Transcripts For CNBC Squawk Box 20140807

Are not moving much at this point, but yesterday we did see heavy action. In the red italy reporting that its in recession, two quarters in a row of contraction. Germany was heavily hit, not only by what happened in italy, but by all the talk about what happens in these sanctions and the retaliation against the sanctions by russians. Back here in the states, key data today. At 8 30 eastern time, weekly jobless claims. This afternoon, we have Consumer Credit. In addition, many of the nations retailers will be reporting july samestore sales today. On the earnings front today, Companies Set to post quarterly includes including orbitz, wendys. In corporate news, bank of america reportedly close to a nearly 17 billion settlement with the government over mortgage bonds. The deal with the doj is said to include about 9 billion in cash. The rest said to be going to consumer relief. Settlement was reportedly reached in principal after a phone call last week between bofa Ceo Brian Moynihan and attorney general eric holder. What are you going to say . So the big two things i would say. First of all, most of this was from countrywide, long before they ever bought the company, right . 4 of loans that went bad were done by bank of america. Second, bnp and the french ought to shut up, right . Because they only paid 10 billion for activity covering 20 years. But this is a jamie dimon problem because they bought merrill and they bought it at behest of the government. I can make all the same arguments that jamie made and i have the same opinion. And i have the same opinion of that. And worse, my real opinion is of all the bad things that happened, who is paying for it . The shareholders. The shareholders. And theres nothing in there that is punitive to make future people not do anything like this because there are no individuals who are the ones who actually have to account for any of this. So its technical of consumer relief . Well, that depends. And, too, consumer relief, who do you think ended up with these houses . The bank did, right . The bank is the one that ended up with massive numbers of houses that they had to sell because the consumer could just mail in the keys, even if they had cash in the bank, nonresource loans. Does anyone think these headlines play case these quote unquote i dont think its it gets to the populous cry . I dont think it tamps down to populous. Its like, here, this is the win in our court and this is what we do with it. Eric denali was in recently and he was somebody on the regulatory side from the insurance companies. Now hes looking at it from the other side and he basically said at much. A lot of this is shakedowns. When the government decides they want this, theres not a lot you can do and expect to continue operating. Literally eric holder said you have until 8 00 a. M. To raise your bid, basically. By a substantial amount. 17 billion to 17 billion. Thats a huge percentage increase. Or else were going to file more charges against you. There you have it. Unbelievable. And, again, bmp has no right to complain. They were accused of breaking the law for 20 years. Sanctions and they only paid 10 billion. Kol log has reportedly hired an adviser to look at a bid for uk smacksmaker united biscuits. They are said to be working on plans for a sale of an ipo by the end of the year. I associate biscuits with the united kingdom. Im not under the impression this was supposed to be structured as an inversion deal. Unlike walmart. Walgreens. Wall genes. Excu walgreens. Excuse me. President obamas topic of inversions is promising to arides. President obama says his administration is set to act to help companies not escape Corporate Taxes. The lost revenue means it has to be made up somewhere and that typically is going to be a bunch of hard working americans who either pay to hire themselves or to reduce services. And in the meantime, the company is still using all the services and all the benefits of effectively being a u. S. Corporation. They just decided that they go through this paper exercise. The president says Congress Needs to pass legislation to stop the use of inversions entirely. In the meantime, hes pledging to look for ways to discourage the deal. Congress isnt going to do anything anytime soon. But the bully pult works in the case of walgreens. That is a certain type of company. One that has Retail Operations walking in the door, choosing whether you go to ralph nader was planning to he wants to have boycotts around this. Right. If they have the drug that youre going to be using they do generics, but who knows. Anyway, lets talk geopolitical news this morning. Russia banning the imports of milk, france, fruit and vegetables from the u. S. , australia, europe and norway. Taking actions on countries which have imposed sanctions on russia. Russia imported 43 billion worth of food last year. This would have been a much bigger deal if it happened back before 2008. Poultry was the really big issue here. There are some poultry farmers who said years ago this used to make up 20 of our sales. But now its a much smaller portion because russia said they wouldnt use chick bs that had been cleaned with chlorine, which is something that is not allowed in the eu, but it is used here. As a result, theyve seen some significant cutbacks in the amount of food. And remember the whole issue originally with ukraine was russia wants to create its own customs union. Belaruse is in this. Remember the whole chiobani issue during the respectolympic. This is a violation of the w. T. O. Agreement. They were anxious to get in and now left and right theyre trying to well, its like the go and the ukraine. Exactly. Fox reports higher profits, betterthanexpected earnings after the bell. The results coming a day after the media giant announced its decision to pull its bid for time warner. I wish you were here yesterday. I really wanted your take on what happens. I was surprised. I felt i had failed you. We had talked a couple of times over is this for real or is this a fake . I think hes really gone for now. I think, by the way, there will be five bucks or more on the time warner stock simply on the assumption that he may come back. But because of the comments he made, and well tell but them in one second, because the comments were as strayed end as they were about leaving and because they committed to ads 6 billion buyback. Over the course of the year. Over the year wait, wait. I think what happens with by the way, it was just authorization. You have to believe now that jeff is going to come back. I think jeff you saw the press release and said, whew and then he saw the stock price and did what . I think he knew that was going to happen. I think he just says now, i have to deal and i have to try to work it out and figure it out as opposed to, oh, my goodness, i have to try and make a deal. I didnt think this was going to change his mind about being open to the idea about coming in. And this is more resolute, by the way, in the hundred dollar number. I think the view was get to 100 and then we will say thank you. In this time period of easy money, i ask a question, is it possible he wasnt able to get the financing . No, i dont think that i think hes somebody who cares legitimately about the stock price. Probably almost to a fault, potentially. Some people say he didnt care enough about the stock price when he was buying the dow jones. But i think he saw what was happening to the stock. Lets tell you one of the things he said, though. Rupert murdoch does not normally get on the earnings calls specifically. He did get on this one and he did it because he wanted to reinforce the decision that he was truly ending the pursuit of time warner saying, while we remain opportunistic and nimble, we are a strategically complete company and have a clear sense of where we are going. And he does not do that. So and today we have barry isabel will i. He will talk to us about this quite a bit. He owns both shares, both stocks. I would be interested to hear what somebody who is on both sides of that table. Its like a wash. He will be joining us at 8 00 a. M. Eastern time. Well have a lot more to talk about. But youre of the sense that yeah i dont think this is part of a shortterm dance. It might be still part of a longterm dance, but thats the stock prices and the economics could go his way at some point if he can come back. Oh, no, he can come back. Im just saying i dont think this was a head fake or a tactic. Right. The timing was beautiful. Right. As a tactic in the sort of public relations. Playing hardball. Plenty of reasons we should talk about for investors to by worried with so much going on around the world. Our next guest, though, says that the markets still look okay as far as hes concerned. Jim is from the American Institute Economic Policy analyst, hes a cnbc contributor. Jim, thanks for being here today. You bet. What is it that worries you the most at this point . I know that youre not overall worried, but for something to creep up, what would it be. . I would have been really worried, you know, had russia banned imports of Louis Vuitton handbags. That would have hit russia where it imports. Thank goodness that didnt happen. But italy in recession, german manufacturing orders, i would be very worried about europe. This isnt going to help. An economy thats not growing very fast, probably not growing at all outside germany. And i really worry about the euro prices, its a fragile economy and the conflict, both the import ban and more generally was going on in ukraine is not good for that economy. I think thats a major worry. But overall, you dont think that stocks are unfairly priced and maybe you think that theyve gotten punishment too much in the last kervel weeks . Listen, i would feel a little better about stocks if, you know, mario draghi came out today and said you know what . Were instituting a qe plan, we are buying sovereign bonds. Otherwise, the u. S. Is doing okay. Were still not, you know, down 2 2. 4 growth path. Thats fine. Where im more worried is what happens in europe and to the extent that what happens in russia affects that. But mario draghi, you dont think its likely that hell come out and say anything other than trying to a reassure markets with words, do you . Why now . Take your time. Its not like its year four or whatever. But listen, those economists are not going anywhere. Debt levelsry main extraordinarily high. Italy, 175 of gdp. Greek, 175. Italy, ireland, 121. Highly indebted countries. Whats amazing, jim, the yield is higher than germany, but nobody appears frightened. You you have that much debt yet you do not grow, your ability to pay back your debt declines dramatically. At some point, if they dont grow, theyre going to be fault, restructure, do something. Its going to be greece all over again. Hopefully american banks dont own all that stuff, right . The writing has been on the wall for a long time. But when they dont grow, they have a big, big problem. Thats been greatly misunderstood about the entire european debt crisis. It was never so much a debt crisis, Interest Rate crisis where Interest Rates eventually in greece, sure, it was a nongdp crisis. They werent growing. That made that debt burden that much worse. These continue not to grow. So why are the yields higher . Thats the mystery. Greece, 6. 4 . I guarantee you theyre not paying back the rest of the european union. Right. To me, that still is a bit of a mystery. Longer term, i would remain very concerned. I wouldnt take any solace in that. So what would you be doing right now . I mean, as we watch stocks fall here, do you think this is just the beginning of something or do you think this was a temporary blip . Listen, i used to cover the markets, you know, back in the 1990s. And i remember writing all these stories about, you know, market is up, but whats going to happen in north korea . Were very worried about north korea. We always have geopolitical issues, ee boll la, to help distract you. But as long as the prospects in the u. S. Economy are growing, and theres no problems right now with the u. S. Economys growth path, i would stick it out. So these sanctions from russia dont matter, essentially . No. Listen, i dont think they matter. Theyre fought going to affect certainly what Vladimir Putin does. Hes knit for the long haul. He will make his people suffer if he has to. He is going to remain in charge and continue to do what he has to do. Will that affect us, will it affect european markets . The idea that theyre not going to be importing food . Whats going to affect european markets is that you have very weak economies where you really dont want anything else to go wrong when you have inflation at 0. 