again. so you're not looking at a bounce back. at least not in the early trade. after you have such rough seas like that it's not unusual to see it the next morning. but right now at least it looks like the dow is indicated to open down another 77 points. yesterday closing below 17,000 for the first time since october. the s&p 500 is down another 8 points after closing down by 2% yesterday. check this out, though, the dow negative on the year. s&p is negative on the year as well. this is decline of 2% yesterday for the dow. 16990 is where it closed at the end. it's at risk of the annual winning streak for six years in a row. we should point out the five dow components hitting 52 week lows yesterday includes utx, conoco, exxon and procter & gamble an intel. japan was down by 3% as well. shanghai composite down and hang seng composite down by 1.5. china's august flash factor pmi. that's a key manufacturing index. it dropped to a 77 month low. do the math on that, that's more than six years. domestic export demand fell as well. the nikkei tumbled below the 20,000 mark to close at a 3.5 year low. let's get a check on the early trading in jurors and again some red arrows here. nothing that's down by more than 1% at this moment but the dax is down by about .5%. cac in france is down by .8% and in italy down by about half a percent. >> other than that, how was the play mrs. lincoln. >> exactly. >> in a flight to safety this morning, gold prices hitting the highest levels in more than a month. i saw a quote there. it's getting the bid from lower interest rates. we're going to talk about that. copper has been dropping on pace for its 7th straight weekly loss. traders point to fear about the chinese economy. copper trading at 22915. one of my guests insists we take it out all the way to the millionth decimal point. let's check on currencies right now. the euro stronger overall. 11272 but right now it's weaker against the dollar. the yen weaker, 12299. as for the all important ten year yield we were at 207. now 2085. we're in that area there and significantly below that 2.10 mark there. >> okay and if you had any doubt about how crazy trading is right now just check out the vix. soaring 26% yesterday. it's currently tracking it's largest monthly gain since, i hate to say it, september 2008. so a little history. >> always remarkable how august somehow always brings a thunderstorm of volatility right. >> and september. >> and september. >> right. although historically for the last ten years if you bought august september, by october you were up. except for 208. it could be bargain hunting tun. >> why do you think volatility happens in august? is it because fewer people are here? >> there's always something happening unexpectedly bad in august and it gives it the extra push. >> keep going to jackson hole and thinking i'm getting fishing in and it ends up being the biggest story of the month every time. >> it's your fault. >> i'm leaving shortly to go there and all of a sudden to me it's a huge story next week. >> what about janet yellen. >> even without janet yellen. stan fisher is giving a speech on inflation. >> what does janet yellen do while everyone else is there? >> i imagine she'll figure out -- not everyone is going but yeah. >> we do have every angle of this story. todd gordon of trading analysis.com hitting the equity markets for us this morning. >> we're going to talk broader markets in a moment and tell us about what happened because it seems like this came almost out of nowhere. it's been building after china devalued the yuan. is it over now? >> what has happened really? has any real damage been done? i'm not sure. there's a lot of talk about whether the trend has been broken and i really don't think there's been any technical significant damage done. there's a lot of talks about the 200 day moving average. have we broken that? have we not? if you look at the dynamic in the technical picture of the market, the stock market has done nothing but flatten out which allowed the longer term moving averages to play catch up. >> although if you look at what's happening in the emerging markets and china it's hard to imagine if you add up all of these economies it's probably about half the global economy. >> sure, absolutely. >> if it's getting sick it's hard to imagine that it's not contagious to us and europe. >> i agree. take a look at the action overnight. this is a key tell. we had asia down another 2 or 3%. maybe more than that. we were down significantly. we just touched positive overnight but when you don't get the follow through on the third day of harsh selling. >> it's early in the day. if we close down at the end of today, if things get uglier do you change your mind on all of this? >> i'm reluctant. i don't think much has changed. asia has been selling off quite significantly. i don't think the fed is in position to hike and what really has changed? i don't think much has changed in the picture. >> and what would change your mind on that front? i'm sorry to keep coming at this but there's a lot of nervousness. there's people that are very worried. >> i understand and we go through this every single time. just to put in perspective again since the european low, the credit crisis low in 2011 the stock market i believe on average has declined about 8.5% over six different declines. right now we're at about a 4.5% decline. we have another 4 to 5% to go even before we get to an average pull back in this up trend. so another 5% and then a little more than that and then we can talk. >> i want to chime in because one of the fears i hear out there is okay china is going to settle down somehow into a lower growth rate. nobody quite understands how china unwinds. which is who has what debt, what leverage. we have never been through this. we have been mostly living in an era of double digit chinese growthment we have gotten to a point where it's 7%. if this goes down further who gets caught holding the bag? and this is classic and i say that only in the last 8 years, classic post financial crisis uncertainty where everybody wonders where the r tare the bo buri buried? >> great way to put it. jeff i don't know how much of that conversation you just caught but people are very nervous at this point. it does feel like investors are less likely to jump in and every time that there's a pull back and prop things up. what do you think happens next? >> yeah i've been speaking to portfolio managers and i haven't seen this much fear since the spring of 2009 and we're only 4.5% off of the high, the cnn fear index is at about it's most negative reading since 2012. the new york stock exchange is about as oversold as it ever gets. a number of finger tore wallet ratios i look at are as oversold as they ever get. our timing models call for a low between august 13th and august 18th with a plus or minus three day margin of error. >> that's like today. >> so today, at least to me, feels like ka pitcapitulation. >> meaning you think we are nearing the bottom. >> absolutely. >> yesterday it was pretty ugly. you'd look for a bottom today or the first part of next week. >> what makes you so confident in that. >> because i've been in this business 45 years and i've seen this act before. it's like pornography, you know it when you see it. >> can you tell us what goes into the model -- tell us about the model that gets you to this very specific period of days. >> the modelsareproprietary. it's like flying a private plane, you have to trust your instruments and the instruments have served me pretty well over the past 45 years. >> what's going into those instruments. >> i'm not going to tell you because they're proprietary. >> yeah but it's hard to come on the air and tell everybody about a specific week you think is going to be the all time low. it's a good record. but i think that it would be -- i think the audience would be a great beneficiary just to at least understand the kind of me tricks with which you're using to come to this conclusion. >> and i say it again it is proprietary and if you tell people how you do your models then the models become worthless so i'm not sharing that. >> i give you kudos for coming on and saying this and pinning yourself to a date like that. you're the only person i know that will say it that specifically and obviously we'll be able to check it in the next week or two weeks. so i give you kudos for that. what are you telling your clients in terms of what to do right now? are you saying buy american? buy u.s. stocks with both hands? or are you more specific than that? >> i am more specific than that. america is still the best place to be. there's head winds in the emerging and frontier markets. jurors looks cheaper than the u.s. but there's issues over there so we think stocks like fundamental analyst of mine has a strong buy rating on a stock like the low orbiting satellites that basically cratered because of the space-x explosion that pushed their launch out. they have come down to $270 a share that has a 6.3% yield and as they get their launch schedule back the cash flow is going to ramp and pretty soon they're going to have a 50% free cash flow yield on their common shares. so we have been using a rifle approach on special situations. >> all right. jeff, i want to thank you very much for joining us today. todd thank you for coming in. it's good to see both of you. >> my pleasure, thanks. let's turn the conversation to oil and currency with crude oil hanging near six year lows. >> john, we know your special model has something like a three handle on oil. you said we're going to get there. >> i do. we have to leave ourselves open for an upper 20s low point because of how fast this whole thing is unraveling for the oil trade. not only is it a supply story but this china situation to me is very disturbing. it's the key demand center for oil and we're not going to have the kind of growth that we experienced over the years. it got built out over the years to see the demand for everything. iron ore, crude oil, not only have they met it but now the demand won't be there to the extent that the industry thought it would be and that's what we're seeing the experience here. >> all of this has a feel of deja vu all over again. you and i went through the bottoming out of oil in 1998 and what was interesting to me is the first pass of lower oil prices was not enough to shake it out. >> right. >> it needed another pass and another pass and only when it hit rock bottom did it create the balance needed in the market for supply and demand. so this could get ugly. could you go -- you did. you're great. there's that and a low, slow climb up. that was a ten year supply-demand balance. so what's your take about how low it can go now? >> like i said, i think we can at least go into the mid 20s but you have to be open for this thing to get real ugly. >> mid 20s you changed your mind from a week ago. >> it's lower. >> what changed your mind? >> the china situation. some of the data is worsening. i think the govern. s reaction means it's a much worse situation than is being talked about and also the bad print on gdp from japan last week also is telling me that the whole center out there is a problem. >> >> if that's the case it's a reflection on oil and the stock mashl market. that would make it seem it's a volu valid mark in the stock market. >> very much so. china is a huge problem for the global economy and that's why the stock market is reacting the way it is. >> let's pivot to another thing. >> i'm going to take the opposite side and stay our lows are still in front of us on the equity side. that we have not seen the lows yet. >> you think there's something real happening. >> i think the whole story is that the market is thinking is this as good as it gets? we threw everything but the kitchen sink at the economy and we did 2% and now everybody is flat lining and starting to go the other way and maybe that's why. >> how low is low? >> i think, you know, we could have at least on a 5% to the down side. >> total of a 10% correction? >> yeah. and then the crisis scenario and one that's an outlier is if something goes wrong in china, that's tun known. >> one thing for the market to decline and that's a bad thing but different from systemic risk and another is the 97 asian financial crisis. anyway, does any of this smell or feel like that kind of crisis to you boris? >> partially but not all the way. you have the same element which is is concentrated capital, huge amount of corruption, lots of mal investment. all the best hit of what happens with asia capitalism. one thing that's different now is all the economies are better buffered against it because they have better reserved so i think they can be presented in some ways. i don't think it's nearly as big of a problem as in '97. >> explain to me, amid all of this, i was looking yesterday it's weakening against the dollar, all of those asian current s currenci currencies, why is the dollar strengthening against the euro. >> i think it could get squeezed out to 115 because everybody was short the euro. they have been able to pass identify greece and this is making the euro more attractive. >> you were at 60% in terms of fed raising in september. i would have agreed with you then. i'm back pedaling at this point. i think it's much riskier for them to do this in september when they were nervous about july and nothing but bad news has come since then. >> i think that's right but i basically shut my market down. we're having an imbalance in the trade in my brain right now and what i know is going to happen is i'm going out to jackson hole and i'm going to get a chance to talk to these guys. why speak before i have better information. >> i'm going to say 35 to 40%. >> but look i thought 60% when i heard what they said. the economic data in the u.s. has been better. we think we're going to print a 3-3 or a 3-4 in the second quarter. we might do 2.5 in the third quarter. they are better numbers than expected. >> so the third scenario is the one and done where they do it just to basically say we're in control of the market. >> is that victory if it's one and done. >> it's a puny victory. >> oh we raised when we really should have been. >> or the boj same kind of a story. what they're hoping for is its one and done and six or seven moss down the road it gets better and they can resume monetary policy. they'll say rates will stay unnaturally low for infinity. so that could be a scenario that nobody is anticipating yet and i don't think the market will react that positively because the forward guidance. >> i want to give you the headlines of this conversation. from the 30s on oil down to the 20s and a 115 handle on the euro before anything happens. >> and he's taking the other side of this equities are going lower. jeff said the bottom could be today. >> it's supposed to be over today. >> in terms of august surprises too you have north korea and south korea exchanging gunfire on their border yet. >> forgot about that. >> that would be a big negative for crude oil because another asian economic center would be thrown into turmoil in a big way. >> but there's a potential hurricane heading toward the gulf. >> what happens if you buy now relative to october. >> if we don't have a systemic risk. if we take the scenario out of it it's a great time to average into a position because generally we have been up. as long as it's a 208 scenario. that's been the history for now. so you can