Transcripts For CNBC Squawk On The Street 20140829

August. Personal spending suffers a drop since january. Latest moon shot project unveiled by google x. Delivery drones are real, and google and amazon are not the only Companies Taking to the sky. Apple preparing to catch its rivals and roll out technology that turns the iphone into a credit card. Well see september 9. First up this morning, Economic Data shows a decline in consumer spending, down. 1 in july, and auto purchase account for the weakness. The dow and s p each up more than 3 for the month, and nasdaq with a more than 4 gain. S p, nasdaq, and russell on pace for the best performance in 14 years. There was a contest whether august would be the best month of the year. It will be tough. Dow needs 16 106 points, and futures are not indicating that sprept this morning. Still a strong month. Four straight weeks of gains, something not seen. Since november. Overall, a strong month. Everyone is trying to figure out whether the growth we saw last quarter can be sustained. Economists were a little surprised. I mean, nobody was expecting to see the drop in household spending. We have not seen that drop since back in january. Big ticket items, Services Spending flat, and income growth, while we did see it, grow. 2 . We see a problem with the consumers with the optics of individual corporates. Quite clearly, were now line up for a huge week next week. Those who might have taken holiday next week will be back because not only do you have European Central bank thursday, but unemployment report friday, clues where the markets go from here presumably on higher volume. Manufacturing out, adp, and diplomatic meetings between russia and ukraine. And chicago pmi. The data with italy back in deflation, cpi for the eurozone. 3. Plus. Setting up a move for the ecb next week, right . The debate is out, but moving to a situation where you may ask, be careful what you wish for. Theres an important contribution for rate strategy where he says look at where you are on bunds, german bonds, extended valuations trading 150 basis point below treasuries. They are tracking for deflation and ecb failure, you can argue. Therefore, if the ecb comes in with massive asset purchases, will it change the underlying assumptions. In other words, if it comes in buys, is it made by waves of selling on sovereign debt. Thats new, but an important contribution we have moving forward, and may be why they are reluctant to do that. No move next week, right . Wait until later in the year, the fall . I expect a consensus. People are picking ideas from the air. I think they point to the fact they have this big horde of cheap cash available in september. They might tweak that. Of course, what draghi does is threatens and promises. He might do either on Asset Backed Securities as done in the past. Question is, how long can you promise without delivering as these economies fall away, and you have the prospect of russian sanctions, and i think sanctions are front and center again. Does it tip the eurozone back in recession . Particularly if they hit the german automotive makers. Germanys is exposed, and russian m a, in ten years according to dell track today. Would you buy in. Its impacting, and how this is impacts markets, charlie, vice chairperson and portfolio management, doug, chief Investment Officer with broad leaf partners. Doug, youre focused on the nasdaq, something not mentioned in the conversation. Nasdaq 5,000 not far away. You lived through the tech bubble and burst, what does this milestone mean to you . Its funny, we talked about the s p touching on 2,000, but my Business Partner mentioned that, wow, the nasdaq is almost back to 5,000, within 10 , and from a long term perspective, it shows i didnt think it would hit that the rest of my career, but look at us. Were welcome there. Its much measure stable footing than the types of companies that were driving it back then. Charlie, after a pretty strong august, we were just talking about it, second best month of the year for the u. S. Stocks since february, you still say youre modestly bullish. What carries us through the fall . I think theres a lot of skepticism about the u. S. Economy. Everybody says gdp growth is 3 management. They say that because everybody else is saging it. It should be higher, 4 or more. If you get that mostly coming from auto, housing, very Strong Energy world, lower unemployment rate, you can still get very nice growth in earnings. Then you couple that with those of us who value stocks for a living have been assuming that were going to go back up. If nay stay down like this, we need to use lower discounted rates. Charlie, for people watching who will hear so many negative voices around at moer thats correct or not, and they are worried about protecting their wealth, how do they i mean, what is the defensive position now in the stock market because arianbly it may not be what we turn to. Well, first of all, id be careful about that, dont be afraid to own cash. If you preserve wealth, you dont want long term bonds. The stocks are high dividend, but they are bid up because Interest Rates are low and people search for yield. Be careful hiding in the stock market. Doug, simon was mentioning some of the worries, economic worries from europe, especially with that exposure to russia if the west increases sanctions. Europe was a hot bet this year. Do you have to rethink the european positions given whats going on economically there . Yeah, i think investers should stay domestically focused for a host of reasons. Chinas Slower Growth rate, problems in europe, obviously geopolitically, but just structurally, and i think all that tends to benefit as much of the folks said this morning, tends to benefit our economy domestically through, you know, a stronger dollar, through even Interest Rates. You know, our Interest Rates ticked lower, surprising most, on the back of the bund bank, but people forget that chinas stimulating their economy and peg their currency to the dollar, which, again, then keeps our rates low, so in a way, its a winwin for the u. S. Economy across the board. So, just divide it up for me, doug. Do you go into the russell 2,000, go into the small caps, do you i mean, how do you divide it up given what you just said . Yeah. I actually think that the indexes and all the etfs mentioned are a huge beneficiary of a risk on, risk off environment. They are stoked on whats the next fed move. We move beyond that to where you generate more alpha, not by getting quick fixes and asset allocations by picking stocks looming from a socialist type environment where everything does well or poorly at the hands of the fed to the environment where success, true success, individual Company Success is more well rewarded. I stake with individual Company Investments in the industrial space, domestic industrials, growth tech, not old tech, and selective names. Theres a shift. Well see if its cyclical, or secular, but stick there. Come back from summer, the labor day vacation, and, yes, low volume, it is a holiday trading week after all. You see record amount, milestones like the s p 2,000, rebounded almost 5 from the august low, what do you do . Do you have to start thinking about putting money into cash, or do you stay as invested as you have been . Its been a risky strategy to stay away from the market. Yeah. The studies have shown that it does make sense to reallocate. If you have an asset class that moves a lot, take it out of the class and put it in a class thats not worked so well shown to be the good strategy. Most people do the opposite. They look at what works and put money into that, and thats the worst strategy. I dont have any problem with people whose stock portfolios go up a lot, putting a little off the table and put it in cash, hard assets, even gold. Even gold. Good ideas there. Good to see you both on the markets. Thank you. In the meantime, apple has its eyes on paybytouch for the next iphone. The ft reports that the company is working with a dutch chip maker, nxp, to add secure shortrange Wireless Technology to the devices meaning the chips allow an iphone to connect to a payment terminal, a public transport ticketing system, or the internet of all things. The report comes after apple confirmed a Product Launch on september 9. In fairness, of course, lg and samsung have the technology. Its popular in japan for public transport and ideal for the iwatch. You go through a subway terminal and thats where we are headed. Yesterday, the highest close of the year for apple, and everyone is making sense of what they said on that invitation. We wish we could hear more. The guess is its something to do with Voice Technology. Can they make Voice Technology any less archaic than it is . Also, the venue to announce the new iphone supposedly where they announced the first mac. A big one. Are they building out to be a huge structure . Some speculating it could have a high production demonstration like the home kit, something that needs real space around the audience in order to demonstrate whats going on. So excited. I they dont allow cameras in. They unveil it. Well have reporters there. Obviously, the bar is high, not just from the stock reaction, and this is tim cooks moment. How hes perceived will be decided in four months, wrote that into the Product Launch because they have not had a new product since back in 2010. The 5s and 5c. But in terms of category, inventing new, wearables, watch, payments. I wonder if theres a Virtual Reality held melt. Maybe this is not the time to talk about it. Trying to tighten up the rules with the health data, the iwatch, linking into your health met tri metrics or apps in general could take that information and sell to advertisers. If they detect you have diabetes, you get notes from diabetic companies. Theres rules whether apple is sufficiently able to police the data they may be about to up leash into the internet of all things. Wow, you learned about that. I love it. Wow. It is exciting. Well be there live. Im trying to get ford to go with me, an exciting day, no question. Gookle taking on amazon in the battle of drone delivery, can the giant oneup jeff bay soez . Linkedin, facebook, explore whether the rally in social media stocks has room to run. The premarket as we close out august today. A lot more squawk on the street from post nine at the nyse when we return. