On it. I dont know. This one here. It looks like a military drone. There it goes. All right. I hope youre ready. It looks like theres a string attached. Oh, it does. And maybe they can drop that right on your lawn. Do you remember the guy that he jumped out of a balloon, the bungee jump. You have to make sure, a, that its the right length and, b, that the balloon is the right height. Because one or the other didnt work. If the balloon is too low, thats bad. So you have to worry about the same thing. Its an interesting story here. So its going to happen, huh . It could happen. Would you get your delivery if it did it with a little rope like that, i didnt see the rope. I like that. I dont know how theyre going to work it in on my island. If i ever do buy anything, the jeans, i was in the store when i bought them. How are the stretch jeans feeling . I havent touched them since i brought them home. But probably the same as they were feeling yesterday. Apple is working on pay by Touch Technology. The fg reports that the tech giant is partnering with a dutch chipmaker. And whats called secure muirfield communications into the device. Technology will let a smartphone communication wirelessly with other devices by tapping them together. Anyway, apple has invited the media to a special event on september 9th when its widely expected to unveil that latest iphone. And we get an update on the big hacking attack. A Major Banking Group is now down playing concerns. This explains why we havent heard a disclosure on it from the companies directly. In an email to members, it says its unaware of any significant Cyber Attacks and says no threats pose the Financial Services sector at this time. Other Law Enforcement offices around the world had announced that they were looking at reports of breaches at the banks with some speculating attacks came from russia. Thats what those media reports were about that we discussed yesterday. Now House Intelligence Committee chairman mike rogers is calling the Cyber Attacks very sophisticated and likely state sponsored. Nato convening an emergency meeting today about the crisis in eastern ukraine, the alliance estimating more than a thousand russian soldiers have invaded the region. In a new conference late yesterday, president obama confirmed Russian Forces are in ukraine. That stopped short of calling it an invasion. We are not taking military action to solve the ukrainian problem. What were doing is to mobilize the International Community to apply pressure on russia. Today, moscow rebels are advancing in the southeast part of ukraine, capturing a coastal town. Were joined now from moscow with more. Good morning. Good morning to you. So this morning in the early hours, russias president Vladimir Putin issued a statement on the kremlin website, calling for the pro russian rebels in ukraine to create a humanitarian corridor that would allow the Ukrainian Military to leave. They are apparent surrounded. The rebel leaders have responded saying they are theyre happy to create this corridor, but only if the Ukrainian Army leaves their weapons behind. Now, weve had the ukrainian the ukrainian response. This just shows, in fact, that the rebels are taking their command from the kremlin. Yesterday, the pro russian rebels admitted that there were 4,000 volunteers from Russia Fighting in east ukraine and that the Russian Military was also involved. Now nato saying there is around a thousand Russian Troops to the area and theres some images that have been released that survei lavrov says there is no evidence that the images that have been released from video. Meanwhile, the fighting in the region apparently is still going on. This is according to ukraine media were learning about. And in the city, which is the news, if you will, there are reports that russian tanks are approaching the city. There is a worry in the city that they will make their way through and capture this town in effect creating a whole new region of conflict. Back to you. Okay. Thank you for that. Lets check on the markets this morning with all this in mind. The futures yesterday did indicate that we would be lower, but it wasnt too bad. They were getting a little bit of a bounceback. Up 37 points or so. The markets did close just under 17, the s p 500 just below 2,000. Take a look at what everyone keys off of. That is oil. There hasnt been a lot of movement in gasoline prices, even though i guess its the late summer driving season. So if it didnt happen yet, they do kind of it seems like they will move lower. They have at 3. 20. The tenyear, which we have decided that instead of keying off our nominal gdp, its keying off the nominal gdp in europe which would make sense. It would make it easier for the fed, it has made it easier for the fed to not really feel like its behind the curve. The dollar, i just look at the euro most of the time. 1. 31. Im singly going to see 1. 