Yes, ever time. Hes not really away. If i was in today, as i originally planned, im sure nothing going on. Not that we wouldnt have plenty to talk about. Just incredible. Get back to your vacation, whatever youre doing. But thanks for calling in. Appreciate the insight. Into this developing story. Thanks for sitting in. See you tomorrow, jim. Talk to you soon. This deals incredible. What happens is, people at home are so used to seeing, how much will Dollar General be down this morning because theyre upping, no. Because people recognize, if you want to grow your business, youre not going to grow it by putting up more stores. Youre going to grow it by shutting stores of a combined company. I think that the headline clearly is, this is only the beginning, as i said and david certainly said, remaybe mains to be seen. Great point throwing walmart into the mix. From a regulatory standpoint, Dollar General being the biggest and Family Dollar, if youre saying wait a minute, how could that happen . Youve got walmart getting smaller. Right. Theyre the ones competing most directly with these dollar stores. Regulators will say, this they can all compete together. There was a New York Times oped or wall street, i forget which, saying this would be a mistake having dollar gen merge because we need competition. The reason i inject walmart, when i go over the walmart call, which was nothing to write home about, one area theyre doing well is neighborhood store. Neighborhood stores, yes, its really what david says, he nose walmart better than anyone in the country, quite a departure for walmart to do anything. Guess what, walmart needs to do quite a departure from anything that its doing. Well follow that story. Any more developments uhoh. Kate kelly. Breaking news. Kate . Scott, breaking news at point 72, which is the Family Office that survived s. A. C. Capital, the wellknown hedge fund. The number two executive, and longtime deputy to steve cohen, is stepping down today abruptly. Hell be replaced by Douglas Hanes who joined the firm in february as managing director of human capital, hiring of course a priority in recent years as the firm faced regulatory and legal issues and late last year, paid a large fine for Insider Trading charges to settle those totalling with civil and criminal penalties 1. 8 billion. Hell stay on to the end of the year to ensure orderly transition. This raises questions about the issue withstanding at term or regulatory chapters. The only thing outstanding is a civil case between cohen and the s. E. C. Which is yet to be settled and the u. S. Attorney says investigations are continuing. One note, ive just got aint hold of internal email from steve cohen talking to employees about the move and he says its mutual and amicable. He says 2008 financial crisis and 2010 aftershocks tested us and we were rocked by revelation of Insider Trading by former employees. Describes this as having been the toughest chapter in the firms history. Steve cohen, you rarely hear from directly. All right. Kate, thank you so much. Kate kelly with latest there. Shrinking firm. Best to run as a family organization, stay out of the crosshairs. No one wants the crosshair of the government Justice Department. People a. At home have to recognize the Justice Department calls, its like, there goes my life. Yeah. Its like if e. F. Hutton calls, people listen. Remember that. Coming up, Rupert Murdoch sounding off on twitter about google. Wait until you see what he tweeted. Well fill you in. Futures, there you go, looks like its a big open on the street. Dow with implied open, up 100. More squawk on the street live from post nine at the New York Stock Exchange when we return. Fd where the reward was that new car smell and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com futures up sharply, as we said this morning, as the threat of escalation of tensions between russia and ukraine appear to be easing. Worries about the crisis resulted in a volatile session on friday in which the dow fell 138 points, before recouping most of the losses. Stocks finished the week on the plus side. Nasdaq closing up 2. 2 , its biggest oneweek advance since may. Were not getting good stuff out of russia. Tensions are easing. On friday, the stock dropped like a stone on a headline. Its a little bit tiresome to have sloppy reporting. Convoy attack, no convoy attack, driven out rebels, rebels doing okay, russia about to rescue rebels. Were trading on as if we know something. I thought look, there was a little bit of a notion that merkel talked to putin, two sides are talking. Can there be as much talking at the same time have a hot war . Well, yes, you see the japanese diplomats going down the steps right before 1941. The fact there is talk is making it so theres a recognition maybe something could be happening that is recognition that maybe theres a stalemate, and this market as much as we like to think its about jackson hole, the Federal Reserve, as much as we like to think its about yellen, its as much about russia ukraine. Going to kiev, i ought to have ply apple, kiev weather. Honestly, were fooling ourselves. This is all about kiev. Its difficult to get a story out. We watched germany up. We saw the ruble go up, give peace a chance. Could you blame people for saying, you know what, i made a lot of money in the market last year, this year hasnt been that bad either. Why bother . I am out. I watched biogen, celgene, regeneron, these Companies Keep winning, biogen, new m. S. , gill add look like defeated patent challenge, regeneron, the drug works well with statin. Btk, incredible. Its where the stake is. Btk. You made the point on friday night, i believe, youve got to know when to ring the register, right . If you had some big gains, you cant fault people for seeing headlines and all of the stuff, its time to take stuff off the table. Im doing all oil on mad money stocks have fallen so bad. You did have to ring the register, oil did collapse. If oil stabilizes, 95, those stocks are going to be good. We see buyers coming in, schlumberger, last time we heard schlumberger, 118 target then the stock goes down. Ringing the register in oils was good but you might have to circle back to stuff that go overly rung from the register. Youll talk about energy. You had a leadership group, stocks doing well, sold off. Some peep people talking about maybe theres a circle. You have go back. To that sick ter. Nat gas, its cool. I thought i ought to have a coat on. I wore a coat for the a. L. S. Challenge in part because it was chilly out. Yeah. Also because it was more standout than the golf shirt that you wore. A golf shirt. That was weak. I do think, in the end, yeah, you know, im watching stocks go up that are speculative. Its a tech myra note, suntrust, more than just ebola. Ive seen too many situations right now where people get excited and it would be good to ring the register except biotech, an endless amount of money going. People ringing the register, monster beverage, too soon. Thats a good situation. Our buddy, looked like he was going surfing. I had my dress pants on. The idea that you should do that challenge with stuff, if i could throw you in a pool, yeah, he was ready for it. The idea was if not, it was zaina. Stay focused is important. Cramers mad dash. Another look at futures. It looks like its going to be a big monday on wall street off the open theres the dow. Plus 96. S p and nasdaq following suit. More squasquawk on the street straight ahead. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. 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. We do . I took the trash out. I know. And thank you so much for that. I think we should get a Medicare Supplement insurance plan. Right now . 