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Google taking battle with amazon to the skies. The internet search giant is developing drones capable of delivering goods under project wing. Google says test flights in australia delivered candy bars, vaccines, water, and radios to farmers. They expect it will be several years before the drone fleet is fully operational, but did 30 successful drops out in the australian cattle country, and back here, we dont know what the faa says long term. Its illegal, right . You can want they cannot do this right now. Laws yet to be written. What is interesting is the rivalry heating up between amazon and google. We saw the drone shots with amazon unveiling they were working on the project. Amazon, we know is reported to build an ad network. Thats Google Easter story, and cnet point this out, and amazon paid almost a billion dollars for twitch. I wonder who is first with the drones. Important they do it in the middle of the outback. Can you imagine the liability of dropping that thing in the streets of manhattan . You can want do this. This is just to copy a phrase in urban areas, but the sport of billionaires, and a good way to grab headlines. When amazon did this initially, they got phenomenal headlines on a slow patch in the media cycle, and, clearly, google is positioning it in the same way. As they have done with the Driverless Cars and all that. Theres no strangers to pr, but i dont think they are intended for urban use, but where you cant put a Distribution Center nearby. Yes, google x, Driverless Cars, a subject of, i think, intrigue and mystery, whats coming out of there, and speaking of google x, did you see that the executive, the vp, is headed to the white house next for top picks for u. S. Cto. Producing not just moon shot products. Didnt walt disney patent this recently . Larger than life characters at the shows flying in the air. I thought i read. Huh. I find i have nothing for you. Speaking of the opening bell today yes . The lion king. Yes. They were rehearsing earlier. They are going to sing here at the new york stock exchange. Oh, look at that. What a camera team. Up next, art cashin visits us with what to expect on this final trading day of the month, and later, the creator of the product thats become one of the most funded projects in kick starter history. A quick look on futures, which are still showing positive. More squawk on the street at the nyse straight ahead. Where the reward was that what if tnew car smelledit card and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. News from london, the joint Terrorism Center in the u. K. Responsible for setting the National Security level raise the the britain for International Terrorism from substantial to severe. In a statement, they say that means that a terrorist attack in the u. K. Is highly likely, but saying theres no intelligence to suggest that an attack is imminent. The immediate effect of that will be to inform public and private Security Operations to raise their level of security, and thats what the u. K. Will now be going through. Guys . All right. A few minutes before the bell, art cashin, director of floor operations at ubs. Good morning to that. In addition to the news simon told us, we have a miss on spending, right . We have euro zone, cpi barely moving, we got the u. S. Calling putin a liar, and premarkets unphase. Well, no, they are having a sigh of relief in the sense that no new shoe has dropped, and the quoteonquote invasion appears to be limited to something under a thousand people, which is other times deemed to be advisers or special forces group, and, again, it looks like putin is trying to establish a land corridor to crimea, so the level of anxiety is lower, although we still have to chew on the news that simon put out about the terrorist level in the u. K. Being advanced. That could be something to address later on friday before a threeday weekend, traditionally, 70 bias to the upside, but thats a lot to chew on. The 2,000 level for the s p is a wobbly place for the market, closing above it once, slid back below, and whats the significance of it . Well, it really on the chart is not a high number, but what happens, these things begin to become selffulfilling prophe prophesi prophesies, you know, every time you do something, and it pains you a little, say there must be some causal relationship there. They are looking at that. I think we really want to watch the news tickers and, unfortunately, the rumor mill because threeday weekend coming up, anything from isis on down, two weeks ago on the program, i cautioned about pakistan. I think we are getting reasonably close to a military move there, possibly taking over. We discussed this before, but just run me through again, how do you position for event risk while the market is not trading . In other words, what positions do you close out typically . I think according to what people believe, its the shorts you tend to close out, is that right . For the simple reason if youre short, your potential loss can be infinite, and so if prosperity of good news broke out over the week, you might have something move far beyond what you were prepared for. The market could, on that basis, likely to rally than fall into the close . That is why the 70 bias to the upside before a threeday weekend. We can talk about low volume this week, but our statistician said theres only four losing lengths of any, what do you think of the meltunderpar this summer . Well, i think it is a variety of reasons as simon and i discussed a few days ago. The overall performance of hedge funds over this year, actually over the year and a half, is dismal, and i think that they are buying back n. You are seeing a lot of people taking an index fund approach. I need to be in the core. I can be bright enough to trade around it. Positive. But i need the core base. I think just on a performance basis, people are getting forced in there. You cant make money almost anywhere else, and so thats where people are headed. Art, i have a question about the bond market. With the temperatureyear yield continuing to defie the forecast, 2. 34 right now, is it considered to be on different factors than what theicty market moves on at this point and the relationship between the two is not often what it is . Absolutely. Several things are going. Everyone is wrong about the bond market, virtually everyone is wrong, so you have people out there who are short and covering, and perversely, even with the tapering, the fed buying and other things, have created kind of a shortage of treasuries, and so people are scrambling. You got the Short Covering there. You got the relative value compared to rates in europe and elsewhere, and so youve got all this stuff pulling together along with geopolitical risk. Art, thanks a lot. My pleasure. Art cashin from ubs, about to get a performance from the balcony of the u. S. 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So the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with thinkorswim from td ameritrade. Youre watching squawk on the street live from the Financial Capital of the world, the opening bell in 30 seconds. Something a little bit different this morning. A performance. That is the raviki from the lion king ringing the opening bell. The highest grossing show in broadway history, 7,000 performances coming up. Later on in the month, congratulations to them. What an amazing franchise thats turned out to be. Youve seen it, right . Oh, yes, well, the film several hundred times because i have kids. Have you seen it on broadway . The chief executive officer on the tennis channel on a weekend where the u. S. Is big news. Well, it was certainly a dramatic way to open the market on the last trading day of august, which has been a dramatically strong aerobullish month. Second best of the year. Its shaping out to be four straight weeks of gains for the s p 500 and bulls are surprised sort of. 4 rebound from the low we saw. Have not have two backtoback losses on the dow or s p since end of the july, a few weeks away, but no repeat losses says something about august, also a big month for m a and others. M a under pinned by that, the better Economic Data seen broadly. Today was a disappointment on the personal spending number, and a revision higher for gdp in the Second Quarter, can the momentum continue . You look at momentum and go its unreal, the fact theres no volatility, it rises every day, and the fact that the data is doesnt it look phoney . A big part raises so many questions. Its why the market is rising, everyone feels how you do, they are skeptical, theres a wall of worry, geopolitical concerns, the fact that the economy gained, and the market just keeps going higher. You have a persistent negativity, and thats continued to fuel this rally, and its not an exuberant rally. Some call it the most hated. Those who play devils advocate, its difficult to do it every day when the darn thing keeps going up. Its really tough. The bulls are waiting. A few selected stock stories this morning, big lots is back 3 is1 31 cents beats by a penny. Analysts look for 24, and a addeding 125 to the buy back. Big lots not responding, but on the face, looks good. Its. A good stock all year, out performed some of its rivals like 44 . Buying wholesale and excess invento inventory, bow doing better than the walmarts, and gears to the same customer, the low middle income consumer so execution widely, and analysts have been bullish and good. In technology, there was a surprise profit of a penny, and stock, of course, more than doubled in 2013, and fdr cuts the price target from 80 down to 67 reflecting what they say is multiple compression. A look at spluyk. They put money to the bottom line, a surprise to some. First profit, right . Not sure, i think, yeah. They have been growing revenue and customer base. Splunking big data is the play on this stock. That was a surprise. Wow, nice pop at the open. Pacific sun, 3 cents loss essentially a meet, guiding lower in the current quarter. Big success is mens jogger pants. Have you seen these . I have not. Sweat pants that taper down to the ankle with a cuff. They said it was one of the great buys of the summer. Sounds cool. The sales trends improved as quarter progressed. Sweaty ankles though. Is that a common problem . With these it would be. You watched the commentary from the retailers this week. Yes, on the consumer, 2. 