Transcripts For CNBC Squawk On The Street 20140903

As futures softened, but higher at this hour. Home builder, Toll Brothers, reported profits doubled last year. Hot prices continuing. A breach larger than target according to the security analyst of the possible hack at home depot. Investigating unusual activity. Apple reels from anger, samsung unveils new products in an event beginning right now in new york city. Rising on hopes of easing tensions in russia and ukraine, but they back away from the announcement that, in fact, a cease fire was reesed. According to the reports, president putin and the ukrainian president are, quote, close to a solution in the conflict and an accord could be reached by friday. Of course, this is taking place as the president has made his way to the baltics, essentially telling putin to watch his step. Right. Whats that mean for the markets . You got the news, and everybody went crazy. You thought, well, thats request Interest Rates went higher yesterday. Maybe the bonds or gold knew something. Again, every time you say the guys are talking, they embarrass the heck out of you. Incredible yesterday. We could be in kiev two weeks in russia from putin, something stalin said in 1943. I find myself thinking dont go too crazy here. They keep pulling the rug from out underneath you. Europe is saying that its for re. Its for real until friday. I just think, look, its obvious this changes the complexion. This trades off ukraine, but they seem to be reigning in what was good immediately. Talking about the buy biforgaited market. Delta is down. Why . They dont have the revenue they had a presentation this morning, stichlt estimated pres. Why . Events in russia, middle east, and africa. Mh 17. This is what i fear. Which is the beginning of the guide down season. Because of russia. This has to end. Its just beginning. Right. How much of that, though, is guiding down russia into europe where theres just nothing good, it seems, economically going on, interesting story today in the times about how you cant bring rates lower there. Right. How do you get banks to lend, taking lower rates for money to be held in central banks. Isnt that the problem . Thats right. Thats code for europe because that is not like deltas nigh g i flying a lot of flights over there, but things have slowed. Slowed if you have europe. Spirit air will not say these things. Right. They are not flying to prague. No. They may put you in the bin. Probably another prague in a country. They are not flying to new berlin in pennsylvania. Hopefully no one reclines the seat in front of you. I mean, that was something. That was another great story. Airlines. Yes. Well, right now theres debate whether seats should go back or not or whether you pay for the privilege or paid for not giving up the privilege. Right. Do you buy delta thinking that, well, this reverses itself because ukraine is maybe talking to putin . Thats the way things are going to do. I shouldnt sell because i was waiting for delta to come down, and now i have to buy. Hast hard for me. Go to situations where you dont think every minute whether putins talking or not. We got housing news today. We did, in fact, Toll Brothers reporting profits more than double its third quarter, ahead of wall streets estimates. Revenues above consensus, up 53 . The home builder said it sold more homes at higher prices. That is the way its supposed to work when things are going well. We have not come back to housing that often lately except not long ago wondering whether it was sort of not doing particularly well. Commentary is very, very upsetting, which is bob toll, again, i love bob, not just an eagle fan, but Consumer Confidence and rising prices and limited personal Income Growth cut back housing. Now, whats interesting is that hes been able hes got Pricing Power. Most Home Builders do not have Pricing Power so he is this company is an aberration as nip w anyone who tried to buy on brooklyn looking at the east river knowings they are out of control prices and sold out. Thats a particular neighborhood that has become an incredible repository for wealth now suddenly. And great food. Drawing people to the neighborhood. Toll is an aberration. Skewed to the luxury end. Average selling price is 732,000. And they are 2 million places in brooklyn. Toll brothers does not do speck homes. They are not stuck with inventory. They are the aberration. I thought the statement is exactly why you dont have a good house. Pending homes up three in july. Mortgage apps ticking, refi ticks up. Thats true. Its hard to get a mortgage. Margins were telling. They were so good. Housing, you know, some are making a lot of money, but they are selective. What we want to see is now housing formation. We dont talk about that enough. Thats demographic, and, yes, immigration, immigration would help, but everything seemed to be tabled. Everything. Yeah, everything. Dont want to be negative because of what you said and rates are down, but i just expected to see much bigger housing start numbers, and its very well difficult to get so many things okay, if housing, punches well above the weight, thank you, john stump, for letting me use that line, ceo of wells fargo. Used that for a year lately and felt guilty, oh, good guying, credit someone. Punches above the weight, and i dont like that. Sticking close to housing, home depot assuring customers in the wake of a possible data breach. The company says its working with the banking partners and Law Enforcement on unusual activity and will notify customers immediately if a breach, in fact, has occurred. Obviously, we dont know what the time line is on this. Experts say it could be larger than target because it might span a longer period of time. Im a believer if the stock is down big, buy it, even because if we look at target, you know, target did spend time in the wilderness, but they have a new ceo. Yeah. Canada, and a lot of things hit target. Not to mention, of course, underlying followiable were no. Daifds, you did work on hacking, and this one, i dont want to sugar coat it. Its early to know at this point. Unfortunately, and im not saying that home depot is going to fall into this, but theres a reluctance on the companies to share a great deal of information. Maybe thats changed as a result of the target breach, but so its difficult to understand fully at least early. Now, this was originally reported by a security you know, and a lot of people follow that at this point. This is going to continue at a rapid pace, it would seem, where were going to see this. One wonders whether the debate about increasing security of the credit card wratratchets up so changes are made in the industry sooner they than want, but as for the stock price, take it off the table, but as a consumer matter, certainly, breaches are only going to continue and perhaps gain in size. I totally agree. Thats why palo alto is red hot. Fire eye, not as favorable, because palo alto is uniquely oriented to banks, and banks are the target, okay . Within the con fifines of home depot, youre going through a bank, you check peoples accounts, getting their information. I check my on every monday, i do a total down load of every account down to the penny because i think they are trying to steal 23 from me. Whats the number you wouldnt know in i used to have 28 in the atm. Do you do this yourself reading in between charts or at dollar tree . Okay, yes, i do employ to check. Every single one . Every single one . Yes, i have anning t account mexico, i have a bba these are big banks, thats like saying you have bank of america. Just the last few months and weeks, target, jpmorgan, apple, home depot, where does it end . Come in here every day, and its some just checking passwords, doing i changed my password this morning, even harder. I mean, more inscrutable. Everyone should who is watching the show. Its just, you know, funny ones, but i just think everybody has to be aware that your password, just change it, make it tougher this morning until we get to identifiers that are much more difficult to crack. Good advise. Seven months of removing product from the shelves, cvs ended tobacco sale and changing the name from cvs care mark to cvs health. Well have a live interview later this hour on squawk on the street, a lot to talk about. He never talks. This is the one that, you know, this is the one thats not hurt by the generic price cut, but saying they are too expensive, and really is at the forefront of trying to figure out if you get rid of tobacco, there for a health concern, and get more pharmacy business management. It is a big thats the benefit play. It is i cant believe hes on the show. Probably the most important ceo in america right now. Certainly, a lot to talk about, which we will. Yes. People want to know, though, how you cannot be short with end of today knowing they will forfeit 2 billion in sales. Most telegraphed earnings decline ive ever seen, and it was like they had been saying over and over again, and theyve always basically risking the number, and i think the people in america applaud. Where are they going to