be both short and long and be right. >> the beauty of the markets. >> you have to look at all of these things and be asking yourself is it a buying opportunity? and guy station market was expensive have to look at 16,900 on the dow and say maybe there's a chance to get in here. >> thanks guys. >> maybe it's as good as it gets. >> worked for the equity guys. >> it has. coming up we have stocks to watch. among the names on the move this morning, hewlett-packard under pressure. before we head to break we'll take a look back at this date in history. ♪ welcome back. we have stocks to watch this morning. the futures are lower after all the news we saw yesterday and the drop in the dow. check out hewlett-packard. revenue dropped for the 4th straight quarter. also hp's current quarter and guidance falls short. we'll be talking to a tech analyst in the next hours. >> shares getting a boost after earnings and revenue topped expectation and that stock is up by over 6% and posting a smaller than expected loss. revenue fell short and the company announced plans to divest quicken and two other units. that stock down by over 10%. >> fed exwill formally launch and it talked about making this offer before but there is a formal launch of the $4.8 billion for dutch rival tnt express. that's going to come next week probably on monday. it's optimistic the deal will get the necessary regulatory approval. you might remember that tnt is the same company that ups tried to buy back in 2013 only to be blocked by regulators. there's a number -- actually they're not a number of delivery companies in europe. all you're talking about is dhl, tnt, fed ex, and ups. >> why is this one good now? >> that will be the question. there's an argument to be made that given the market power of dhl and ups in europe that it could create a better competitor to those two others. that would be the argument so we will see what they have to say. it's possible to allow the deal to go through. there's certain market where is they actually own too much of the business. but we will see. we'll turn to politics. john harwood joins us from new hampshire where presidential candidates are pounding the pavement. good morning to you jon. >> good morning, andrew. we have an escalating immigration debate on the republican side that involved donald trump, jeb bush and the entire range of candidates. i sat down yesterday in detroit with marco rubio and asked him whether or not he was concerned given the republican parties interest in repairing poor relations with the constituentcy whether or not he saw a need for this debate to be toned down. here's what he said. >> when i talk about 13 million people in this country illegal i say 13 million human beings. >> anchor babies. >> well these are 13 million -- those are human beings and ultimately they're people. they're not just statistics. they're human being with stories. >> after the last presidential election your party did an autopsy and said number one priority is to repair the breach with latino voters. as you sit here in a campaign that's got a descent shot to win aren't you thinking that right now the republican party is dropping a giant homemade bomb on itself and it's chances in 2016. >> but it's not the republican party. these are individual candidates responsible for their own rhetoric. >> but that's the face of the republican party to the country. >> the face of the republican party will be our nominee. >> isn't birth right citizenship, is that not one of the foundations of what american exceptionalism is. >> they were legal residents of the united states. >> but they're talking about people that are illegally in this country not having access to citizenship. not people legally here like my parents were. >> is that not one of the things that makes america exceptional. >> yes. that's why i'm not in favor of repealing the 14th amendment? but what's the slip side? you have people coming to this country expressly for the purpose of having children. >> we don't know where this debate is going. donald trump is driving it. he's leading in all the polls. most republicans expect he won't be their nominee but the question is going to be how much of a hang over does this debate have for a republican party that needs to branch out? it's the flip side of the issue hanging over the democratic debate right now which is how much will the hillary clinton e-mail controversy be a factor in 2016 as opposed to either now. >> i don't know what happens or who gets the nomination on this but listening to how he just spoke it made me think that he's a very strong candidate as a vice presidential republican nominee no matter who gets the top slot. >> he would be a strong candidate as the vice presidential candidate for sure. he's also a candidate for the top spot. >> right. >> you have four candidates right now who are widely seen as having the potential. but trump in a different category because he's not like the others but jeb bush, marco rubio, scott walker and john kasich. he's a very effective communique to and he's young and looks young. >> i'm not knocking him but i'm saying it wouldn't surprise me if they wanted him and it's hard to imagine that anyone else would be appealing so universally for a second choice on the ticket. >> becky it wouldn't surprise me either. >> my pick by the way, i think it's an interesting pick. get a woman in there. south carolina issue. anyway, second question for you actually goes back to trump and immigration. you saw the story in boston about these two guys, i call them thugs, who apparently beat up some guy they thought was an illegal immigrant and claimed they were inspired by trump and when called on it he didn't seem to condemn their activities as far as i could tell. >> donald trump is not one who is given to apology or regret, or humility. that sort of thing. but i would be fearful about drawing a connection between any particular crime and what a political figure like donald trump has to say. so i can imagine that that impulse is why he didn't express regret because he probably doesn't feel culpable for it. i don't know all the circumstances in that case and i know that there has been a stated link. i just don't know how significant it is. >> donald trump saying it would be a shame but i am saying people following me are very passionate. what kind of response is that? >> that is a politically foolish response. because if you give people the impression that a crime committed against another person reflects the passion of your supporters then there's something wrong with the passion of your supporters. i'm just not sure that that link actually exists as opposed to people who are just saying something who were criminals otherwise. >> john we appreciate it this morning. great to see you. >> you bet. >> thanks. >> these are moments i'm glad i'm an economics reporter. don't have to cover politics like that. coming up more on this morning's top story. the global market sell off. the dow and s&p now negative for the year and if futures are an indication in for another rough session. and first as we go to break here, a look at yesterday's s&p 500 winners and especially the losers. can it make a dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? at ally bank no branches equalsit's a fact.. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. welcome back to squawk box. we're in the shares looking at stories grabbing our attention with a lot of things going on but the one thing grabbing my attention is iconic. the whole world focuses on it. times square, the mayor of new york city trying to get rid of the pedestrian plazas in new york city. major bloomberg had actually gotten rid of cars. a large part of the cars going through times square. there's now one road effectively that goes through times square and used to be two and now there's pedestrian plazas. it's nicer. people weren't getting hit by cars. >> but there's a reason that he's talking about destroying them all because the pedestrian malls have gotten chaotic and ridiculous. >> what he doesn't like about it is all the furry figures. so there's elmo acosting people. >> chasing down tourists. >> and topless women, painted topless women. it's nott illegal to be topless in new york city and that's created frustrations for people and it's become a difficulty. >> i think he's the one that said just get rid of them. >> he said get rid of them completely. he didn't say that this in particular recent interview yesterday but some people argue there's a security issue when you have lot of people just walking around like that. >> i've walked through in the last week by myself didn't feel comfortable with it and intentionally went out of my way to get away from all of those crazy panhandlers who are dressed up as things. >> the idea that -- they just spent tens of millions if not $100 million to do this to then rip it up because they can't handle elmo is crazy. >> i don't say rip it up but do what you have to do to get people off of the streets. it's ridiculous. it's like going back to the days of 1980s when there were sex shops all over the place. >> the question is the whole first amendment issue. >> it's a quality of life issue in new york city. >> but can they actually make these furry friends and not so furry friends. can certain ones be approved or be licensed. >> it looks like a great tourist attraction and there's a couple of difficult individuals. >> no, now there's dozens if not 100 -- the new york times, i go through there and it's not a good situation. >> i brought my kids through there also and you get a little creeped out. >> very uncomfortable. >> it's a little creepy. >> it doesn't look bad from this picture you're looking at. first of all they harass you and try to get you to take a picture with them and then they chase you down with money and have gotten tourists that have not paid them what they thought was an appropriate fee. >> is that enough reason to get rid of it. >> and naked ladies. >> and if your disney you're upset about this because all of the costumes are not licensed costumes. it's problematic on so many fronts. >> it's a side show compared to what's happening in the markets today. we'll talk more about that when we come back. look at the front page of the wall street journal today. it's about the growth fears around the globe. it's about losing faith in the chinese government. it's about what's still happening with oil prices and what's happening in greece and we'll talk about all of that stuff when we come back too. >> coming up shares of hp under pressure this morning. is this the latest sign of the pc dying? that's coming up next but first a quick check of what's happening in european markets right now and i'm seeing red. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive? ♪balance transferot to othat's my game♪ bank you never heard of, that's my name♪ haa! thank you. uh, next. watch me make your interest rate... disappear. there's gotta be a better way to find the right card. whatever kind you're searching for, creditcards.com lets you compare hundreds of cards to find the one that's right for you. just search, compare, and apply at creditcards.com. ♪a one, a two, a three percent cash back♪ welcome back. take a look at the u.s. equity futures. the dow down by over 350 points. this morning we're looking at triple digit losses once again. now obviously still a lot of turmoil. you expect to see churning in the early hours as people try to figure out what to make of yesterday's moves because these are moves that moved not only in the he questionty market but markets around the globe. this happened in oil markets and currencies. dow futures are down by 113 points. s&p futures down by 12 and nasdaq down by 38. this follows the biggest decline all year. >> let's talk tech. and then i want to get to am stuff with you. hp reported better than expected earnings but revenue was hurt by slumping pc sales. this is the last time that we should tell you the computing apolo giant reports before splitting into two companies. he is lowering his price target for hp. good morning to you. >> good morning. >> this is the first time or the last time that we will see this company as one. >> yes. >> the revenue number missing again. >> yeah. >> and the question is when they are two will those revenue numbers go up? >> i think the company will continue to be challenged. whether it's stand alone or separated they're quickly and about 70 to 80% of this portfolio and if you look back they haven't been able to grow profits. our numbers for this year, next year, the year after will be lower than fiscal '08. >> i saw a couple of analyst pieces yesterday saying that this san argument for why they need to split. this is going to allow them to focus and shift gears. you don't think they'll shift gears? >> i think a split is better than stand alone but i think both businesses will be very challenged. so if you look at pc units we're down 11% year over year. just a tough market. >> what does that have to say about hewlett-packard versus the industry. the problem is people just aren't buying pcs. they're just not buying printers. that's one of the portfolios they were down 4% year over year. >> so you attribute that to what? what are you saying that is? >> in the past they haven't invested properly to address new trends so that's big data which is also down in cloud computing. >> right. >> can we switch gears? >> can i just continue real quick? does this business ever come back? does anybody end up being the winner in this? they're more of a laptop company but they have desktops as well. is michael dell not doing well in his private venture now? >> so look they're still in the game they haven't kept up with hp but you'll see a consolidation of the pc industry. what we have seen is some japanese players even over in korea bailout of the market a little bit or not focus on it as much. that's helped the top players like at hp but the market is so difficult. you go to markets like china. >> pick a winner for us. is there a potential winner out there? >> my long-term view is the china based players will ultimately win. >> do you look at either of them as a take over candidate? as a function of the split. >> it gives them flexibility. we always thought this and we have written about it and there was a lot of media reports that the hp enterprise could merge with another company and we talked with this so it puts those options on the table for sure and you couldn't do it if you're one company because an enterprise company would say i don't want anything to do with sprinting a pc but as separate entities it's more palatable. >> all the apple gear, that's why hp is not doing as well but you have a very high price target on apple stock and it's hard to justify what's happening here. >> they grew at over 100% last quarter. clearly the revaluation has a correct impact as it does have an incorrect impact in that the economy is clearly slowing so that is the major concern. >> what's your target though. >> is it a see no evil hear no evil situation for you now? >> it's getting caught up in this backdrop. i was in china last week and i'll tell you despite knowing everything about apple and what we have seen in the numbers in china, blown away by the number of people with iphone 6 and 6s and they are nowhere in tooer 3 through five sy cities and they'll make a big push and that is going to drag out and like i said we have india as well. so am, it