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 elsewhe