roll out an antiwalgreeps in if they inverted . Zblep yo how to answer the question, but if you see a competitive advantage in some way and waving the flag againstier key competitor who is inverted, which did not happen, you might take that. A big guess. I never see him. I never see him. I wanted to talk to him, hes been just on fire. Thats later on. Also, samsung with a big event looking to beat apple to the punch launching products today. The latest coming up, u. S. Rider cup tom watson added three more players to the squaurd to take on the europeans later this morning. A lot more squawk on the street continues in a moment. Dont go away. In new york state, were changing the way we do business, with startup ny. Weve created tax free zones throughout the state. And startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. Thanks to startup ny, businesses can operate tax free for 10 years. No property tax. No business tax. And no sales tax. Which means more growth for your business, and more jobs. Its not just business as usual. See how new york can help your business grow, at startup. Ny. Gov Samsung Holding an event in new york city, berlin, and beijing today. The berlin event started, but there is a delay at the new york event. New products said to include a new jumbo sized smart phone and Virtual Reality hand set to rival the rift. Samsung looking to jump on apple, obviously, holding a big event tuesday. Reports say that we might get three separate devices today. Well see what they have in mind. They need to play catchup. Theres people all over the place apple is starting to bug the heck out of me. Request to sell, the other guy says, great. Stop trading apple. Own apple. Its an up believable stock, sells at 16 times earnings. I dont do wish apples thunder not been stolen, but enough trade apple. Sell at 700, buy back at 710 . Well, thats hows that work for you . More interesting question might be well, the time, at some point to buy samsung. This is a name heard from hedge fund guys, love the cash flow yes Free Cash Flow yieldings strong, and does nothing but go county over the last year. Well generated cash too, by the way. . True. When apple we want in, when is apple going into china . They have big time. Th that blunted asian sales. The bigger screen is important in china. In china allowing marketers to do more with advertising, obviously. So true. I mean, you go to a yelp, you want a bigger screen. You mentioned the specific call today, andy targeting 100 says unless theres overwhelming profit opportunities unveiled next week, take profits now. Theres opportunities for brokers who tell you to trade now. There you go. Thats where the trade is. Start buy brokerage stocks because they tell you to buy apple so much. In and out, in and out, i mean, really. Absolutely right. Why not just own it . Is it a bad idea . Its a good idea. Sure many people have just owned it. Well, good. Theres a small group of people probably. Telling you to trade apple . Not up on jeffreys. Interesting numbers today. Was it . Yeah, his dad was aaccountant for 25 years, slept in a cot this looking over the return when i had no money. It was not a difficult return. When you didnt have a lady checking youring th accounts we. Its good because the volume. You never know. 23 could be 230, just a decimal point. Thank you. Do you think the icloud, say it was not the icloud, do you think the controversy over the celebrity hack affects how tim cook positions the message next week . I think tim cook is adepth now at being able to fend off questions and making it clear that theres, in this case, just seems like there was more atwork than the icloud, and i thought hay had a clear statement. By the time that meeting, hes going to have some fbi guy who would tell you, listen, it was not you. It is my bet. I dont know that. I think that what hell address is the wallet, the wearable. Its the wallet, the wearable, and the wide. The wider screen. Its the three ws. Thank andy if you use that. Or the symbol for wolverine worldwide. Look at the g 3 numbers. Incredible. The man talks about anything. Starting to get headlines on samsung, the galaxy note 4 made a debut, 16 megapixel camera, and a wide angle self lens. The toys and bells and whistles are the story. Exciting, and we have to go immediately check with the provider to see who is getting subsidies and who is not and which ones cheaper and what will john ledger do . What would he do . Worry about that wild man, right . Maybe he pays you to have the samsung. Hes capable of anything. He is. Hes capable of crushing margins completely to gain share. Hell give that guy, who did he throwunderpar dan hessey. Didnt even say, hey, dan completely competing on price now. And then theres the story about vodafone. Dont read too much into it. Quoting a Company Executive saying, oh, yeah, we might want to never know. He sticks by insistence on multiple sources. Terrible, terrible. Horrible. I know. Youre one last toy on the note 4. Super fast charge. Thats going to be interesting to watch. Really . Super fast charge. That i want. I want super fast charge. No, im not kidding. I mean, arent you just i was down to 35 on fantasy football last night, and, oh, my, my lifeline is almost over, and them i realized you plug it in. Cramers mad dash and opening bell. One of the nations largest drugstore chains ends twak sales and changes name. Cvs caremark is now cvs health. Well talk to him after the break, and here a look at premarket after the break. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Well, we have five minutes before opening bell, time for a mad dash on this hump day. Lets go to the other white meat. This is important. Youll see the stock up. This is when they worked on it. This is when they had it. Im talking about the pig vaccine. Remember, 5 million pigs died, bacon up 10 , considered to be in the basket of the consumer. Think about it, cot tom came down, corn came down, soy is down, beef is down big because of putins ridiculous banning of beef helping the american consumer. Chicken is down. One point is pork. Zrgs oetiss vaccine causes it to plummet. Pork about to have a leg up, and this is the breakthrough waiting for. Weve been thinking zoetis had it, announced today, theres a conditional license for this epidemic diarrhea disease. Okay. Can they get it to the field quickly . I believe they can. Its a two dose inactivated vaccine licensed for healthy female pregnant pigs. Its going to happen. This is big. This is big. Its going to really distinguish janet yellen as nailing the top when she said inflations noisy, it will go down. What a call. Does she get credit . No, no. Shes not allowed to get credit. Im giving her credit. She nailed it. Said inflation was peaking, had it, and she deserves credit. She knows something. She knows something. Expert on by yo technology. What about the people who picked welker and just, putting that out there. Three and a half minutes, opening bell, more stocks to watch, stay with us, back on squawk on the street. Female narrator sleep train challenged its manufacturers sleep train challenged its manufacturers to offer even lower prices. But the mattress price wars ends sunday. Now its posturepedic versus beautyrest with big savings of up to 400 off. 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Making it. The new 2015 cadillac ats. Became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Youre watching squawk on the street live from the Financial Capital of the world, opening bell in 30 secs. Busy morning with the president in the baltics, conflicting reports about a wouldbe cease fire between eukraine and russi. Eurozone services a slight miss as data there continues to disapoint. So hard, and china, i dont like the copper figures, baltic freight is leveling off here. It is so in flux now that nip who says, look, the world is looking good. I think the worlds in flux. Thats the best way to put it. In flux right now. A real peace treaty, theres money flowing back. Well, people are hoping for that this morning. Good breath at the open, s p, big board, cvs health, and well talk to merlo, the companys ceo, in a minute, and well talk to tom watson in a little over an hour. Oh. Yes. Hopefully show the europeans what were made you have. Gm and ford release auto sales figures for august, and phil lebeau has that in august. Lets start with gm. The numbers coming out, gm sales, last month, dropped 1. 2 , better than the edmonds. Com estimate of decline of 2. 5 . August of last year was the best month of the year volume wise, a tough comparison. As for ford, it eked out a slight gain of 0. 4 of august sales, better than the edmonds exception, a decline of 1. 3 . Guys, the overall expectation for the sales rate of the month of august is around 16. 7 million for a sales rate. If that comes through, and thats the expectation at this point, itll be the sixth straight month with monthly auto sales pace of greater than 16 million vehicles. Guys, back to you. Thank you very much, phil lebe lebeau. Thats straept there. Thats what was said over and over again, the number thats keeping the economy alive. On the subject of autos, news, strength to grow, not traded heavily, fdml, but a two and a half billion dollar company, announcing plans to separate power train and motor parts independent publicly traded companies, a tax free distribution of the motor division, and the stock is up 4. 