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Time for cramers mad dash as head of the market own. A thin market a huge call by Goldman Sachs that says, semi cycle may be peaking, get cautious, is going to drive stocks down. And xpi downgraded to sell. Ma maxim. Hes been negative, and the groups been a smoke show. Youve got to be careful. But this is whats going to get people freaked out. Lots of fear of double ordering and hes saying that the Semiconductor Index could be down 10 minimum. Ouch. Yeah. Now do i buy on intel, right . Hows that worked out . I came in this within i did a lot of like mind i did a lot of mindfulness stuff, trying to learn mindfulness which kept me from saying, boy, hes been dead wrong. This is my find i would have opened the door. I did ten minutes of meditation, i think the guys dead wrong. Theres the Semiconductor Index. You and packer, you cant be positive on hewlettpackard. Circle back. Everybodys positive. People were negative about cisco last week. If the emerging markets turned, cisco would be on fire. As it is, i see tremendous demand for semis throughout the system avnet on recently, rick has 100,000 different clients for semis. Hes saying the opposite. Im with cisco saying things could be getting better. Im say avnet. Im not with the goldman call, optional to the gigantic incredible run on intel. Optional. I didnt use the word wrong. Right on the edge from i studied jefferson. He would have said this guys early. Jefferson might have declared it early. You now how hard it is like lincoln, with charity. Well be back right after this. [ intercom ] drivers, to your marks. Go [ male announcer ] its chaos out there. But the mclass sees in your blind spot. Pulls you back into your lane. Even brakes all by itself. Its almost like it couldnt crash. Even if it tried. The 2015 mclass. See your authorized dealer for exceptional offers who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. So the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with thinkorswim from td ameritrade. You are watching cnbcs squawk on the street live from the Financial Capital of the world. Opening bell is set to ring in a minute and a half. Jim, its still a market to be careful in. Friday was perfect evidence of that. I hate up markets on monday morning. Theyre like its just brings the bears out. Brings the register ringers out, because it is so thin. Ive watched Dollar General now its up 10 . Its like, guys, take a chill pill. Its not going to be up 15 today. Friday was a particularly ugly day because there was supposed to be war this within. War meaning supposed to be lots of heat there. And in the meantime, if were saying, isis is retreating from the dam, im going to go buy some intel, no, please, its not like everythings breaking positively. Take a deep breath before you come in higher. The markets overbought here. Situations that are, you know, breaking and developing all over the globe far away from the United States. Hard to get a real realtime handle on exactly whats taking place. Weve seen the act of a simple headline, jim, to move the market. Theres risk up and down depending what side youre on. Two fridays the market was up almost 200 points on the headline. I like London Housing going down in price, chinese housing going down in price. We need the housing to cool. Somethings going on in china thats positive that no one wanted to talk about. Well, there goes the bells. Youre watching the opening bells and the s p 500 at the cnbc realtime exchange. Here at the big board, owner and operator of natural gas, crude Oil Infrastructure assets. At nasdaq, fastenal. You know them well. Great gauge about the industrial economy. I have to tell you, when you see Something Like these midstream stocks have been strong and thats about trying to get oil and gas where it can be used as opposed to where it is. Half of where we refine things, its jammed up. Louisiana we didnt get the big heavy crude down, thats what they set that up for. Indiana and northeastern canadian refineries working overtime. Everything is wlong rong in thi country in terms of the where the energy is. Union pacific train crash, we need Union Pacific to ship swand oil. Were in disarray where oil needs to be and companies are scrambling. Thats the Kinder Morgan deal. Why i like kmi. Rich kinder said weve got to get the stuff tweeting about that over the weekend. Rich kinder said this is a revolution. Most interesting thing he said last week, i said are we going to be continental or domestic energy, selfsufficient . He said, be careful. Well be exporting a lot of oil, oil in the this is just a market influx. We are changing the Worlds Energy dynamic. Right in this country, dan dicker on squawk we have so much oil in the country. The brick benchmark will be going away. All west texas. Happening faster than people realize. Update a stock, Family Dollar, this morning 79. 60. Of course, Dollar General making that bid of 78. 3507 this story, far from over. Only the beginning. However you want to phrase that. Theres more room to go here. This call, jim, Credit Suisse saying, own both home depot and lowes ahead of earnings. Those stocks have been so good. Both had breakouts last week. People are just forgetting the fact that spring planting season was late, maybe it didnt matter. They dont seem to care Owens Corning didnt have a good number, whirlpool didnt have a good number. Stocks going in with expectation that is macys like. Three firms tell you macys going to be great. I like both companies. When you have firms constantly saying things are going to be great, its almost impossible for lungren to do the number he had to do. Is the ceo of home depot, if the stock were at 81, id be pounding the table. 84 wow, ive got to be careful. Expectations are in home depot and theyve got to do a number that is just extraordinary at the alltime high here. So be careful, piling in at this level. Part of the issue here is, as most retail report came in negative, excuses came out. People may not be spending on apparel because theyre spending on the cars and spending on their homes and thus the expectations for a home depot or a lowes seem to get ratcheted up as overall expectations on other parts of retail seem to be going down. I like the groups like airlines, in the penalty box, churning went on, now starting to go up. Home depot never had the set back. Take a look other than williams sonoma, thats home goods too, nordstrom quarter, i went over that quart this weekend, that is about spending billions of dollars in technology in order to make it so people want to go to nordstrom. Com which means they doesnt go to the stores which means you dont get to interact with those salespeople. The half yearly sale that they do, right, for men and women, here and there. Lots of stuff on sale, got to be there to see it. New york times. Com became to so great, i said you know what . Im not going to buy the paper any more. Ive have newyorktimes. Com. Home depot, yes, they have homedepot. Com. Its complimentary. I wish analysts would stop squawking how great its going to be. The great ceo of home depot was not a promotional guy. He does not come on and just say, listen, everythings fab lups his style is to say here are the numbers, interpret it. Youve got to be at 84, its got to be like, look, we see much more room for margin expansion. I dont know. Speaking of expectations going up, apple, your note, rbc reiterates buy. Youre like, here we go again. Look, one of the things that tim cook has stressed over and over again you dont know how well apples going to do. So stop the game of gaming apples earnings. Never going to stop. You know what. I think its a fools errant. You dont want to do it. Its like betting on a preseason game. I mean, hey like tonight, you mean . Referring to tonight, by any chance . I dont you cant bet on a preseason game, you cant get on what apples going to done would you have out in the niners would do poorly . Were trying out players. Apple woe dont know how theyr going to do. Who cares about this quarter . You cant know what theyre going to do because apple wont let you. We dont know what theyre doing with the sapphire screen because your screen keeps breaking. Stop gaming apple its not ga gamble. We dont know if the skins will play cousins. Well play rg3, thank you very little. Keep rg3 on the ben. So he doesnt get hurt. Play maybe one quarter. No, three series, okay, three series. Ill take that. A big game. Johnny football. We do. Johnny football. Cleveland has to get a full team besides just a quarterback. Im saying this idea that, ill buy apple because rbc knows something. Rbc does not know anything because tim cook doesnt let you know. Youre not allowed to talk about being a supplier at apple. Look, then you know cooks guy goes out, a few months back and says weve got the greatest pipeline in the history of pipelines. Kinder morgan has the best pipeline. His name escapes me. I can tell you if youre playing apple for this quarter waiting for someone in my ear to tell me. If youre trying to game shipments youre not going to do well and theres moves parts, whether ipad or the phone, and this may not be a crucial quarter. Stop it, all right . Eddie cue, eddie cue. I was going to do a Google Search and segue into rupert and dole. Eddie cue. Knows a great deal about apple and analysts dont. The