29, you would think, but it hasnt happened yet. Finally, gold, gold is dead in the water, under 1300. What really doesnt make any sense, i like this, you know, i i dont the New York Times probably doesnt have this story. A lot of people are making a lot of noise about this. I guess there was another press conference yesterday. We do not have a strategy yet in syria. I dont know whether do you think his people said go ahead and say that just so i dont know. I dont know whether it was a gaffe or i dont know if id admit that or, even worse, avenue it was already when was the chemical weapons feel with kerry when we got lucky and they said they so i would have started with the strategy. Now, i understand, the strategy they really developed is the Climate Change strategy. Every day, we read a new paper that theres another thing going on. Hopefully nothing happens in syria between now and 2100. Because if we dont get this stuff to if we dont take care of what could happen in 2100 come on. If the models are correct, we have a problem. So the serious lets put this on the back burner. And if kerry said, the most significant threat to our security is carbon dioxide. So dont worry about syria so much. Lets focus on this. I thought you would be talking about his khaki shoes at this point. I cant believe that they just yesterday, they are working on this way to get around congress to do why werent they maybe thinking about this for a second or spending a little time on that . They do not have strategy on syria right now. The reason he doesnt have a strategy is because they dont have do these priorities seem like theyre correct to you at this point . I think youre rewriting what the priorities are. There has consistently been a minimalist in the use of u. S. Military. So he hasnt change. He never promised the ukrainians well help you. A rose garden. Basically, this is a consistent policy. Right. Its a consistent you can say, you dont like the policy, but its not inconsistent. He has spent a lot of the time figuring out redistribution. Again, this is consistent. This is the man that got reelected, the American People, hes president of the United States. He won by a pretty good margin. This is what the American People chose and he hasnt changed. Hes not a different president today than he was in his first term. This is a continuity of policy. Did the American People choose this congress . Yeah. Then why do we constantly hear that this congress is preventing everything . All we do is vilify these guys that wont let him do everything when theyre not happy with the choice. Investors are getting ready for the final averages of august. What if the road map for your money this fall on the markets, james swanson, chief Investment Strategy at mfs investment management. Now im starting to think, so are you, jim, im starting to think so many people now are saying buy the markets, hold your nose, just hang in here because its going to keep going higher because everything is looking for now im starting to wonder whether the market is going to surprise everyone and say thats not going to work, either. Where are you on this . Keep buying it, stay in it . Im looking at the fundamentals. Its unbelievable how these companies are making money. Im not worried about hitting new highs here. And i think the market is catching up with the fundamentals. Just to give you an example, the government said in the first quarter, the economy shrank. The margins hit close to 10 , which is pretty unbelievable if this economy is shrinking. Second quarter was better. So im following someone else in saying the story is getting better, not worse. So the story is getting better, but obviously the market has moved higher. Before the story got better in anticipation of it getting better, is it at a point now where most of the good news is reflected in the valuation or not . I think the valuations are probably in the fair range. Its not a cheap market, for sure. But if profits keep doing what theyre doing and we get a little better news out of europe, and im not saying we will or these em countries, its the Large Cap Companies that are the cheaper of the two choices, small versus large. And theyre going to benefit from that and so im saying im not looking for pe schan e expansion. It doesnt seem to get the earnings right. The earnings are growing faster than people think. So thats where i am on it. I think the good news is still coming. Hang on a second. You know, the reason joseph a. Bank is not you get a lot of wear out of that suit. If it worked for you, youre going to get with it, right . This is the new america. You know, you just have to really . Ten of them like that . Its the same one, you know . I try to be very consistent. No wonder retailers are having a problem. They havent sold anything to dick in 20 years. I thought you were trying to help the economy. The next decade, we may deal with i thought they did okay. Thats why they did so well in the 1990s. Youre a good sport. The beard looks good. We come to you more for just the Economic Forecast than whether you think the market is higher or lower. 3 . Yeah. I think we just made the transition to a couple of years of 3 growth. I think that that is what the market has been discounting. One thing ive noticed is that for years, i would get push back against the the idea that we had a long economic expansion that would extend for a number of years. And i dont get push back any more. The market has, to some degree, capitulate t to the idea that we have a long economic expansion. That means that weve had much of the discounting that takes place. I see the fundamentals as basically favorable. Weve got modern inflation, weve got Central Banks to in the u. S. In england, in europe and in japan. For the g4 Central Banks are very supportive of the economic expansion and inflation is not soaring anywhere. Theyre not going to stop this. So the basic trend is sustained economic expansion, rising profits, modern inflation, and sense of banks what about the fed . Well if the fed orchestrates something, it needs to be corrected in a nasty pullback. That is not right now, but at some point have they inflated asset prices to the point where were going to really feel it . And theyve set up us for something bad in the future or not . They have not taken on responsibilities for Financial Stability. They basically said, thats the regulators job. The regulators job is