5 . Another shrink to grow. Its hot. My trust owns leer. A red hot machine, trw, rumored a takeover. Yes. Its not just cars. Navistar, not a great company, but singled that may be a major, major shift up. These things take a huge number of people to build, trucks, cars, putting people to work. Lets get to john ford covering new products launched by samsung today. Good morning, john. Morning, carl, yes. Samsupg raising stakes here, two phones introduced to you, expecting the galaxy note 4, impressive, screen at 5. 7 inches with 80 more pixels and qhd resolution. Samsung said we invented the big phone category, out first with lte and a number of technologies that are quota for smart phones, stealing thunder from apple where we expect bigger iphones. The unexpected bit of news is the edge. This is a phone with a screen that wraps surgeon the sign. This is not a sense on galaxy phone, but imagine the screen curved around the side here and use the side of the phone as navigation, the edge of the screen to the side to the back of the phone. Even at night, the edge of the phone is ab alarm clock and opened up an sd cape, software hooks developers use to create app features that use the edge of the phone. Theres going to be streaming content feature called milk that service calmed milk along with the galaxy milk force. Not done with announcements and expect a watch announcement, a few surprises, and well be covering it all here today and talk to samsung executives in a few minutes. Guys . John, whats your take on the gear vr, what do we make of that . Well, they have been working, and not announced it yet, but samsung, a leader in screen technology, both from the product side and on the engineering side. Remember, they are the biggest supplier of the screens out there. They dont want to be left behind with the technology, but pushing ahead and be the supplier. Thats an important announcement for the whole industry as well. Well see more of you this morning. Get back to worked in. Thank you so much, john. Makes you wonder if they can start to get some Pricing Power themselves, a problem for samsung. A hot phone. I remember there was a peer where you felt like you needed a samsunging a samsungi samsunging and then apple froze the market. I want a big screen. Yesyes. I cant see on a small screen. Gopro up 13 of 14 sessions for a gain of 41 and a gain today. I pushed it hard on mad money and last night. The ecosystem is powerful, people think they are knockoffs, but it is thee hot present for the Holiday Season and preorders are incredible. The new device, it ration will be big. I think this is an amazing deviolatid device. Camera on a stick . I returned mine. I told you. I know. That i had no idea what to do with it. The harness for the dog was not working because i bought the wrong harness. Oh, really . Tried to fit the dog, and the gopro i hooked up to watch the string beans, but it was a boring video. Did it. Speed it up over three months. I should time lapse it. I was watching a minute like the statue of liberty, not great excitement. Talking about movies or videos, netflix up 2 this morning on the deal to stream gotham, a show thats not yet aired. Netflix will continue. A new high. A favorite stock. Better call saul if youre going to watch that. Finished breaking bad last night. Finished the finale, im up to date now. I know what happened. Oh, man, sorry i missed him as lyndon johnson. Darn. Closing in on s p 2010 now. This crowd behind me, you talked about it all norng, cvs changing their name, getting rid of the Tobacco Sales, here in front of post five, and this group is all basically the cvs health Team Checking out the action on the floor. The action, you spoke about gopro, a hot stock to the pos sieve side. Now that traders are back from vacation, getting back to work, we may see volumes pick up. The action just so far in the very young week after labor day. The number one performing sector, an Industry Group here in the s p 500 has been airlines. Huge. Weve seen oil prices falling. Names like southwest. Names Like Delta Airlines started the week as a group out of here in the s p up by 3. 5 , and oil trade factors into that as well. The commodity side, worst performing group in the s p 500 has been metals and minings company. You look at names like freeport and golden copper, and newmont mining, worst performers week to date. Coming back to work, thats where the actions been. The Home Building side, real estate at the fore front for investors, Toll Brothers ourt with earnings, things were good, generally better. The ceo saying that they sold more homes at higher prices with less Pricing Power. Still, Toll Brothers is selling more homes at higher costs although the Pricing Power is less. He made comments, again, in the Earnings Release about that saying that they have seen a lessening of Pricing Power, although, we have not felt the need to incentivize to spur home sales. So on one hand, you got retailers talking about the fact that their Profit Margins may be squeezed because of discounting, but the home selling side with toll, theres not a need to discount to move invenn toirks and theres growth in coastal california and new york, some of the higher growth areas, carl. Back to you. Thank you so much. Lets go to the bond pits, Rick Santelli at the cme. Hey, rick. Hi, carl. Telling you, the markets are telling you something loudly, investo investors. We can look at fundamentals, translate out of russia or get 50 directions on every report, but theres a chart, get it all there. We see that we did violate intraday 245. How big is 245 . July, big bottom on the left. 245. Midmay, see the bottom on the lef, 245, that was the low bid of the year until we took it out in august. A huge, significant level says every technician on this floor with a chart. Switching gears. Whats going on with the dax . Look at the dax, just intraday, you know, when i was coming in this morning, all the reports were that the european markets wrestled with ukraine. Not much going on on this chart. Opened strong, stayed strong. Hes the real chart. August 1st. Does that dax look to you as if they are huge Investor Society about geopolitical . Certainly everyones talking and worried. When it comes to trading equities in europe, its all about mario draghi, not mr. Putin. Look at dollaryen, humanly significant levels today. Now, you never see this very often. 105 on most systems as the dollaryen high today. Open the chart up, and you can see that december is still over. New years eve of last year. You know the wloes . 105. 31. Well tear the chart back to the fall of 2008, the next stop on the train carrying the dollar higher as qe carries foreign currencies a whole lot lower. Carl, back to you. Rick, thank you so much, Rick Santelli. Cvs pulling Tobacco Products off the shelves ahead of schedule and rebranding itself as cvs health. We have a live interview with larry merlo. Record highs for facebook this morning, gopro, test la, and the s p at 2007. Well be right back. Cute little guy, huh . This guy could take down your entire company. Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab cvs ended Tobacco Sales in stores, change the corporate name from cvs caremark to cvs health. Here is larry motherlo. Great to be here. You are doing this earlier than scheduled. Why give up a business that brings in billions of tobaccorelated sales . Carl, we are a pharmacy Innovation Company helping people on the path to better health. We have big opportunities to help on Health Care Delivery. The fact we deliver health care in a retail environment at the same time selling tobacco, that contradiction grew for us. You know, we made the decision. We announced it back in february, happy to say that as of today, were tobacco free. Larry, one of the things talk about earlier is you give up a couple billion dollars in sales. We got Dollar Generals excited about it, family dollar, walgreens saying its not our job. Why own it . We have many opportunities to play a big role in Health Care Delivery, and, you know, we have our 7700 cvs pharmacies, a leading Pharmacy Benefit Management company. We have walkin medical clippni, and we do things to change and shape the future of Health Care Delivery. I think the playing devils advocate, your stock is the best in the industry, not hit at all, but i have to believe your pharmacy benefit, i know its not happened yet, but youre winning business from people who say we have to go with the Health Company, not the company that destroys health. Well, certainly people view us as a health care company, especially in light of, you know, the decision. I think it further makes a statement and commitment to, you know, our focus on health. Weve had a very successful selling season this year. Weve been award over 5 billion in new business, be