5 growth on consumer in the gdp report. It does not paint the same picture of the optimistic sort of consumer. If you go through the comments from Dollar General, no matter how the stock did or how the earnings performed, the commentary on the consumer, challenging. I mean, you can do a search and all the earnings reports for the word challenging pops up in retail to food and beverage. Guess metrics put out that restaurant traffic went up in the month of august for the first time all year. Interesting. A little, but a sign of progre progress. Cost of groceries are up so when you weigh it, its not cheaper to eat at home than it is to go out. Price of gas is falling. Headed into Labor Day Weekend, the cheapest gas price in Labor Day Weekend since 2010 helping consumers. I think they are back up to the levels we had before the financial crisis according to aaa. On driving . Yes, on driving. On miles driven. And numbers i think. On gas prices, people said well hit 3. 41 on gas, lowest on gas for many years on this weekend, but crude back up to 95 and change. Thats particularly a sensitivity for the low middle income consumer were watching carefully yet to recover. All the color from the earnings calls is on that group because at the high end, theres groups like tiffany and the other names, they have continued to out perform and continues to be a tale of two consumers. 34. 7 million americans journey 50 miles or more, the highest volume since 2008, partly due to the prices. Airlines doing well too, right . Talking about the airlines in a minute. Interesting to know what ticket prices are this weekend. Higher. Imagine they are. They feel higher. I dont think anyone a bearish on delta. I remember seeing almost all guys, like 30 buys. Crazy. An amazing run this year as well. It has. Good morning, i want to say first off when i shopped at pacific sun as a kid, i was pegging my pants. Maybe its the same as the jogger pants you talked about. Lets talk about the markets. We are just flat this trading session so far. Only up a third to half percent in the major indexes this week. Im not beleaguering you and viewers with the talk of volume because we know they are low all week. The sector wins, energy and telecom standouts, and the cyclical or economically sensitive ones are the downside performers or laggards so far. Look at the stocks on the nneney side of things that are doing well, neighbors energy, or the exploration and production side of oil, those stocks are up above 3 this week. Look at the industrials not doing as well in the trade, delta airline, flying high the airlines so much, also pept air as well. Look at whats going to happen overall for the rest of the particular seg, again, we are expecting low trading volumes, so were not going to hit on that much more today. We know its a holiday weekend, but as we look at whats going to happen in the rest of the day, so far, we want to know if theres interesting stories, three stocks to watch here from the floor of the exchange are ones that are earnings related. Look at nature foods, zeoys kitchen, big lots, stocks to focus on because of the earnings catalyst news, but, again, look at the way things are trading, this is the last day of the month, so there could be action as people try to square up some positions, also, maybe do a little bit of portfolio dressing for the end of this particular month, not a major one, but, still, something to keep an eye on and, of course, watch what happens with the ma crow trade. Weve seen oil prices find a short term bottom, that could be one trade to watch, could put more of a bid, carl, gang, whats happening with the energy stocks. Back to you guys. Thank you for flagging that, especially oil. Thank you. Rick santelli at the cme group in chicago, good morning. Good morning, sarah. Twoday chart says it all, compressing a bit within yesterdays range, and that is significant. Threeday weekend, a lot of issues out there, there could be some jockeying for positions in front of the weekend, and usually they are mean reverting. Look at the chart going back to june of last year, you can see yesterday we set a new yield close going back to june, and consider here we sit at 234, we began august at 250 for perspective. We all know we ended last year at 303. Lets look at the twoday bunds, a different pattern here, traded down to 8 7 basis points, and snapped back to 90 basis points. You know, this was the chart we showed so long ago that really was the precursor. This is a 20year chart of the difference of our ten year and theirs. One spot higher, may of 1999, and a little over 150, really want to watch this. If the trade reversions, big things happen for higher yields. A oneyear chart, year row versus the dollar. 131 significant in traders did not think so and think momentum is down, and year to date chart of the dollar yen, this is according to technicians, a level to Pay Attention to, 104. Carl, back to you. Thanks a lot, Rick Santelli. The u. K. Raised the Terror Threat to severe. How many are fighting with the group, isis, and our Michelle Carusocabrera has the latest. According to the u. K. Government office meaning, quote, a terrorist attack is highly likely, although there is no intelligence to suggest that one is imminent. Now, here in the United States, the administration is trying to figure out what to do as well as the brutality of the group nope as isis because its clearer every day the latest evidence this propaganda video released on yush showing 150 syria soldiers marched in the desert in underwear. We cant show you the video in entirety, but the gentlemen, the individuals were later executed. President obama coming under criticism from both sides of the aisle for a following statement in a hastily called News Conference yesterday afternoon. I dont want to put the cart before the horse. We dont have a strategy yet. I think what ive seen in some of the news reports suggests that folks are getting a little further ahead of where were at than we currently are. We dont have a strategy yet has been played across all the Major Networks today. At the same time, the other geopolitical situation is still front and center as well, the battle that ewe crepe fights with russia separatists on the border. They discussed the situation and evidence they say theyve seen much more russian involvement in eastern ukraine. They call it an invasion, but thus far neither president obama or u. N. Ambassador power used that word. Thats key in diplomatic terms, certainly significant if and when they use it, that signals further move by the u. S. In terms of sanction or something. Putin lashed out at ukraine in an activity in russia, went as far to say what ukraine does in yeern ukraine is equivalent of what the nazis did in world war ii. The ruble hammered, bottom part of the chart is the dollar. The dollar is strengthening. The price code is above. Heres the russian stock market, as you can see, its moved lower today as well. Carl, back to you. All right, michelle, thank you. Well hear what cameron has to say coming up. Chicago pmi in a moment. Dont go away. Latte or au lait . Cozy or cool . Exactly the way you want it. Until boom, its bedtime your mattress is a battleground of thwarted desire. Enter the sleep number bed. Right now, all beds are on sale. Hes the softy. His sleep number setting is 35. Youre the rock, at 60. And snoring . Sleep numbers even got an adjustment for that. You can only find sleep number at a sleep number store. Right now save 50 on the labor Day Limited Edition bed, plus 24month special financing. Hurry ends monday ow better sleep with sleep number. It can bring out the worst in people. But the mclass scans for danger, corrects for lane drifting, and if necessary, it will even brake all by itself. It is a luxury suv engineered to get you there and back safely. For tomorrow is another fight. The 2015 mclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. Welcome back to squawk on the street, we are awaiting the august read on Chicago Purchasing Managers survey that should be interesting because the last read for july plummeted from 62 and change to 52 and change, a rebound back into the 60 handle. 64. 