trades at 8 to 9 times earnings and hp is trading at 8 times. really? a 38% grower, eps for five years is apple. hp negative 1% for five years. makes no sense. >> there you have it. we appreciate it. we should give you a programming note as well. you won't want to miss this because the ceo of hp will be answering the same questions. meg whitman will be joining the gang at 9:00 eastern time. >> coming up we'll talk about the economy and the consumer. the executive behind household names joins us next but first check out the price of oil. stay tuned. you're watching squawk box on cnbc, first in business worldwide. you wouldn't do half of your daily routine. so why treat your mouth any differently. brushing alone does less than half the job, leaving behind millions of germs. complete the job with listerine®. kill up to 99 percent of germs. and prevent plaque, early gum disease and bad breath. complete the job with listerine®. power to your mouth™! also try listerine® pocket packs to kill bad breath germs on the go. the gillette mach 3 turbo still feels better after 10 shaves than a disposable on it's first. mach 3 blades have twice the coatings. for a closer shave with zero redness. get an incredible experience shave after shave after shave. gillette. the best a man can get. all right. welcome back, everybody. we are continuing under pressure this morning. if you take a look at what's been happening with the equities markets, we are now looking at the dow down triple digits once again this morning after a drop of 350 points yesterday. you now have the dow and the s&p negative for the year and you're talking about levels we haven't seen in more than 18 months for many markets. right now it looks like the dow futures again indicate a down another 103 points this morning if we were to open now. the s&p futures down another 10 points after drops of more than 2% yesterday for the s&p. the nasdaq looks down another 34 points. of course, this is all coming after some major declines we saw in asian markets overnight with the nikkei down by 2%. if you want to look at what's happening with the ten-year note, a key indicator as we wait to see what the federal reserve does next months. you're now talking 208%, a lot of pressure on markets. we'll continue to keep you up to date through the morning. we'll talk about the global markets and economy in a different way. focus brands is a franchiser in the u.s. and more than 60 countries around the world, cinnabon and carvel. you know them as they launch an on demand service. there is a good time to check in on the consumer appetite here and in emerging markets. cat call is the group president of focus brands. good morning. >> good morning. >> given what's going on in the marketplace now and the economy, walk us through how you see the u.s. consumer. but i really want to talk about what you think is happening in some of these emerging markets you're in. >> so focus is in 68 countries, primarily with cinnabon and anti ann's, no presence in china or brazil, and about 10% of our business is the international emerging market side of what we do. >> so what you're seeing the consumer do in those emerging markets. >> we've had incredible year over year comp. sales in the u.s. and emerging markets. coming out of what happened in russia, it has severely impacted our strategy, whether we direct franchise or sub franchise and our overall approach, considering geopolitical factors. >> so how does that change your thinking? >> it makes us take a harder look at how we enter markets like china and brazil. >> and you say to yourself i want to enter these markets? >> you want to enter these markets, but differently. >> much more thoughtfully. the approach to partnership, direct franchising, the speed at which we can enter and whether we will cluster multiple brands or one that has lower barriers to entry. >> what's changing that entry? >> the consumer behavior hasn't changed as much. it's not so much the consumer behavior. it's how the royalty structure affects how those things affect our ability to plan and project our business. >> the currency markets are out of control. >> it's a hot mess. >> i can't imagine trying to figure out. we talk about how uncertainty is the biggest enemy when it comes to corporate planning and trying to figure out what you're going to do next and things have gotten much more volatile. >> we're having to bring more thinking to the table as a country. we used to be able to rely on industry centric globalization strategies and now we bring in economic experts, not just in the food industry but retail industries. we have never had to bring much thinking to the table before. >> is there any anxiety about what's going on in china for you, in terms of you saying okay, we're going to enter this market but maybe now is not the time or maybe this is the time because we think we're at a low? >> yeah. we feel this is the time. we really do. we're bringing the right thinking to the table to get into china. but we want to do it thoughtfully and carefully and with the right brand. it's not scaring us away from entering the market. it's going to take us another 6 to 12 months to get the plan straight. >> what's the right brand? >> scinnabon and auntie ann's. known globally. cinnabons in 68 countries, already. we surround china. we're just not in it. >> are there other brands trying to do what you're doing there now? >> not new brands. starbucks has gone in and out. ium has had a great deal of experience. >> and selfishly i can now get my cinnabon delivered here. >> carvel, cinnabon. >> because i've got to go on post mates to do that. >> you've got to go on post mates to do that. >> thank you. >> thank you. when we come back, we will have more on this morning's top story, the goebel market. stock selling off once again. volatilities we have not seen since the financial crisis. we are in for a wild friday ride. "squawk box" will be right back. what if there were only one kind of dog? then it would be easy to know everything about that one breed. but in fact, there are over three hundred breeds of dogs. because no one can be an expert in every one... an app powered by ibm watson will help vets tap specialized knowledge in the cloud for every breed... and whatever else walks, flies or slithers through the door. ibm watson is working to make medicine smarter every day. more data means more freedom to do..whatever. that's why at&t is giving you 50% more data. that's 15 gigs of data for the price of 10. because the more data you have, the better. and right now at at&t get $300 credit for every line you switch when you trade in a smartphone and buy any smartphone on at&t next. market alert. global stocks under pressure. the dow and s&p coming off their worst day of the year and the selloff spread to go asia overnight. we have mike ryan, straight ahead. more bad blood for media stocks after a broad selloff earlier this month. disney now down more than 16% in 30 days. guest host walter isaacson weighs in on the changing media landscape and it's literally the coolest new trend in health. >> in this universe, there's only one absolute. everything freezes. >> why lebron james and lindsay lohan are turning to the subzero temperatures of cry owe therapy to repair their bodies. >> oh, look. frost. >> harry? >> the second hour of "squawk box" begins right now. ♪ ice ice baby ♪ live from the beating heart of business, new york city. this is "squawk box." >> welcome back to "squawk box" right here on cnbc, physician in business worldwide. i'm andrew sorkin along with becky lease. walter isaacson is a cnbc contributor. becky has your morning headlines, and boy, are they big this morning. >> they are. take a look at what's been hang with this sell off in global stocks, spreading to asia. japan's nikkei fell by 3%. the shanghai composite off by 4%. declines have exceeded 1% for many markets. the dax down by 1.3% and so is the kak in france. in italy the market down by 1%, as well. this all comes after the dow and s&p suffered the worst losses of the year yesterday. the dow closing below 17,000 for the first time since last october. you're now talking about both the dow and the s&p, and in negative territory for the year to date. check out the u.s. equity futures this morning. we have been off by triple digits for much of the morning. now it looks like the dow futures. >> it seems to me the u.s. is following europe. this is not follow on in europe from yesterday's selloff. what's your sense of this? >> i think things were exasperated here. the problem was yesterday's declines here in the market. you saw it follow through into asia in europe this morning. things were easier this morning. we were only down by half a percent in many markets. i think this is uneasiest, people not doing what to do. any time you have a major storm, you are going to see churn in the water, a lot of foam and foaminess that comes up. i think this is people trying to figure out what they do on a friday in august before they leave. >> it may be uneasiness, but there are fundamental reasons for this. this china thing is real. we were in colorado, as your friends were gathering for the world economy program there, and others. and it was like everything from the overborrowing and the debt in china to the corruption that this is now happening and brings commodity prices down. so i don't think this is just frost. this is a real problem. >> there's turmoil in the foreign exchange markets too. >> when it got devalued, that reminded everybody, oh, yeah, china is about to go down. >> what does it mean, go down? >> i didn't mean to collapse down. >> does that mean a 5% growth rate, a negative growth rate? >> you would not believe they had a 7% when they said they had a 7. and i think it reminds us, they never had a 7% -- >> and the factory numbers they had overnight were the weakest in 77 months. >> terrible. >> you're talking about additional weakness and raises people thinking they're not going to hit 7%. >> and at some point their debt becomes a problem like ours was eight years ago. by going down, 2, 3% down after a while. >> by the way folks, this is walter isaacson. >> not that bad? >> i haven't forecast on china. what i think is so interesting what becky is talking about, the uncertainty. they kind of came into the room. and now they're the second-biggest player in the room. second-biggest economy. i don't think anybody has a way of processing. >> right. >> what happens when china slows down. to me, they have always been a facto factory, and a through put place and not an input place. i have a hard time getting too concerned about china, china's growth going lower. i have a problem understanding what -- >> copper and part of the reason for oil. >> that's fine. all of that for the u.s. ends up being good, lower prices for the u.s. i don't know -- i know there's a lot of sales out there, but not a whole lot. i have a hard time getting concerned. where i can get concerned is how it all falls out. who ends up with the debt. who is holding the bag on this. so that's what i'm concerned about in terms of processing. not necessarily in terms of china's growth being 7 to 5 -- >> but when you add all that up, who is controlling the debt, will apple sell anymore watches and devices as things get bad. hp, each one of our companies, as the yuan gets devalued, it's bringing commodity prices down. part of it is the energy component with commodity prices going down. so i just think there is fundamental reasons we're seeing a bad market now. >> folks, this is a taste of the discussions, everybody i think is having on the selloff. now let's go to dom chu. >> in many ways, let's talk with what you said. china is the root of a lot of uncertainty, unprecedented to have china the size that it is in terms of the world economy having the impact it does. in many ways, this is about a story of markets trying to deal with that. so if you take a look at the market selloff, let's put it in context for viewers and listeners out there on radio. the s&p 500 year-to-date, we have seen this up and down kind of motion. it's just around flat. now we're slightly down year-to-date. but we are off by about 4.5% from our record highs back in may. again, we have seen at least a move down. we're not going to call it a correction just yet. you can see here, we're now trading on a longer-term basis here, trading below the shorter term and average price, an indicator of trend for the s&p 500, something called the 50 and 200-day moving averageses. we are solidly below that. the worst day for maybe a year-and-a-half for some of the stock indicators. if you look at the nasdaq composite, this has been one of the leaders for over the last couple years, and that market has now traded below it's longer term average trend line or price, the 200 day moving average, the first time since october 20th, you have to go back there. the question is if that happens again. sector wise, drilling down into some of these internals. if you look at one layer below, the biggest laggards retail stocks yesterday, consumer discretiona discretionary. technology and financials. the biggest sectors in the s&p 500, carry a lot of weight. the fact these guys are helping to lead the declines, not good overall. and if you look at the laggards, you have to look at the relative leaders, as well. the ten of them, all lower. but utilities and telecom, remember the two sectors maybe more associated with dividend payers, staples as well here. those stocks getting a little bit of a bid because those dividend yields become relatively more attractive, given the interest rate environment. let's go to the interest rate environment now. ten-year yields, you've got to watch that. everybody thought the trend was going to be higher and maybe it still is. but we are talking about maybe a 2.5% ten-year yield headed towards three. now we're back almost to 2. 