right on price and service, and what we do is more than an intangible in why people trust us. Talk about opportunities in terms of health care. At the center is the aca, Affordable Care act, and yet its another season not long from now when people reup and sign up, not to Mention Court cases out there. Does it worry you at all that this is not necessarily on a Straight Line here in terms of usage and or lawful in some states . Well, david, i think that, you know, theres a lot of learnings taking place in the first year of the Affordable Care act. I think that as you think as 30 million americans that dont have, you know, health coverage, the opportunity for them to have the same opportunities that we have i think is good for society. At the same time while the Affordable Care act deals with access, we have to focus on quality of cost. Whats that the health model is doing. And so what are you going to be offering in the store that you have not been in the past when it comes to that . Well, we think about, you know, todays announcement of our corporate name change to cvs hell, catching up to the things weve done for the last couple years. We have a big focus on keeping people compliant to their prescription medications. Interesting to know half of all americans suffer from one or more chronic diseases, and threefourths of people newly diagnosed whether its high cholesterol or diabetes, they drop off their medications within a year. We want them to stay on the medications and be healthy as a result. You say you sell beer, so how can you call yourself a Health Company selling alcohol . Where is that discussion . Looking at the other products we sell whether its a bag of chips or candy bar, you cant compare those two, you know, a pack a cigarettes. A dietitian and nutritionist would tell you they have not been proven to cause me call harm. Theres no amount of tobacco use considered safe. Tell you, just speaking of chronic, you are, perhaps, at the fore front in the recent Conference Call about hep c costing too much. You expect potential cost of treatment is high, 3 million people, that competing products will be available later this year. Im not getting that read. Are you confident that the fda will go with competing products . Were pretty certain, jim, weal see r you know, competing products later this year, perhaps, you know, in the early part of 2015, but competition drove down the cost of care. We expect that to happen. What do you believe about the 84,000 price for the drug that cures the disease . Yeah, you know, i mean, the cost of drugs is not a new issue. Theres a lot more that, you know, goes into that. The appropriate utilization, the medication adherence we talked about, and all those things in tandem, you know, really Work Together to manage the cost of care. You know, a few weeks ago, the post did a story that you met with Chuck Schumer and said, senator, you have to do something about inversions because if you dont, well all do it. That story essentially true . Well, we talked a lot over the years about comprehensive tax reform. You know, we, cvs health, pays about 1 of all Corporate Taxes in america, and, you know, theres a lot that we can do to accelerate investments to do things we talked about, and we are concerned that these tax inversions left unchecked further erode the Corporate Tax base and make comprehensive reform that much more challenging. I know walgreens were concerned, that cvs could target walgreen if they had gone inversion. You know, im not going to speak, jim, boabout any of our competitors. Leave it that we need comprehensive Corporate Tax reform. You spoke about a competitor in the august 15th call, the generic problems that walgreen had in the short fall. Why didnt you have that . We have talked about the fact that, you know, overall, the, you know, generic pharmaceutical environment remains deflation their. Theres price increases, but its not changed the general nature of the deflationary environment surrounder generics. Walmart pursuing the strategy outlined here in terms of bringing people into the stores to maintain their health. Are they significant competitor there . Are you following, perhaps, where they started . Well, we certainly, you know, keep an eye on what all our competitors do. As we think about our instore medical clinics, you know, were really focused on, you know, working with primary care physicians. We see the Minute Clinics as being collaborative to primary care and not replacing primary care. Youll find it interesting that about 50 of all visits to the clinics occur nights and weekends. Think about, you know, access and cost of care. If Minute Clinic does not exist, where are the visits . Perhaps in Emergency Rooms at a higher cost. 1 of Corporate Taxes in the country . 1 . Really . Really. How is that possible. We pay a high tax. Quickly, 2 billion, al, incredible, no cessation in the buy back . No. Best earnings season seen, how does that make you feel . Proud of the decision we made. Somebody had to be first to make the decision, and, you know, proud to say that, you know, we were the first in the interest of our customers, patients, and, you know, we believe that, you know, it will help us play a bigger role in Health Care Delivery and outlook for the futures bright. Larry, thank you for coming in. Thank you for having me. Well get stop trading with jim in just a minute. Female narrator through sunday, its posturepedic through sunday, its posturepedic versus beautyrest with up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Mattress price wars end sunday at sleep train. Your ticket to a better nights sleep time for cramer and stop trading. Sometimes youre blown away. Theres stocks like a gopro, netflix, mobile eye, just inkredsble technology. Go to the website. You can want believe. Collision avoidance, whatever. 100 price target. Just went public. Yes, 100 price target. 46, ha, here it is. This is the horse that people want to be on between now and year end, mobileeye. Whats on mad money . A pipeline in the east, lead story today, i got world dutch, first on cnbc. Royal doucutch. They never come on. I dont know. We got to find out. What a blowout. Ha. Oh. Rest up. Rest up. I got the runningbacks for the fantasy league. I think it was important. A lot of people making fun of me. I won twice. Last year they made fun of me, all laughing last year, but it was like the people who laugh at me, carrie, remember that scene . Theyll laugh at me. When we come back, samsungs products biggest dow gain in two weeks, by the way. Dont go away. With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. The last four hours have seen. One child fail to get to the air sickness bag in time. Another left his shoes on the plane. His shoes and a third simply doesnt want to be here. Until now. Until right booking now. Planet earths number one accomodation site booking. Com booking. Yeah its in this spirit that ingu u. S. Is becoming a new kind of company. Booking. Com one that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. Welcome back to squak on the street, factory orders up 10. 5 , sounds big . It is big. Expectations were bigger, around 11, 11plus, but that is a healthy number. Last look for june . Originally released at 1. 1, upgraded to 1. 5. There are, indeed, factory orders for july, and we continue to monitor, of course, the supply. We are seeing large amounts of supply coming into the marketplace, corporate and investment grade, and high yield. So even at a time when theres a lot of geopolitics, there continues to be huge amount investor interest in securities of any vintage. Sarah eisen, back to you. Thank you, rich, for the breaking data. In rally mode, record highs on the s p. Bringing in the global chief Market Strategist with jp morgan asset management. The news on the economy, record jump in factory orders continues to come in strong. Are you surprised to see this kind of strength . You know, the manufacturing data caught people by surprise, but the weakness last quarter, we expected a rebound. Yesterdays report, getting some back in europe and japan and u. S. Continues the strong run of manufacturing data. Continuing to make u. S. Assets whether they are stocks, bonds, or the dollar, all in rally mode right now, attractive . Exactly. Equities particularly attractive. We are see a strong economic backdrop materialize. That said, we expect Interest Rates to move higher over im, and more u. S. Data will be a catalyst. Speaking this morning on squawk box, the stock market at the alltime high, but Economic Activity is not at the high, and, therefore, were as a rule near vulnerable to a correction. Dpl theres risks out there. Europe is a risk for the united states. With whats going on, well see back and forth. Were not going to see things shoot higher, but takes time. What about sentiment . The ii report shows that bearishness is now at a 27year low. Boldbear spread in, quote, dangerous territory, according to the release. Are people too optimistic . Too exuberant over the rally . People are getting complacent. But theres a strong run of no bad news. People are