code conference, when he said like the greatest pipeline in the history of the pipeline. What, im going to tell him he doesnt know what hes doing in hes mr. Pipeline. I dont like analysts playing a game that gets people sucked in. Hows amazon doing . Amazon tries to be opaque. So youre going to be able to tell what amazons going to do . You cant. I mean, tesla changed the warranty this weeks end, and its does anyone care . Teslas a charmed stock. Talking about stocks teslas up. Changed warranty, its up four. It done matter. We are in some weird moment. Do no wrong. Why is gill add only one a dollar today . Thats not right. See what it does now. Mary tohompson on the floor of the knock stock exchange. Strong move for the markets in the early going. Dow up 98 points. Right now up 94. Strength across the board for stocks with exception of semiconductors, theyre weaker today. Seeing gains, slight gains in dollar, treasury yields moving higher. We are seeing weakness in crude oil. These are the groups that were keeping watch on. Housing stocks, retailers and of course, watching what happens to jackson hole at end of the week with key speeches by yellen and ecbs draghi. Home builders index, reason were watching this group we get key data, including Home Builders confidence. As you can see, Home Builders rallied off the low of the year, starting at beginning of august, theyve made a strong move since then. Retailers of course also in focus. Bad week last week because of disappointing numbers from some department stores. This week the storys the teen retailers. Peep arent expecting a strong move. Theyve been moving sideways since the beginning of the year, weaker last week. Take a look, some of the things driving the markets today, asia up overnight, europe strong as well. Primary reason for that is that easing tensions in the uk, this yukraine. Volatility index moves lower as investors say it doesnt look bad today. Ukraine has been pushing the market around so in the event theres any news, it could be perceived as a negative it could cut the market rally. Quick check of stocks. As i mentions retailers in focus. Lowes and home depot, reporting this week. Credit suisse saying buy them ahead of earnings, home depot on tuesday, lowes on wednesday, expected to beat numbers. And some of the teen retailers, they are higher ahead of earnings, american eagle, buckle, aeropostale. Concerns about the group because the consumer doesnt seem to be going shopping the way they used to. Thats putting pressure on retailers. Biogen, the fda approved a longlasting m. S. Drug, supposed to take the place of its topselling drug. Its stock, as you can see, up 4. 50 on that move. Dows up 102 points, nice move to the upside. Scott, back to you. To chicago and the bond pits. Rick santellis at the cme. Rick . Thanks, scott. You know, the best thing to do is look at twoday charts. Lots of speculation and lots of markets theyve had lots of liquidity over six years. Its just the weekend effect, okay . Look at twoday charts of bunds, down in yield, into the 90s, back up to 1 . Two day of dax, didnt recover all but you can see how much of the anxiety of a weekend there was. Of course with all of the tweets and social media, nobody knows whats going on. Weekends are treacherous for speculators. Lets look at twoday of tens. Same dynamic. Here we sit, 2. 36. Whats going on in maybe stories that had little attention friday, like we didnt get nine in a row on university of michigan where it had 80 handle. It slipped below 80. Or the worst, biggest single month drop in Treasury International capital flows since 78. What was it . Nobody remembers. I do, minus 153. 4 billion. Now, lets look at whats going on with flattening spreads which have kept you pretty much in the long treasury trade with weak data like i described and whats going on with over seas rate. Relative value trade, tens to twos low to 190s. Were not quite at fresh 14month low narrows for the flattening trade but were very close. Foreign exchange, one would think if the real friday jitters had to 0 with going on in the Market Investors are effect in a fundamental way, look at euro, look at the scale on the right, this is a monthtodate, going nowhere quickly. Judge, back to you. All right. Rick, thanks so much. Check out the action in commodities. Bertha coombs at the nymex. The issue here is headline risk or headline rally. Today its about pulling back with the headlines having been more benign when it comes to the International Situation with the kurds having taken back the mosul dam in iraq and the ukraine situation, pulling back, more production seen in libya. We are seeing a pullback in prices. Steven shork noticed beyond the headline risk if you look at onemonth chart of the wti nymex, we are seeing greater volatility over the last four weeks up 45 . One of the things were seeing intradate trade now is used to be about a dollar or so where we would move. Now its more than 1. 50 a day. That is something to watch. One of the situations is if we dont have geopolitical headlines overall, most analysts are saying the situation here in the u. S. Is bearish. We are awash in crude producing a lot. Refiners, with a couple of them out, we still have a lot of gasoline because we are coming to the end of the peak demand season. Back to you. Bertha. Wti, cant lift. Even in the face of all of this stuff . Iraq, maybe they were going to lose the southern oil feels. Libya, nigeria. Russia. People worried about bp, royal dutch, what happens . What happens during this period . West texas intermediate keeps going down. Amazing story. This has to do not with demand side, as so many say, it has to do with the supply side and no place to put it. When i hear rb and energy, they need to find salt domes underneath houston replace all of the oil, this is extraordinary. You said talking about this all week . Doing a week on energy. Ive got range resources and danberry, range, natural gasp we cant find places to put. We are flaring more natural gas in this country, burning it off, than we are using it. These amazing stories. And a lot of the reason you dont hear about it because its not like new york is Energy Central here. Yeah. Its not. Well, rupert plmurdoch takin aim at google. Weapon, a weekend tweet. One of 50 cents album titles get rich or die trying. So here with the multiplatinum rapper has to say about his move in the tech world. [ male announcer ] dont just visit hawaii. [ squeaking ] [ water dripping ] visit tripadvisor hawaii. [ whistling ] with millions of reviews, tripadvisor makes any destination better. Well, Rupert Murdoch is known for sounding off about google and now hes taken it to a new level. Yesterday, murdoch tweeted nsa privacy invasion bad, but nothing compared to google. Oh, please smart guy. But remember, google withdrew itself from china rather than playing with the prc which has created incredible opportunities for everybody from j. D. , ali baba, bay due and that was a statement, freedom of speech, costs us freedom of earnings. I dont think google nsa, which they were better at their job. Nsa tends not target good guys. Google is not targeting anybody. Hes he said things about google in the past. Ive seen some people this morning sort of ridiculing this most recent comment based on some of the past issues regarding privacy. Yeah, the pot kettle, pot kettle. Google has destroyed like amazon destroyed retail, google programmatic selling has destroyed the journalism business by sucking out the margins. Advertisers rather give google a buck than give anybody else three bucks, including any murdoch operation. Murdoch is murdoch has a good point, google is so powerful but its not necessarily theyre the nsa. Its just theyre just powerful and a price wrecker, not a price creator. Diana olick has news on nahb, housing information for us. Diana . Thats right, scott. The National Association of Home Builders Sentiment Index jumped two points in august to 55. The expectation was for it to rema remain flat at 53, a jump to the upside. Third monthly gain since january of this year. Index measures sentiment at a 50point level. Anything above 50 is considered positive and it jumped over into positive last month. So again, up at 55 is a surprise to the yuch sione side. Current sales and sales expectations were both up two points to 58 and 65, respectively. Buyer traffic still on the weak side, did gain three points but at 42 which is negative territory. Now, regionally, midwest took a nice leap in home builder confidence, up seven points to 55 into