2.7 now. some of these stocks, becky, are the ones catching a bid, getting a little bit of a boost here because investors see them as more attractive, relatively speaking, giving the fact that interest rates interest for the short term to go lower. back over to you. >> why don't you come over and join us. we're going to continue this conversation with mike ryan, chief investment strategist at ubs. thanks for coming in today. >> thanks, becky. >> if you had to put your finger on it, figure out how the nervousness factor is, on a scale from 1 to 10 with 1: bein the least nervous, 10 the most. >> what you said, you have an exacerbated situation with thin liquid market conditions, it's august, what we call the trader's coffin period, a lot of people on vacation, undermanned desks. what happens is, you tend to get exaggerated. what we have is as walter mentioned, concerns about the growth dynamics and what the spillover is globally. what's adding to that is the down draft and concerns about what the fed may do, certainly add to go a level of anxiety in the market. >> so the uncertainty factor popping up once again. let's deal first of all with the economy overall. the big concern is if china is slowing down, what does that mean for other markets around the globe, what does it mean for europe, what does it mean for us, do we stay healthy and how healthy are we? >> first of all, we have to be careful to say china doesn't matter. of course it matters. it's the second largest economy in the world and what happens in china effects the rest of the globe. i want to be careful in terms of what's happening in terms of a deceleration and growth rate in china versus a collapse in china. what you're seeing is china going through this awkward phase as they move from an infrastructure to one more dynamically driven and it will take some time and some bumps on the road. what you see in europe in and the u.s., though, economies actually improving. for example, while we focus this morning on the really poor flash pmis in china, what was missed by the market was the fact the eurozone pmis were actually very strong. we're getting pmis today in the u.s., reflecting that the economy gains traction. there's some effects from it, and being reflected in the commodity markets and certainly through the foreign exchange markets. but i don't think this is having a ripple effect in terms of damping global growth. >> what happens if the fed does raise rates, even if it's only a quarter point, that would exacerbate things like the strong dollar. >> it will, but i don't think the fact that the fed is going to raise rates this year is going to sneak up on anybody. what you have had is a currency readjustment going on all year. i actually argue when the fed begins that step, what they're going to also signal is that's going to be a deliberate, very pragmatic, very measured fed rate tightening psycyclel and n raising rates aggressively and moving to a tight policy. what. >> do you see in other emerging markets, especially russia, getting creamed because of the decline of oil prices? >> russia is very unique, because remember, russia has basically -- they're so single commodity dependent. you basically had an economy deindustrializing, and will become relying upon energy. at the same time, they're feeling the bite from the sanctions. so i think russia is a case where the down draft in commodity prices, especially oil, are having a more pronounced effect. by the way, when we talk about commodity prices, that's a net benefit for china. >> what is it about the world we live in today, walter? all we can talk about is the negative aspects of declining commodity prices. for every dollar i do not send to an oil producer, it's a dollar i keep in my blanket. >> or i spend here. >> or i spend here. this is a good new story, ultimately. i am very sorry for these people that sell commodities, and these are emerging market stories. >> probably becomes capital expenditures in the s&p 500. >> it's great. >> it's great. >> all the bad country -- >> can we be happy? i'm sorry. i have missed in this whole time i have felt totally insane as everybody la mentalitied the decline of the price of oil. i have friends in the sorry business. i'm sorry for them. but $30 oil, bring it on, baby. >>is i will also say instability in the mid east is not a great thing. >> i cover lower oil prices. and a guy who grew up with a father who would drive 20 miles to save 2 cents on gas, loving it. >> that sounds like an economist to be driving 20 miles. >> that's my father, not me. >> when you talk about this idea, we talk about the middle east here. let's not forget that there's a good amount of our economy. not the majority, by any measure. but fracking. hydraulic fracturing, this new technology that somehow put us on the map in terms of oil and gas producer in the united states. this is a big deal, right? the more these oil prices go lower, you have all of a sudden a situation where these companies that have emerged, smaller mid cap oil producers, drillers, they employ people here in the u.s. if the economics don't work there, there is a balance here between lower fuel prices that benefit the consumer versus the benefit of the jobs lost. >> a different dynamic with regard to energy prices in the u.s. economy, overall a net benefit when oil prices go down. however, less of a positive than in the past. we have made this transition from being the marginal consumer of oil to the marginal producer of oil. i want to be careful. what we're seeing is a cyclical pull back, affected in terms of rig count and employment. a long term secular trend. the u.s. energy production is here to stay, a game-changing moment and i want to be careful about the job losses. i think they're temporary and will be transitory as we see commodities transition. >> you haven't seen them slow down, slowing -- >> you are saying rig counts -- >> in the gulf of mexico. >> one thing you have to remember, with tight oil, you have to be making reinvestments, because it has a very quick decay rate. so the notion is that capital spending stops, not a permanent condition. you have to reinvest. you have the decay fields usually in traditional fields 50 or 60 years, they're more like 67, 8, 9. >> one thing important, because of lower oil prices and smaller mid cap oil producers, they're dependent on high yield debt markets, bank landing. now these banks because of lower oil prices have to reevaluate on a mar frequent basis. then do they squeeze credit lines, cut off? charge more for interest? >> we have a ceo who does loans yesterday, pointed out he had run the portfolio. it's the variations and every 10% drop. >> these sensitivity on every dollar. >> businesses go up and down, stocks go up and down. businesses go bankrupt and loans default. that's not the same thing as a financial crisis. >> right. >> that's different. and what bothers me -- it doesn't bother -- i notice this all over. given the wake, every de -- everything that goes up is a bubble. we lost the idea of businesses being overvalued and being undervalued. there's a range here that's not this range. >> right. >> and i don't want to be pollyanna this morning. coffee is very good. >> it's going to slow down any feel of inflation, right? with oil prices going this low. >> and chinese devaluation. >> exactly. >> oil prices cut inflation. there's no sign. why do people assume there is going to be a rate increase? >> because it's transitory. that's what everyone says. >> walter, i think the answer to that is the rhetoric may not have caught up with the reality. you had this meeting three weeks ago. they made a statement. oil was about halfway to where it is right now. it was 52. when the fed met it was 47. now it's 40. even more than halfway, gone down quite a bit more. the yuan was not devalued. things have changed. the cpi came in below expectation. what we haven't heard and this is why it makes jackson hole very important. stan fish certify going to talk about inflation. so to hear how the fed guys are processing information. >> one thing to be careful about, i do agree, the fed is clearly focused on the data accumulated since the last meeting. one of the things, walter, you have policy right now which is set toward crisis conditions. this was a policy set in the middle of a crisis, no longer appropriate. the economy has how moved well out of crisis. financial markets have stabilized. so i think the fed begins to reset rates and you normalize policy. the question is all about timing. is it going to be september or december. i agree the events have certainly impacted the feds' decision making process. the fed is a dual mandate, full employment and price stability. other issues are secondary in terms of the volatility markets. >> they're playing us out. thanks for joining us today. walter with us the rest of the morning. coming up, shares of disney slammed again, down more than 16% in the last month. bob eyeing eye gar comes on the show -- walter isaacson next. and is wall street encouraging a short term bias? larry fink and hillary clinton say yes. we talk to a harvard professor who says no. and later much more on the market selloff. the latest buzz from chicago. a lot more when "squawk box" returns in just a moment. ♪ one of the stocks we're watching on what is start south to be a brutal friday, heavy equipment maker deere earning $1.50 per share. good news. bad news, revenue below forecast and lowering its forward guidance. deere impacted by a down turn in the farm economy and lower demand for construction equipment, the stock off at least 1.5% in the market. an upbeat quarter for sports footwear and apparel, 15 cents above estimates. revenue above forecast as well. same store sales up 9.3%, well above estimates of a 6% increase. so there you have sort of the sale of two cities there. coming up, disney getting crushed again, downgrades dragging down the stock. we'll talk to a panelist about it. time now for today's aflac trivia question. in what country did the great dane dog originate? the answer when cnbc's "squawk box" continues. ah! aflac? aflac! i thought you said this guy was the best? oh, he's a horrible stylist. gah? but he's the best at paying claims fast! really... mmhmm. paid mine in just one day. one day? yea. aaaflaaaac! in just one day, we approve and pay. one day pay, only from aflac. why should over two hundred years of citi history matter to you? well, because it tells us something powerful about progress: that whether times are good or bad, innovators with great ideas will continue to drive the world forward. as log as they have someone to believe in them. for more than two centuries we've helped progress makers turn their ideas into reality. and the next great idea could be yours. now the answer to today's aflac trivia question. in what country did the great dane dog originate? the answer? germany. for the second time in a week, disney had its its stock downgraded over concerns of dwindling subscriptions. shares tumbling 7% thursday. now down below the $100 level. started the month at $120 a share so a rapid decline. joining us to talk about the changing media landscape is barton crockett. our guest host this morning, walter isaacson, cnbc contributor. barton, thank you for joining us. you at this the selloff is overdone. why? >> i think disney -- it will be clear in the next couple quarters disney is separating from the fears driving down the rest of the tv network stocks. first half of the business is not even tv and that's going like gang busters with the movies and licensing. but within tv, the theory has been their sports-driven espn, what separates from the fact. and i think you'll see that. the next couple quarters when we get back into football season. these guys are the best upfront ad sales of any tv network in the industry, growth in volume, growth in rate. they're seeing ad growth in the september quarter, even they have a tough sports area. and then cord cutting, what we're going to see with the passage of time, this 1% decline in cable subscriptions is it. the majority of people find it difficult to give up cable because the companies bundle broadband with tv so you get a pricing hike and most homes have a sports fan. so you've got to keep the tv subscription. so comfortable with a 1% pace of decline. disney continues high single digit growth. the ad growth strong. and all of these fears that have kind of really exploded will abate as we get into the regular season. >> that's a defense for disney. but it is not necessarily a defense for the rest of the media industry. you think the selloff we have seen in other areas has been warranted? >> i do think there is pressure in the group, right? i think the biggest pressure is advertising, right? and the problem there is audiences moving towards netflix, away from entertainment. they're watching the big sports games, the audiences for the big events are growing. advertisers want to be exposed to that. but when it comes to general entertainment and kids, that is leaking from the bundle. people are keeping their cable subscriptions. as a group, you've got to be careful and stay away from guys with a lot of ad exposure. another name we like is someone with less exposure, time warner, with hbo, where we think their over the top offering will resonate and be a propellent. >> what do you make of what's going on? the big losers seem to be viacom and the weather channel which now appears to be up for sale. what does that say about what's going to happen if it's not happening already? >> okay. well, you know, i don't know about the weather channel. it's a small privately held independent channel complex that has issues with their contact, and a lot of players potentially in that area. i think with viacom, you have someone that's really kind of in the bull's eye of the difficulties. but there's a price for everything, right? viacom is now the cheapest stock in the s&p 500, the cheapest stock globally in the $2 billion market cap. even a struggling business is worth something. i do think that over the next few years, there will be an opportunity for an ownership change at viacom. i think they have trophy assets, if you look at the paramount movie studio, the oldest active studio in the business. smaller studios like lionsgate, the $5 billion plus market cap. paramount is worth more. these tv networks they run, the nickelodeon network, comedy central, other media companies believe they can program better and i think th would love to him them. i think with time there will be value. >> what should we think of the cable operators and how do you think about, for example, parent company of this network, comcast, which owns a piece of content in nbc universal and also the bulk of the business still remains the cable assets? >> well, i think that the cable companies are in a comparatively strong position, right? you've got to have your broadband to watch netflix and the other services we're loving. and the pace of change in tv sub subscriptions is not large. they're relatively underexposed there. so i think to the extent those guys are caught in the selloff, i don't cover them, but they are stocks that warrant a close look. >> burton, this is not something as simple or global as this shift of capital from distribution to content. i'm just trying to understand, where the money is going right now. it had been -- distribution was a really good way to make money and now it seems like content is a better way to make money, is that right? >> well, i think that content has been a great investment. i think it's, you know, for years until the past couple weeks where it's been on its tail. i think there will be opportunities within content. i don't think you can throw the baby out with the bath water. there is select opportunities in the select content stocks. i believe the cable companies have a critical element in fact future, your internet service. i think that's happening is the biggest beneficiary is the stock i've been recommending for a decent chunk of time, netflix. and i think there is a bright future there. but i think there's select opportunities in the rest of the ecosystem. >> you know, you make a good point, i think, when it comes to iger and disney. iger is one of the great ceos of the business, disney has a lot going for it. but it seems to me there is a big tsunami happening in the changes in the way we watch television, changes in the way we want things bundled. people watching cable less, but paying more. that's an unsustainable thing. i hate to use the metaphor of levees as we come to the 10th anniversary of katrina, but at a certain point, the levees may break, and the big levee seems to be sports programming. what do you think could happen that would cause the pent-up pressures to lead to a fundamental change? >> you know, it's interesting. you talk about pent-up pressures. there is nothing that -- is more loved, more broadly than sports. you know, the audiences for sports are growing. so what you have to see is that change. people not watching the championship series in record numbers. not watching the super bowl in record numbers. not watching the olympics. that's not happening. instead what you're seeing is the pressure is boiling over on to the rest of the guys. they're the guys getting squeezed, the guys in the general entertainment space, losing audience, losing ad share. but sports, you know, i think survives this transition nicely. i think over the longer term, you'll see the content companies separate themselves from pure exposure to the tv bundle. of these guys can over the top with services that consumers will pay for. >> real quickly, though. do you think disney may ever do a slimmed down sports bundle for those who want it, and that would break things open? >> i don't think it breaks things open but supplements. there will be over time a subscription version of an espn 3 with minor sports. i think over time there will be a subscription version of a star wars channel or marvel channel or pixar. tens of millions would pay for those channels and that could be a nice driver to kind of offset the pressure you might see at some point on tv bundle. >> never thought about that, a star wars channel. >> sirius satellite already has that, bruce springsteen channel, anything you want. comedy. >> comedy. >> barton, thank you for joining us this morning. a pleasure talking to you. >> thank you. walter is with us for the rest of the program. we have a lot more to talk about. coming up, blackrock's larry fink taking on corporate short termism. our next guest says that is an imaginary problem. professor mark roe joins us next. and take a look at the u.s. equity, still looking negative. so you're a small business expert from at&t? 