comfortable with the ukraine, comfortable with whats going on in the middle east. I expect that there will be something that catches us by surprise at some point, but generally speaking, things are good. What does it say to you that the lesson of the year has been to buy the dip . Yep. Is that the playbook in the back half . I think it will be. Im a value guy at heart. I try to buy the dip. Thats where opportunities lie. If you get good assets, thats what we look for. Whats a dip in 3 . Thats all we were given. Take what the market gives you. Going with what you are handed is the best play book. Looking at the groups you like. Consumer discretionary stocks benefit from wage growth and technology benefitting from a pick up in cap x, Capital Expenditures did. Waiting and waiting and waiting. We are seeing a pick up in technology goods. We need a new computer from time to time. I expect companies spend and replease assets, some at the oldest levels since 1938. Loaded with ipos as the summer has been. Cramer warned about supply. Yep. Wheres thats going to suck oxygen out of the room . Whats the risk . Its a risk. When you look at ipos, make sure you understand the company you are buying. Understand the business. Whats goepg to drive the cash flows. If theres a top of ipos, thats a region to be selective, important for investors. What if you own names not having the irk po, but victim to an outflow because people want the idea . Sit tight. Hold the names, market fluxuations should not be part of the consideration. How much is that a tone setter for ipo markets . For the markets in general . It will set the tone because its a big name. Everybody knows about it. Were talking about it here today. I think the thing you keep in mind is do we understand the business, is the business sustainable . Initial reaction is yes. We have to see how the market receives that and time will tell. I know you cant talk individual stocks, but tell clients to buy that if they wanted exposure, for instance, to the chinese economy . How do you play that . If i was adding exposure, i would go for the balance approach. Chinese financials attractive trading at levels similar to the greek bank, and its the play i rem. A jobs number on friday. Another strong one, another 200plus thousand, do you think theres a risk of that refocusing investor attention on higher rates and spooking the market . There is. We are looking for above 200,000. Another strong print with the fed minutes in september give clarity. Clarity, but not necessarily risk off worry . No. Not until the fed makes a commitment to make the next step. Are you avoiding all things european . Buying with expectations that the ecb does something next year. Equities, once we get the catalyst, we see european equities out perform. Not buying austrian rates with negative yields . No, no negative yields for me. Ed goo to see you. Thank you very much. Global strategist at jp morgan asset management. The latest with russia and ukraine, both backing away from the announcement that a cease fire was reached. Nbc is live in london with the latest. Good morning, jim. Reporter hi, carl, how are you doing . Listen, there was quite a bit confusion this morning. First, you had ukrainian president s office announcing that after a phone call between him and the russian president p putin that the sides agreed on a permanent ceasefire. I agree the russian stock market jumped 2 on the news. The kremlin speaksman doused water on that statement saying that while the two leaders had spoken together by phone and they had agreed on steps, that could lead to a cease fire. The kremlin, ie mr. Putin, was, he said, in no position to physically agree a cease fire because russia is not an active player in the ukrainian crisis. Now, this, of course, has been the kremlins line all along that this is a conflict between the kiev government and russian separatists who are, themselves, ethnic ukrainians. They embarrassingly retracted the statement, and putin on a trip to mongolia today said that, indeed, the two sides were very close, and that kiev and the rebels could reach the agreement by friday. Putin spoke about a 7point plan to get there, mentioning a holding of fire by the rebels, pulling back of ukrainian forces, a prisoner exchange, and the creation of a humanitarian corridor for those displaced peoples, some 350,000 of them, and, of course, aid supplies as well. Still, some western analysts here and other capitals are already suggesting that putin has launched this peace balloon, if you will, to steal some of president obamas thunder. Remember that nato summit meets here in Great Britain and wells tomorrow and friday with ukraine at the top of the agenda. Carl, bottom line, may have a deal friday. Back to you. A lot of politics. The markets like the word of it. Thank you. Up next, summer slow down . Not for the auto makers, ford, general motors, and chrysler with big numbers. Is the industry back . Apple shares, samsung unveiling a new slate of products today. The latest on the gamgts and how they stack up from what we expect from apple. Squawk on the street will be right back. Work with equity experts who work with regional experts who work with Portfolio Management experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. Female narrator sleep train challenged its manufacturers sleep train challenged its manufacturers to offer even lower prices. But the mattress price wars ends sunday. Now its posturepedic versus beautyrest with big savings of up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing, plus free sameday delivery, setup, and removal of your old set. When brands compete, you save. Mattress price wars ends sunday at sleep train. Your ticket to a better nights sleep welcome back to squawk on the street. Bank regulators unveiled a final proposal that would require some nearly 3 dozen banks with over 50 billion in assets to save more in safe assets as a buffer for potential crisis down the road. In a final rule up vailed this morning, that is currently set to be approved at a meeting of the Federal Reserve board of governors. This says that banks would have to basically cover all of their outflows for 30 days stress period in return. Banks need to stock up on cash. High grade treasuries and government bonds as well as high quality corporate and Municipal Bonds and will shift away from shorter term funding and riskier Asset Classes, and this is only banks, not private equity firms, not insurance companies, or nonbank, but still systematically important companies. Banks face a short fall of the types of safe as the of a hundred billion dollars. This final rule will not even be fully in place until more than a year from now, so Federal Reserve officials are confident that the sector can meet the regulations. They dont expect a substantial rebalancing and pricing of some of the Asset Classes as banks continue stocking up on safer assets because they have been doing it for such a long period of time. That will be important that you wont see a huge rebalancing in some of the Asset Classes. This only applies to u. S. Banks. There is another rule coming for foreign banks down the road, but this is a significant move in terms of washingtons response to International Regulation from basal 3 where banks and their safety is concerned. Back to you. Thank you for following that for us. Banks to autos, no slow down. Phil lebeau is live in chicago. They are coming in better than expected. In fact, theres some chatter that we could see a sales pace of greater than 17 million. The numbers we have so far. Look at that number from chrysler, increased year over year of almost 20 . Nissan better than expected. Ford and gm, although they are not impressive numbers when you look at them, they were better than the edmonds expectation. Look what happened last month. General motors says the august sales rate for the industry, its expectation that the Industry Sales rate comes in at 17. 2 million. By the way, the last time the industry had sales of greater than 17 million, you got to go back to july of 2006. Whats driving it . Low financing, 13 of the vehicles came with 0 financing, but strong Consumer Confidence in the economy playing factors. Also, i want to talk chrysler. They reported strongest sales since 2002, and a big part of that . Jeep. Sales up 49 last month. Wrangler, and chrysler expects the sales pace to be at 17. 