the positive. West up four points to 56. Northeast up two points. Weakest in confidence 38. South one point jump up to 52. Good surprise to the upside on home builder confidence. But also a report from fannie mae saying their outlook for home build in second half of the year and housing in general has, quote, deteriorated, also lowering their forecast for home sales for this year, and they say that 2015 will, quote, not be a breakout year. Fan any may not this pessimistic. Sprid surprise to. Upside on the builder, surprise to the downside on fannie mae. Thanks. Lower rates, lower prices in homes equals more buyers. Interesting the northeast has not had the decline in the rate of change. People in new york, which has gotten out of control, but much of the northeast has not come down in price. Many areas that diane mentioned, midwest, theres been a nice stabilization to even a bit of a decline in the cost of housing and obviously the Mortgage Rates are just pretty bountiful. Going through the home builder stocks as youre speaking. What are we to make how to trade these things when you know feelings about the Housing Market are all over the place. A bit of good news and then terrible stocks. Fannie mae throwing cold water. Fannie maes under siege from lawsuits about whether they should be privatized and who belongs to gets the preferred coupons. I would point out that, every time you buy housing stocks, every time you buy, someone downgrades them. Its really hard. I saw horton had a decent chart, maybe take a shot. You dont have to take a shot i mean, look, i believed that lower rates and lower prices of homes is bringing in buyers. But thats not necessarily lower price, its not that good for leonard toll. They got to make their margins. Theyre not going to get that. Stop trading next with jim. Well be right back from post nine. A brand new start. Your chance to rise and shine. With centurylink as your trusted technology partner, you can do just that. With our visionary cloud infrastructure, Global Broadband network and Custom Communications solutions, your business is more reliable secure agile. And with responsive, dedicated support, we help you shine every day of the week. Centurylink your link to whats next. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. Hurry in this exceptional offer ends soon. Habeing able to pay as we goo rawas crucial for a start up. S. Hurry in this exceptional offer ends soon. Having to fork out a lot of money up front was risky. You can launch a feature really quick, and if the feature doesnt work, we havent lost anything and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Ideas can be tried and tried again on the ibm cloud. The ibm cloud is the cloud for business. It can help your business save money. False. The truth is when you compare our Fastest Internet to the fastest dsl from the phone company, comcast business gives you more for your money. Why pay more for less . Call today for a low price on speeds up to 150mbps. And find out more about our twoyear price guarantee. Comcast business. Built for business. Time for cramer and stop trading. Well stop with ge. Stephanie link, biography on your show last week, ge one of most frustrating stocks weve encountered. Credit suisse initiates with a buy, could be margin improvement coming. Top line was strong, margin wasnt great. September 10th analyst oil and gas meeting. This is one to watch. Its been behind the a lot of the stocks, caterpillars coming back today, ala friday, where they got they got just crushed line at ge call and say its the soul of the market. The stock can go up, then what people are saying, you know what . I kind of believe in the industrial i believe the gdps going to get better worldwide. We talked earlier about gdp, john faraci, the excellent ceo of ip on squawk, talking about prices up 1 . Ge needs better growth to get those margins to be better but it could happen. It could happen. Ge getting a bit of a bump. But not what i would expect. Not what i would expect. So the other industrials are getting more of a lift than ge. Quicksand feel to ge. Wow, ill hold back. A nice call by the way i should mention, Credit Suisse pushes unp, had the terrible accident, but unp behind the market. Ge behind the market. Coming up tonight . Were spending the week talking about oil. Ive been waiting for oil to come down. Oil has come down. Look at range, one of my earliest recommendations, natural gas, and denberry, a disappoint. But lets see. Looking at stocks, which is fracking sand, the revolution is real. Its not televised except on mad money and this show. Its been fun. Great. Simon hobbs with a look at next hour of squawk on the street. The ceo of gulf oil, shale, where were going with oil prices why in retail bricks and mortar may be more interesting than online for investors. And the challenge has been set, gauntlet has been thrown down, ceo of carnival challenged me to the a. L. S. Ice bucket challenge. I will take the water from my good friend sarah and nominate three more as the world spins on. I make a lot of purchases for my business. And i get a lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare changes. When frustration and paperwork decrease. When healthcare becomes simpler. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. 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 back to squawk on the street. Road map starts with the markets. After fridays stumble, markets are in full rally mode to start off a new trading week. Geopolitical tensions pushed to the back burner, once again. You can call it a bidding war. Family dollar gets another offer, this time Dollar General comes in over the top of dollar trees bid. Is this the best and final . How much should investors be watching the Ukraine Russia boarder . Updates from a former ambassador to russia. Markets adding to gains. In rally mode for the dow up 135 points. Nasdaq at 13year highs. It has been reinforced by that report, released moments ago from home builder sentiment. Third straight increase has sentiment now hitting the highest level since back in january. The tenyear treasury yield, watching closely, after on friday it hit its lowest level since june. As you can see, yields ticking higher, 237 on the tenyear. John rutledge, chief investment strategist. Why are we seeing a rotation as equities continue to climb to records and this continuation of buy the dip on geopolitical tensions out of bonds, more reinforced than we thought . We have been seeing this tugofwar for some time, since january Political Risk has gone up through the roof. But its countered on the other side by the tremendous weight of the 4 trillion of bank reserved the feds laid out during qe. After finished with qe, reserves will be there, theyll push through into loans noosh deposits, spending and theyre showing up in firming economy and firming Inflation Numbers. I think the fed long term is going to win this story. But theyll be periodic corrections, as russia, pakistan, china, syria, loom in the news. And you have these questions now about valuations. I guess its nothing new. Bob shiller highlighting that, wrote on bubble says the stock market is expensivexpensive. What point do you have to worry about the stock market valuations . Its expensive today for todays earnings. Its not expensive for the earnings that are implied by the stock of bank reserved. You know the incremental earning that come out of a dollar of sales are double the returns the profit rates. And were seeing firming pricing numbers, firming labor markets. That means finally were going to get increasing Sales Numbers. And increasing Sales Numbers should be a big boost to the earnings over the next two years. But until those earnings show up, p es will look high. How far then if we accept what you say, how far can the market run from here . I think you wont have another 20 year this year, thats for sure. The markets up five and some change to date. But i think you can have improvements as the news comes in, like we saw today with the Home Builders. In particular, id be looking for the price and wage news, see if we have firming pricing. The big weakness in the stock market has been the lack of top line growth. All of the growth has happened in terms of rising margins. Now were going to see that reversed and were going to see pricing come back, rising margins and people will worry about inflation hedging which is why real estate should be the number one asset class now the biggest, the most liquid, most traded market in the world, which is clearly arguing against you and that is the treasury market with the yield on treasuries, where are we, below 2. 