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and export demand fell, obviously, and that was a huge concern. take a look at what happened in the asian stock market on some of the news and other things happening there. you can see the nikkei down by 3%. the shanghai composite was down by 4.25%, with the hang seng off by 1.5. copper dropping as well on pace for its seventh straight weekly loss. traders point to fears about the chinese economy. again, take a look at copper, a steady decline. and it's been sitting at lower and lower levels throughout every morning we've been watching. if you check out what's happening here in the united states, take a look at the futures right now. you'll see that so far it looks like we are still firmly in the red. dow futures down triple digits earlier, still down by 94 points below fair value. the nasdaq down by 32 points. as we look at the markets minute by minute and also, of course, are in the midst of earning season, corporate short termism is now under attack. a law firm joining the list, call on the s.e.c. to consider allowing u.s. companies to get rid of quarterly earnings reports entirely. and then, of course, you remember that back in april blackrock's larry fink wrote a letter saying the effects of what he's calling short termism phenomenon are troubling to those seeking to save for long-term goals such as retirement and broader economy. now a prominent harvard law school professor is calling this an imaginenary problem. we welcome the professor to the table. mark roe is here. good morning. >> good morning. >> you think this is all bunk. >> it is. imaginary is kind of a good newspaper headline. it's imaginary in the sense that it's a problem, something we should pay attention to. but it's not the kind of thing that's crippling the american economy that we -- that we have to put right at the top of our policy list. >> the great investors like warren buffett say, it's almost a set and it forget. he looks at the market every day, obviously. watches "squawk box." but when he buys something, he's not necessarily looking at every earnings report, every -- it's not quarter by quarter story for him. it's a multiyear story for him, if in the a decades-long story for him. and when you look at the average actively managed fund in this country today, the turnover i think is close to 100% annually. >> right. >> what does that say about this sort of a.d.d. nation? >> we may have an a.d.d. nation, and we may have in some ways an a.d.d. economy, in that things are moving very fast, not just in stock market, but in the real economy. >> what is that doing to companies? if you have a stock base that's constantly turning over, and you're a ceo who may only be in the job three to five years anyway, and you start saying, okay, i'm going to buyback my stock, because that's easier than investing, because, by the way, five years from now i may not be in the job anyway, i'm not going to get the credit for good or bad. >> we have had the problem where companies are not investing in capital expenditures. i don't know what's causing that. if this is the reason behind it. it has created a problem with the jobs market. >> let's talk about that. the economy is still a weak economy. i had had occasion last weekend to look at the federal reserve's capacity utilization numbers. capacity utilization in the united states is still below long-term averages. if capacity utilization is still behind and below long-term averages, you shouldn't expect companies to be rushing to put in new business equipment in place, if we are not yet utilizing the equipment that we have in place -- >> it's a demand. >> it's a demand picture. it would be a much more serious problem for us to worry about if three years from now the economy is at 85% capacity utilization, and we see companies that have good businesses and good futures, buying back anyway. but that's not where we are today. so to look at buybacks in 2015 as misusing cash is potentially a mistake. >> issues of how do we make better decisions. do we make better decisions by looking at the company on a quarterly basis, but one way to think about this is to imagine we didn't get any information until the end of the year. >> which i think is awful. >> right. that's my point. so the business is deteriorating over a period of time. >> you don't know it. >> you don't know it for three quarters and all of a sudden you've -- is the market adjustment -- is the liquidity that's -- what would happen to liquidity of these stocks if you didn't get information? liquidity would go away. >> i'm agreeing, by the way, there's tons of problems with this quarterly stuff. but i think the alternative is way worse. >> let me pick up on that. there's a baby and bath water problem here. there's no doubt that some companies -- >> one of the best metaphors. >> there will be some companies that will be managing for the quarterly return. and do some things that are distortive and not particularly good. but the baby here is we've got really good securities markets in the united states. one of the reasons we've got really good securities markets in the united states is we've got a very good information flow from companies to analysts who can look at what's going on, make comparisons inside the industry. >> but there's a difference between giving information and spoon-feeding and telling people these ridiculous numbers. we're going to earn $7.62 for this year and we can see three months down the road or nine months down the road. it gets ridiculous when giving guidance as specific as a penny for that long a period. >> it's probably a mistake for a lot of companies to give out any guidance and certainly a mistake for a lot of companies to say we're going to make $7.62, and then if they're at $7.60 the day before -- >> it pushes them to cheat around the edges, around the margins. >> and companies call painting the trucks an extraordinary item and then they start fudging the figures and that kind of stuff. >> but the solution to this problem is not to eliminate quarterly earnings. the solution is to eliminate the guidance. companies aren't required to give the guidance. they are required to give quarterly earnings. >> hillary clinton has suggested and larry fink has suggested a different structure of the capital gains rate, such to incentivize longer-term investments. does that make sense to you? >> it could. it should be coupled with something else. what would really help in making an integrating boards to facility making long-term investments is bigger blocks of stock that stay there for -- warren buffett is the kind of example. so a combination of tax rules and other securities rules that fit together so that we're going to get more warren buffet's could make sense. >> thank you for joining us on a day where we are focused on the short term term before the market opens this morning. thank you. >> thank you. >> appreciate it. coming up, we're spanning the country with our series on rebuilding america's infrastructure. up next, bridges badly in need of repair. mary thompson tells us how some states are turning to the private sector to fix bridges and fix them fast. ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great. in the us, three in ten college students drop out. but how can you spot who's at risk? the one who lives far from campus? the one who works the night shift? the one with new responsibilities? one thing can't tell you, but the right combination can. universities are using ibm analytics to understand pressures in and out of the classroom- some expect to cut dropout rates by twenty-five percent. ibm analytics is working to make education smarter every day. the nation's bridges are on shaky ground. 10% are structural deficient, meaning you can drive on them, but they need some kind of repair. no state has more of these faulty spans than pennsylvania, which is taking the unusual step of bringing on private partners to try and execute a fast fix for bad bridges. mary thompson reports. >> reporter: pennsylvania's got a problem. or 4,200 of them in the form of structurally deficient bridges. >> it's still a lot of bridges. we needed to really work hard and aggressively to reduce that number, even further. >> reporter: so the state secretary of transportation, leslie richards, says it's spending almost $1 billion on a public/private partnership to repair 558 bridges in three years. >> normally, it would take about a dozen years to get to this many bridges. >> reporter: daniel galvin works for the firm running the bridge project, the walsh group. critical to meeting the deadline, repairing a single span bridge like this one in ten weeks rather than the typical six months. >> we'll come in, remove the old one, tear out the abutments, pile driving, put in new abutments and then put the deck in place, repave it, and it's back open for business. >> reporter: helping to save time and money using uniform methods to repair and rebuild the bridges and buying materials in bulk. here in pennsylvania, northeast products will be making almost 2,300 of beams like these. those beams slated for the targeted bridges, which in an unusual twist will be maintained by the walsh group for a much longer than normal 25 years. >> so we've got an investment in this project to make sure the quality is there, and that it lasts the 100 years each of these bridges are supposed to stand up. >> mary thompson joins us now with more on this. mary? >> reporter: hey there, becky. you know, what we want to point out, pennsylvania says this is really more about saving time than money, because it's on a rush to get off that federal list. of the states with the most structurally deficient bridges. they will spend $1.6 million to replace an average bridge where a state would spend $2 million. so there is an element of cost savings, as well. coming up on "power lunch," did you know that americans drove a record number of miles in the month of june? we'll show you how the state of new jersey and ibm are using technology to help you get where you need to go more quickly. back to you. >> and mary, how does that element of cost savings work? why are they able to do it for so much cheaper than the state can? >> reporter: well, again, it's the economies of scale. you have a three-year project where you know you have to fix 556 bridges. and most of these bridges are very similar. they're typically in rural roads in pennsylvania, single-span bridges. so there's a uniformity of design, a uniformity of repair and construction, and the economies of scale when you're buying the materials in bulk. so all of that helps you to lower the cost on this project. >> but the government can't do that? i mean, it's -- i would think that the state would have the same economies of scale and the same bulk if it chose to. >> reporter: well, i'm assuming that when you get a private contractor involved, because they have a three-year time span and because they can use their same people over and over again to do this, that allows them to do it more efficiently than the state. you know what's interesting, becky, typically here in the united states, the government handles these projects. where in europe, public/private partnerships like the one we're talking about here, they're far more common. so they're taking a page from that book to see whether or not this works. not that that's to say that the governments are going to completely give this up to private/public partnerships. but pennsylvania really is in a bind. it needs to get these bridges fixed quickly, so it's reaching outside of its typical way of doing so in order to get this project done. >> seems to make a lot of sense. mary, thank you very much. >> i find very charming your view that government can do it as efficiently as a private contractor. >> and if they can't, explain why. maybe subsidize all of it out. give it all out to private industry if they can do it that much cheaper, let's have it happen. anyway, we'll talk more when we come back, including yesterday's big selloff, continuing in the futures this morning. we are watching this very closely. when we come back, we're going to head to chicago for a look at what the traders there are watching. ♪ no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great. welcome back to "squawk box." another volatile trading session shaping up this morning. allen joins us. what's the mood like? >> a couple things contributed yesterday. the dog days of summer, no one stepped up with bids to buy yesterday and the slide continued. we took out two levels. last week's lows, if you remember we had that fakeout flushout last wednesday with the market coming back in close positive last week. that was taken out. and also we took out the bottom of the channel in the s&p. we have been going sideways for essentially six months, took out 20/40 on the down side t s&p, that accelerated losses. let's see what happens the next couple sessions. the markets always resilient. the fundamentals still remain solid. a couple things are positive. low energy prices and rates, long-term rates at the lowest level since april. the chinese yuan being devalued also helps because those products are cheaper. i think there are a number of things that can be viewed as a positive, if you can look into next week, next month, and let's say six months out from now. >> so when you were up there getting your coffee, i know one of those nice coffee shops, breakfast shops you've got there, did you hear anybody saying you know what, i'm going put a bid in today. was anybody thinking -- were they running scared this morning still? >> it's not so much scared. volatility is opportunity. and reminds us, we haven't had any volatility. the s&p traded in a 4% range for the last six