4 million. There are expectations there for a sales rate above 17 million looking at shares of general motors, ford, and toyota. Keep in mine, there could be a number of analysts come back and raise their expectations for the auto stocks because were seeing strong transaction prices in addition to strong volume that has a number of analysts saying, wait a second, look at the numbers we have for the auto makers. Back to you. You tweeted that lee sing is at a high . How does that account . One out of every four vehicles in the second quarter. What we see with the leasing activity, increasingly, higher end vehicles that people are moving towards. They want that lower Monthly Payment, carl, and its about 407 is the average lease payment compared with a new vehicle you buy where the Monthly Payment is 473. Slightly lower, driving a lot of what we see with the luxury name plates. Yeah. Jeep numbers incredible. Thank you, phil lebeau in chicago. You bet. John ford at the samsung event in new york city with the latest on new products today. Hey, john. Reporter a number of things. When we last talked, we talked about Virtual Reality, had not shown on stage yet, and now they have. Samsung is interesting a collaboration with facebooks ok lus unit. They are providing the hardware, the note for the new phone with the qhd screen. Very high resolution. That allows you to get the level of resolution that you need to start doing Virtual Reality. Now, earlier viewer say its not as good as you get with the headset, hardware, but good enough to provide a gateway into the technology, and sam supg is not doing this alone. Vevo says later this year theyll launch music vehicles on the gear vr as well. Theres content there for it, also, samsung is showing off a collaboration with disney to feel like youre inside tony starks lab, tony stark, of course, the alias for iron man. Very early content, the sort of thing you see when you get a new High Definition Tv Technology and early content partners could roll out movies. See how it develops as gaming was seen as the early use case for vr and dedicated hardware from the likes of sony and facebook. Now, of course, the phones are the money making story of the day. Again, thats the note four and the galaxy note edge with the screen that raps around, allowing navigation on the side. These are big phones seeking to get ahead of the big iphones expected to see next week when you are in san francisco, carl. Yeah, and well talk more about samsung in the next hour, john, with our john ford there at the samsung event. Dows up 76, best gain for the dow in a couple weeks. Lets get a market flash. Good morning, carl. Shares of infinity pharmaceuticals, stocks soaring on news there was a payment of 275 million from abbvie. Trading up 7 . Well see where they are trading, up just a fraction of a percent right now. Sarah, back to you. Thank you very much. Up next, one of the leaders in the m a industry weighs in on the topic. Tax inversions and shareholder act vichl. We are joined when we come back. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. I research. I dig. And dig some wha trader more. Search. For. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Welcome back to squawk on the street, phil lebeau with breaking news on toyota, an increase of 6. 3 , above the expectations of a decline of 2. 1 . Again, toyota reporting sales in august increasing 6. 3 , the latest auto maker to report much better than expected sales number for the month of august, and, again, starting to hear chatter there could be a sales rate topping 17 million for the First Time Since july of 2006. David, back to you. Woah. July 2006. Remember it well. Thank you phil lebeau. Talking about big numbers, numbers of multibillion dollar deals pushed deal making to 2. 4 trillion for the year, a 75 increase from last year. This, in part, fueled by the increasing wave of Corporate Tax inversions starting in the pharmaceutical industry, but now widespread. The next guest is a leading adviser on m a, shareholder activism, and involved with deals on inversions like salix and cosmo technology. We have chairman elect, and taft. Great to see you. Nice to see you, david. We talked about the burger king deal, a different type on the menu of inversions, but first question is simple. Are there more . Therell be more inversions. What happens is the impact from washington will take out a certain layer of transactions, and companies not familiar with global tax risk that do not manage tax risk dont have the same kind of appetite for that or sophistication with it will be probably spooked by whats going on in washington. You have a whole other set of companies who manage tax globally. Take burger king, sophisticated operation. Swim in the waters, Companies Continue to invert, and they will, and i want to point out that we are not inverting to an island. Its not bermuda. They are going to canada, the u. K. , ireland. These are very competitive, welldeveloped jurisdictions, david, and our economy and our tax structures going to have to compete. Period. Now, of course, there is concern its in the investment community, particularly amongst those investing in takeovers, for example, but theres something done by treasury, that jack lew will change rules that conceivably put a stop to this. Do you expect that to be the case . I think there will be some activity that tries to implement a unilateral action of some kind, but i think it will be proposed. I dont think had will actually be that theyll go straight to it, and if they do, im not sure that its going to withstand sort of scrutiny over time. I think they are struggling now. If there was a clean unilateral option here, we would have seen it already, so what it tells you is they are struggling to find a path, and right now, you dont have a congress that can cut a deal, so, you know, with that as a background, it looks like a lot of posturing in a political season, and it will impact the market, but it will be on the margins. Right, those who worry abbvie shire will not close, in your opinion, they will, in fact, get those deals done . I believe they will. You mentioned ireland, of course, this summer, interesting piece was put out, you visited with officials in ireland. The prime minister. They are not that keen as we thought on tax inversions. Is that something that could change . They encourage companies to make Real Investment in the Irish Economy beyond just board meetings in ireland, and i think that companies are well advised. Its a great jurisdiction. If its going to be your corporate home, david, and you use the law of the land, its good to have investment there as well. Thats the advice we give to clients. I want to move on in the short time we have to m a. Running m a, and now this is health of the year we are seeing now. Will it keep on . Its really on. Its going to keep up. Reason is because we are moving deeper into the cycle. We have a situation where my competitor did a deal, i have to do a deal. Were in the competitive dynamic of m a where theres a domino effect to the transactions. You seeing it in health care. I mean, thats what drove the m a market this year. Driven in part by inversions. In part. They are a dynamic transaction. Private equitys picking up, significantly. So all of the factors are here, moving deeper into the m a sickle, and m a is important. Ill tell you why. This market traded on multiple expansions. Thats been the trade. Thats over. Okay . Revenue is growing slower than earnings grow. What are the options . M a, consolidation, synergies, very attractive options for companies today, and, frankly, looking at deals all over the world. Its a global market. Its a very robust one. You expect the second half, forty quarter to be robust . We expect well lean into the market, and were as busy as weve been. Finally, you have an approach on activism that distinguishes you as well trying to get boards to talk to their shareholders change that dynamic in terms of the activist investor and the board. How is that going . . Really well. The point of view is that its not 19 85 mim, right . Some of the techniques used then are antiquated. Shareholders are much more engaged, and if youre a public company, and there are hedge funds or activists engaging continuely with the shareholders and the board is not going to engage in any kind of similar fashion, theres going to be a very asymmetric conversation and companies are hurt by that. Thats what happened in the latest wave of activism, and what they are doing is building a bridge between the long term shareholders, those in for the long term, and the public companies. If you have long term shareholder with you, you dont have to fear activism. Activism keeps up, m a keeps up. Its fun. Well bring you back. Thank you. Back to you. Straight ahead on the show, Global Markets facing one flash point after another, and major centralback meetings. The dow moves higher, briefly pushes its record close, now up 50 points. The former chairman of Goldman Sacks jim oneill joining us live for a take on all of it when we come back. An hour into the trading session, whats moving . Looking at the biggest losers on the s p 500 now, a few winning names including apple after the record high, michael kors on the list, delta airline, and apple circulating saying take profit on apple after record highs into the new product cycle, but, still, a lot of bullish sentiment and enthusiasm whats to come in the next week or so. They recommend taking profits, in their words, unless next weeks events details massive incremental profit opportunities, likely to downgrade apples ratings, only down to levels from last week. Still above 1 00. Concern with delta. You talk about this earlier. Exposed to middle east and to russia, putting pressure in terms of the results, but still delta