4 still. That that signals surely one of low growth, low inflation. Indeed. And the Federal Reserve believes theyre going to see low inflation as well because they think about Interest Rates, not about stocks of reserves and stocks of assets. But i think the flight to quality has been very strong, as you say. But werent you saying to us that in the future you will be able to get a higher stock market because earnings will be higher, i paraphrase you, companies will have Pricing Power because they will be able to grow revenues. Thats not what the bond market is screaming at people this morning. Thats exactly right. The bond market has been heavily influenced by Political Risk and the pushback into the dollar. I think well continue to be in the near term. But thats going to be off set and reversed over time by the firming pricing and wage growth and rising inflation. Its going to take time for that to happen. And between now and nen, there will be more comments like bob schiller, comments about the market being expensive. I think short term you want to worery about the risk, medium, longer term, two, three, five years worry about inflation and rising Interest Rates. Well see what janet yellen has to say friday speaking from jackson hole. Thanks for weighing in on this climbing market, dow up 126. Family dollar is at the center of a bidding war. Dollar general countering the bid on the table for dollar tree. Courtney reagan back at hq with more details on an interesting fight. This proposed combination is more what wall street expected as Dollar General confirms its made a bid for Family Dollar, giving us details today. Dollar general offering 78. 50 in cash for Family Dollar. Superior to dollar trees 74. 50 offer at the end of july, in stock and cash. Additionally, Dollar General proposed nearly double the amount of cost synergies estimated by dollar tree. The proposed combination will have 20,000 stores in 46 states with sales of 28 billion compared to dollar tree Family Dollar combination, yield 13,000 stores, 48 state and canada, with 18 billion in sales. Now wall street has long thought a Dollar General Family Dollar combination makes the most sense, similar customers. Dollar general ceo said in june huh we would retire next year, if the deal would go through he would stay until 2016. Its too early to discuss branning but believes Family Dollar would look like Dollar General. Dg expressed interest in a merger a few times over the last few years. Suffice it to say for someone involved in a process, we were very surprised by Family Dollars announcement with dollar tree. And ill go one step further if i thought the asset was in play i wouldnt have announced my retirement. Its water under the bridge. But Dollar General has to wait and see how Family Dollar responses. If dollar tree responds with a higher off somewhere what the ftc has to say. This is far from over. Courtney, thank you very much. Oil prices shot up early friday amid views of tensions with russia and the ukraine. Things took a turn. World oil prices down sharply, paring gains before the weekend not to mention nat gas prices down 20 since middle of june due to the cool weather in this country. Lets bring in the former gulf oil ceo, joe petrowski, welcome. Thank you. A different world where we are a few years ago when oil was heading to 150 a barrel. I know you want to talk about the very Strong Energy revolution in this country. But before we get on to that, is it also true that one of the reasons why oil is where it is is because the investment banks have pulled out of Commodity Trading and can no longer hype the market the way they did a few years ago . I think that is a factor, but i wouldnt i would not say thats the big factor. Its still a supply demand market. Our suppliers are tremendously, producing more oil than saudi arabia, almost as much as russia. And natural gass equivalents ovr a Million Barrels a day and going higher. Its a revolution. I think jim has always pointed that out on his programs, the amount of investment in the energy area hasek seeded what weve done in construction and real estate for the First Time Since back in the 50s. On the demand side, there has been real demand destruction on especially transportation fuel. Overall fuel has gone down Oil Consumption because of switch to natural gas, wind, solar. Really starting to take hold. Sure. On the driving side, gasoline demand is dropping so fast that one of the big issues in washington is how to tax Going Forward because taxes on gasoline have historically funded the Highway Trust Fund which has becoming rapidly depleted. We need to keep the roads and infrastructure up in the United States. Its fascinating to see, i mean you told one of the researchers the Energy Revolution here was real and implens. Where does that dream take us . What sort of country could this be . What is the caveat that youre mentioning here about lack of investment in infrastructure . How does that potentially hole back that dream . I think the crises in the middle east and russia and ukrai ukraine, i would like to see it not happen, is actually more bearish than bullish because its finally getting washington to focus that we can continue to drill in this country. We should be building pipeline. We should be investing in refineries which, by the way, there was a lot of interest in investing in refineries. Some of the good news in the Energy Markets, put ciko up for sale, mexico more inclusive to bringing in foreign capital to stop their decline in production. A lot of bearish things for oil. What that means for the United States i think is fantastic because the last time energy dropped precipitously i think every evidence is that were going to see wti at 90 or below and brent maybe will certainly be a premium five or six. But well see lower energy prices. And i think that is a tremendous room for the economy. Losing your satellite there. Well end the interview. Good to see you. Thanks for joining us, former gulf oil ceo, now Founding Partner of mccantor. Violence escalating between ukraine and russia, both sides blaming each other. Well speak to the former u. S. Ambassador to russia about these latest developments. Virtually all your important legal matters in just minutes. Now its quicker and easier for you to start your business, protect your family, and launch your dreams. At legalzoom. Com we put the law on your side. Welcome back to squawk on the street. Shares of biogen, the stock moving higher off of its highs on word that late friday the fda approved one of its drugs, long acting multiple sclerosis drug which the biotechs see as replacement. The stock up a percent on the days trapd back over to you. Thank you. Now the latest on russia and the ukraine. Ukraine acruisi kruskru accusin rebel of hitting a bus with rocket fire. There was progress made on humanitarian deliveries. Lets get insight from thomas pickering, former u. S. Ambassador to russia. Mr. Ambassador, welcome to the program. Thank you, simon. The bigger issue appears to be the Ukrainian Government forces seems to have had great military success over the one and closing in on prorussian rebels what happen does Vladimir Putin do in the situation . Kiev would like a rout of the forces sunday, independence day. Can putin stay silent or does he need to do more . Hes already moving. Immediate objective is to hang on to the donetsk positions that the separatists carved out and hes supporting, including last week with apparently Armored Vehicles and fighters. There may be exaggerations about the numbers but Something Like that has clearly happened. And a complicated question because, in the end, it will probably result in some political settlement and putin would like that political settlement to give him something he can call a victory because its important to his position in the eyes of the russian people that he continue to turn in the kind of nationalist exploits that hes been pushing for now six or eight months in ukraine. Interesting. There was a you know better than i, five hours of talks led by the french and germans dont appear to have got us very far. What in broad terms would a deal look like . Does russia get more of the ukraine . I dont think so, because the ukrainian position is not in a the ukrainian president is not a position to give them that. Particularly now hes got a rightwing opposition, which is threatening to march in kiev and which is going to cause him some