months. we haven't seen that in the longest time. it was a little bit of disappointment to set things off on the down side. and it will be very important, like you said, to see who steps up today and see if there's some value here. but like we all know, you know, august some of the desks aren't at full capacity. so are there the people there that can do that and find the value at these levels? but we have been waiting for discount in so many stocks. now let's see if people have the nerve to step up and buy them. >> yeah. i mean, becky asked this morning, what should people do on an august in friday, and the answer to me was clear. go away. >> yeah, but i'm looking at options for january. and march. you know, look and see where are we going to be in six months. that's how you look at the big picture so you can ride out the ups and downs. >> thanks, allen. thanks for joining us. when we come back this morning, a squawk market master weighs in on yesterday's big selloff, blackrock's peter fisher. bracing for another down day. the nasdaq now below it's 200th day moving average. the s&p now negative for the year and since last october. we break down how the latest market slide will affect your investment decisions ahead of the september fed meeting. valuations gone wild. is it a case of back to the future or is this time different? >> are you telling me you built a time machine? out of a delorean? >> snapchat, interest, uber and others, with no revenue to say show for it. find out if these unicorns are living in a fairytale land. plus, welcome to blunt talk. >> why is he sniffing like that? >> actor patrick stuart joins the ceo of stars to talk about the future of cable and the network's new show as the final hour of "squawk box" begins right now. >> the ratio of cocaine to speed is just right. >> please, sir, can i have some more? ♪ ♪ say it ain't so i will not go ♪ ♪ turn the lights off ♪ live from the most powerful city in the world, new york. this is "squawk box." >> welcome back to "squawk box," everybody fblth. this is cnbc, first in business worldwide. i'm becky quick with andrew ross sorkin and steve liesman, less than 90 minutes away from the opening bell on wall street. the futures. we have been sitting around these levels most of the morning. in triple digit declines when you look at the open. the dow would open down by 107 points. the s&p would open down by close to 12 points, and the nasdaq open down by 34. this comes after the worst market day for the markets for both the s&p and the dow in the entire year yesterday. you saw the dow was down by about 350-plus points. check out how this has spread into europe at this hour. you can see some red arrows there, as well. right now, the dax down by 1%. of the cac in france by 1.1%. all of this after steep declines in asia. the nikkei overnight down by 3%. and the shanghai composite, where we have seen so much volatility down by 4.25%. if you've been watching oil prices, it has been a heck of a run. since the peak of oil prices back in 2014, we are now down by about 60%. wti sitting at $40.96. we're looking at the longest weekly losing streak, eight weeks in a row that we have seen since 1986. again, this morning as the october contract you're looking at down 36 cents to 40.97. >> a few stocks on the move this morning. earnings from heavy equipment maker deere beating the street. lowered its forward guidance, impacted by a down turn in the farm economy and lower demand for construction equipment. sales force company -- salesforce.com, excuse me, beating estimates by 2 cents with quarterly profits of 19 cents we are share. the business software maker, with subscriptions and profit margins increased. fresh markets fell four cents, with 36 cents we are share. revenue falling short of forecast as does the grocery chain's full-year outlook. this morning, global selloff continuing. the world following our lead after stocks here posted their worst day of the year. the s&p now negative for the year, dom chu joins us with a look at some of the stocks slapped around again. >> if you're waking up on the west coast, listening on radio, driving to work, this idea here that the markets are going to maybe take another leg lower today is probably going to get started with what's happening around the world. so let's bring you up to speed on what's happening, first of all, in the asian area, the asian time zone. the hang seng affects hong kong. the reason i put up this year-to-date chart, says it's down 5%. but if you look from the peaks we saw back at the end of april, early may, we're now down over 20%. so yes, that means the hang seng, hong kong stocks in bear market territory. if we rotate over to what's happening in europe, you can see that as well. the dax has been in correction territory for quite some time here. you can see on a year-to-date basis still up 5%. but we are now down about 16, 17% from where we were at its most recent highs, so the dax extending some of those losses you can see down a percent so far in trading today. and then, of course, we fast forward to what's happening with our u.s. markets. no trading yet, futures indicating what could be another lower open today, and we are struggling to find some kind of stability, but again, if you look at the nasdaq composite, we use that as our proxy for the u.s. market, because it's been such a huge gainer. still positive year-to-date. we should note that. not like the dow, not like the s&p 500. however, now down 6.5% from just -- the middle of july, july 20th. so now we're down 6.5%, just 3.5% away from the correction-ish type territory range minus 10%. so that's how the time zones are stacking up as we head towards, steve, our own opening bell. back over to you guys. >> dom, you and i talked yesterday about something we recall as reporters back in the '97 asian financial crisis with what's been going on recently with china, some of the appreciation of the dollar versus some of the asian currencies. some people are asking the question -- here's what happened back in '97, if you weren't around then. east asian currencies falling 85% against the dollar, stocks plunging 40 to 60%. $35 billion of support for indones indonesia, korea and thailand. here's the cost of the crisis. what's interesting about it, if you look at an aggregate of gdp in the area, it was worst than the '08 financial crisis. it really took the wind out of the those economies right there, as hot money fled, and there was a big debate over whether or not capital -- it was a really interesting time. i was in russia for a lot of that time, which escaped it for a while. and then it got slammed as you recall back in august of 1998. here's just one look at a currency and what happened back then. i love it when these massive events show up in the charts. >> yeah. >> and that's the kind of thing that -- but we don't know if this is it again or if this is just an adjustment period that we're going through. here is a man who lived through it all, joining us on the fed markets and economic growth concerns, peter fisher, senior director at blackrock's investment institute, senior fellow at the center for global business and government. at dartmouth's tech school of business. thanks for joining us, peter. >> thank you all. good to be here. good morning. >> so peter, is it walking like an asian financial crisis, is it talking like an asian financial crisis? what's your gauge of what's going on right now? >> well, there's some parallels. i wouldn't overplay them. we had a lot of paid currencies then. and the advice at the time given those countries was don't worry, just take off your peg and everything will be fine after you devalue 5 or 10 percent. it didn't turn out that way. so i think that was a lot of rigidity in the foreign exchange markets that came unglued. i think there is a parallel here. you've been talking about it the last couple days. i think the devaluation by the chinese authority has smoked out what i'll call the china slow down deniers, the people in denial that china could meaningfully slow down. they have been smoked out. so i think there is significance there. it's mostly the spillover of what's now the second largest economy, really slowing down a lot. so i put a lot on that. i hope it doesn't turn out as badly as '97. but the game is not over yet. >> peter, i just want to remember your august career. you were on the desk at the new york fed at that time when this happened? in '97, '98? >> yes. >> and you played a big part. when you were on the desk there, did you guys see this coming, or did you walk in one day and the world was different from how it was the way you left it the night before? >> well, it unraveled rather slowly. first what happened, if you go back, the japanese thought their economy was going to recover. some japanese officials say we're going to normalize interest rates, rates are going up. that shocked, unraveled the thai bot when japanese forward interest rates jumped up. so it got a head of steam going then and then tripped up other countries. once that happened and the thai bot came unglued, then i think we saw some things happening. but that was a shock that japan thought their interest rates were rising, not unlike what we're facing today vis-a-vis u.s. rates. >> peter, it's walter isaacson. when that was happening, i was here in this very building at "time" magazine. we did a cover called the committee to save the world. and it was larry summers, allen greenspan, bob rubin, and how they leaked in. do you think we have a problem now in that we don't have as much american strong leadership trying to take over something like this? >> i think there might be some parallels or concerns there. i think your cover story was in the fall of '98. '97, the u.s. -- i was at the fed. we were still trying to figure out what was going on. we didn't see coming what happened to the korean currency. so there was stuff unraveling. by the time we got to '98, once again, the fed eased monetary policy. that's what happened in the fall of '98 to try to smooth things over. so the committee to save the world was a lot about easing policy. we're not in that place now with the fed. >> can't do that now. we're already at zero. >> but walter, i think you put a finger on an interesting question here. which is the extent of expertise among the chinese financial officials, and i'm going to throw that question to peter right now. peter, that's where we are right now. it's up to the pboc. it's up to the chinese finance ministry. should we put our trust and faith in them that they can see their way out of the problems they have coming? >> i think we can put a lot of faith in them. but i think they've got an economy that's slowing down. they're used to being able to fix things for the last 25 years with more investment. and that game is over. they've been talking for a decade now about boosting consumption. reducing investment as a share of gdp. now they've got to get on with it. so i'm not sure they're going to be able to save the rest of the emerging world from the challenge of the chinese slow down we see playing through commodity markets. >> peter, i have to tell you -- >> if i could, i want to make clear -- >> go ahead. >> go ahead. >> no, you. >> i think we've also got to unpack a problem with the fed here. this is the most telegraphed fed move in history that we expect to come sometime in the coming months. but its meaning, its significance, is still remote to us. the fed has been publishing every member of the committee, publishing their own forward path of interest rates. they've got to get on one page. they've got to be able to explain persuasively to us what we should be expecting. their most important output is the expected path of short term rates. and they've been having a free lunch all of them, explaining their own views in a rather a cacophony when it hasn't mattered. i think that uncertainty, the uncertainty about the meaning of a fed move, is what's weighing on markets. >> so what's your best advice for what they should do now? should they hike in september? >> yeah, i think they should tear the band-aid off, but more importantly, they've got to control all of the voices. they should stop publishing those silly dots that imply every member of the committee has their own view of what's going to happen to interest rates. so stop publishing the dots and explain whether you're going to raise rates slowly, which is what the chairman has been saying for a few months, whereas a year ago she was saying once they start raising, they would raise quickly. and now some other members of the committee are starting to introduce that. they've got to get on one page about the path. >> it's not just that. >> less comfort. >> probably. what you can't be data-dependent and also say you're going to be raising things slowly, because we don't know what the data points are. it's one or the other. >> yes, that's another example. exactly. that's another problem they have. they have also been skirting the issue of the low productivity growth. so this profoundly low slow down in productivity is a big problem for corporate profits, maybe. if we believe it, it's a big problem for the fed, if prod tifrt is this slow, then they have to play catchup. and that's all happening while we're in a disinflating world. but a u.s. economy that's doing better. or maybe the fed is behind the curve. >> steve, you are going out to the meeting next week. what do you expect to hear? >> these guys have a way of being on topic, and they're going to be talking about the relationship between central bank and monetary policy and inflation. and one of the perplexing developments of the last several years is the fed has been unable to hit its inflation target. and everybody thought that if a central bank could do one thing, they could hit an inflation target. i'm sure peter has thoughts on this. they have missed that target for a long time. and so i want to hear about how they're going to think about missing this one key part of their mandate, and how important that is for their policy. and how -- and how they hike rates. we have to thank peter. >> i agree with that. the policy they have been pursuing is pump up asset prices in the hope it generates consumer price inflation. and it hasn't worked for five years. now, they like to say that their policy has been working, because the economy is doing a little better. but it's not been working the way they thought it would. or inflation would have come in closer to target. >> okay. that's the key thing. thanks, peter, for joining us. was that my tease there? >> thank you. coming up, the year 2000 all over again? high valuations for companies without the revenue numbers. a big red flag in tech land back then. now it seems every day we hear about a new startup valued in the billions. is what's old new again? another check on the futures at this hour. "squawk box" will be right back. my name is rene guerrero. i'm a senior field technician for pg&e here in san jose. pg&e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. raising a family here in the city of san jose has been a wonderful experience. my oldest son now works for pg&e. when i do get a chance, an opportunity to work with him, it's always a pleasure. i love my job and i care about the work i do. i know how hard our crews work for our customers. i want them to know that they do have a safe and reliable system. together, we're building a better california. welcome back. lately it seems every day another tech startup with little or no revenue becomes a unicorn, a valuation of over a billion dollars. or maybe they get some sort of crazy amount of funding. companies like snapchat now worth more than $15 billion, but reports say this week they're only going to bring in about $3 million in actual revenue. it begs the question, is tech bubble 2.0 on its way. joining us right now is henry blodgett. our guest host is walter isaacson. henry, you say people should be prepared for a major market selloff t. could happen. >> i do. i think we are in general in the market stocks incredibly expensive on cyclically valid historical measures. really only two times in history stocks have been this expensive. 