4 and basically the region is not growing other than one country. Okay. Jim, i want to thank you for joining us today. Good talking to you. You bet. Some crazy stories in the New York Post today. Coming up, the tiger drama and the pga tournament. He took a practice round yesterday, but will he be able to compete this weekend . Were going to tee that up next. And apple could be about to get a new neighbor in new york city. Is fifth avenue big enough for apple and microsoft . Well talk about it when squawk box returns. Welcome back, everybody. Microsoft is negotiating to open it first big apple retail location at 677 fifth avenue. Thats about a fivenet walk from apples flag location. I think theyre too close, too close for comfort. Really . Microsoft is going to be able to have such a prominent the apple store itself is so you know. A draw. Its like a tourism spot. It is a landmark. We should introduce would is here. Were talking about tiger woods this morning. Deciding to play in the pga championship. Showing up yesterday unannounced, a practice round to test his strengths. Joining us now is dave rigs. Nbc sports anchor. Good morning to you. He says its different, whatever happened. Its not where are the back surgery was, its in darnt spot. Theater. I even brought an illustration for you. Its the sacrum. He says those thee words that you dont often hear a golfer say. Just the sacrum. In that means its not that big of a deal . I think its a bigger deal. For a guy that had back pain for 20 years, its a big problem. So i did put a call in to a surgeon who said you cant pop out a is i acrum on a bunker shot. So he must have mistaken something in terms of the language. So he brought along a physiotherapyist. It was likened back to 20 years on a certain white bronco going down a california freeway. The coverage was redeckus. But this was 72 hours before his practice round, what youre seeing right there, withdrawning from a tournament. Youre telling me everything is fine . Its not possible. His game is off even when hes healthy and hes clearly not. Do you think hes ever gone to win a major tournament again . Absolutely. The rest of the world world seems to write off the best golfer weve ever seen. Hes going to have to reinvent himself and stop taking thinks violent but rory mcilroy, hes amazing. Hes not just amazing. Hes 25 years old. Hes doing everything right. He is head and shoulders above the rest of the golfers. Could he be greater than tiger woods some day . Jack nicklaus said yesterday he thinks he could win 15 or 20 majors if he sets his priorities right. Theoretically, that means if he doesnt try to get married again and cancel the wedding after the invitations go out. Good for him. Good for her, by the way. Its a different level than tiger when it comes to the business of sponsorship and never. Not close. Why . When you look at what rory mcilroy is doing, hes playing brilliantly, hes young, hes in good shape and looks like the package. Then tiger shows up limping in shoes and gets ten times the press coverage, it clearly tells you no one will ever gather our attention like tiger. Sergio garcia could finally stop being a brides maid and win. You can get a guy like Jordan Spieth would wins. I think theres some golfers, is it better to have people that we dont necessarily know, younger people who are americans going up in this, and im talking from a sponsorship and from the pga perspective or to have those top golfers show up. And thats assuming that we need american. Look at the game of tennis. Very similar. Theres some dominant, some of the greatest players ever. But unless theyre americans, we dont pay attention. Remember the drama at the ladies pga where they wanted to see you have to speak english because there are so many korean winners who didnt speak english and you lose audience in the United States. If you want american, Rickie Fowler finished in the top five of every major this year. He wears cool puma clothes, good looking kid. He could win this weekend and get a lot of attention. Weve got the New York Post to talk about. Okay. So here it is. Jerry jones. Extortion. On the front page of the New York Post. Theres a lovely lady down here. In a compromising position on page five she is fully clothed in all these photos. This one seems like a different lovely lady. Yeah. She has her clothes on. She has her clothes on, too. But she doesnt look like shes the wife. Im just stunned that a billionaire owner of the most popular sports team arguably in the country got caught in some compromising photos, clearly an extortion plot. Hes been married for decades. But again, im sure his wife is furious, but beyond that, we can fault jerry jones for a lot of things. Stupid nights, stupid photos. Anything more than ta does his wife own half the team or anything . They always do. They always do. Do you know how much money she would get or any details on the well, the photos actually emerged from a groupie, not a female groupie, a guy who got a load of i thought that was like a new selfie. I was going to ask you, theres a term for every photo today. What do you call those photos . Sexy . A badie. Jerry jones has done it all wrong. Building the cowboys and taking a lot of im going to leave this between he and his longtime wife. And you know what happens . You get to a certain age and people say, go get em. He did not want to go home when those pictures emerged. Khakis or is he not wearing pants . No, he has thats her arm. Oh, okay. I think jerry has more to worry about in terms of that that was awful last year. Speaking of six nfl preseason games tonight. Lets get excited for this, people, no . Patriots, redskins, broncos, seahawks. Does football season ever end . God help us. We want it to never end. Its the best product on the planet. 12 months a year . And it really gets krapging up tonight. Theres no more football free weekends in 2014. Thats something to celebrate, people. Thank you for coming in. Im going to rock this. Is it okay i know joe is not here. Joe would give you such grief. For wearing a jacket . Patterned shirt and patterned jacket. Oh, pattern on pattern inspect. Joe is a stylist. He has views. Im not sure its visible on tv, the pattern there, but yeah. Okay. Well get joes permission on monday. I think ill be back. Have a great weekend. Next, we put the markets front and center ahead of todays ecb decision, which is expected around 7 45 a. M. Eastern time. Will the news of a massive Internet Security breach by a russian gang mean the death of a password as we know it . We check out the alternatives that could be making your cyber life safer later in the show. As we head to break, take a look at yesterdays winners and losers. First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. [ woman ] if you have moderate to severe Rheumatoid Arthritis like me, and youre talking to your rheumatologist about a biologic. This is humira. 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This is humira at work. Good morning and welcome back to squawk box here on cnbc. Im Andrew Ross Sorkin. Im Andrew Ross Sorkin along with becky quick and Michelle Caruso cabrera. Joe is off today. The World Health Organization is holding an emergency meeting in switzerland on ebola. The group will decide whether the outbreak constitutes what is called a Public Health emergency. In the meantime, in washington the cdc director will testify on ebola. And one more, the patient at mt. Sinai city tested negative for the virus. Becky can go back to mt. Sinai. The doctor who had mt. Sinai on last night, got it last night or today got that news last night and it was very good to hear. He talked about how the hospital is prepared if Something Like this happens. If someone comes in who has been in west africa, he was apparently put in violation within seven minutes of showing up the. Good. They have procedure procedures in place which is al good, too. Will you relax. Are you a germaphobe . I am relaxed reporting ebola. But he has plane issues. I get on a plane and i overheard the pilot say something, i thoughts he said 787. And i said immediately to the stewardess . I dont think they call them stewardess. Flight attendant. I said is this a 787 . And she said no. And i thought oh, my goodness. Because im a nervous flyer. Youre nervous about the 787 line because the battery. Oh, youre still worried about the battery. For months the batteries have been fine. I know. But if she was sitting next to me, she would have seen my eyes. It was a andrew and i both have our own issues. He has planes. Mine is germs. Take a look at the futures this morning. Youre going to see at this point at least youre talking about some green arrows. Dow futures look like theyre up about 32 points. S p futures up by just over 4 points. Take a look at whats been happening in europe. A much better situation. Things have barely budged. After yesterday, that is good news. The dax was under a lot of pressure yesterday. Italy, the italian markets were under quite a bit of pressure. Theyre waiting for the ecb official report. About an hour from now, well be hearing quite a bit more. Take a look at what happened overnight in asia. Youll see that the shanghai composite was down by about 1. 3 . Hang seng was off 0. 8 . Nikkei was up by 0. 5 . Oil prices settled yesterday at another sixmonth low, closing below 97. And you can see theres additional pressure this morning on wti. Its down 21 cents to 96. 71. The tenyear note weve been watching very closely. The yield was down yesterday for the fourth day in a row to 2. 47 . And, again, some additional pressure on the yield this morning, 2. 455 . Also, the dollar at this point looks like it is up across the board. Euro is trading at 1. 3378. Dollar yen at 102. 32. Gold, 1,305. 90. From geopolitical concerns to uncertainty about the fed, the numbers are dealing with a number of question marks. Joining us now, chris rustler and coportfolio manager of the ne needham portfolio, as well. Jerald, started something big, correction, buy the dip . It doesnt look like something big. Global stocks are off about 3 to 4 , michelle. I think what youre seeing is weve seen about five of these mini corrections since 2012 and the euro crisis. This looks like another one. Kind of that 3 to 6 number. And then the buyers step in. The fundamentals still look good. Valuations arent stretched. So youre not telling people wait until we get to the 10 mark and then get in . No. I think those 5 corrections have been a good chance to add to risk and not take away from them. But were going to get one some day, arent we . We will. We will. But in the interim, what youre seeing is the Economic Data. So youre seeing employment, unemployment claims, ism numbers, pmi numbers, consumer confidence, a new cycle high. All of the data into q3, what weve seen in july soever to the extent weve seen some is continuing to accelerate. Theres probably not downward revisions through q2. Are the the same way, chris . I think were a nominalized market. Stocks are beginning to function more normally. Correlations are down a bit. You should be looking for good opportunity, value opportunities. Were stock pickers, so were looking at certain sectors to put money to work. But certainly we could see a correction. It would probably be healthy for the market. But youre not thinking its the big one coming and keep cash on the sidelines for now . I dont think so. I think were in a period of higher volatility with elections coming up and i think the Fourth Quarter will be a good period to be invested. Even the Small Cap Fund . Correct. I think its liquidity in small caps. People want to be in larger cap. If youre shifting out of bonds, youre not shifting into small cap. Youre shifting into large, Multi National dividend paying companies. Small caps require more growth. You had a terrible First Quarter which impacted a lot of Small Companies. So do you buy small caps here or do they prestage big concern . Small caps rolling over, thats a bad sign for the market . I think the best thing you can be is investor patience. Wait for the opportunity. I dont know what that means. You look for the Earnings Report where theyre down 20 . Youve done your homework on it. Take the opportunity there to buy stocks. Europe is a mess. Does that threaten in any way . I mean, italian gdp yesterday were going to hear from mario draghi today. You can keep money lose, but ultimately it doesnt fix a broken economy. How worried are you about that impact . Well, i think it is elevating to one of the concerns for the Global Markets at this point, right . We saw german Industrial Production this morning came in quite a bit weaker than we expected. Certainly italy banked its recession. I think it puts a downward bias to germanys q2 number. You could see a negative print of gdp. We still like it. We think not today, but we think it puts draghi and the ecb back front and center with the decelerating Inflation Numbers. We have to do something more on the Monetary Policy. So dont fight the fed, in other words . Yeah. And i think the actions, we took quick actions in portugal with one of the banks. They know what to do. I dont think were going to go through what we did a few years ago, but its serve a risk. Europe is not strong. So well keep an eye on that. Is tough talk going to be enough at this point or are they going to have to actually split the money . Eventually they will have to show us the money, i think. But right now, youll hear today draghi talk about the waiting for the impact of the ltros, the longterm refinancing options. So that will be a lot of the rhetoric that goes on. But if Inflation Numbers continue to decelerate and gdp numbers are not there, they will be forced into action. What happens to markets around the globe . Stock markets and bond markets when and if they do put real money on the line . Do we go to quantitative easing . Yeah. I think thats fundamentally very good for european equities. I think your does it help us in turn or does it make them more attractive . Absolutely. Because we have a huge tie both on the sales and earnings side to europe. And so to the extent that the economies stay healthy or accelerate is nothing but a positive for our economy. Does it keep rates very low here, too, if as long as your tenyear fund at 110 basis points, i think it puts a cap on where you can have shortterm rates go in the u. S. We still get back to forcing us into riskier assets. And equities are the best place to be. So thats the opportunity. One last view on the small cap side, i think the interesting thing, we were looking at the earnings numbers. Heings are growing this quarter at 18 and revenue at 9 . Thats a nice growth number compared to even the s p 500. Gentlemen, thank you. When we come back, the cost of hiking the minimum wage. You better check your bill carefully the next time you eat out. Well tell you what one restaurant is doing. And is your phone as smart as it could be . Maybe not. And it could be the fdas fault. Right now, take a quick check on whats happening in european markets. Financial noise financial noise financial noise financial noise 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. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare gets simpler. When frustration and paperwork decrease. When grandparents get to live at home instead of in a home. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. Welcome back. Ooups reporting futures at this hour are suggesting a positive open. Were waiting for a lot of events this morning. The ecb, for example, what theyre going to do. Dow jones industrial average would open higher by more than 26 points. Watch shares of mylan, earnings missing the street by a penny and the companys forecast falling short of the streets view. But the real issue, by the way, on this call and everything today on mylan is about the inversion and whether the deal goes through and what the president is going to do and what the congress is going to do and not do and if something happens would it be retroactive. And how does it affect the transaction . If its not an inversion, when it does it become . Would they want to pursue the transition . Any guess is they would still want to pursue this transaction. At least what bankers tell us, this is not just about the inversion. Its just we are looking for synergies and that happens to be Something Else theyre taking. Right. We will see how attractive it is or isnt. Lets tell but whats going on because some consumers are very familiar with paying fees, whether its a checked bag on an airline or a cork fee at a byob restaurant. I havent been to a byob restaurant in a long time. A minnesota restaurant is now charging a 35 cent minimum wage fee. The owners say minimum wage for tipped employees is costing them more than 10 those per year. The new fee is designed to offset that. About an hour from now, we are going to he up a poll on this. Would you go to a restaurant that charges a minimum wage fee . Its kind of stupid. The poll or the idea . The idea of putting that fee for 35 cents on the bottom. I think you nickel and dime your customers. Things like baggage fees drive me crazy, little hidden fees that could slip into things. And i know why you like it because theyre making a point saying these costs go on. But charging a fee every time darely or milk prices go on, they dont argue this out. I would argue youre paying for it regardless. This is a political statement. And you are trying to say here is what its costing me. But if your electricity costs go up, do you break that up and put a fee on it . Gas. And they charge a fuel fee. Youre not dealing with its it ticks me off. I hate nickel and diming fees. I think this is going to go over actually very well in minnesota. Youre coming from a northeastern perspective, but i think this is actually not going to be a problem. I just think, look, youre right, costs regardless, right. But i just again, this comes from the perspective of somebody who hates the fees that airlines charges to the tune of like 2 billion a year. Not a quibble. Youre coming at it from the political statement point of view. And i would argue airlines got very smart. Because for years, they were shipping companies that happened to move humans. Now they finally got smart and said now they try and cram it into the overhead bins. But they bring less, right . Its created such a problem with checking i love this. I love this. Coming up, were going to talk about why your phone is not as smart as it could be. The frustrations in silicone valley is having with the food and Drug Administration over medical technology. I love this story. And is it time for password toes be retired . The renewed push to take Internet Security to the next level. All that and more coming up on squawk box in just a moment. 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 [ 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. Welcome back to squawk box. Is the fda to blame for stalling back medical Technology Innovation . Thats the subject of a wall street journal opinion piece this morning. The author of that piece joins us now. Dr. Scott gottlieb, the resident fellow at the American Enterprise institute and a former fda deputy commissioner. You make a very compelling argument that our phones could be doing a lot more than they are when it comes to health but that the government is preventing it. Well, they could be. Looks like apple ran into trouble with the food and Drug Administration. They had a meeting with the agency back in dose and fdas released the minutes from that meeting and the agency told apple they have to decouple any medically related hardware they want to embed with any software. Looks like the phones are being purposely dumbed down to avoid fda regulation. Give us an example of something that could be in the phone or should be in the phone that you think isnt. Certainly anything with a sensor that has medical software attached to it. Something like a heart rate sensor you might use when youre exercising. Something as simple as an app that helps you make a selfdiagnosis. Say you want to input your symptoms to know the probability of having the flu. Under the fdas guidance document thats a medical device subject to premarket review by the fda. What i dont understand about this is, this is this would be considered a device but is your computer not considered a device . I can go on to webmd, put in all of my symptoms, and it will spit out the same thing that the app would. And less reliably. Thats the conundrum. Fda would probably say those are medical devices subject to regulation but theyre going to exercise enforcement discretion. So the reality is there are applications that are less reliable we could be embedding on a phone and they could be much more reliable and portable. Are you saying like a polartec monitor that a lot of people wear for exercising that is considered because it feeds right into my phone . By fdas guidance thats a medical device. Something as simple as an app that helps you lose weight is a medical device. Something that facilitates supplemental Clinical Care to help patients manage their Health Including strategies for maintaining a healthy weight, getting optimal nutrition has apple or somebody else come out publicly and said, look, we were planning on building in all of these great things that would take your Blood Pressure and your this and your that but, these fda folks, theyre not playing along and we decided we dont really want to do it . Apple seemed to express frustration at that meeting. Apple just patented a heartrate monitor that they want to embed in a phone and they said the use of that monitor is going to be for authentication, instead of a pass word it will measure your heartrate. Looks like theyre trying to develop Technology Hardware but not have a medical use for it. Really . What is the right answer in terms of regulation you could see a world in which the fda isnt part of this and theres an app store with all sorts of health all sorts of things and some of them would work and some might not and some might prompt you to do the right thing and some might not and then the question is this becomes a larger issue. The challenge is the premarket review process because its very costly and uncertain. You could have post market enforcement where you basically say to technology developers, heres specifications that weve agreed upon. You have to build your product to these specifications for reliability, safety and testing and as long as you do that were only going to regulate post market. There are very few things subject to premarket review by the government. Most Consumer Products are subject to post market review. They have to build to specifications and the Consumer Product Safety Commission certifies that. This is very crucial because in the United States everything is approved until it is no longer approved, as opposed to in europe where nothing is approved until you go through a very long regulatory process. Right. And so theres so much less innovation that happens there, because of the different structure of laws and the way we think about things. If you think about it the only things where you need government approval before you sell it is aircraft engines, insectsides and medical products. I dont think apps should be included in that. Theyre less risky and giving patients incremental information. We should always be on the side of things that give patients more information. I dont even understand why you would make an argument for regulating it . Theres a lot of cultural issues in fda. The new things are the things that are interesting to work on. Fda will argue that it meets the classic definition of a medical device. I think theyre wrong about that. Even if it does i think we need to think of a different scheme and put these things in a post market regulatory regime. Its the perfect example of mission creep. Often happens with Government Agencies in order to maintain your existence youre always looking for new things. The way you get promoted in government jobs and the interesting things to work on are the new technologies. This guidance was something the staff was interesting to work on im quite sure. Thats the culture of the agency they want to embed themselves in these new areas and basically lay out rules. All right. Dr. Scott gottlieb thank you for helping us through this. Hopefully well get some of these, maybe maybe you will persuade people. I didnt know your heartbeat was so different like a snowflake that mine would not open your phone. That is weird. All right. And pretty cool. Yep. When we come back were going to talk about the death of the password. How you could be logging in to secure internet sites in the very near future. But first Vladimir Putin retaliates with a food fight. Well have the latest move by the russian president put pressure on the Global Markets. Thats next right here on squawk box. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab White Chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. Life with Crohns Disease ois a daily game of what ifs. What if my abdominal pain and cramps come back . What if the plane gets delayed . What if i cant hide my symptoms . What if . But what if the most important question is the one youre not asking . What if the underlying cause of your symptoms is damaging inflammation . For help getting the answers you need, talk to your doctor and visit crohnsandcolitisinfo. Com to get your complimentary q a book, with information from experts on your condition. It can help your business save money. False. The truth is when you compare our Fastest Internet to the fastest dsl from the phone company, comcast business gives you more for your money. Why pay more for less . Call today for a low price on speeds up to 150mbps. And find out more about our twoyear price guarantee. Comcast business. Built for business. Yee yo political concerns for the markets. How will the Global Markets handle rising tensions with russia and ukraine after Vladimir Putin retaliates against sanctions. Your data and money at risk. Reports of a russian gang stealing more than 1 billion usernames and passwords raising Big Questions about Internet Security. The password is what can make the password a thing of the past. And squawkers start your engines. Danica patrick pulls in to cnbc for a pit stop. Were going to get the inside track on the racing biz, the second hour of squawk box begins right now. Good morning. Welcome to squawk box right here on cnbc im Andrew Ross Sorkin along with becky quick and Michelle Carusocabrera. Joes got the day off. Lets give you a look at the futures. Ahead of the bell were going to show you that on the screen. Dow looking like it would open up about 25 points higher. S p up about three points higher and the nasdaq up close to four points. The tenyear right now as we flip that board around 2. 453 . Look at that. The number to beat. The bank of england has left the key Interest Rate unchanged. The ecb will have its decision at 7 45 eastern time. On todays Economic Calendar the Labor Department is out with weekly jobless claims. Thats at 8 30 eastern time. Expecting claims to rise from 310,000. Also the later Consumer Credit figures this afternoon. With concerns escalating about the spread of ebola the fda has authorized emergency use of an unapproved test for the vice russ. It was developed by the military and used to detect an ebola strain that has affected 1700 people in west africa. The fda says it is working with other Government Agencies to hasten the development of various ebola treatments. Priceline expanding its involvement in china investing 500 million in chinabased Online Travel company ctrip. Com. Priceline will hold roughly 10 stake in that company when the deal is complete. Bank of america is reportedly close to a nearly 17 billion Dollar Settlement with the government over mortgage bonds. The deal with the doj is said to include about 9 billion in cash. 9 rest will go to consumer relief. Kate kelly joins us right now with some more of those details and kate weve kind of been stunned by the idea of 17 billion. No. The number is eye popping. Remember the jpmorgan settlement from last year. I was standing in front of the building looking for comment from jamie dimon but it was such an astonishing number. That was 13 billion. Now were talking about 17 billion. I guess it stands to reason that b of a inherited and had such a large footprint in this subprime Mortgage Business but they are looking at a pretty massive number here. And im told the board is supportive of those figures. They need to be hammered out and we probably wont see anything final today. Maybe as early as tomorrow. Maybe more likely next week. But note this, too, theyve already shelled out 60 billion in mortgage related settlements. Fhfa the overseer of fannie and freddie paid 9. 