is riding high, another winner as well. Looking at some flipping over to the winners now. First solar, staples among those, and also new corp. , a steel company, up, and the euro is bouncing after tensions easing over in ukraine, but investors will be keeping a close eye on the ecbs action, if any, tomorrow, and the euro is near a oneyear low in anticipation, jim oneill, former chairman of goldman sachs, and people dont know your first love is foreign exchange. Well ask right now, whats the call on the euro ahead of the widely anticipated ecb meeting . Wow. Thats something to start with a nice easy one, huh . Nice to meet you. You know, fondly enough, ive personally been short the order for the past few months, and maybe im a bit premature, got out of it a few days ago. Youre seeing a bottom . Well, i think im not surprised theres a bounce because theres two things going on. First of all, not only is the now already very strong expectation for an ecb further shift at least towards qe, if not actually doing it, but more intriguingly and greater substance there are the first signs of germany relaxing a bit in terms of fiscal policy and following draghis influential speech again in jackson hole. This pressure mounting more a more open minded approach in fiscal policy that might be seen as a more sensible thing to do to deal with the nature of european challenges rather than just some version of qe which would do bring down bond yields further, not making any influence anyhow. Thats the debate. People are focused on the Monetary Policy side of things this week. With yields negative, Stocks Holding the highs in europe, and euro at the oneyear low. What is the scope for the ecb to deliver something meaningful in terms of the boost to the economy and also to help further assets . Well, i think thats the bigger question these days. Im not sure, unless the ecb starts really getting into substantial corporate debts buying, particularly if china wouldnt clog what appears to be still a broken Banking System by buying back debts, i dont know what the ecb can do. I think announcing some kind of u. S. Style qe of buying government bonds these yields does not make a lot of sense so i cant see them doing that. And if they did, i dont think it would make much difference, so i do suspect they will move towards some corporate debt program, but as i said, i think whats coming at the large margin of more interest is a shift in european fiscal policy from the pressures building in france and in italy, but also now germany seemingly shifting its stance on it which that would stop the constant pressure for further fiscal austerity harming some economies still. Yeah, seen as a positive. I want to ask you about the u. S. With u. S. Equities back in record territory. Billionaire sam zell was on squawk box this morning talking about uncertainty in the Global Markets talking about a correctionment listen to this, jim. I dont remember anything in my career where theres as many wild cards floating out there that have the potential to be very significant and alter peoples thinking. Is it altering your thinking on Global Economy and Global Equity markets to have so much uncertainty from the geopoliticalfunny hearing that very experienced person. I say funny because this morning i wrote something going in the british newspaper over the week saying essentially the same. I cant remember the start of the backtoschool season and finance where there was so many very complex issues around the world which are unpredictable, and ironically, of course, with the evidence of the u. S. Economy strengthening more and more, well creep towards a position here where the fed might get less dovish than its been recently which could cause bond yields to rise earlier, and that, if it happens, would be a challenge to the markets as well, so as much as its good to see the economic story improving in the u. S. And doing okay elsewhere, i dont feel my normal, usual bullish self about markets at the moment. Hey, jim, a lot is written about russias finances, amount of money to refinance in the next couple years. If they dont, people are talking about declines to gdp between 6 and 10 . Why run into the brick wall, so to speak . Oh, i think he seems on a path he cant really reverse because its otherwise a good question, but i would throw one very important slightly worrying additional, but sobering fact. Yesterdays papers in europe, at least, with followup stories about the russians reaching out to china about taking a big stake in a domestic Russian Energy company, and as i think i might have said to you guys before, unless you know, like with my other countries increasingly, the most important client for russia is china, and so as long as they think the chinese will be happy with them, theyll not overly bothered by noises coming out of europe. Although, as the pressures get tougher, obviously, it is going to hurt them more, but it will be really, really usefuling i think, if somehow washington and berlin and brussels persuade chinese to be part of a greater, truly Global Alliance of the matters, otherwise im not sure the russians respond. While we go around the world here, jim, finally, japan. We are starting to see the dollaryen move past 105. Where does it go next . You know, i think this is partly because of the two things going on, i suspect. First of all, people think with the weakness in the japanese economy, the doj has to do more again in terms of japanese qe, and then, of course, this never ending talk about the japanese Public Pension Fund shifting more money into equities. Thats lying around too. I dont really understand why theres so much focus on the topic in the markets because its not a new story, and, you know, we know its been coming. Given the 105 area, so sensitive inside asia, and it could have consequences for the rmb, which washington wouldnt like, im not so convinced about the yen trade at this level. It does seem to me with the strengthening u. S. Economy, however, the notion of a slowly rising dollar more broadly is looking i know its a popular thing, scares me with the c consensus in foreign exchange, but looks a rising dollar will be one thats gentle as long as we continue not to just get to the end, but against other currencies. Good to get your thoughts on global economics. Ive been corrected, your first love is football and then foreign exchange. Correct, yeah. Football way more, way more than currencies. All right. Dont go overboard. The former chairman of gold lkman sachs asset management, jim oneill. The rider cup team set, tom watson making picks to complete the team joining us live to talk about the cup and future of golf in general when squawk on the street continues. R stops. Tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account and you could earn tdd 18003452550 0 commissionfree online trades. D 18003452550. So if you get a trade idea, schwab can help you take it on. D 18003452550 were getting a lot of questions about organic food stocks. Tdd 18003452550 sharpen your instincts with indepth tdd 18003452550 analysis by schwab experts. Tdd 18003452550 and if you want to run your idea by a schwab trading specialist. Tdd 18003452550. Our expertise is just a tap away. Tdd 18003452550 whats on your mind, lisa . 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Welcome back to squawk on the street, checkous delta earlies, stock lower after lowering the revenue for average seat mile for the third quarter, a key revenue metric for the airline reporting a 2 rise in august. The stock trading down by more than 4. 2 . Other airlines down as well after rallying on Falling Oil Prices yesterday. United, southwest, jetblue down for the session. Back to you. Thanks a lot. The cme this morning for the santelli exchange. Good morning, rick. Good morning, carl. A special guest, why a special guest . Because the capital markets, central banks, certain hedges, they are all, like, a special country club, and its very difficult to get in. Jewels is breaking the country club status opening up potentially 6500 local banks to the capital markets. Welcome. Good morning, rich. All right. Competition. Thats what makes america great, but its been late to the party coming to rating agencies moving outside the big boys. Maybe you can tell us what Bond Rating Agency has been up to. Okay. Well, we issued our first rating about two and a half years ago, and the idea is to do deeper research, put aside the old rules, understand the aelts coming out of the crisis, and to do good, deep work on behalf of investers. Now, most of the regional banks that have moved into this program so to speak, and from what i read, you are closing on in 400 million of issues, but small, is it not . Good potential, banks close to their communities, many of them are extremely well run. They are ignored, have been ignored by the big guys because they do not pay very much, number one, and, number two, they only really Pay Attention to the top 250 banks, and youve got thousands of banks around the country that are close to their communities, mostly depositor funded, meaning they dont rely on the