3, a huge surprise, eight points better than we were looking for representing the best level going back to, well, may, because we were up there and fell. They will dig into the gran Nuclear Issues regarding the strength in this number from the people who collect the data from chicago purchasing survey. Back to you, simon. Thank you very much, rick. We are watching events in london. A statement from the u. K. Prime minister is imminent. If you are tuning in, the u. K. Raised the terrorist threat level for the first time in four years. They raised it to the fourth highest level, severe. They say theres no intelligence to suggest that an attack on the United Kingdom is imminent, but it is highly likely. Its a signal to the private sector and public sector, to all the security teams to go a notch higher in everything they do. This is a real hot button issue within the u. K. , partly because iraq, look, this is made without reference to ministers, the security industry, or the Intelligence Industry telling us this should be done. In addition, of course, youll be aware a number of britains have gone into the middle east and are fighting, it is believed, with Islamic State, the figure is 400, and when foley was murdered the other day, of course, the man that did that had a british accent, and the Intelligence Services in the u. K. Desperately trying to track who he is using Voice Recognition analysis, and the latest calm we have on that they were close to achieving that. They did not make it public. Trying to find who the suspect was. Meantime, u. K. Says the decision to do this is based largely, not surprising surprisingly, on intelligence from syria, from iraq. So the situation with isil as the president calls them or isis and the new terrorist threat level, obviously, closely connected. And it hits close to home here as well. Jim foley put it more on americans radar and the threat that isis, isil declared in the execution video that americans will be targeted. Thats another reason. They do that all the time, but the question is materially, do you have information . Can you pick up the chatter . You know, thats the cutting edge, really. Thats why it was striking when president obama in the News Conference yesterday said we do not yet have a strategy. Dealing in general with Islamic States. In syria. People in the media thought he would come in after speculation as the president eluded to and announce a strategy or plan for intervention in syria, and a lot of people were disappointed. Although, he understandably under pressure to Keep Congress alerted, wanted to tell Reporters Congress will not be left in the dark, as he said. Because they are on recess until september. Asked the pentagon to build up plans whether its military, political, or economic, about how the country and the world handles this. Lets squeeze in a quick break, and well be straight back with david cameron. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. Weve had a tec for a while. But now that we have the Adjustable Base, its even better. Male speaker 2 when i put my feet up on this bed, my stress just goes away. I go up, hey. Female speaker our tempurpedic is the best thing in our house, except for my husband. Wait. Wait. Where are you going . Female announcer 1 discover how tempurpedic can move you. Female announcer 2 save up to 500 on a tempurpedic mattress with Adjustable Base while supplies last at sleep train. Awaiting the u. K. S David Cameron gaving comments after raising the terrorist threat from substantial to severe based on intelligence from syria and iraq. As soon as he takes good afternoon, the home secretary confirmed the joint terrorist Analysis Center raised the threat level in the United Kingdom from substantial to severe. This is the first time in three years the threat to our country has been at this level. My First Priority as Prime Minister is to do Everything Possible to keep our people safe. Today, i want to set out the scale and nature of the threat we face and the comprehensive approach we take to combat it. Weve all been shocked and sickened by the barbaric murder of james foley and by the voice of what increasingly seems to have been a british terrorist recorded on that video. It was clear evidence,anymo nymphs needed, but we cannot ignore. The intention to create this in syria is a threat to our security here in the u. K. That is in addition to the many other al qaeda inspired terrorist groups that exist in the region. The first isilinspired terrorist acts on the continent of europe already took place. We believe 500 people traveled from britain to fight in syria and potentially iraq. Lets be clear about the source of the threat that we face. The terrorist threat was not created by the iraq war ten years ago. It existed even before the horrific attacks on 9 11. This threat cannot be solved by dealing with the perceived grievances over western Foreign Policy nor dealt with addressing quality, dictatorship in the region as important as these things are. The root cause of this threat to our security is quite clear. It is a poisenous ideology of extremism that is condemned by all faith and by all faith leaders. It believes in using the most brutal forms of terrorism to force people to accept a warped world view and to live in an almost medieval state, a state in which its own citizens suffer unimaginable brutality including barbaric beheadings of those who refuse to convert to their warped version of islam, enslavement and raping of murder, and murder of fellow muslims and exporting of terrorism abroad. This is about a battlen islam on the one hand and extremists who want to abuse islam on the other. It is absolutely vital we make the distinction between religion and political ideology. Islam is a religion observed peacefully and devoutly by over a billion people. It is a source of spiritual guidance that daily inspires millions to countless acts of kindness. Islamic extremism is a political ideology supported by a minority. The extremists funded by fanatics living far away from the battlefield pervert the islamic faith as a way to justify the warped ideology. This is not a new problem. Weve seen this extremism before here in our own country with the sickening murder of rigby, and home grown 777 bombers who blew up two trains and busses. The links between what happens overseas and what happens here has also always been there. Many of those who sought to do us harm in the past are foreign nationals living in britain or britain citizens returning from Training Camps in pakistan or elsewhere around the world. What we face in iraq now with isil is a greater and deeper threat to our security than we have known before. In afghanistan, the taliban were prepared to play host to al qaeda, a terrorist organization. With isil, we face a terrorist organization not been hosted in a country, but actually seeking to establish and then violencely expand its own terrorist state. With designs on expanding to jordan and lebanon up to the turkish border, we could be facing a terrorist state on the shores of the mediterranean and bordering a nato member. Now, we cannot appease this ideology. We have to confront it at home and abroad. To do this, we need a tough, intelligent, patient, and comprehensive approach to defeat the terrorist threat at its source. Tough in that we need a Firm Security response whether that is action to go after the terrorists, International Cooperation on intelligence, and counterterrorism or on compromising measures against terrorist here at home. But it also must be an intelligent, political response. We have to use all resources we have at our disposal, aid, and our military, and learning lessons from the past doesnt mean theres not a place for our military. The military were vital in driving al qaeda from afghanistan and support air strikes against isil in iraq. Key point is military force is just one element of what we can do, and we need a much wider approach working with neighbors in the region in addressing not just security, but politics too. We know that terrorist organizations thrive where theres political instability and weak or dysfunctional political institutions. We must support the b. I. D. Ing blocks of democracy, the rule of law, independence of the judicia judiciary, rights of minorities, free media, free association, a proper place in the society for army and show perseverance. Not because these Building Blocks take time to put in place, but because we are in the middle of a generational struggle against a poisonous ideology that well fight for years and probably decades. Well take whatever action is necessary to keep the british people safe here at home. Britain has some of the finest and most Effective Security and Intelligence Services anywhere in the world. We will always act with urgency where needed as we did with the Emergency Data retention legislation already yielding itself, and we took a whole range of measures to keep our people safe. We are stopping suspects by traveling by seizing passports, barring nationals from reentering the u. K. , depriving people of citizenship and legislating to prosecute people for all terrorist activity even where the activity takes place overseas. Weve stepped up the operational response. Since last year, seen a fivefold increase in syriarelated arrests. Weve seen port spots and cash see sures grow by over 50 , took down over 28,000 pieces of extremist material of the internet this year alone including 46 isilrelated videos. Those who carry the flags or recruit will be arrested and material seized, and a 58 of the channel project. Now, people are rightly concerned about socalled foreign fighters who traveled to iraq, took part in terrorist acts, and now come back to threaten security here at home. The scale of the threat is growing. I said very clearly last week that there would be no kneejerk reactions. Well respond calmly and with purpose and do so driven by the evidence and importance of main taping that liberty, that