3 billion or have agreed to. That group of investors that included blackrock and metlife 8. 5 wl. Aig pretty recently for about 650 million which looks cheap compared to the rest. And also, as part of a Group Settlement of 25 billion. Thats not just them thats other banks, as well. They still have investigations ongoing. I mean the justice department, state attorneys general and others are still looking into whether they misled investors. How much more money could they have to outlay . Obviously theyre hoping this is the end of the road or close to it. They have resolved a lot of these. If you look at their filings i think they say of the claims have been resolved. Is it the number of claims or the potential damage . The dollar value. Thats what i dont know. Thats still a good question mark. I do think they resolved a lot. Why wasnt it compelling for the doj that a lot of this happened at countrywide before they bought them . It wasnt compelling to the doj when you made the argument about bear stearns and womamu. Thats not reducing the settlement fines. If you think about it, this was a case where attorney general holder had declined to meet with Brian Moynihan the ceo of b of a saying talks hadnt progressed far enough. They talked on the phone more than once and there was a threat apparently you know by holder were going to file suit tomorrow or imminently if you dont come to the table with something. Let me ask you, when your intro was up we said 9 billion in cash. In cash. The rest of it coming in help for consumers. Does that mean lower rates for people who are in homes to make sure they can stay you know what happens to this consumer relief money is a great question. I mean its foreclosure relief, i think it could be Loan Modifications. If its Loan Modifications, 17 billion is a big number. But if a big chunk of that is coming in Loan Modifications that, to me, as a shareholder would seem like its less of a big deal. Its not money straight off the top. I think as a shareholder its the 9 billion in cash you want to be focused on. They dont disclose the overall size of their legal reserves. That is a hefty number to have to come up with straight away. I think that will be a concern. I notice the stock was relatively flat in after market trading last night. On this news. But thats 9 billion pretax, right . I believe so, yeah. Only because you remember jpmorgan had the big head line number and then once you actually factored out some of the tax issues. Thats the key. Whittling down that number and figuring out what it fully means to the bottom line. I think because i cover overseas so much i would underline bnp has little to complain about after supposedly violating the law for 20 years. They said oh, youre targeting french companies. Well they target everybody. Right. I mean, this is a period of time where the banks are being held accountable whether you disagree with it or not. But they are being held to very high penalties for these Mortgage Securities issues. By both private investors and the government. I mean if you think about the 8. 5 billion settlement i all e alluded to these are major Institutional Investors that have held them accountable, as pell thanks, kate. Border tensions between russia and ukraine coming to a boil and geopolitics becoming increasingly important. Vladimir putin is banning the imports of meat, fish milk and fruit from the u. S. , the eu, australia, canada and norway. All countries that have imposed sanctions on russia. Joining us is director of global macro at Fidelity Investments and coportfolio management of Global Strategies fund and also former state undersecretary for Economic Growth energy and the environment. Bob, youre not surprised by this retaliatory moves by russia, right . Not at all. How damaging . I think theyll be damaging. We export about 1. 3 billion agricultural exports, europe is about 15 billion plus. It will be much more troublesome to the europeans than the United States. The u. S. Will be focused on poultry. There have been a rising number of poultry issues between the u. S. And russia over the years. We thought some were settled but apparently putins raising them again. How does this impact your investment thesis or what you do when it comes to are you changing Asset Allocation because of this . Well, you know, for investors by the way, good morning. Thanks for having me. Good morning. For investors the question always is when Something Like this happens, whether it was the bank four weeks ago or Something Else is this a systemic event for investors . And obviously if the tensions escalate, and there are incursions into the ukraine by russia, if anything like that happens obviously, sanctions would escalate and that would be a negative for certainly for europe, and therefore for european risk assets and that could spill over into u. S. Risk assets. But ultimately, the question is, you know, is this systemic for the u. S. Markets which is where most u. S. Investors are based. And, so far, i dont see the link. You know, earnings are still growing mid to high single digits. Valuations are okay. So, you know, volatility has come up a little bit. Spreads have widened on high yield bonds so the risk premium are coming back a little bit and that maybe warrants a little bit less of an aggressive stance. But overall were still pretty constructive on risk assets. What if russia actually invades ukraine . Does that change the possibility of it being systemic . I think for europe it could be systemic. Because what would happen is if that if that situation escalates, then i think you would see a more united front in terms of the level of sanctions, and a more united front in terms of europe and the u. S. Being on the same page, and you know, as we know from the headlines, you know, italy had a negative gdp. Germanys Industrial Production was on the weaker side. So that could certainly create some more Downside Risk to the european economy. Bob what do you think are the chances that hes got this massive theres only so much they can do there. Massive buildup of troops on the border . Hes probably at this point trying to intimidate the Ukrainian Army and get them to stop the attacks against the rebels. But you never know with putin. If he moves in, all bets are off. This is no longer cold. This is hot. Moving Russian Troops across the ukraine border, thats quite different from annexation of crimea. This is much more difficult for europe to deal with. And for the u. S. The u. S. Is going to have to move some military capabilities to europe or nato allies. To our nato allies. As were required to do. And we should to do our baltic allies, to poland, to others. This becomes hot, not cold. What happens in a potential escalation like that. If we have troops there, they have troops there. I dont think wed actually move troops in a way that confronted the russian army. But i do think we would have to provide a lot of support for Ukraine Military support, so would the europeans, its going to cost them money. We have to provide more support for those countries where we do have nato commitments. This is a much bigger thing if that happens. If we do move troops to nato that begs a response from putin. Well i think the troops would be they wouldnt be forward troops in the sense that they confront the russian army they would be in ukraine. They would not be in ukraine. I can imagine its not something were doing this is a big game of chess if you move pawns and he is youre asking for his next move. And hes going to have to do he will probably do something but i dont think the u. S. Or russia wants a confrontation between the russian army and the u. S. Army or nato forces. But i think it would be this is a real chess game in the sense that we would have todom straight a greater degree of conviction to underscore the commitment we have to our nato allies. Psychologically important. But we need to do other sthings. We need to not only strengthen nato cooperation we need no move on the economy. We have to provide more support for ukraine. Because his goal is not just to intimidate. He wants to weaken ukraine in general to demonstrate that their move toward europe has cost them economically. Right. Thats something thats very important psychologically. He doesnt want an economic Success Story in the ukraine or in europe the situation is ultdly you invest more based on whats going on with the ecb and the italian gdp as opposed to what happens there right . Because how do you even quantify that . Yeah, i mean the whole military aspect is obviously very difficult to quantify. The sanctions are more straightforward. That if you do get an escalation and it does bring in sort of these level three sanctions, and maybe the Payment System by the russian banks is impacted. You know, then trade slows, and europe is obviously affected. And then everyone will be looking to the ecb. But the ecb has already played its hand so theres only so much more the ecb can do. You know theyre not going to go out and buy sovereign bonds because the bunds already at 1. 1 thats not going to achieve much. A weaker europe is not unlikely in this scene air crow. Yourion, thanks so much for joining us, really appreciate it from near my hometown of nash shaw, new hampshire. And bob hard mats, thank you as well. When squawk box returns password plus. The latest Internet Security breach by a russian gang could have you logging in several different ways to avoid the bad guys. Can we just get rid of all the passwords al together . Thats a question were going to tackle right after this. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Then boom. What happened . Stress, fun, bad habits kids, now what . Lets build a new, smarter bed using the dualair chambers to sense your movement, heartbeat, breathing. 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Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Go to comcastbusiness. Com checkyourspeed if we cant offer faster speeds or save you money well give you 150. Comcast business. Built for business. Welcome back to squawk box this morning. Making some headlines. Google wants to encourage Web Developers to adopt technology that protects against hacking. So the search giant now plans to reward sites that are more secure. The wall street journal reported that google giving points in its ranking algorithm to web pages that are encrypted. Now on the same topic of security this week, word broke that a russian cyber criminal gang has stolen more than a billion credentials. Ian javers joins us from washington and a look at why passwords could soon be a thing of the past. Eamon. Good morning, andrew. This is the week of the big black hat and defcon security conference in vegas. You can imagine this hacking attack is a big topic of conversation. Ive been talking to some of the people on their way to the convention including continuefoil security and getting a sense of whats going to happen in this world after passwords. A lot of Security Investors believe passwords are simply too complicated. Theres too many of them and weve got to move on. Some of the folks had a couple suggestions of what this world is going to look like starting with websites that simply send you an email instead of requiring a password. So you type in you go to the website. Instead of typing the password it sends you the email to verify that its actually you, you click on that email and you go through. Another big area of exploration for a lot of companies is wireless wearables. Something like a wireless bracelet that you would wear that verifies its actually you when you try to logon into a computer and device. And thumbprints and facial recognition. A lot of that work is being done in different ways of verifying that you are you. And finally behavioral analytics. What they can do is watch what you do when you get onto the device. And make sure that its you based on the pattern of your previous use. Where you are. The types of information that you access. The pattern of time of day and things like that can all be used to verify that you are who you say you are. Finally these biometrics have an interesting advantage. Take a listen to this. Biometrics are not stored. They are validated each time that you try to logon. So theoretically those are a stronger opportunity for us to secure the information that we rely on every day. The idea of it not being stored is important because that means that theres not something there that the hackers can actually get in to with another attack. You dont want to replace a password with Something Else that can be stolen. And finally, guys, android already has an app out there right now that works in this way. You can match up your bluetooth and your wifi, and if you use this app you can get into your Android Device without typing in a pass word. That means that you can actually access that based on just what you have, rather than what you know. A password. Its an interesting area. And youre going to see a lot more experimentation with this as we go forward. Who can remember all these passwords that were all expected to deal with . Its awful. No kidding. Eamon stick around. Joining us right now is john herring. Executive chairman and cofunder of lookout. Which builds Security Technology to protect information. John, i have to say, i agree with eamon the passwords are a pain. Everybody i know has a list of all their passwords that they keep somewhere, or they are completely insecure by using or are unsecure because they only use one password on every site which i know youre not supposed to be doing. All these new things, those sound pretty complicated too. I think youve identified the exact point, simplicity is kind of a fundamental point that we need to be focused on. The practical reality is you have situations like this where over 1. 