problems on his own home front and so, the military stuff is going to go on. But the truth is that there will only be a political settlement. Each side is deeply dug in with widely opposing positions. That isnt going to come soon what happen we saw over the weekend with the Ukrainian Foreign minister and lavrov the efforts trying to work it. The convoy, its partly empty. My own view was that, one, it was a cover to move Armored Vehicles in last week, to see if it could take off what the russian were doing on the military side. Two, if its allowed through by the ukrainians, it would be a net benefit to the separatists who need food and who need some support. If it is opposed by the ukrainians, delays at the board or shelled by the ukrainians, it will increase mr. Putins possibility of pushing for a political settlement on the grounds that hes been mistreated by the ukrainians, that hes the wronged individual and it will gin up some support for him. Given everything youve just laid out, mr. Ambassador, how likely would it be to see increased sanctions from the west, from europe and the United States, on russia and therefore a harsher retaliation from russia, economic sanctions im talking about . I think thats very likely because that represents additional leverage which i think the west is now slowly beginning to gear itself up to use in light of what seems to be the stalemate and mr. Putins even more aggressive military stance. Perfect segue, mr. Ambassador, to my question which is, how much does putin even being fazed by the economic problems within russia, the fact these sanctions are taking their toll . Is he feeling any pressure whatsoever from the russian people who want him to appear strong and mighty but on the other hand hurting in their own right . I think that this is essentially for putin, an ability to play short term while ignoring the long term. Its absolutely necessary that the long term question, including the Energy Equation in europe, be addressed if were going to get mr. Putin to Pay Attention to the fact that he is leading with tactical victory, or thinks he is, to jazz up his popularity ratings but hes putting himself in a position where hes distrusted, where hes isolated, and where he could be economically isolated with the europeans to get smart and spend some time and money in reducing their energy dependence, what we hear about oil availabilities and the potential of iran coming on the market opened the door to that. But thats like a oneyear to twoyear proposition, something that wont happen right away. Mr. Putin in fact has torn up, shredded any credibility he has and hes not likely to get it back very quickly. Good to see you, sir. Thank you for sharing your analysis. Former ambassador to russia, thomas pickering. A rally in treasuries all year, as you can see, the tenyear as stocks rise selling off a bit today with yields slightly higher. Still, talking about tenyear below 2. 40. Longtime at pimco, john, a brave soul to walk in today and sell treasuries. Is that you . It has been the wrong bet for the entire year. Yeah, no, weve been tactti l tactically trading treasuries. Strong auctions last week suggested there was some real money buying into treasury and driving yields lower, concerns about geoPolitical Risk and, frankly, flight to quality. So that did create a bid in the treasuries, strong rally towards friday and last week. But the longerterm trend, certainly over the next coming quarters, im worried about inflation. I see a lot of shorterterm inflation indicators firing up, rentals here in the u. S. The u. S. Economy is driving inflation up, employment or unemployment down. And ultimately that means yellen will probably be moving sooner rather than later. But she hasnt indicated, john, shes worried about inflation in the least. What are you seeing that the fed isnt . Well, the year over year Inflation Numbers look pretty tame. But as lower inflation prints drop out of last years numbers, and the higheren flation prints that have occurred over the past three and six months start coming in, Inflation Numbers will be above target. There is certainly a possibility or likelihood that yellen will err on the side of being behind the curve. But we know ultimately that means rates would end up going higher than on a more deliberate, early, preemptive rate path. So, either way, it looks like tenyear yield and 30year yield on the way up. Jeffrey gunlock told me friday, 2. 35 is the level hes watching. We reach that you could go down to 2. 20 but does not see us reaching 2. Is that in line with the way youre thinking . Calls a benign jackson hole event on friday. Yeah, the jackson hole event probably will be benign. Yellen is expected to talk about labor markets and obviously the more emphasis on labor markets the more thought of lower for longer goes. But we did get down to i guess 2. 30 on friday afternoon, now back up to 2. 37. So you know, jeffs outlook, at least for the past 24 hours, has kind of been to prove but markets will move in either direction. Its hard to make money on tenyear treasury if the yields 2. 37 and even 10 or 20basis point yield on upside would wipe out the returns. Im sure is view is longer than a couple of hours. You get the point that hes trying to make, the momentum that can exist within the bond market if you reach a certain level and theres a geoPolitical Risk around the world, worries about whats going to happen friday, you can see rates tick lower. Yeah. Theres been some extent a Short Covering rally, as shortterm traders have tried to buy in their shorts and avoid the shortterm pain. But the Interest Rate path will be driven by fundamentals and fundamentally although the globe is weak, the u. S. Is strong. John brynjolfson, thanks for weighing in on that for us today. Up next, why selfdriving cars could be hitting the road sooner than you think. 25 years from now, people are expecting every car on the road to be selfdriven. Well, guess what . The future is now in this audi a7, press a button, take my hands off the wheel, we have a selfdriven car. The future of autonomous drive vehicles when squawk on the street returns. [ woman ] the cadillac summer collection is here. [ male announcer ] during the cadillac summers best event, lease this 2014 ats for around 299 a month. Hurry in this exceptional offer ends soon. Hurry in this exceptional offer ends soon. When im working, things can get so hectic. So sometimes i need to find an easy way to express whats most important to me. Like, with my crew, i use shorthand to talk to them and tell them what i need. And when i need to talk directly to my fans. But the most meaningful shorthand of all is the one i use when im about to drive x. Its an easy way to tell everyone that im about to drive. And i do it every time before i get behind the wheel. Use x to pause the conversation before you drive. Because no text is worth a life whether or not whether you like or not i was thrown off by the lebeau dancing autonomous drive vehicles are coming sooner than you think. Honor of cnbcs 25th anniversary, phil lebeau joins us with a look how autonomous drive vehicles chak the wnge the look. It was not intended to be on cam rap live tv. Which i should have paid attention. Hey, listen guys, selfdriven cars are coming. Audi a7, a taste after what were seeing in the future. Look at automakers theyre working on autonomous drive technology. Were going to see partially autonomous drive vehicles by the end of the decade. Global sales of selfdriven car will hit 94 million by 2035. What will it be like . Check this out. Mercedesbenz, we went out to r d fast in Silicon Valley a vision of the future, youll have a virtual heads up display as youre passing vehicles and theres somebody in your social network it will pop up on the screen. Youre not driving a car, dont worry about distracted driving. Head of the facility out there says early tests show this is what drivers want. We have actually brought customers into the simulators to see and experience actually autonomous driving and the acceptance level is amazingly high. So as soon as people experience it, they actually accept it. I actually believe that its going to be widely accepted, much, much quicker than most people think. Reporter for something way out there. By 2039, bob lu it z, former vice chair of general motors, he believes by 2039 our world will be dominated by selfdriven vehicles. His vision for the future transportation module comes within minutes of ordering it. Its streamlined and roughly 12 feet long. About the size of