is the hallmark of the society we defend. We have to listen carefully to the security and intelligence offices who do so much every day to keep us safe. I chaired a meeting a week ago with the intelligence and security service, and agree agreed the answer to the threat was not to dream up sweeping new power to be ineffective in practice, but it is becoming clear theres some gaps in our armo armory, and we have to strength p them. We have to stop those traveling and those who do go from returning and deal decisively with those already here. Ill make a statement in the house of commons on monday. This would include further steps to stop people traveling with new legislation that will make it easier to take peoples passports away. Now, as well as being tough, patient and intelligent, we have a comprehensive approach. Dealing with the threat is not just about new powers, but about how we combat extremism in all its forms. We need to tackle that ideology of extremism head on, at route before it takes the form of violence and terror. That means challenging the thinking of extremist ied logs, identifying the groups in the country that push an extremist agenda, and countering them by empowering the overwhelming majority who believe in British Values, democracy, rule of law, and respect minorities. As Prime Minister, theres a new approach to counter extremism in britain focusing on all typing of extremism, not just violent. I set it out in the speech in 2011, and drove it forward, and this is funding organizations, banning hate preacher, and ensuring that every part of the government and state from schools and universities to prisons are all focused on beating the scourge of extremism, and this task force will continue to meet regularly. Britainerant and free nation, backs people in every community who want to work hard, make a contribution, and build a life for themselves and their families. We cannot stand by and allow our openness to be confused with a tolerance of extremism. All one that encourages cultures to live separate lives, behave in ways that run completely counter to our values. Adhering to British Values is not an option or a choice, but it is a duty for those who live in these islands, and in the end, it is only by standing up for values that well defeat this extremism, protect our way of life, and keep all our people safe. Thank you. Very happy to take questions from the broadcasters, and one or two from the print media. Prime minister, do you feel do you feel this changes the syria vote, reflect what has been done that that vote could have helped the very people who you just say posed a Severe Threat . Ill answer as comprehensively as i can. First of all, the change in the threat level, that is determined by the joint Terrorism Center, and, the substance of the announcements, and i understand, and i agree with the assessment they made, that there is a greater threat that we face from syria and iraq, and that theres a greater problem of returning foreign fighters, and also it is worth remembering, as i said in the statement, were dealing not just with isil, but dealing with other Al Qaedalinked franchises in syria and, inkedeed, potentially in the iraq. Thats the reason for the threat level change. What it triggers first of all is a comprehensive assessment, domestic, the prism through which i look at the problems. First priority is are we safe here at home in the u. K. . What more can we do . I think thats the prism through which we have to look at first of all is my statement sets out. In terms of what we do with others to deal with the problem at source, we have been focused on humanitarian aid drops, playing a very leading role, focused on intelligence gathering and working with our partners to help with the work they are doing, and the americans who have taken the lead on the rather more kinetic action in terms of air strikes against isil. Thats been the situation, and i think that is the right approach to take, but be clear, i would always do what i believe is necessary to keep the british people safe. That is the way i make these judgments about what we should do. In terms of linking back to the syria vote, i would not over analyze that. The syria vote in the house of commons of about a proposal to take limited military action in response to the use of chemical weapons in syria. The house of commons made the determination that that is the u. K. S David Cameron there raising the terrorist level in the u. K. To severe and laying out an aggressive response to isis saying its a deeper threat than known before, in his words, that we cannot appease this, but confront it and fight it for years, in his words, probably decades. Our Michelle Carusocabrera joining us back at hq with thoughts. I add a couple points, coming out the beginning saying, you cannot blame foreign intervention for the extremist ideology or blame go straight to him. Ideology trying to push away naysayers who say part of the issues are, and weve frequently seen this is a response to pov poverty, response to wars, but he pushed that aside immediately. The core issues face are some of the fighters travel the to the region with u. K. Passports, and its easy to return if they cant figure out who is involved, and they want to be sure they are no longer committed to travel, and some of the futures measures they will take are focused on stopping mobility of individuals, but i think you highlighted the key point, a fight for years and probably decades. Trying to pave the way for what is likely to be a long battle against what he calls extremist and poisonous ideology, not religion. Okay, michelle, thank you very much, joining us now the the former u. S. Ambassador to ukraine, and he served and coordinated this countrys response to the arab spring and breakup of the soviet union. Ambassador taylor, welcome to the program. Thank you. Would you agree with the Prime Minister the Islamic State is the greatest and deepest threat to security ever faced . Its a terrible threat. Its a serious threat that we have to take seriously both immediately and over the long term. It as the u. K. Pointed out, it is controlling territory, not just in a cave somewhere, but controlling territory and establishing a government. The goals are antithetical to our allies and ours, and we have to counter it forcefully. Are the allies drawn into Armed Conflict here stepbystep . I believe in order to stop this threat, we have to move into Armed Conflict. Thats the only way this is going to be countered. We are going to be able to counter this threat, so, yes, i believe that allies and we will be pulled into counter the threat militarily. Do you think that youll be able to persuade the people of the country to do that begin half of them want less involvement in International Affairs . People of the country are well trained, are well they understand things very well. They are sophisticated and understand the problem that we face. They understood it in the past. They will understand it in the future. This is a leadership issue, but it is also a test for the United States and its allies for dealing with this serious threat. You know, he talked about tackling the ideology, what he called poisonous a number of times. The warped version of islam. How do you do that . How do you tackle extremist ideology at home, in the u. K. , other parts of the world, and where its based . You have to point out to all of us, we have to understand that this kind of ideology is warped. It is a terrible ideology that goes to violence in order to achieve its end. People will understand that. People in europe, people in the United States will understand that. In the meantime, it has to be contained. It has to be contained and pushed back. It cannot be allowed to Gain Momentum and a larger threat to the allies and to us in the middle east. In the meantime, sir, nato is involved in an emergency meeting as to what to do with vladimir putin. Sanctions dont seem to be stopping his ambitions there. Is it time to start thinking the unthinkable . That we have to ramp up spending on defense, that the peace dividend we had in the last 25 years has maybe run its course, taken spending as a proportion of gdp on defense in the country from 4 to 3 preponderate , does that have to be reversed in your view . It does. We have to face the challenge in europe. Russia is not the russia russia today is not the russia of two months ago or last year. This is a new russia. It is a mafia, kgb governed state. Thats not what we had hoped in after the end of the cold war. We made decisions after the cold war. Those decisions are now out of date. Russia is a different, more threatening russia, and we have to counter that russia. Another question on isis, is Armed Conflict necessary done with air strikes alone . Can start with air strikes alone, but air strikes are not capable we cant do air strikes without good intelligence on the ground. We have allies in the kurds, and we are working with the iraqi army as well. There are americans there with both of those forces, both the iraq army, and so, yes, we need people on the ground and air strikes are important. Okay. Well leave it there. Thank you for the time. Ambassador william taylor. Whats the impact of this on global market, the growing threat . Our markets are negative, dow down 34 after a positive open. The nasdaq down as well, fractional losses, though, the ceo of principle Global Investors with more than 320 billion in assets under management. You are responsible for so much money, jim, what are your thoughts hearing the growing threat, and you see the terrorist level raised in the u. K. . Its not new news. We knew it was severe. Theres positive things, though, in camerons comments. For example, he