2 billion passwords were compromised across over 400,000 sites. And much of this is due to lack of kind of basic security measures on the site of the operator, if you will. I think two factor authentication is a musthave in 2014. And when you look at twofactor authentication explain for everyone who may not know. The idea of twofactor authentication is when you go to logon with a standard password, even if its not a strong password you have to have Something Else that you have, and something that you know, if you will. So in many cases this would be whats called static twofactor authentication. Your mothers maiden name. Now, thats very easily guessable. Especially with a world of google its something that can be figured out very quickly so were seeing a shift to dynamic twofactor authentication where you might receive a text message, for example. And i think that thats where we need to move. Thats kind of tablestakes for 2014, if you will. Is moving to twofactor authentication universally across the web. Theres really no excuse for any major internet property not to have deployed two factor authentication. Biometrics, i think a lot of the more experimental technologies, you see apple doing this with touch i. D. Are interesting using your fingerprint for example to logon. One of the great challenges with that if its compromised its very challenging to get a new fingerprint, if you will. And, john, its not that they would compromise your fingerprint, i assume whatever your fingerprint is is attached to some string of numbers, right, and once you get the numbers it doesnt matter whether they have your finger or not. There are different techniques that one might be able to use to replicate, you know, what comes the data from a biometric logon mechanism. But i do think that some of the areas that were discussed are quite interesting when you look at stitching to the a number of different factors which allow for users to logon to something securely without having to think. Im sorry, go ahead, john. Well, what i believe generally is we will move in to a world of a password list user experience, if you will. And there will be authentication but the user wont have to think. That will happen because of, you know, a number of different factors. Hat devices you have, what location youre in, and a combination of your behavior that just enables you to logon without passwords. I think were upwards of a decade away from that. Even what apple does with the fingerprint technology, i have the new 5s or whatever it is, and it doesnt work for me. I dont know why. Ive always had problems with the finger i. D. S. I dont know if my fingers theyre cold all the time. It doesnt quite work. I never get in on that thing. So the idea that i would be shut out of every website i ever try to access is something that concerns me. Eyes. Maybe well go to eyes. Think about this, if i could just jump back in for a second this idea, this distinction between what you know, and what you actually have on you, that gets us back to the good oldfashioned key like you used to have for your front door. Its something that you have that you carry with you. And the advantage of that in security terms is that you dont have to you wont have these cyber gangs able to amass billions of these things. Because youre going to have to go back to oldfashioned crime where you have to sneak up on somebody, hit them on the head and take that key. That takes time and you cant do that with passwords. Youre not being very comforting. Isnt the key also going to be digital . Yes. Ultimately if i have an iwatch the watch will act as a key to the phone, but right. Now youre going to get mugged. Right. Im not andrew youre right because it becomes zeros and ones. Then it doesnt matter whether you have the watch. It becomes zeros and ones. And one of the ways the experts say theyll try to solve that problem is by only having that zero and one pass code store on your device not in some central location. You can have it on your phone but not at apple servers. A lot of that will be up to the companies. And a lot of the companies for Customer Service and other reasons are going to want to keep the codes. So there might be a problem of a central repository of numbers and ideas that people can steal. John, youre a young man. I know youve been doing this for awhile. You started this when you were in college. From your perspective are we safer or less safe when you first started looking into Security Issues . I think were making fundamental progress. You know, im headed to defcon this afternoon, one of the Worlds Largest hacker conferences. And when i look at how things have evolved, cybersecurity has always been kind of a something thats sitting on the edge of where technology is. But its really come into the forefront of society, especially over the last two to three years. And you look at this. This is a conversation thats being had in a very mainstream environment. And its because these cyberSecurity Issues are impacting the world. Everything is connected. All technology is connected and its something that impacts our lives. So i think that were making progress. But let me tell you, security is not about technology. Its about people and information. And taking simple solutions, to solve the problems that impact peoples everyday lives. And i think we have a long way to go on that front. All right, john, thanks a lot for joining us. Really appreciate it. Eamon, thank you too. You bet. Coming up Internet Security a major issue for retailers especially after targets amassive data breach last christmas. Steve sadove is going to join us to talk about how the industry is reacting. Danica patrick is going to be live in the studio. Nascar racer is more than a driver with dozens of sponsorships, shes a brand. Were going to get on the track with her in the next half hour. . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab but parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. E financial noise financial noise financial noise financial noise the cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. For the evert time. She let him plan the vacation. Off the beaten path he said trust me he implored alas, she is beginning to seriously wonder why she ever doubted the booking genius planet earths number one accomodation site booking. Com booking. Yeah when we come back today, the health of the consumer. The backtoschool shopping season is under way, but are americans spending money in stores this summer . Former Saks Cho Steve sadove says the retail details are something we need to know about. Also what happens after Companies Lose that loving feeling dr. Love himself Mario Gabelli will be reacting to Rupert Murdochs decision to drop that 80 bid for time warner. Well find out where that leaves media m a right now. Squawk box will be right back. Visit tripadvisor new york. With millions of reviews, tripadvisor makes any destination better. White chocolate loversividual. Dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. So i get invited to quite a few family gatherings. Heck, i saved judith here a fortune with discounts like safe driver, multicar, paperless. You make a mighty fine missus, mlady. Im not saying marks thrifty. Lets just say, i saved him 519, and it certainly didnt go toward that ring. Am i right . [ laughs ] [ dance music playing ] so visit progressive. Com today. I call this one the robox. Welcome back to squawk box on cnbc, first in business worldwide. Im Michelle Carusocabrera. Making headlines, bank of america reportedly close to a nearly 17 billion settlement with a government over mortgage bonds. The deal with the doj is said to include about 9 billion in cash. The rest is said to go to consumer relief. 31st century fox posting better than expected quarterly earnings. The results coming a day after the media giant announced its decision to pull its bid for time warner. In an unusual move Rupert Murdoch was on the companys earnings call. Time warners management and board to engage with us, to explore this compelling offer. Coupled with the share price, resulted in our conclusion that this transaction was no longer attractive to fox shareholders. As you know yesterday we walked away. This is our resolute decision which is why we withdrew our acquisition offer. Fox coo chase carey adds the company has no plans to pursue another content company as an alternative. In global news Edward Snowden has been given a three year residence permit by russia. The announcement coming as russia and the wrest imposing sanctions on each other. Our next guest is a retail veteran who has his finger on the pulse of the consumer. Joining us is steve sadove the chairman of the National Retail federation. Hes also the former chairman and ceo of saks and steve its great to see you. Good to be here. There have been a lot of questions about how the consumers feeling right now. We heard from target earlier this week and that only stoked some of these concerns. Do you think the consumer is really feeling the pinch at this point . Or are these specific stores that maybe are getting hit harder than others . I think its a combination of both. The consumer certainly has a malaise at both the high and the middle and the low. The low end consumer is totally squeezed. The high end consumer is feeling okay. But value is the word that i would use for the high end consumer. Theyre focused on value. At the lower and middle end. Got to get a deal. At the high end weve heard that part of the slowdown in sales has been very specific because china is cutting down on corruption. As part of that theyre not giving gifts like they used to. Clearly in asia, thats an example. Watch sales are down dramatically. In the u. S. I think you have a relatively healthy luxury market probably growing in the mid single digit level. Why is the Luxury Consumer in the United States focused on value . I think that overall they have a lot of stuff at the high end. Theyre looking at experiences and they want product that is differentiated. If they think its something new, different, latest fashion, theyll pay the high price. Otherwise theyre going to look for a deal. And then you have the internet. The internet is changing everybodys behavior across all levels, and people are looking for what they can find in terms of the best price. Yeah, the internet has certainly been something that weve seen a big change in our household. Boxes coming to our doors all the time. Were not going to stores as often as we used to. Ive seen analysts actually say that internet is going to be siphoning a large part of the growth. And that samestore sales will be a lot tougher to improve upon. I dont know if thats true or not. Clearly internet is affecting everything. The word is omni channel. People want product anywhere, any time that they want it. And what youre finding is a fundamental change in behavior. Theyre using the telephone, the ipads. Thats affecting how they operate. But it doesnt necessarily and it means that there will probably be less stores. But it doesnt mean there will be less shopping. Overall comps, the people who are winning are the ones who are playing in both the stores and brick and mortar and youre going to amazon gets a lot of my purchases. Absolutely amazon is driving. Theyre driving the expectations. In terms of service, of course. Fashion. Amazon wants to be in the fashion game in a really big way. Will they ever be . Theyre in the fashion game. Theyre already selling products. What theyre going to have a hard time playing in is the very high end luxury brands, because amazon plays the discounting game. And the high end brands arent going to play. Theyre in the same place as walmart is when it comes to fashion when it comes to some degree. No. I think walmart is much more basics. Youre going to see more of the midtier contemporary brands will be playing with amazon. How do you ever get around that you need to try it on . Well, one of the reasons that you have such a high return rate on the internet, you have 30 , 40 return rates in apparel on the internet because you havent tried it on. Youll buy a size 7 and a size 8 shoes and return one of them. Whats happening is you now have these technologies and algorithms that can reduce the return rates. You have companies that are fit related companies that are showing you what is the best size for you. Ive seen companies that have avatars of yourself where you can actually see what the products going to look like on you in the specific size. So, you know, technology is changing everything. The reality is the companies that invest in technology to be an omni channel player, to be brick and mortar, to be on the web, are the ones that are winning, and the interesting thing is that theres new technology coming thats allowing some of these Smaller Companies to have the capabilities