markets, and they are really theyve been ignored, and its cost them a lot of money to put infrastructure together and were hoping itll enable investers for a clear and better look at this group of institutions. Well, anybody whos looked into the background understands you are a visionary. Lets both be visionaries here. Right now, youre allowing these banks to tap capital markets. Is there a point in time where you may be working with the regional banks to actually do things like Mortgage Backed securities and maybe jump start a form of finance in the Housing Market that the governments programs, in essence, have not only not help bring back, but they are as dormant as Rick Van Winkle . Its an important issue for the country much less these institutions. We do have a whole department dedicated to Mortgage Backed securities in a residential nature and commercial mortgage backs. What really has to happen is the private sector has got to get more involved, a lot of money waiting to invest in the residential sector, but there really hasnt been opportunity because of the uncertainty of whats going to happen with the gses, fannie and freddie, and those folks as well as some regulatory issues that are still unresolved. I think the Community Banks have a role to play. They are close to the communities. They know the depositors. They know the credit backgrounds. I think theres a big opportunity here. Its very important for the country. Now, do you think that its possible that you could move into more of the mortgage scenario setting youve described without anymore information regarding the gses, because perm im not optimistic Social Security a clear picture because its operating like a sung hedge fund making up rules as they go along. Is it possible . They could usurp the questions and move on its own . The private sector expects this market to pick up from what we are seeing and hearing in a considerable way moving into 15 and 16 from what we are able to presently tell. Its really going to get down to the fundamental credits, the value of the homes, and the loantovalue ratio, and we do expect theres liquidity thats not the issue. Theres plenty of liquidity, and i do think we will make progress. The fcc just issued many new regulations out of doddfrank regarding the Credit Rating industry. I think thats one issue, but the more important issue is for the banks, not just the big guys, but the smaller institutions. Well, we have to leave it there. I could talk to you at great length how this is going to develop. Well continue to bring you back and monitor the situation. Thanks for taking the time this wednesday morning. Sarah, back to you. Thank you. Thank you very much, Rick Santelli. The companys vp of products is joining squawk alley live later for an exclusive interview you will not want to miss. Well be right back. You want to cut through the noise of an overwhelming amount of analysis. [ all talking ] you want the insights that will help you decide which ideas to execute and which to leave behind. You want your trades executed in one second or less, guaranteed, and routed with institutionalquality technology. Look no further. Open an account and find more of the expertise you need to be a better investor. Morning, andrew madoff, younger son of Bernie Madoff, convicted felon who ran the largest ponzi scheme in the history of wall street has passed away. He had been suffering from lymphoma. Our scott cone followed the story for so long. Last reported in july his health was precarious. According to sources, mr. Madoff, andrew madoff, passed away this morning of lymphoma. He, of course, was the only surviving son. His older brother mark having committed suicide in 2012, and, of course, their father Bernie Madoff in prison for the remainder of his life. Andrew madoff dead at 48. Another sad development in the family. Gentlemen. Be right back on squawk on the street. Dad,thank you mom for said this oftprotecting my future. You. Thank you for being my hero and my dad. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance could be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Whenwork with equity experts who work with regional experts who work with Portfolio Management experts thats when expertise happens. Mfs. Because there is no expertise without collaboration. [ inhales deeply ] [ sighs ] [ inhales ] [ male announcer ] at cvs health, we took a deep breath. [ inhales, exhales ] [ male announcer ] and made the decision to quit selling cigarettes in our cvs pharmacies. Now we invite smokers to quit, too, with our comprehensive program. We just want to help everyone, everywhere, breathe a little easier. Introducing cvs health. Because health is everything. Spotlight on jobs. Plus the weekly jobless claims report. How the numbers would sway the numbers. Squawk box, tomorrow on cnbc. Welcome back to squawk on the street. Wanted to point out a mini, increments deal on the deal involves cocacola and green mountain. Today announces honest tea, i actually have the product here, shipped to me by cocacola, a coke brand, will be the first coke brand in the keurig hot brewing machine. The latest in a series of moves. Coke took a stake in green mountain, 10 in may. Said it was raising that to 16 and working on a current cold beverage, bringing a machine together. A lot of speculation perhaps this is build sdwroup a potential acquisition from cocacola of green mountain. Obviously, just speculation. You continue to see this relationship build with this honest tea. What is this . Little pods . Right. Similar to the coffee. Put it in the hot brewing machine, though it says brew over ice. You can make one cold. Ill make you one after the show. That would be refrerging. Thanks. Green or black. Green, please. Two flavors. Something to watch. Two companies. Green mountain shares near record high. They are. Coke going on to do a somewhat similar deal with monster. Just two days away from jobs friday, and that means another opportunity for you to nail the number. Tweet your predictions for the august non farm payrolls. Use our handle. If you are the lucky winner, youll receive a new cnbc pullover, just in time for fall, of course. Well autograph it right here. The entire squawk on the street team. Im going to start, if thats okay. Thats okay. Very nice. A little large for me, but, oh, man. A good size. How are you supposed to do this . Using my hand . Simon, if he were here, make him turn around and do it on his back. Optimistic heading into the jobs report. Expecting another 200,000 plus jobs to be created in the month of august. Really . You want to use my back . Yeah. Turn around. Much easier. Your back is too small. Dont forget, nail the number, people. This is a good one. Well get carl and jim to sign it later on. A lot more professionally as well. One minute until friday release. 8 30 a. M. Nonfarm payrolls to be able to win that prize. Earlier in the interview with the gentleman from jpmorgan, asked if there is a hot number. Hes expecting one. No. Dont worry about rates. You start to wonder whether in fact this lack of fear about rates moving higher given theyve been below 24, now a bit above it. Higher rates at least in the early stage of the cycle, the economy and market should be able to sustain that. Economic growth. Right. This fed made it clear. Balance sheeft. Has to be good. Makes me wonder. A big question. Higher rates definitely going forward. We leave you to ponder that one. Carl, time for squawk alley. Thank you so much. Good morning. It is almost midnight at samsung headquarters in seoul, south korea. 11 00 a. M. Here on wall street. Squawk alley is live. Not every day we open with adam levine in room 5, a special 2k3we689 playing samsungs event in new york city today. Were have a lot more on that. Super fired up about your partnership with you guys. Amazing. Samsung is incredible. Well have a ceremonial iphone burning directly following this press conference. Yeah first, though, a special guest here on asset with us. Walt mossberg, coexec piv editor of re code is here. A treat to have you onset. Treat to be here. Josh steinberg and of course, Kayla Tausche as always, jon fortt is live at the samsung event in new york city, and jon, we start with pup what have we seen so far this morning . Well, i just ran in there for you, guys. Got my hands on pretty much everything they would let me get my hands on. The galaxy is about what you expect. An update to the note line. The screen is nice. The note edge is probably the most notable phone of the two, because its got that screen, that slightly wraps around the right side of the device. You can do numerous things with it. A center meter inch ruler to use if you want to measure something. Acts as an extra navigational ping. Operates completely separate from the main screen. So its possible that Software Developers can come in and do things with that little piece of screen to enhance the operation of their apps. I also tried on the headset. The samsung gear vr. Interesting experience. You can see the pixels in the headset. This isnt going to trick you into thinking youre in an actual