was down playing the idea of a direct military involvement, talking at length about restricting travel, about identifying the bad guys, about doing something pretty extreme, which is taking away their pass ports. He did to be clear, jim, in fairness, he listed military force saying it was not the sole element of what must be pursued. Yes. If the point of what hes saying is the military force is on the table. It has to be at the backstop because diplomacy only works if theres a threat behind it. You can be shouresure, though, american and British Forces are deeply involved in this, and i think one of the risks for the market, though, is the Foreign Policy establishment brings us to quickly into military involvement. Remember, were not fighting a region here. The isil forces are faced up against iran, and its better if the war is fought locally without us Long Distance secondg in forces. Theres no road map. I cant believe you think theres a table of any kind. Its a long, unpleasant fight. Thats clear from what the Prime Minister said, but it will be worse and the market is worried, i believe, both in the iraqsyria situation, and also in the ukrainerussia standoff. The market is worried were in open military conflict involving the nato allies. That is the negative tail risk here. Where do you see the market being worried . We continue to see stocks remain resilient to the growing tension around the world coming from russia. You come into the headlines that point to a worsening escalating situation, not the opposite. Yet the markets continue to hold in there. First thing to say on that is the tenyear yield turned at 3 . Why is it now closer to 2. 30. The other related to is is the growth slow down. The sanctions on russia are negative for western europe. They could tip germany into recession. I dont take that off the table. Those are good reasons why the u. S. Treasury yes are sharply down, and the dollar only a bit stronger. Thats not actually necessarily bad news for the u. S. Domestic economy absent the negative tail risk. Thats how you justified the fact stocks have been raising and yes. The valuation, because of the lower treasury yields, a valuation increase is more supportable, and weve got after all, the s p is between 17 and 18 times earnings, thats not an extreme valuation, particularly against a 2. 3 ten year. The two wars, a a appointment on sanctions there. Its well for obama to push europeans into sanction, and in an ideological sense, maybe the right thing to do, but are we sure the economy is Strong Enough to deal with this . Sanctions are not working. Whatever the New York Times says, they are pursuing the policy, and putin is belliger t belligerent. Any point if the retaliation is with german automotives or the Prime Minister said this week, they are prepared to cut off gas supplies in the winter, is there any point in pushing further on this . I think there is because sanctions are likely to have an impact on Russian Forces and be a force for change. Putin does not care. He does. He has to face public opinion. Public opinion at the moment is ukraine is par to russia and the americans and europeans talking internally within russ russia . Within russia. Globally, he does not care because within russia, the news media are controlled, but russians do not have the same view of this as we do in the west because do you expect that trade to continue where people buy treasuries to hide out, the safe haven bid to quality and equities to out perform on that in. Well, i think thats right. I think if it was not for the geopolitics, then and the growth slow down with it, which is equally important, u. S. Equities are 5 to 10 higher than now, and yield is 3. Thats a fantasy scenario that didnt happen. What happened is the growth slow down and the geopolitical turmoil that president obama talked about repeatly. I think that caused the economic environment to be different. My take on this is yields stay low. The dollar stays strong, and absent open military stays strong. Thats a question mark, but thanks for now. A very important question mark. Every time investors consider everything, something new. Thats why we love markets, carl. Thank you. Big lots following in the footsteps of retailers in recent weeks, following results after better earnings and buy back programs, whats going on, as we break, another check on the markets, we lost ground, dow down 38 points, back in a minute. [ male announcer ] its one of the most Amazing Things we build and it doesnt even fly. We build it in classrooms and exhibit halls, mentoring tomorrows innovators. We build it raising roofs, preserving habitats and serving americas veterans. Every day, thousands of boeing volunteers help make their communities the best they can be. Building Something Better for all of us. Female announcer througet 36 months interestfree financing, plus big savings of up to 400 on beautyrest and posturepedic. Even get three years interestfree financing on Serta Icomfort and tempurpedic. Plus, free same day delivery, setup, and removal of your old set. When brands compete, you save but this special financing offer ends labor day at sleep train. Sleep train your ticket to a better nights sleep zplmplg big lots reporting, profit topped expectations, but stock is lower as the companys top line is lower, and closer look at big lots and other discount retailers today. Analyst with the advisory group, and patrick at mkm partners, happy friday, good to have you. Thanks. Joe, walk us through what it means, and invenn stories okay, a buy back, and why isnt the stock responding . Yeah, no, big lots has done a lot of things right lately, and the stocks are performing well. They price in the turn around, and people are taking profit here, and, you know, the consumer, the guidance was a little bit softer for the second half, okay, not great, you know, for the Third Quarter, and maybe people need profit, but the underlying trend is better. Patrick, the color out of discounters in regigeneral, not good. The words of the Dollar General conference call, the consumer continues to battle head winds faced for more than a year. When is that going to change . Yeah, big lots has that same basic customer profile, a fair bit of exposure to lower and middle income consumers, but this is a managementdriven turn around. The company got a new ceo, a little over a year ago, and hes done a great job just pushing the early stages of this turn around. But, no, the consumers tough. No doubt. I was down in arkansas on wednesday meeting with walmart. Joe was too, as a matter of fact, and, you know, the body language from doug mcmillian, ceo, was cautious remitting to the consumer. The jobs numbers are there, stock markets good as we know, gas prices are benign. Theres spending power out there. I think it needs more of a psychology boost now and i think well probably get that in the back half of the year around the holiday period. The one thing, joe, i dont see anywhere, does big lots have an Online Presence . Are they growing as they need to be online as the peers are . No, they dont have the Online Presence. Thats lacking. Thats the nature of what they sell, its a Treasure Hunt environment. They do not do ecommerce. As patrick said, discounters, seeing softer trends in the Second Quarter, backtoschool is better for a lot of retailers out there. You know, target said something last week that was interesting. They are seeing people buying for the occasion, not just for the dispoupts, and i do think theres a limit followthrough going on, and that should bode well in the second half. Patrick, you know that big lots have been turning more towards food. You mentioned the management has taken some initiatives thats driving growth. Food and furniture, higher margin businesses. Whats the strategy there, and what results are they seeing from that . Yeah, i mean, one of the new things the new ceo did was do a deep dive look at the companys core customer, and the name jep fer comes up, and its rudimentary, but they slipped in terms of the product offering. They were not lined up with the core customer, and so they made major adjustments in the merchandise assortment to better align with their core customer. They also started to roll out frozen andrefridge rated food, and so they have a nice lift to the furniture business. You dont think about it, but its 20 of the sales. Those were a few things they were doing, yeah. Joe, dana was on earlier in the week and said if theres something changing its that its less worse, with that in mind, do you have favorite names going into holiday . Well, yeah, i mean, game stops one of the names we like a lot. Wow. They are wellpositioned with the new game cycle, and, you know, sales trends are solid, a lot of excitement, but thats one of the ones they like. Might be interesting. Have a great long weekend. See you next time. Sure. You too. Well, as many of the fast casual restaurants face challenges in the industry right now, one chain is growing, freshii, opening two locations a week globally. How is it succeeding where others struggle . Where does it see the Market Opportunity . The ceo joining us live after the break. Anufacturers a day shut down in america. Theres no reason we cant manufacture in the United States. Here at timbuk2, we make more than 70,000 custom bags a year, right here in san francisco. We knew we needed to grow internationally, we also knew that it was much more complicated to deal with. I cant imagine having executed what weve executed without having citi side by side with us. Their global expertise was critical to our International Expansion into asia, into europe and into canada. So today, a customer can walk into our store in singapore, will design a custom bag and that customer will have that American Made bag within a few days in singapore. Citi has helped us expand our manufacturing facility; the company has doubled in size since 2007. If it can be done here in san francisco, it can be done anywhere in america. You need to see this. Show em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. Cozy or cool . 