of the Big Companies, at a relatively low cost. Right now its the players in the Department Store space, the macys the nordstroms that are winning dramatically because theyve made the investments. What im seeing is a lot of startup Early Stage Companies that are providing those Technology Solutions to smaller retailers, because right now, the ones that arent investing, and theyre just in the brick and mortar, are getting killed by the amazons of the world. Lets talk a little bit about whats been happening in the Discount Retail area. First of all, we have this bid where dollar tree is going to be buying Family Dollar and then you have target and the tough news that theyve been dealing with. Is this because the u. S. Consumer at the low end is facing so many troubles . Or does a situation like target was that selfinflicted . You have two Different Things on. The consolidation within the dollar store business is a phenomena thats similar to what happened in all sectors of retail where youve seen cost efficiencies, you see a consumer thats having difficulty. The category isnt growing as quickly as it was. And you have enormous cost benefits of the consolidation of the companies. And so you see retail in general has seen consolidation over the last 100 years. It continues. The target situation is unique. You know, there youve lost confidence in the company. And its the breach just triggered this question in the consumers mind, is it safe to shop at target, your prior previous segment where you talked about the cybersecurity issue, its a major issue for retail, because the consumer if they dont feel confident and secure they dont want to shop. And anything it wasnt just the data breach with target. What they told us earlier this week is that the data breach was going to cost more than we thought but also that the samestore sales both in the United States and canada were worse than expected. And they were having oh, absolutely. They have a broader issue in terms of target has lost a little bit of the cool factor. Target was to go to target, you go and its going to be the fashion. And i think that they lost an element of that, and you know, one of the things that i think youre going to see with Brian Cornell coming in is the moving away from you know looking at different ways of approaching the business, and a little bit more digital, and a little bit more fashion focus. What upsets you the most in retail if anybody . Oh, my gosh. Theres excitement everywhere in retail. I mean you can look at the michael kors of the world and explosive growth that theyre seeing. Wait they just had this big dramatic decline in their stock. But the sales were phenomenal. The earnings growth. But i wondered if they didnt suffer from the issue that a lot of designers suffer from right which is youre a publicly traded company. You have to grow. The minute youre ubiquitous nobody wants to wear you anymore because everybody else is wearing you. Thats a question michael kors is going to have to deal with. Thats the coach issue. But i get excited by things like warby parker. I get excited by rent the runway because theyre disruptors. Theyre breaking the mold and theyre getting people to think differently about how they shop. I get excited by warby parker, too. Its fun. Used to be 600 for a pair of glass, 400. 99. But its happening in every category. And thats whats exciting is because you have people coming in and getting you to think differently. And theres growth. Look at the growth youre seeing out of a brand like that. People get excited when they see something new. Yeah. Thats great. Steve want to thank you very much for coming in. Great talking to you today. Good talking to you. When we return you know, you pay a cork fee when you go out to eat. Would you pay a minimum wage fee . Get ready for a squawk snap poll. And then Danica Patrick can drive cars. But she can also drive business from marketing to brand building. Theres not much she cant do. She is our special guest. And coming up at the top of the hour our guest host today Mario Gabelli the chairman and ceo of gamco investors. Well talk to him about whats happening with fox, with Rupert Murdoch, with time warner. Hes a shareholder in both companies. Squawk box will be right back. Youre driving along, having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back. Were stirring up a debate this morning. Restaurants sometimes charge a cork fee or even a splitting the check fee. What is a split the check there are a couple places that do that. Splitting the entree. Ive never seen splitting the check. Now a restaurant in minnesota is charging a minimum wage fee and its proving hard for customers to stomach. The oasis cafe in stillwater, minnesota, has been bombarded on their Facebook Page with negative reviews, many vowing to never eat there again after the owners began adding a 35 cent minimum wage fee to the check. Minnesota raised its minimum wage by 75 cents to 8 last week. First increase since 2009. So were going to ask you, the viewers, would you eat at a restaurant that charges a minimum wage fee . Polls are open. You can vote right now. Cnbc. Com vote. All right. Michelle and i talked about this before. I i dont like being nickelled and dimed. I dont like the political statement on it. I dont like any political statement, whether you agree with it or not i want it out of my restaurant and dont stick it in my face. When your milk prices go up do you put that on the bill . When your chicken prices go up so youd prefer they add it to the bill without telling you . Everything i know i end up paying for. I have no issue with it. You know there are shipping companies that add fuel fees. We talked during the break earlier, theres some countries that prohibit the separation of the tax out from the overall price, because they dont want their consumers to realize how much is going to the government. And that is a persuasive argument because i do like seeing the sales tax. I do like having that stripped out. You ought to know what is going to the if you are talking about minimum wage, this is labor costs. Are you going to break down how much labor cost . Are you going to break down how much im paying in terms of the electric he . If tomatoes go up the tomato fee, chicken fee. At some point it gets a little ridiculous and we talked about how neither one of us likes political statements at concerts or anywhere else. Stay out of it. You are noticeably silent, andrew. You know where i am. No, i dont. Actually i think the answer is i wouldnt put it on the bill. But would you eat there . Would i eat there . How great is the food . If its amazing food, amazing restaurant ill bet a lot of the critics on facebook dont even live in minnesota. Oh, im sure. Youre probably right. If i liked the restaurant, i might complain about it but id still go there. Is the ecb out . No. We heard from the bank of england earlier and as expected they did nothing with rates. Left things exactly where they are. Were going to get the decision from the ecb momentarily. The big news, though, probably will come at 8 30 when we start hearing from mario draghi. Hell be talking a little bit more and the street is going to be digging into every comment he makes. Weve talked about it a lot this morning. The poll not to go back to something more serious, but most people agreed with you becky. 62 said they would not eat at the restaurant. Id like to know how many votes that was. I would eat at the restaurant. I would complain about it but i would still eat at the restaurant. If the food was good. Right. Again, though, it looks like right now we can say that the ecb left rates unchanged. As expected. You can see the futures this morning. Theyve been up all morning long. S p futures up by 3. 5 points and the nasdaq up close to 5. 5 points. The real news on the ecb will come at 8 30 when we get the head lines from mario draghi. What he thinks about things. If theres anything more specific he will say at this point. Especially in response to his home countrys going into recession, italy going into recession and also the effect of sanctions on the German Economy will most certainly be asked by reporters. All right coming up, Danica Patrick is here. I thought we were going to see her. There she is. Take the shot. We talk the business of branding her deal with godaddy and of course, pressure on the track. Squawk box. And sunglasses. Good to have you here. Thank you. T new car smell 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 its hard to read otherwise. Lets talk race cars and the business of nascar. Also were talking sunglasses this morning as you take a look at the around the table. Racing superstar Danica Patrick is here with us. Shes also launching her first line of revo sunglasses. A portion of the proceeds sold will go to the National Parks conservation association. Shes wearing her glasses. Becky is wearing the other pair. Michelle is wearing look cool. I feel totally inappropriate to not make eye contact with you. I was wearing if i was wearing them could i see but your phone because theyre polarized. But theyre a lot better for colors. A lot better for i want to talk about racing. You designed these yourself . How does this work . So, revo, i mean everybodys heard of revo but theyre doing a revamp. So part of it is me doing a line. And it comes out in october at sun glass hut. And its Available Online at revo. Com now. But we went and just looked at all kinds of different sunglasses and tried on different styles, different shapes, so that we could they could know what fit my face, because theres a geometry to them and then what kind of styles i like. And aviators always are the best fit for my face. So, then they came out with this online which i found out you can customize the lenses and the frames. Theres four frames and six lenses. So, yeah very good how does this work. Did they come to you i mean, do they come to you, do you go to sponsors . I assume theres hundreds of people that are knocking down your door constantly saying we want you to be our spokesperson but how does it work . Or do you how do you decide . Or do you say this company i want to be involved with them, can we try and figure out a way to do something . Usually a company is looking for someone to represent their product. You know, the groundworks of it all and how it gets to how the phone call gets to someone i have an agent, and so but also, like going way back in time to the beginning when i worked with the agent i have now, we did a whole branding session where it was ideas and boards and everything and how do you come up with basically a brand slogan. And so that you have a direction with your brand, and know what it represents and what it stands for. So they also know what fits my brand. And thats important because if you arent with things that you believe in, and will actually wear, and or use, then the relationship doesnt really work. How many sponsors do you have total . Gosh i mean i love that youre struggling to come up with the number. I think we looked on the suit this morning and i mean its godaddy and nationwide and cocacola, and oh, we dont want to forget one. I shouldnt have asked. So we wont go too far. But then theres my personal sponsors. So, revo and im going to forget them and thats where im going to get in trouble. But i have lots of great personal sponsors too. Somewhere around 15ish. Are you required to tweet on their behalf or do anything like that . Sometimes. Sometimes its part of like the day that youre doing. But its always built around whats natural. And i stand my ground pretty hard with especially with social media. When i first started twitter way back in 2009, i was really guarded with and i always have been really guarded with that kind of stuff because again thats an extension of my personality. And if its not believable, then and if its not real, then its for naught. So, i stand my ground pretty hard on sticking with brand values, and trust and believability. Just making sure that people know that its really me. And ive been lucky enough that i can, you know. I know that not everyones in my position. But im lucky enough i have great people around me, great agents, great partners and sponsors, and they do a good job. So i have a driving question for you. You had a little mishap this weekend, last weekend. Oh, yeah that happens. That happens . Like you crashed. I was it was kind of early in the race. How fast were you going . I want to know what this feels like. So i was running like qualified 10th. I was running in the top ten. It was kind of early and you saw right there i bumped the wall, and it gave the body work then rubbed on the tire and gave me a flat tire. So, i just bumped the wall a little bit but it was enough you make it out like people bump the wall up the time. I hit the wall a little bit but it was enough to give the body work a push into the tire and made it cut the tire and go flat. So thats can you bump the wall without this happening . Yeah, yeah, plenty of times that you bump the wall and you know your spotter will be looking from up above with binoculars and theyll look just smoke, doesnt look like theres any issue. So i was how fast were you going when you quote unquote bumped the wall . I dont like probably like 170 or are you scared when that happens . No. Youre just angry that youve done it. Youre just i mean for me i was running in the top ten so i was like oh, my gosh im throwing an awesome day. So thats all. I would be scared. Oh, but you know i dont get scared if i was like theyre like three, two, one. I was like oh, my god i better read this right. Your job is scary to me. So