a fourperson golf cart. Hop in, tell the module your destination, off you go. You wont steer it or control its speed. Powered by highly advanced batteries the module headed to the closest freeway where youll speed up in acceleration lanes and join other modules going bullet train speeds. On the freeway, connected to the other modules with little separation. Rails burieded up the highway radiate electricity to power the modules above. Exiting your module breaks free seamlessly and slows in a series of deceleration lanes. Once your final destination, get out. The module leaves to pick up its next passenger or recharges itself nearby. Thats cool stuff im asked bob lutz, when you brought this up to people in the industry, whats their reaction . They think im nuts but he believes thats coming, that we will see fully selfdriven vehicles by 2039. Piloting us around on highways, recharging over rails within the road. I love the idea because im a terrible driver. Most people are freaked out its not safe, bill. Im all about selfdriving cars. Thats the selling point. Safe somewhere youll have a better use of your time. They just have to figure out how to regulate it. Phil lebeau, thanks for the vision into the future. Look forward to more. And maybe even dance moves. Why is that not surprising. Im terrible, yeah. Over to dom chu for a quick market flash on Proctor Gamble. I like to be the drivers seat. But Proctor Gamble wants to be drivers seat. One of the better performing stocks talking up news. Reuters reporting the company which was reviewing up to 100 underperforming brans for potential die vesture is likely to shed duracell batteries brand and shaves are brand. That stock up towards session highs up a percent in value on the day. Back over to you guys. A lot of speculation. Straight ahead, the chairman of eurasia group, david gordon will discuss what the geopolitical turmoil will mean for the markets. 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. Habeing able to pay as we goo rawas crucial for a start up. S. Having to fork out a lot of money up front was risky. You can launch a feature really quick, and if the feature doesnt work, we havent lost anything and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Ideas can be tried and tried again on the ibm cloud. The ibm cloud is the cloud for business. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Go to comcastbusiness. Com checkyourspeed if we cant offer faster speeds or save you money well give you 150. Comcast business. Built for business. Looks like no resolution in sight between russia and ukraine. The latest ceasefire in gaza set to expire today with no signs of a peace deal there. David gordon, welcome. Good to talk to you this morning. Great to be here, scott. To ukraine first. Hows this thing going play out . For the next 24 hours, you can give us, because the situation changes so often and it has had a dramatic impact on the way folks down here and who watch cnbc are running their daily business lives. Yeah. I think the latest shift here is that the Ukrainian Forces really increasingly have the advantage on the ground and theyre looking to get as far as they can before entering into any kind of a ceasefire. The russians now want a ceasefire here. The ukrainians continue to press their advantage. I think the balance is beginning to shift against russia on this, but i still dont see a settlement anytime soon. Putins not going to walk away from this that easily. So what then has to happen . What does he need to do to more credibly pursue any kind of diplomatic solution . Thats his problem here. He has to put a set of ideas on the table that are going to be something that poroshenko and engage with and negotiate around, that right now the kind of ideas that putin has been talking about are just nonstarter for the ukrainians and ukrainians have strong support from germany, the u. S. Investor reaction has been curious, given the risk youre analyzing at the u rare shah group, do you think investors have it right, they see a scary headline, sell, look at impact on global growth, supply and demand and buy on the dip. Are they underestimating the risk . I think they have it pretty much right. I think there are a lot of Political Risks out there. I dont see them synergizing in a way that generates a big crisis. So i dont think gaza is going to get out of control even in iraq, it looks like iraqi and Kurdish Forces are about to retake the mosul dam. So i do think here, as krprices get pushed down, buying tunes are real. Wait. You say you dont think the situations are going to get out of control . I dont. It seems well too soon to tell. Well, i just dont see the instrument by which they impact on each other. Thats right now these are all contained. I think the only thing that could lead to them coming together would be something happening that really put oil supplies at risk, and i think thats increasingly unlikely to take place. So, im not saying that anything is going to get better quickly here, particularly on russia ukraine, but putins being squeezed here im done think putin is going to want to do a full bore conventional forces move into eastern ukraine. Hes going to have to find a way out of this, if he wants to restabilize his economy. I dont think hes going to do that anytime soon. It seems like the only thing in terms of iraq goes, that the only thing thats changed is that, okay, they may have retaken this critical dam for now and that al maliki is out of the way. Right. Paving the way for the iraqis themselves to come together but theres a lot more work that needs to be done before we can make a definitive statement its going to be a success. I dont think its going to be a success. I dont think iraq will come back together but i think its going to be successful enough to prevent the kind of pressure on Energy Markets that i dont think the southern fields are going to be at risk here. And i think as long as those southern fields arent at risk, you dont get a lot of pressure on energy prices. I think thats the key point to watch in terms of looking at how these geopolitical events impact markets more broadly. Understood. David, thanks so much. Youre welcome. Points well taken today, sara, wti down, yet again. The dow continues to push higher, up 155. Up almost a full percent. Why brick and Mortar Stores might be more profitable than the online versions. More on that when squawk on the street comes back. You make a great team. 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Potential bidding war for Family Dollar, Companies Like amazon and ebay squeezing margins of Traditional Stores like macys a surprising view how to play. Brick and mortar a better bet than ecommerce says a retail analyst. I know you dont cover the dollar stores, were not going to ask you about that but its relevant to the point. They dont have a big online presence. Why is brick and mortar more profitable. Whats interesting you have conventional wisdom tell you online is the way to go, because it doesnt have rent its the more profitable channel. Think about them in one cohesive unit stores are a fixed cost, because youre selling something online doesnt mean you can walk away from the rent check. Seeing new reports coming out where were changing wait we used to think about the brick and mortar versus online equation. Who will benefit most. Abercrombie you like. Look at ecommerce as a prisoners dilemma, something we need to be doing as opposed to something well have a margin benefit look at it in two different ways. One hand a sig net, jared and kay, jewelry, youll get people that will walk in, need to feel that stone. Thats the one hand. So you take an industry that wont be overcome by e come youll benefit. To the extent youre a threat closer and shift sales online, youll benefit. Abercrombie and the rest of the teens embarked on this. You say that conventional wisdom suggests that online is the better bet. I mean, its more than conventional wisdom. Theres real results right . Amazon is having an impact on many businesses, whether its costco, in some respects perhaps walmart and others we havent mentioned. Great point. Man yn on your list. You hear everyone talking about the slift theyshift they. What is amazons profit ability. Its not a lack of business. The lack there of comes from the lack of spending, not the lack of what theyre drawing. Maybe thats where the issue comes where youre creating fixed cost that didnt exist beforehand. When does it stop. Profitability is getting hurt, macys michael kors, whether it speaks