2000 in 1929, most very temporary, we went down from there. so i think folks should be prepared for that. >> with regard to tech. >> broader markets. >> this is a broader market. >> and you're talking about a selloff. >> i have no idea near-term at all. but i think long-term the returns for stocks are very depressed, based on where prices are today. and a lot is going there. but a talk about tech in particular, i think we are in a tech boom. not a bubble. it's nothing like the 1990s. but tech has always been cyclical. go back to the early 1980s, three big tech cycles. eve time they have been followed by a bust. they last seven to ten years and then we go into a bust. everyone says tech was a huge hallucination, just wreckage everywhere. then you begin the next boom. and i think we are at the tail end of this boom, and i think that what you're starting to see in the market where some startups are starting to run into trouble. money has been raining from the sky, that is likely to stop soon. so i think we're headed into a bust at some point. >> so i'm making the argument, and bill gurley just did a tweet storm. you guys might have covered it from benchmark. this idea that if you look at the public markets for tech, given the last three or four weeks down materially, and when that actually hits the private markets in the media. what is the trigger at which the public market issue becomes a private market issue? >> i think relatively quickly. because any private market invest investor, and a lot of what has been fueling the huge boom in valuations is a lot of money that used to be invested in public markets is now going into private markets, because so few companies are going public, and they're going public so much later. at some point you have to look at your return. your expected return. and your benchmark based on where the public comparables are. a lot of the late-stage hedge funds investments are basically wagered on the fact there's going to be an ipo within a year or two, should trade at x. when x is down 30%, that is going to change your calculation from where you're putting money in the private market. >> i keep thinking about the private markets. and if the exaggerated prices that you've seen in the private market that you didn't used to see -- used to be the public markets that that would happen. does that protect the public markets at all or are those same overwrought sort of overbought conditions in the public markets? >> we've already seen the public markets get hammered. a lot of stocks down 25, 50%. >> is it an issue of the ipo market? for example, we think square is going to have an ipo. if you told me the ipo market all of a sudden starts to shut, is that the trigger with which all of the private market valuations start shutting too? >> it certainly does not help. again if you're a private market, you have to look for an exit at some point. either somebody has to buy you our you've got to be public. if that door is closed, folks get more cautious. >> can we have a conversation about tech? and valuations without talking about the stuff they're making? is there any good stuff coming out that makes some of these valuations worthwhile? >> there is incredible stuff happening. >> so there's incredible stuff. incredible stuff, incredible valuation. >> that's right. you look at uber, for example. uber, all -- all the way up, ridicul ridiculed, it's obviously crazy, the valuation. now you look at some of the numbers being revealed. $10 billion in gross bookings this year. $2 billion in revenue. the growth there is staggering. now, that doesn't mean that it's going to continue forever. it doesn't mean that uber is an amazing investment. it's $60 billion in the private markets. those investors who are buying it are expecting an ipo within the next year or two at something close to $100 billion. so they think there is growth from there. again, most of the return has been missed. this is what happened with facebook, it's what happened with twitter. twitter went public at the top, basically. and so unfortunately, a lot of small investors who actually in the 1990s, we look back in horror at the ipo market then, which i remember very well. lots of folks had a chance to get in early on a lot of stories and they have not, because of that -- it has been only the private markets that have captured so much of this. >> i think steve has a really good question here. which is are there really fundamentally great things that are being made. you had a -- the latest great boom was because of something new, which was the gig economy. ubers and everything else saying hey, we can have a shared economy. and that changed our economy. that was something of real value. a lot of these new social networking apps, whether they're snapchats or whatever, they're not anything fundamentally new, and they feel a bit more ephemeral. so if it's venture capitalists chasing that type of investment, but in the end people can then move on to something else, i think that's the fundamental problem. >> they can. but most of them will fail. and most of the social networks have already failed, and twitter is running into problems. look at what facebook has done. staggering. snapchat, the younger demographics, walter, i don't understand it. i can't figure out how to use it. teenagers love it. and the audience, they have amassed is colossal. they had for one of their videos a bigger audience -- people watched one video than watched thursday night football. so folks are looking and saying, at some point that is going to generate a meaningful amount of revenue and they don't have a lot of costs going with it. so big valuation. >> can i -- well, very quickly. i just want to show something that joe has been talking about for a long time. when they first put apple in the dow, he said that that was a sign of things being in pig big trouble. the dow down 4% since apple was replaced at&t. apple down 9.7%. at&t, by the way, up 5.1% since that time. >> they can pick 'em. henry, thanks so much for coming. >> great to be here. thank you. coming up, more on this morning's market moves, and later we've got actor patrick stuart and chris al brecht joining us to talk bluntly about blunt talk, a new show. "squawk box" returns in just a moment. you're watching "squawk box" on cnbc. first in business worldwide. ♪ ♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end august 31st. share your summer moments in your mercedes-benz with us. when you're not confident you have complete visibility into your business, it can quickly become the only thing you think about. that's where at&t can help. at&t's innovative solutions connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most. seven out of ten power outages in the us are caused by weather. but utilities can now predict where the power will go out, within a few city blocks. working with ibm, they're combining micro weather forecasts with detailed data from local sensors. to predict where outages are likely to occur. and send crews exactly where they're needed, when they're needed. ibm analytics from the internet of things is making energy smarter every day. welcome back to "squawk box." netflix employees, it's -- employees dvd by mail service left out from a recently introduced benefit that gives up to a year of paid leave to most of its workers after the birth or adoption of a baby. activists groups are urging netflix to extend the same baby benefit beyond the roughly 2,000 workers in the streaming department that generates most of the revenue. netflix has about 450 temporary part-time and full-time employees in its dvd division. the group contends that netflix is unfairly favoring the highest paid in its internet service. shares of netflix falling 11% over the past five days but up, of course, and put this in context, more than 46% over the past year. and one mention, netflix tried to split in two, wanted to make the dvd business completely separate but then after there was a huge customer backlash, they kept it together. so -- this is one of the little fights it creates. >> andrew, fedex says it will formally launch its offer for tnt express next week and opt music they will get the necessary regulatory approval. the offer expected to launch next week, fedex hit a bump with the planned acquisition last month after the european commission opened an in depth investigation amid concerns about competition in deliveries in some european markets. when we come back this morning, brian bell ski. as we head to a break, look at the u.s. equity futures. this may be the worst picture we have seen of the day. at this point the dow futures indicated down by 126 points. s&p futures off by 12 points. this comes after the worst day for both of those indexes all year long. stick around. squawk will be right back. when you get up to 50% off hotels with travelocity, it means you can also afford to get up to ♪ 50% romantic-er romantic sunsets. making it the place to find a place for labor day. go and smell the roses! dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? welcome back to "squawk box." here's what's making headlines this morning. china's factory sector shrank at the fastest rate in six and a half years in august, added to growing investor concerns about a slow down in the chinese economy. used car prices at a record high. according to edmunds.com, the average used car price is now $18,800. and the average age of a used car has fallen to four and a half years from 4.9 a year ago. toyota, moving business away from air bag supplier at that it cata whose inflaters involved in a widespread recall, plans to buy 13 million air bags. and to take over a deal in the spa industry, steiner leisure is being bought by private equity firm caterton for $65 a share in cash. a 15% premium over yesterday's close. >> i did not know that there were publicly traded spas. >> we should invest. >> there's some jokes in there. why don't you work on them? >> i will think. >> let's check the markets at this hour, which is not a stupid pun. the futures down now, sharply, just before we went to break, 117. a triple digit loss all morning, as an implied open when you factor in fair value. for more on yesterday's big selloff, this morning we're joined by brian belski, chief investment strategist. good morning, brian. >> good morning, steve. how are you? >> okay. so the answer earlier, what do you do on a friday in august after triple digit selloff? my answer was to go away. what's your answer? >> that's exactly right. i mean, i think the problem with investors is this whole notion of aadhd, right? such short term attention spans and lack perspective. i know you all love stats. if you go back since 1990, and you look at negative 2% down days for the u.s. market, that being the s&p 500, 35% of them happen in august, september and october. dude, it's august. this happens. okay? now oh, by the way, it's never a good thing when clients lose money, right? however, what's happening in the markets is pretty normal. it's very healthy. and much needed. and oh, by the way, we still stand behind our 20-year bull market thesis. markets need to pull back sometimes. this is exactly what's needed. very healthy. and nothing changes to our longer-term picture for u.s. stocks. >> okay. so are you saying that this is it? yesterday's selloff is as bad as it's going to get? or is there more to come here? more pain to come? >> there's probably more pain to come. this is textbook, steve. you know this. i mean, the markets close at the low on thursday. international markets react more on friday morning. we have even more negative selloff during friday. over the weekend, we're going to see all the headlines about a bear market. all the bears are out, all the technicians are jumping up and down. head and shoulders top. after the market's already down, market down 4% from the highs. this is normal, this is regular. coming into the conference season in september/october and earnings season, people start feeling better. and then markets we think are going to go a lot higher in the fourth quarter. and reach our target of 22.50. that doesn't mean we're not going to see increased volatility. we have to stop calling for bottoms and corrections in the markets saying today is the end. this is a normal process and much needed process. >> you're so sure everything is going wonderful. you're taking the mortgage out on the house today, putting it into the stock market? is that what you're doing, belski? >> come on. of we don't make binary decisions in investments. >> you're really, really sure here, brian. >> i'm very, very sure that america and north america in general, is going to drive gdp and drive profits going forward. we have to stop depending on china, stop depending on the emerging market. that was the prior trade, steve. the next trade is going back to the '80s and '90s where america will be driving growth. why? because we have the most highest quality companies, most consistent earners and strongest balance sheets in the world. get off the former trade and get on the current trade. the current trade is the u.s. it's america. it's consistent growth. it's large cap. stop this silliness and in terms of trying to call the markets, tops and bots. let the market come to you. that's a free market experience. and that's what american stocks are telling you right now. >> brian, this is walter. let me just ask, don't you think there's some fundamental problems in the global economy right now, which can actually affect our ability to sell things around the world? >> i think there is some. but i think our call all along, walter, has been that volatility in china and emerging markets is actually good for america, because we'll see capacity and jobs come back to america. the theme in the last 30 years clearly has been make as much cheap crap as you can overseas and ship it back to america. i think the theme over the next 10 to 15 years is make a high-quality part and ship it out from america. we're not going to need as much as we needed in the past, because of the high productivity and robotics and that, so that's a key thing. yes, that's what the volatility over the next few months and that's why '15 and '16 in terms of 2015 and 2016, are to be more volatile and the recovery we saw from the 2008 lows. >> brian, i hear you from a macro perspective. when you start looking industry by industry, you think about the valuations for biotech, technology, what's even happened in the media space in the past couple weeks. how do you think about that? >> well, here's how i think about it. we're neutral health care, and consumer discretionary. remember, consumer discretionary outperformed eight of the last nine years. this year everyone was hiding, quote, unquote, in