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It was seeking to establish an violencely expand its own territory, could not be appeased, needs con prompted, and working with the allies, clearly a military component exists to that. Sarah . Switching gears to talk about the Restaurant Business because while many face challenges, one fast food chain is growing, and that is the health casual chain called freshii, opening two locations a week around the world. Matthew, the ceo and founder of freshii with locations in more than 50 cities and ten countries. Good to see you. Good to see you. You know, i learned that your headquarters are in canada. I think you are ka neighborhood yap, and does that make you a good candidate for inversion now that weve seen burger king buy tim hortons . Its a good week to be a Canadian Consumer brand and good week to be focused on healthy food. You know, its interesting. I know the burger king guys well, and they did it for the right business reasons, and the tax inversion is an added bow fuss for them. How much an advantage do you get for dg domiciled in canada . Ironically, its hard to operate from canada. Theres commodity pressures, quotas put on poultry and dairy, and the food costs are higher. If you figure up the business mo e in canada, making operating around the world easier. Talk about your growth. How many locations do you have right now . About 120 restaurants today. Opening two stores every week. We opened in orlando this week, and our 40th store in toronto this week. Everybodys on the healthy trend, even the big guys are on it slowly. I saw, for instance, taco bell is opening u. S. Taco co. Fast casual healthy are the trends in restaurants. What do you feel you have . Whats the Value Proposition as an opportunity . We see the white space as better for you, nutritionally beneficial and having a Broad Product mix giving the reason for breakfast, lunch, dinner, and snack. Healthy eating is appealing, a gloe global issue, thats why weve had such success. Matthew, are you selling the brand and the contents to individual independent owners . So while the first nine Stores Opened were company owned, we are now largely a franchise Business Model and asset model grown by franchises. You started the conversation knowing the burger king guys well, talking about the operations said they want to be like yum with a staple of brands. Assumption is you are talking to them about joining that staple of brands . What is the nature of your discussion generally about, who owns you, and what you want to do with the business . I want to start by saying we just respect daniel and the young Management Team because were also a young Management Team and shows that young entrepreneurs can build huge bricks and mortar businesses. That said, jim cramer said its a Great Partnership between burger king and tims, but have not addressed the issue that all giants are experiencing, losing millennials on mass, and freshi, we had 9 comps last month. . Right. They are going somewhere. Its clear they go to the healthier brands out there. So just to guide you back to the question, are you talking to them about becoming part of the staple . Whats going on behind the scenes . I met with the ceos of some of the biggest chains over the last 24 months, and they all are aware its something to figure out, mcdonalds took entries off, and wendys announced less than 3 of sales in salads. Youll see over the next couple years, big giants actually start to twin with the rising stars in the healthier fast food category. I find the answer interesting. The chipolte ceo quoted saying arrogantly fast food is going away, well replace them. You see a different future where fasted food and your healthy fast casual restaurants can be urn one roof and drive growth, is that right . Well, i heard what monte said, and i heard another article saying that mcdonalds should buy chipolte. I think that healthy is a movement thats not going away. The fast food giants are still the largest in the industry, and they will figure it out one way or another. They have been testing for decades to do it internally. Its not working. I think over time well see more Creative Solutions for that. All right, well thank you for joining us toe talk about the interesting trends in the industry. Markets mixed as you see, u. K. Raises the terrorist threat level, more on whats moving next. [ radio chatter ] [ male announcer ] andrew. Rita. Sandy. Meet chris jackie joe. Minor damage, or major disaster, when you need us most, were there. State farm. Were a force of nature, too. With a newt ace of nature, too. Volkswagen turbo. Ed reward card so why are we so obsessed with turbo . Because theres nothing more exhilarating than a powerful ride. And you can get that in places you might not expect. Like the passat. And also in the funtodrive jetta. In fact, volkswagen has sold more turbos than any other brand over the last ten years. That is a lot of turbo. Get a 1,000 reward card on new 2014 turbo models or lease a 2014 passat s for 179 a month after a 1,000 bonus. Ends soon in todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of Fidelity Investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. A little over an hour into trading, checking the markets now, hovering in the unchanged line, the dow is now down 27 points after cameron spoke on the increased terrorist threat in the u. K. Assets coming back. Art watching gold, the nasdaq turned into positive territory, and s p is flat on the last trading day of august. A look at the gainers on the s p right now, marathon oil, murphy oil, and boston scientific. Some of the oil names up there, saw the price of oil rebounding, and watch that, maybe a bottom as its. Declining to multimonth lows. A Communications Technology company having results that people like. That explains that. The losers on s p right now, underarian rm under armor, and coles, and constellation brands, some of the stocks actually on the losing lists have been some of the high fliers and better performers so far all year. Alltime highs for apple, home depot, amgen, and dr. Peppersnaple. Apple continues a tra jejectory weve seen in the past with the big launch going higher. The team pointed out it peaked last time around in september just on the day before. Absolutely. And dan on this program told us generally it under performs following the Product Launch. He thinks it will be different this time, but we have to wait pb. Because a bigger range . Thinks the pipeline is better, and judging where the stock was and is now, its not that much more expensive relative to the market. Best bargain, what did carl call apple . No brainer. The no brainer. Of course, its confirmed september 9 th, the date of the next product unveil. The leak of the apple, preparing to roll out touch pay technology, basically allowing your phone to work as your credit card as samsung and lg have curtesy of a dutch chip maker, whos stock we should check actually. I didnt realize the technology has been in phones the last eight to nine years, but its not caught on. You whether apple talk about payments a huge growth area, social media or here. Start by tapping the iphone on the mta, whatever it is, or, you know, to, you know, i was going to say in a ror shop, but they dont exist anymore, do they . Thats ridiculous. Dating yourself, simon. Public transportation in japan. The highlights on the consumer, front and center, 70 of the economy figuring out whats next in the Third Quarter after a solid Second Quarter growth. I went through the earnings commentaries, statement, and kmep commentaries from ceos across the big company. Its not pretty. Low and middle income consumers continuing to struggle. We heard from from the buying habits there, north American Consumer picture continues to be weak from the ceo of pepsic organization. You saw in layzboy, and economic environment at best improving gradually, from the cfo, just to give you color now that we have wrapped up earnings season and in light of todays personal spending numbers which declined, first time we saw that since january. Cramer would say were overstored. Mike santelli, we didnt take out enough retailers in the crisis. Too many stores. With lower traffic levels. It is goingon that. You see it in the household products. They had the roughest earnings, and in terms of Revenue Growth for the household products company, the beauty companies, Procter Gambles of the world, they are suffering and the Restaurant Industries as well. Maybe denys has the answers, opening the First Manhattan location, dennys opening 5 00 a. M. , north of where we are, city hall, its tailored to the financial district crowd. The diner features a full bar at 1 1, upscale version of the grand slam breakfast. Theres bacon, agos, pancakes, sausage, and 2004 bottle of champaigne. The price tag . 300. There you go. They wanted to reflect what the people of manhattan wanted. You think they want that . Thats a different part of manhattan, but i dont know. Champaigne, appeal, the other stuff not so much. 300 . A lot more on moving the global news today. Squawk on the street continues in a moment. To quality. Todays chevrolet has it all. And the time to buy is now. 