that good that they havent . Its a little concerning because one of Alan Greenspans stories was you shouldnt pop a bubble. Just let them burst and then well clean it up afterwards. That didnt work out very well if you think about what happened to the american economy. Right. So i do think that there are some on the fed who think that the Financial Stability risks are reinforce the argument that the fed should begin to normalize policy. We have a policy that is appropriate to an emergency situation. Right. We have for years this is no longer an emergency situation in the u. S. Economy. Yeah, but so an emergency policy doesnt make sense any more. They are making Real Progress in halting the quantitative easing and theyre tapering that out. If you go and sit on the other side of the aisle, the emergency is that no one has had any wage gain no point. We sit on the same side of the aisle together. They just had an editorial that did not raise Interest Rates anytime soon because the economy, the job market, the wage growth, people arent going well. They think the fed have to keep it there. Many of these problems need other solution s than a continuation of zero Interest Rates for many years. If youre not going to get it, maybe you should keep zerp. You know, i think that the potential negative side effects are growing. And, therefore, i think that as the keeps coming down month after month after month, you can say yes theres slack in the u. S. Economy, but its unarguable, that slack is being reduced month after month after month. We are getting closer and closer to normal. So for the fed to start to raise Interest Rates in the middle of 2015 is totally consistent with the fundamentals that theyre dealing with. Okay. Good. And were not going to rip the economy apart with the fed funds rate of 50 basis points or 75 basis points or a hundred basis points. As a matter of fact, it will halt the income of a lot of people who have been sitting there with their investments earning zero because theyve been too frightened to be in this hot market. Thank you. Jim, thank you. Weve got at least on the economy, but well see you again. Coming up next, were going to talk movies. Blockbusters, busting the future of the box office. Disney scoring big. What is the next film to generate buzz for dollars in hollywood . And then, the big labor day holiday. How early will everyone leave to beat the rush . It could mean more traffic. Squawk box returns. In just a moment. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. A weekend ahead for the labor day holiday. Aaa forecasting 35 million americans will travel 50 miles or more over the next three days. Both of us will. An increase of more than 1 over the last year was still shy of what was going on before the financial crisis. And looking at how people are getting their 85 , surveyed they will be taking a road trip, nearly 30 million buckling up and hitting the highway. Some in zip cars, others of us own an automobile. What a concept. You have nothing . No. How are you going to get up there . How am i going to get up where . Arent you going back up to to connecticut . Im going to take the train. And then someone picks you up . Do they have a car . You know, weve argued it. The zip car . Yeah. Mid size. Suv. Suv. Wow. Yeah, you are. And gasoline price ves moderated and are now pretty roam. And you actually did mention you didnt like pumping you wanted to pump your own and in connecticut they have pumpers. Yeah, in emergency emergency the same. You know what i do . I am so ocd, i get out and i go and they wont top it off. And i top it off. For some reason, i want to get all the way up to as much mileage that i can do, but i never even wait to run it all the way down. But i always get out and do it myself. Certain ones have the thing where you can just put the clipper in. No, im talking about the thing that keeps them up. I know exactly what it is opinion. Its way early, you can put another gallon or two in. I want to talk to you more about that, though. The Summer Movie Box Office delivering disappointing results. What were this years big winners and losers and how important was china to the future of americas film business . David bowen, moviecitynews. Com editor. It wasnt so awful for the movie business. Thats the funny thing. It was down significantly in the United States, but the movie business is primarily interested in International Numbers these days and those numbers are up for the big movies. The wall street journal today, i was reading that through the international impact, which is to say that yes, movies may do better over there. But actually longterm its bad for business because there is so much piracy that theres no sort of secondary market the way there is here. Do you buy that . Its somewhat of an issue. The netflixzation of the whole world will change the dynamic i think ultimately of posting the revenues. The whole thick is glass ceilinged around 35 of the audience in the United States. Eventually, that will become 80 , 90 , and it will feed over into the rest of the world. There are a lot of Companies Working on that all over the world right now. Lets go through some of the winners and losers in terms of move virginias this summer. What was the big surprise hit for you . It was guardians of the gal axis, which will be the number one movie in the United States for the summer. However, it will probably be the number six movie for the summer internationally. So, you know, that is where the mixed bag is. It probably wont do as well as spid spiderman or godzilla in the United States. Flip it around, Biggest Surprise loser, the one everyone thought was going to