the media. we acknowledge that we need to see a bit of a correction in those media stocks. at the end of the day, the strongest component. number two, biotech, we put out a very cautious report on biotech two months ago with respect to valuations. clearly, the majority of performance in the health care sectors coming from biotech. any time you concentrate on a few stocks, that's a problem. you have a lot of great hmos and drug stocks that have great cash flow and consistent earnings far from volatile and far from biotech. in terms of technology, apple has had its problems as of late. i think too many people have been focusing on apple near-term. but longer term what people are missing and blodgett was focusing on kind of the shorter term smaller cap tech. if you look at large cap tech, ladies and gentlemen, technology companies in america have become the second most stable earner of all companies in the s&p 500. and i think people are missing that. so i think tech in terms of the cash juggernaut is still a place we should be. >> brian, next time you come on, we'll have the -- cue the star spangled banner beneath when you're talking. i will concede this. there is a bit of a tail wag the dog here. the idea that's what's going on in foreign economies is going to affect the u.s. more than what's going on in the u.s. economies. i would say at least it's a balance there, rather than what's happening in china is going to determine the u.s. i think the u.s. has more influence on china itself. >> 100%. think about what you just said and what everybody was saying in 2007-2008. exact opposite. stick with the consistency and fundamentals. >> god bless america. god bless you. thanks for joining us this morning. >> thank you. coming up, walter blunt -- >> steve or you. >> that's me. intent on conquering america cable news but has a couple off-air problems like drinking too much and indulging in illegal drugs. chris albrecht talks about the network's new show along with actors and star patrick stewart. and later today, don't miss jim chanos at noon eastern. s here. now get the unmistakable thrill and the incredible rush of the mercedes-benz you've always wanted. but you better get here fast... yay, daddy's here! here you go, honey. thank you. ...because a good thing like this phew! won't last forever. see your authorized dealer for an incredible offer on the exhilarating c300 sport sedan. but hurry, offers end august 31st. share your summer moments in your mercedes-benz with us. i think i may just have had a near death experience. if so, then i'm happy to report that in heaven there's a lot of dancing. and joy. however, i think and i'm sure you would all agree with me, it would be prudent to take a commercial break. i remain and always will be walter blunt, right here, right now. >> he does it better than we do. that was cable anchor walter blunt as played by patrick stewart on the new stars comedy, "blunt talk", part of starz network strategy to invest. chris albrecht is here, the ceo. thanks for coming in. >> thank you. >> who are you supposed to be? come on. >> oh, really, there is no one news man. >> yeah. >> who can take us to court and sue us for all of the incidents happening on this. i've already explained that to piers morgan, by the way. >> yeah. >> and restaurant -- >> in beverly hills. but i was able to calm him down, and assure him. what. >> kind of research went into this role for you? >> well, i've been a news junky all my life. i campaigned outside my local polling station during the first post war election in britain. that was 1945. i was 4 years old. so i have been an activist and interested in the news and political scene all along. so i have spent my life preparing to do this show. for chris. and -- but there are contemporary people who i -- i was on a show with charlie rose yesterday. charlie i watched a great deal. there is a lot of jon stewart in this man. jon allowed me to be a fly on the wall of his show for a whole day from the first 8:30 production meeting until after the show at night. and that was really a wonderful experience. as did rachel mad do ydomaddow. she is outstanding. so there are little parts of all of them nestling inside walter blunt. >> sir patrick, how is playing shakespeare characters helped you prepare for the role and is there a shakespearean character that fits in? >> there certainly is. i'm named after one. >> yeah, walter blunt. >> jonathan ames, our executive producer and creator and show runner, e-mailed me one day and said we're going to get a name for this guy. we can't go on calling him he and him all of the time. do you have any names that mean anything to you? and i said only one. i've had a pseudonym for decades now. walter blunt. it's the first role i ever played with the royal shakespeare company. it's not a good role. it's a small supporting role of a rather foolish man who dies at the end of henry iv. and he e-mailed back, but that's perfect. and the show is called "blunt talk." >> if there are shakespearean influences, are there also star trek pieces that show up? >> i'm not aware of any star trek showing up. and is shakespeare certainly at the moment is in the lead. i think we've got three or four references. >> can we talk media business? >> absolutely. >> given what's going on with the revaluation of media companies? the unbundling, revaluation? >> i think it's called overreaction. >> okay. so what's -- what is going on? does it make sense to you? do you think that media companies have been overvalued in this unbundling and going to undo that? >> no. first of all, i think whatever is going to happen in the media business is already happening. it's a transition to different distribution models, and i certainly think that the large companies and the really targeted companies, like starz -- i feel great about our model. the ala carte premium, you know, business model has always been a survivor, and i think now we're seeing that it has more advantages than disadvantages. so people like us, and i certainly think the big media companies are going to be able to survive and provide content. >> what about your former -- you used to run hbo, time warner. what do you make of that business? >> listen, it's a great business, a great brand. i think brands will become more and more important. because they're going to be -- people are going to need to have their content organized for them. i think as john malone calls it, random access. a total random access world, people still need companies, brands, channels, whatever you want to call them, to sort of cure rate and organize the kinds of things that they want to watch and go to an unlimited menu. >> does it make sense to have some of the stocks sell off though? people look at viacom in a different place. we had an analyst who said he thought time warner with hbo at the top would be just fine and that should be valued higher. but there are different categories in these players, and maybe not everyone is not created equal. >> look, certainly ad supported is a different model than premium subscription. i think ad supported becomes a little challenged if the audience continues to fragment, a lot less about negative cord-cutting than fragmentation of the audience, also a lot about choices. if you can't aggregate enough eyeballs. >> chris, can you talk about how working with patrick and paying the salary you're paying him, how does this series translate into bottom-line profit for you? >> well, look, the -- >> notice how intently -- to listen to -- >> he has back-he said points so he's waiting to hear this. >> the model for us is to please all the different constituents that make up the audience and potential audience for premium television. so we have a show like "power" which appeals to african-americans, "outlander" which appeals to women. this appeals to the patrick stewart fan and the news fan as we find out to the. and the patrick stewart fan i found -- >> how many eyeballs is it worth to you? >> we're not selling ads, we're selling noise, engagement, and we're selling loyalty. and i think that the brand of starz is burnished, and the product of starz becomes more valuable to subscribers when you've got a show like "one talk" which is a great show and then you put patrick stewart in it. >> there is now too much quality tv being produced, meaning there are now 400 -- there are 400 this year, will be over 400 original new series. you're paying for them. you're now in them. do you worry about that? >> no. i do not. because where people are watching that content now is changing so rapidly. the conventional way of having entertainment or news or weather or whatever is being transformed, and it seems to me if we have 400 and there are going to be more, they are simply happily supplying all of those outlets where the content can be viewed. >> and it's totally cool now to do tv, right? that's the prestigious thing that people are doing, right? >> so cool. >> it used to be like i wanted to be in a great movie or something like that. and now is it equivalent to you to do a big movie and big tv series? >> i am very fortunate i get to do both. and little movies too. but the world of film is changing, because the studios are truly now focused on these big blockbusters. everyone is looking for a new franchise. i don't have to tell you guys, that's where the huge profits are made. >> and what about shakespeare on stage, sir walter? >> well, shakespeare on stage was probably the best money there ever was, until benedict cumberbatch played hamlet in london and sold out the entire run, i think in 75 minutes. >> but you're doing an improv, right? >> well, i work with a company out of chicago called the improvised shakespeare company, and that's exactly what they do. five -- or when i'm with them, i have a standing invitation to join them whenever they're in town, six. and they ask for a title from the audience, they yell out a title, the first one we hear is the title of the play we will perform. and it is a 90-minute improvised shakespearean play. >> great. >> chris, before you go, you have to tell me, is 50 cent who is in power, is he really bankrupt? does that make any sense? you're paying this guy. >> i -- you know, if he's bankrupt, i want to be as bankrupt as him. >> okay. >> sir, he's bankruptcy, i wanto be as bankrupt as him. >> before you go, steve, i hate to do this, but would you channel your read the prompter for us on our way out? >> yes, indeed. i would love to. here we go. jim cramer on this market's move and what's driving the downturn. how low will it go? we ask him after the week. and then the u.s. nuclear deal under more scrutiny after the u.s. acknowledged that the u.n. would be involved in searches. we talk about whether or not the deal gets past congress in september. >> yeah, well done. >> thank you. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? i wish i was in school. [overlapping chatter] if only i had a math test today. i'll stay after class. i'll clean the chalkboard. i wish i was in school. man: school ends, but free lunches for your kids don't have to. find your local feeding america food bank for help. my here at c.k. mondavi.on, the vice president of operations to make this fine wine it takes a lot of energy. pg&e is the energy expert. we reached out to pg&e to become more efficient. my job is basically to help them achieve their goals around sustainability and really to keep their overhead low. solar and energy efficiency are all core values of pg&e. they've given us the tools that we need to become more efficient and bottom line save more money. together, we're building a better california. jim cramer is standing by. and a lot of people trying to figure out what to do this morning. >> we don't want to put too much fear in because we have a lower dollar and low interest rates. lower commodity rates will impact things positively. we're paying more for everything. when i see stocks dropping, it tends to freak people out. they're extrapolating things going on outside in the world. the market is too high. but there are individual stocks that are going to be winners and ones that rnlt. be sure that you have cash so when the winners come down you can buy them. >> we know the market's too high you said to so matter of fact. how much is too much at this point? >> i think disney is the perfect security. it was up 13% in earnings per share. no one cut numbers but the stock has been taken down. i think we watch disney. it was the proximate cause of the decline. the industrials are dependent upon a weaker dollar which we've been getting. i'm concerned about the price of gold going up. that's devaluation of currencies worldwide. what's lacking, we have a tremendous lack of leadership. you don't see the treasury secretary coming out. yellen not telling the people of the fed to be quiet and not assuring people of no rate hike. let it come down a little. have some cash. you'll be fine. sorry. >> we'll see you in a few minutes. >> the market is not rg 3 playing in the second quarter. >> jim cramer, i love him. >> when we come back, why walterizic san thinks the deal with iran is a good thing and presidential politics when we return. ♪ ♪ ♪ if you can't stand the heat, get off the test track. get the mercedes-benz you've been burning for at the summer event, going on now at your authorized mercedes-benz dealer. but hurry, offers end august 31st. share your summer moments in your mercedes-benz with us. by the time police arrive on a crime scene, they could have little to go on. a vague description. a single piece of evidence. a partial plate number. with an app from ibm, officers can now access over a billion police documents to find hidden connections, and identify potential suspects. ibm analytics helps one hundred thousand officers work smarter every day. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. host this morning, walter isaacson we haven't talked about iran yet. you've spoken publicly about this issue. >> i was just in colorado with hank paulson. he said it's ridiculous to think that you're ever going to get a better deal by putting on more sanctions. at a certain point, this probably has a huge up side to it and there's no up side to now rejecting the deal and letting the rest of europe and china decide they're going to open up to iran. >> the downside being in a decade from now, if not sooner, and you have to believe you can police this. >> you can police it better with a deal that be without it. you monitor the supply chain and put in the inspectors. it would be nice to accompany this with a piece of legislation that says if they're going after the bomb, we will stop it. to make it clear that's what happens at the end of a decade. including an authorization of the us of military force if need be. >> donald trump, how long is he in the race for and is he the next president? >> no. i shouldn't have laughed, i guess. i have to gasp at the question you have to consider. i think he's in the race for quite a while. he's tapped in. he has 25%. at a certain point i think it helps jeb bush. >> thanks, everybody. make sure you join us on monday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." after the worst day for the dow in four years the premarket is red for a ninth straight session. all the technical levels now broken. we're going to find out what they may mean. china's flash pmi disappoints again. yields here have

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