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Com offer2. Dows down 27 on friday before a long weekend, and Rick Santelli with the santelli exchange, hey, rick. Hey, carl. You know, chicago pmi day, alice can give us all the detail, and for those of you who are not as familiar with chicago purchasing surveys, you ought to be, unlike ism, it includes both manufacturing and service, 60 40, correct . Thats correct. 60 services and 40 manufacturing. Chicago pmi, their products are not only in chicago, are they . Thats right, rick, a Multinational Group of people, the products are all over the world. We certainly had oo strong report, rick, 63 best since may, a strong push in production up 23 preponderate 3, biggest jump on record. A push in new orders, and moats of the data here takes us back to where we were in may erasing the decline in july putting us on trend to where we were in the Second Quarter, which was very strong. Now, if you want to look at the data, rick, we had a huge prush in production. Why . Demand is there. Theres a push in new orders, guys got the stuff out the door, and they were trying to work off the big push in order backlogs. Now order backlogs in thats an important issue. You told me logistics make purchasing managers nervous. Where is the rub from . A lack of invenn story. Its problematic. While its a positive calculati calculation, it hurts business. If you cant get the wimjts in, you cant produce. Is it a supplier issue internationally, thats the slow down . Its twofold, rick. We are hearing that supplier delivery times from china are slow. This is a problem because companies there cannot get loans. What . I like that. Here its logistics, not enough truck drivers, even though we supposedly have a jobs issue, but in china, its not logistics, but financial lo jis tigs, thats big. A big part of it. Back here, as you mentioned, its a logistic issue. We have problems with trucks, cant get to the plants to deliver goods, rails are slow, so all that plays doo the u. S. Economy by far is better, i get that, and i dont know if i find total solace in that, but here is something bigger with the inventory number big, nonfarm inventories in Second Quarter, were the widgets find a home . Absolutely, rick. We have a special survey question this month and 75 of the respondents expect demand to be strong in three months. Seskly september and purchasers think theres one final push thats larger than the 11. 7 gain seen this month. Probably at the beginning of the first quarter. Expected demand is certainly there. Well, thanks, alice, have a great threeday holiday weekend, and my hope is were done with the fix and starts and get consistency to the strong numbers. Back to you, simon. Upbeat outlook, thank you very much, Rick Santelli live in chicago. Still ahead, google testing delivery of drones. Is this the future of the product delivery . 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. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Online advertiser, one of the biggest movers of the day, serging up 19 , advertising giants is considering a buyout offer, focusing on display ads for online despite the big move in the stock, krcriteo still down. Thanks. And director of Institutional Sales with stuart frankel. Good to see you. Good to see you on set. Do we have to start pricing in world war now . Hasnt had the ability to knock down the markets. Geopolitical has had the ability. But it feels ratcheted up. You are more in touch with it than i am. The whole no strategy thing shooct market. The president s presser yesterday . Yeah. And you hear other countries sound like theyre ratcheting a little higher than us, has the ability to spook the market. Somebody tweeted wait until all the well on vacation get back and pick up a newspaper on tuesday. Because a lots gone on. As a trader, waiting. Back to t. A. R. P. Everyone waiting for volume. Just wait. After the election is over. Just wait. After the midterm, over. Always a reason to wait. Right . I dont know if its really what is the volume . Etfs, people buy contracts, not stock . A portion of that. I think a lot of people were spooked away from the markets with flash crash. I think its a host of reasons why you dont see t. Make a lack of catalyst. The geopolitical concerns arent weighing on the markets. Next week, the Economic Data comes back full force and ecb, boe, boj meetings and the jobs report. I could take the other side to push back. How about say too much data gives people a reason to wait longer . Back in the old days, no one really i dont even know what the old day. Be prepared for that followup question. Nobody waited for these numbers. People traded. Stock to buy. You bought stock. Stock to sell, you sold stock. Fed deictated by whats happening make the case only waiting for the fed. Everything else, shut up, not trade, wait for the fed. I think the original point was, geopolitical has the ability to take the steam out of the bulls. But i think unfortunately, theyre looking for a catalyst and maybe there is a war. Maybe there is another war. I think thats the only thing that would take a lot of this momentum out of the markets. September is usually fraught a little bit, right . Were going to get an apple phone. Were going to get an alibaba ipo, in addition to the data sara mentions. I mean, are you feeling good about the month, at least . The month to come . I think more nervous about october. You know, if you look at the s p going back to, lets say, may. Last year. We thought about seven had seven, eight dips into the 100 day moving average. Looking for another one in october. Sorry to disrupt. Also an argument saying none of the central bankers will want to rock the boat until the stress tests on the european banksened recapitalizations out of the way. Taking you into octobernovember anyway. Thats when theyll rattled cages. Makes a ton of sense. Having said all of that, if you look on a eck technical level, on charts, back year looking for another test, we still gained for 2100 in the s p cash yearend. Impossible to thread the needle waiting for the selloffs. Stay in the market unless you feel its a much bigger entity of a selloff. Look at the crazy action in bonds. Stronger u. S. Dollar. What is your litmus paper . Your litmus test Going Forward to confirm whether this equity can continue . As long as rates doens escalate and spark higher, housing market, corporate paper okay, for me when do equities start to fail jl when do you think people have less of an appetite . I thought you were going to actually ask me an fx question. I know what your love is. Something id never ive never heard of before. I was a little nervous. The swiss franc at a multiyear there you go. Theres action. Kick the question back to carl. Carl, what do you think . Dont be a stranger. Dont give fast money all the love. Love being here with you. Have a great weekend. Up next, is there a doctor in the walmart . The retailing giants next big initiative, well discuss, and squawk alley is coming up next. Kayla, whats in store for that hour . Sara, apple wishes it could say more about its big Product Launch on 99. What could it be launching . Well read the tea leaves on apple, and then googles project wing taking flight, but is the tech giants delivery drone project a moon shot or a reality . And finally, theyve skyrocketed all summer, but could a september swoon be in store for social media stocks . All that is up next on squawk alley. Summer collection is her. [ male announcer ] during the cadillac summers best event, lease this allnew 2014 cts for around 459 a month or purchase with 0 apr. Hurry in this exceptional offer ends soon. Walmart wants to be the price lead around disrupter in health care, especially when it comes to instore primary care. Interesting. Bertha coombs in georgia with more on walmarts strategy, which could become a gamechanger. Bertha . Yeah, it is a big gamechanger for walmart and a big deal. Had a band here kicking off an opening at this carrollton, georgia, clinic. Theyve had cake. They want to emphasize this is a walmartbranded clinic that is going to offer their customer, and their employee s primary cae at a price others will find hard to beat. 40. For 40 a customer, you can go in, get a physical. A fraction of what it costs at an Urgent Care Center or at a doctors office. And for employees, that visit will cost just 4. And that is a big reason and a big priority behind where they are opening these krclinics wit the two opening in west georgia, they will be able to provide care for some 3,000 employees, and their families, at that 4 price. And that could help them control their own costs, and their employees control their own out of pocket costs for primary care. Its still a pilot program, and its still early, but theyre encouraged by what theyve found. We are beating expectations, means, Great Customer satisfaction. People want to come. We are seeing an average of 50 to 20 patients a day within the walmart care clinics, and were seeing chronic and acute care. We know that people need us. Right now, theyre operating in texas, georgia and south carolina. They have opened their ninth clinic today. They plan 12 bip the ey the end year and see whether they can scale it up to have more. Check out my piece on cnbc. Com. Back to you. Interesting. Very interesting story, bertha. Well check out your piece. Simon, thanks for now. This speaks to a new trend. Look at the walgreens and rite aids of the world, a big move, no longer have tobacco, focus on health kagcare, clearly a opportunity. Subsidizing health care for their own workers. Fixed costs paid by the customers. Their own staff get it much, much cheaper. Interesting. It is. Well follow bertha all day on cnbc and check out her blog. With that plug, over to you for squawk alley. Guys have a good weekend. 8 00 a. M. At google headquarters, and 11 00 a. M. Here on wall street. Squawk alley is live