to the cyclical, macro environment or theyre getting pressure from pricing online. One hand you have Gross Margins and that speaks to the notion, Price Transparency proliferates. You will have the gross margin issue. On the other hand extra cost, every incremental dollar, theres no scale, maybe what were seeing with broader players, variable cost, shipping is there, fulfillment is there. Extent you have rent, every rental dollar will earn you more money. A world where apparel retailers seem to be struggle, backtoschool shopping about to be in full tilt, if its not already there how than going to Impact Companies on your coverage list . Many play right into that, whether its abercrombie or old navy or any number, the gap, et cetera . This is a slow and stead yo process from the online piece. Some companies acknowledging it to the ton of 20 basis points. To the point of retail, Gross Margins are the price of entry. Promaegss arent going away now and 2008 you had massive inventories you need to clear. Now the Consumer Needs the promotion to get into the door. Ratio, sales from online, some stores we cover like 10 , investors want more, they can see the double digit growth if its higher ratio. Growth numbers will be huge, my average group around 15 , pr probably gets around 20, 25. If if debt gets above that i worry. Later on, simon hobbs has been challenged. Mickey, i accept your a. L. S. Ice bucket challenge. And in turn, i challenge simon hobbs with cnbc. Bring it on simon will take the ice bucket challenge live himself outside the New York Stock Exchange later on in the hour. With that bucket right there. There is ice in there, i saw that shot. Yeah, hes going to feel it. Controversy online about people taking the ice bucket challenge with no ice. The water bucket challenge. You used real ice. Thats ice, right there. For hobbs when we come back. So i can reach ally bank 24 7, but there are no branches . 24 7 its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. 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 to squawk on the street. Mondays edition of the Santelli Exchange with the man, ira harris. Ledge endary trader, cme. All right, ira, listen. For the last several weekends, geopolitical headlines supposedly making a huge difference. Cause and effect, somebody sends a memo. The markets moving because of this or that. But you and i are questioning the gegeopolitical effects. You saw on friday, we got the tweet or whatever came out of russia and ukraine that ukrainians, what was the response . The stock market broke, and the Euro Currency which had been somewhat weak because this is where the algorithms are set up. Weak stock market, oh, were going to get out of dollar assets and start gravitating towards other. And of course the bonds. But its insanity. Right. And listen, if people want to look at geopolitics and think social media is going to win an award, thats their business. But in the end it really is the deterioration of europe. And i dont see any tangible effects, for example, that the natural gas is being used as a tool yet by putin, but then again, winters not here yet. Right. But the bigger issue to me and the more i think about it is that if you put your money in a European Bank any European Bank i like where this is going. Pay attention. You have to be a moron. Bail ends. Who last year in cyprus, they did the bailin. We saw it in portugal. Its not that im more pro bailins than bailouts. Lets p up that boiler plate on it. Were looking at it as a bondholder. Dont forget, in europe, theres no fdic insurance, by the way. So where does that money come . If it really was geopolitical, meaning mr. Putin everybody kissed tomorrow, wed have a sustained rally. No, the economy isnt sustainable for that rally. But in the end, it really is a deterioration thats been going on for quite a while. And you were talking about watching the auto experts a year ago. Right. Weve seen it. The economy in europe, listen. Italys negative. Germanys negative. France is barely positive. There is no real growth. And theres not enough growth around the world to get them to bail out. And of course, they need a weaker currency, but they dont know how to get there. I got you. Ira, thank you, as always. And sara icen, its all yours. Thanks very much. And to that point, the euro is weakening, quarter percent, 133. 65. Lets go to jon fortt with a look at whats coming up. Youve got a big interview im looking forward to. Rupert murdoch knows a thing or two about privacy violations. He says this company is worse than the nsa. Ill give you a hint, its not his. Well have more on that and my interview with 50 cent on his new headphone line. Tieup with a tech company on that one. And kara swisher plus ice bucket challenge equals awesome. Well have it all live on squawk alley. Tune in. Developers are all about speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical and hows the performance of the cloud. And i tell them, if you can make gamers happy, you can make anybody happy. Speed is made with the ibm cloud. The ibm cloud is the cloud for business. I make a lot of purchases foand i get ass. Lot in return with ink plus from chase. Like 50,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards, even cash back. And my rewards points wont expire. So you can make owning a business even more rewarding. Ink from chase. So you can. Welcome back to squawk on the street. I have been nominated for the als ice bucket challenge. Sara eisens greatest moment in her career as she delivers that. Ive been waiting for a long time to do this. Mickey, i accept your als ice bucket challenge. And in turn, i challenge simon hobbs with cnbc. Bring it on. Oh, man yes, the coo of carnival, i accept your als ice bucket challenge for charity. And i couldnt be happier to do it. Oh i got it on myself. That is cold. And applause from the crowd. And i now nominate the coo of priceline, darren houston, i nominate you and the booking. Com team in amsterdam. The ceo of mare not, arnie sorenson, i nominate you and your team outside d. C. And i also nominate the ceo of gopro, nick woodman, to pull off an event like the als ice bucket challenge as only, i assume, the gopro team can do. Thank you, sara. You look very nice in your little tshirt. The crowd is happy. How about you pick those people . Lots of thinking. And theyre good friends of the show. Its raised a lot of money. Its gone absolutely viral and its huge. They have raised just over 15 million so far. Thats up, i think, from 7 million last week, which is seven times what they had this time last year. So with these new teams, theyll make even more. All right. Well, simon hobbs, you look great. Thank you. Are you cold . A little bit. I have to do the europe close now. See you in a minute. Hes going to change back into his suit. With that we turn it over to squawk alley. Thank you so much. Good morning. It is 8 00 a. M. At google headquarters in mountain view, california. 11 00 a. M. Here on wall street, and squawk alley is live. Good monday morning. Im kelly evans. Carl quintanilla is off today. And joining me all hour are the jons. Our jon fortt and jon steinberg. Good morning to you both. None of us here have no, you just did the ice bucket challenge. Zploo he did it with his kids, too. We want to start with the markets. Take a look at the Dow Jones Industrial average, up 157 points, thats a start to a monday. 16,820, closing in a mixed session on friday. A look at some of the winners on the dow. They include united technologies, visa, ge, nike and 3m leading the way higher this morning. Also shares of Dollar General rallying after the company is offering 78 ining 78. 50 for co Family Dollar. Those top the biggest gainers on the s p 500, both higher to the tune of about 10 and 4. 7 respectively. Now, first up both facebook and twitter rolling out a couple of changes to their main pages. Facebook is testing a new satire tag to help users tell the difference between real news and articles from places like the onion. Meantime, tweets other users have favorited right into your time line. So popular tweets go right into your feed whether you follow that person or not. Especially the latter ones been controversial. The first ones going to help a lot of people. I know on my Facebook News feed, usually political news. People will be, like, oh, my gosh, i cant believe this. Yeah, really . Did you check the headline . Its not actual news. Then the second, says i think some diehard twitter users are upset, but it kind of makes sense. If you favorite something,