everybodys good at something. You shouldnt be scared of this. Well im going to need you guys are just asking me questions that i have answers to. Nobody dies here around the table. One other question by the way, in the racing context, you are in a bit of a back and forth with Richard Petty . You know, he made these comments, do you know what im talking about . What is happening here . Well, awhile back he made some comments about not thinking that i was a driver. Funny, i am, though. Like im out there racing. So do you like him . Do you hate him . Is there like a thing . I did we did do driver intros this weekend and he was the grand marshal and had to go by and shake his hand and he gave me a little extra pat and i thought was that an im sorry, or was that i i really dont care. I think that, you know, and this is the beauty of media these days is there is so much of it. And so when somebody says Something Like that, in the nature of media, of course, its the other side, too. Sure theres people that are going to agree and back it up. But then theres going to be the other side of it, too. So i think theres a lot of really positive articles and things that come out that are great for me. So i just say nothing. You have to be competitive in this sport. I mean, just hearing that it made you angry when you bumped up against the wall tells you a lot. You have to have really competitive juices. I mean in any sport. You do, and i mean we do 38 of these events a year, and i dont care any less about one of them. They are all very important, and im i get very nervous for all of them. And i get mad when they dont go well. Im going to ask a question to make feminists mad. Men, are they less fearful of speed than women in general . Oh, i have no idea. You arent. There are some really brave women for sure. So why arent there more women drivers . I think that culturally you just dont do it, right . You wouldnt have thought when you were a kid to try gokart racing probably. No, i you historically i found men are willing to drive a heck of a lot faster than me. Period. I think thats what they grew up doing. They might have rode four wheelers and dirt bikes and snow mobiles and stuff like boats and jet skis and so, i think that by nature and just culturally thats what they do more of. So theyre probably more comfortable driving. Do you hang out with all the other drivers . I mean is there theres a male female does everybody yeah a lot. Danica patrick, thank you for being here. Appreciate it. You know, you do have friends in the sport. But we do keep pretty busy outside the cars. Cool. Thank you so much. Youre welcome. Really, really great. Congratulations on the new line of sunglasses. Please enjoy your sunglasses. All right coming up Mario Gabelli talks time warner 21st century fox earnings and the media landscape. Hes our special guest host right after the break. 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The ibm cloud is the cloud for business. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were going public [cheering] the fastest inhome wifi for your entire family. Only from xfinity. Welcome back to squawk box right here on cnbc, first in business worldwide. Andrew ross sorkin along with becky quick and Michelle Carusocabrera. In studio today, Mario Gabelli, chairman and ceo of gamco investors, also known as dr. Love. Though he said theres a little less love in the air this week. Well talk about that in just a little bit. All right, bank of america is reportedly close to a nearly 17 billion settlement with the government over mortgage bonds. That deal with the department of justice is said to include about 9 billion in cash. The rest will go to consumer relief. You can think of things like lowered mortgage rates, and issues along those lines. The stock today, though, is actually trading higher. Its up by almost 1 . Also another Financial News Goldman Sachs is lowering the range of its possible legal costs. Putting the top at 3. 2 billion. The firms estimate is still above what it has set aside in legal reserves. Also in todays regulatory filing goldman said that its traders lost money on eight separate days during the second quarter. That stock is down just by about a quarter percentage point. Russia is banning the imports of meat, fish, milk and fruit from the u. S. , eu, australia, canada, and norway. Vladimir putin taking the action against countries that have imposed sanctions on russia following the escalation in ukraine and the situation there. Russia imported 43 billion worth of food last year. And on the same day as that announcement, Edward Snowdens lawyer says that the former u. S. Government contractor turned leaker has been given a threeyear permanent residence permit by russia. You can guess that that is there to tweak, as well. Lets get a check on the mark markets. So far two Central Global Bank Decisions this morning. The ecb and the bank of england keeping their key rates unchanged. Now were waiting for ecb president Mario Draghis News Conference at 8 30 a. M. Eastern time. Watchers will be listening for his comments on recent signs of weakness in the eurozone, especially the Economic Data out of germany and italy. Yesterday, also take on the geopolitical threats, sanctions regarding russia. U. S. Equity futures in the wake of those announcements, dow would open higher by roughly 35 points. The s p higher by four and the nasdaq higher by six. We did have a positive day yesterday but not by much. Hong kong was lower by nearly 200 points. Shanghai was lower, and the chinese currency actually was able to strengthen for the first time in months. The government allowed it to strengthen. Whats europe doing in the wake of the decision that we just heard. Still flat because we really have to see what is going on when it comes to marios talk related to listen to me like were on a first name basis, draghis discussion about those key issues. Italy is recovering a little bit this morning by twothirds of a percent. We are on a first name with us another mario. Thats why i did that, yes. Mario gabelli. Michelle, mario im channeling you. Its all downhill after danica. Pretty much. Mario we should point out is top shareholder in both 20th century fox and time warner. Were going to get his take on the next steps since Rupert Murdochs 80 billion bid fell apart or since he decided to make it fall apart. Thanks for coming in today. Were delighted to talk about our favorite subject how to make money in the markets and stock specifics. You were the first person i thought of yesterday. I like that. When we started talking about this because you own stakes in both of these companies. This was such such a dilemma because you dont want to see Rupert Murdoch overpay for time warner. And yet youd like to see time warner get a good price, too. What do you think about whats happened . Thats an interesting point. We owned content companies and weve owned the Distribution Companies for a long period of time. We are a large shareholder of viacom in terms of the voting stock behind sumner. Weve owned that for 25 years. What do i think . Basically, ruperts stock, fox, has dropped from 35 to 31 when they announced the deal. Time waerner was 72 went up to 85. 6 and is back to 74. Both of these companies will do extraordinarily well over the next five years. Hitchhiking and putting it together we would have owned and received the upside in the fox stock. But i think you will see 130 in time warner in five years, youll see a 65 stock in five years. I think the investors will do quite well owning both. Youre a bigger fox shareholder. We own 11 million shares of fox. A lot of it i acquired because i owned bac which they bought in 2000. They bought fox bought the broadcasters and we have a dollar cost basis plus we got the spinoff of news corp. And in addition to that weve been buying because its like the cow that keeps giving. They gave us aol. They gave us the cable company. They gave us time inc. Theyre shrinking the cap. I own more for my clients. We only own about 4 million shares. Im still unclear. You would have preferred that they merge or not . I think that the vision of the future is simple. And we do this in aerospace and elsewhere. The rising middle class trying to go anywhere in the world and what youre seeing is tourists, theyre going with smartphones. The nobility. They want content, and having both put together with the right synergies. If i received stock in news corp. Whatever you might have thought they all were paid, i would recapture what the benefit did you want i guess the question is im neutral on the deal. Would you have been persuaded or would you have been more supportive if they had raised their bid to 100 no, no, no. The way i worked out, if i was an investment banker i would sit down and say lets talk. In order for us to dance we need to talk to each other. You cant dance virtual dancing, andrew. To the degree that i received from my clients a convertible preferred convertible into fox corp at lets say 50, would a fiveyear, and i had two or three seats with a coupon that would rise in index like an index bond, thats not bad. Theres a lot of ways to do it. The only problem, andrew, you and i can talk. You needed carey and buchananous. Did buchas make a mistake by not talking . I cant answer that. Within that framework the only mistake, hes given us and weve made a significant amount of money in time warner. We will continue to make a lot of money in time warner. So im not unhappy. Companies turned it down by air gas the stock is up sharply there are others like aol you didnt use the opportunity when it shot up a little bit . We nibbled at it a very tiny amount for our arb accounts. We have different pockets. We run 45 billion all equities. We bought some time warner and my other guys who are not in the bought fox. Okay. Would you have shorted then the buy. No, they we run a billion dollars in arb. Weve never a down year gross ever and even in 08 we were up but thats basically the team has certain disciplines and my job is to watch the 55 mile speed limits. Any chance you think its a negotiating employ . Yes. Well a chance. Any chance what chance . I would say the following. If youre rupert and you listen to that call as you did yesterday, what he said, and what chase carey whos brilliant on that call absolutely brilliant, and unfettered by lawyers, whereas i think jeff was handcuffed by lawyers in terms of what he could say because he did a good job of explaining the current value. Within that framework, he said, fox stock went down. Im going to buy 6 billion shares, a dollars worth. Thats 150 million shares on a 1. 5 billion base. Hes shrinking by 10 because the stock is they let out the plan which they did on august 8th. 2013 and in l. A. About what they were going to do. They did not talk about avatar two and avatar three. They talked about the dynamics of the business and one of the problems, andrew, that i didnt think about was cricket is crimping them profits. The sport of cricket . The sport of cricket. Theyve had to pay what . I thought it was the nfl. Amazing isnt it . The point is that they talked about earnings hiccup, and because theyre investing in a cricket, its like sports travels well, news travels well around the world. Things that thats an india play. Thats correct. But sky india is important because the rising middle class of these countries there are very few cricket players, plus the game lasts longer. You get a lot of commercial breaks in. Thats correct. And its so slow. But any event. Thats just i just did it for fun to talk about that. The point is, what works globally over the next ten years. You have discovery, animals travel well, cartoons travel well, sports is phenomenal. Look what happened with the world cup fifa. You had people tuning in so the passion, the tribal passion both global and local, it works. And you cant fast forward through commercials. Thats the bottom line, right . You dont why do you want to . Right. Youve got 90 minutes of pure historic pleasure. Cant watch it later on netflix. Its like baseball you tuned in to the yankees in the eighth inning and you had some excitement in the last three days. Did you speak with any of the management at fox, any of the management at time warner to let them know what you thought about the deal beforehand . Beforehand . Before yesterday. The conclusion ive made is fairly simple, go back to the early 1950s, there are only x number of studios at that time. The only one that might have disappeared was mgm and youve had some wannabes that emerged since then. Theres got to be a consolidation, whether its sony, columbia merging with paramount and viacom. Theres too much you have to concentrate. I think theres an element of it. So i dont have to talk to them. They understand this. They all see the future. And the question is whats right for their shareholders now. And in the future. Im not interested in now ten years from now, well be in the content companies and well be in the Distribution Companies. Theres a great way to make money. All right. Dont move. Coming up more from Mario Gabelli, including his take on tax inversions. And then 21foot waves expected to pound hawaii today as hurricane us l moves in. We get an update on where it could make landfall. And as we head to break check out the squawk box market indicator. The cadillac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Your studied day and night for her drivers test. Secretly inside, you hoped she wouldnt pass. The thought of your baby girl driving around all by herself was. You just werent ready. But she did pass. cause shes your baby girl. And now youre proud. A bundle of nerves proud. But proud. Get a discount when you add a newlylicensed teen to your Liberty Mutual insurance policy. Call to learn about our whole range of life event discounts. Newlywed discount. New College Graduate and retiree discounts. You could even get a discount when you add a car. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Welcome back to squawk box. President obama says his administration plans to move quickly to curb tax inversion deals. Take a listen. Its not fair. Its not right. The lost revenue to treasury means its got to be made up somewhere and that typically is going to be a bunch of hardworking americans, who either pay through higher taxes themselves or through reduced services. And in the mean time, the company is still using all the services and all the benefits of effectively being a u. S. Corporation, they just decided that they go through this this paper exercise. President says Congress Needs to pass legislation to stop the use of inversions entirely. Hes pledging to look for ways to discourage these deals. Pharmacy giant walgreens did buck the recent inversion trend declining to rebase in europe following its purchase of European Alliance rival foods. Heres what the ceo said yesterday on the companys conference call. We fully understand and consider the significant financial benefits of an inversion when weighed against the risk the company and board determined that pursuing a structure that included an inversion was not the right course of action for a combined future enterprise. Lets get back to our guest host Mario Gabelli for more on the climate for mergers and Corporate Taxes. You listen to a ceo like that who says im not doing it, they weighed all of the issues, people that i know that have been in and around this that particular deal said they felt they couldnt do it, not because the financials werent good. The financials would have been good but they thought people might boycott literally outside the stores, and the sort of image hit would be too big. What do you think . I think youre worried about the guy with ebola walking into the mount sinai hospital. I am. Youre looking at the wrong person over here. But my point is that, what we do as analysts we gather the data. Im no expert on wall green but let me give you some numbers. 950 million shares, giving 140 million shares plus 5 billion u. S. 3 billion to do an inversion you needed to have the owner own over 125 , 20 . Secondly theyre going to acquire a company which theyve already announced about a year and a half ago Alliance Boots that would give them a globalization. They basically were going to do a simple deal whereby they were acquiring a 15 billion worth of debt in Alliance Booth and the cash flow overthere. Lets go back to basics. What do i want to do with an inversion . The u. S. Is a global tax which means they tax you around the world. Your guests have always talked about this versus territorial. Im still paying. I am still paying my taxes to the United States. Im paying a tax on the date i exit by paying out my emp and that is once the president is totally wrong with regards to that they won secondly they are u. S. Citizens they will continue there are people that are not u. S. Citizens that use our services. So i think the global marketplace has to allow and then finally the cash tax doesnt go down. What goes down is the book tax which allows them to have a higher multiple, and so we can debate this. But at the same time, andrew, taxes for corporations are 300400 billion dollars out of the total tax revenues of this country of 3. 5. Less than 10 . Well, yeah ive got the numbers but i have to put my glasses on. I think it was 22 billion. The estimate by the budget of Economic Outlook was for the year fiscal 2014, 351 out of 3 billion. Income tax. And the estate tax is only 22 billion what they call in new york bup kiss. It is more of a liberal dynamic of rebalancing wealth. I didnt understand something you said the actual taxes paid doesnt go down the cash tax versus initially, initially the cash tax in the United States does not go down. What open and over time with the book tax goes down. But the tax in europe lets say is 25 in the United States is 35 by inverting you will permanently not have to book a tax for book and so within that framework, thats the big benefit to public companies. Then over time theyll do things, you know, its been i took advanced taxation in 19 and so i got some of the details down but the point the point is that there are ways to do a stripping of expenses and you do a lot of other things once you get that established. We had mark cuban on the program maybe a week ago and he said as an investor you should be against the inversions because it will ultimately raise the costs for everybody else. Do you buy that argument . There are many arguments not to do inversions, okay . And within that dynamic, i want the most important fundamental argument is to have the United States corporations compete globally so that you have tax rates come down on a competitive basis where youre missing the point. This is to get away from knowing that we are just 30 years behinded world in tax reform on a corporate basis. This is a bad straw person to attack and that is that if we can lower our Corporate Tax rate eliminate some of these loopholes that the lobbyists put in. Hedge fund guys. Carried interest. You cant get rid of something so obvious . If you make a billion dollars on a hedge fund and youre eliminating your w2 income you know what you lose with regards to taxes with regards to the payment of medicare and Social Security . Medicare alone is 3. Odd 2. 45 open ended. You will over thats more than you lose on inversions. Notwithstanding that the main issue and mark cuban should reassess this. How do we level the playing field. How do i create companies in dallas, how do i create companies everywhere. We should use the caveat he called in from his hospital bed where he just had hip surgery. We wondered if he wasnt clear. Some of us have had lobotomies. He made a very strong argument but admitted at the end he was calling from his hospital bed. There are individuals that can give you the 101s of these better than i can. Were going to come back. And we talk about reits and we talk about mlps. Got a lot to talk about. Also when we come back were going to talk about hawaii bracing for hurricane iselle. A live report right after this. And speaking of hurricanes is there a Storm Brewing in the Media Industry . Whats Rupert Murdochs next move . Michael wolf will be joining us. Squawk box will be right back. Welcome back. We often talk about alternative Energy Sources but boeing may be taking it to the next level. The Aerospace Giant is teaming up with south African Airways in a Dutch Company to develop jet fuel from a new type of toqueco plant. An announcement the Companies Say South African performers could begin growing a tobacco plant which is virtually free of nicotine. The projects partners argue the biofuels derived from organic sources could reduce Carbon Emissions by as much as 80 . Isnt this ebola serum related to tobacco plants . There is a company that is working on that aspect of an ebola all right. Lets get to hurricane iselle strengthened slightly and is projected to be a hurricane when it approaches the big island today. The weather channels mike seidel joins us with the latest. Weve got two systems. Were watching iselle and also julio for later in the weekend. Iselle is the shortterm impact. It has a much higher probability of causing problems across the entire string of pearls. Remember on record just two landfalling hurricanes, the last one was iniki and both of those went over in kauai. And they generally come up from the south. Its unusual to see something coming in from the east. Its a category 1 hurricane. Winds as of 8 00 eastern still overnight in hawaii at 85 miles an hour. You can see it is heading in that general direction of the big island in hilo moving west northwest at 18 miles an hour. It may lose a little strength before it gets there. But it is now about 270 miles away. That is the out your bands. The center is farther away. Its going to be later on this evening east coast time and certainly late this afternoon before we start to see the fringe effects affecting the big island. Then those effects will spread across the chain of hawaii. Those Hawaiian Islands as we go through tonight and tomorrow. Heres the track right now. It should go south of how ee and owe ahue. Tropical storm warnings. Hurricane warning for hilo as much as pa to eight irvs of rain. All the islands have flash flood watches. The big concern will be heavy rain flash flooding and certainly on the big island where winds could gust 60 or 70 miles an hour we may have some power outages. There are your watches in kauai, otherwise warnings from honolulu to maui and for the big island of all things a hurricane warning. This is very, very unusual. Then were watching julio. A category 2 hurricane. It strengthened overnight. 100mileperhour maximum sustained winds. Its got a little bit of an eye right now. But what were seeing, and the trend has been over the past couple of days, as it tracks towards hawaii, its going to be steered a little towards the north and northwest. As a result we think the brunt of julio will miss the hawaiian chain over the weekend. But first things first, we could have a landfalling hurricane in hawaii later on tonight and tomorrow morning. Guys, back to you. Big deal. All right, thank you so much, mike. Coming up, jobless claims data. And pork lovers have a reason to be inspired. The other white meat is getting a production boost which means more bacon at lower prices for everyone. Jane wells will have that story in just a bit. As we head to break take a look at u. S. Equity futures. Dow would open higher by roughly 62 points. Developers are all about speeds and feeds. Its all about latency. Its all about how fast does it run. I often sit with enterprises who ask me about how Mission Critical and hows the performance of the cloud. And i tell them, if you can make gamers happy, you can make anybody happy. Speed is made with the ibm cloud. The ibm cloud is the cloud for business. 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. If energy could come from anything . Or if power could go anywhere . Or if light could seek out the dark . What would happen if that happens . Anything. Welcome back to squawk box. Were just seconds away from weekly jobless claims. The futures suggest that the dow would open positive. Lets see what the numbers show us in just a little bit. The s p would open higher by nine and the nasdaq by 17. Dont forget were also waiting for an ecb News Conference. We know the decision unchanged. But right now, the italian market recovering somewhat from yesterday, not everything was regained, higher by 152 points after they went into recession again. France is flat essentially. Germany, ftse also flat. Go to rick santelli. Hes standing by in chicago. Wow, we see a nice drop in the jobless claims. Down 14,000 from a revised 303 down to 289. So, a bit of a surprise there. But once again you know, maybe this is like north carolina, as jobless claims benefits get curtailed around the country what we see is these numbers start to fall and we actually see pickup in job creation. What we can argue is the type of jobs that are being created and the type of jobs some of these folks are taking. Ecb bank of japan, bank of england that Monetary Policy committee, it all seems as though the news is about the same as, of course, we will monitor the press conference and the notion that, you know, the central bank of europe is most likely causing a lot of the downward pressure they see. Its all a spiral. Theres deflation, and then theres deflation. I think the deleveraging, and the competitive issues that need to be helped out by dropping prices is going to be fought hard by the central bank. And the spiral most likely will continue. Back to you. All right, thank you so much, rick santry. Steve liesman joins us now. A little on the ecb here. I just want to give you the numbers weve had the last several weeks. 305, 303, 279, 303, 289. Today, and i think what were in to here is a pretty security or stable shift downward in the number of jobless claims for whatever reason that youre down to this 300 level. If i had a second to look at the forward moving average my guess is its certainly one of the lowest weve had since before the recession. So, what were looking at here is the firings have really declined into a level thats going to suggest again continued strong job growth, could be some seasonals have to do with the auto plant shutdowns. Were going to want to watch for that. As the Economic Data gets better in the United States its worse its worst in europe. Lets take a look. Theres a lot of debate about what it would look like if the fed wasnt doing it. The socalled counterfactual debate. We have a counterfactual. It is in europe. I want to show you the Balance Sheets. And whats happens is the wall street journal had a nice lead on a story ive got to give a shoutout to that the ecb picked the wrong time to go on a diet. Thats whats happening right here. Theres the falling ecb Balance Sheet. And what that is, its banks repaying loans. The ecb, as you know, michelle, tried to put money out in the economy. And the banks took some of it down, and then they paid it back. The criticism here is that thats essentially letting the banks run the Central Banks Balance Sheet. Whereas the fed goes out and buys assets, and controls the size of the Balance Sheet that it wants can i just make a very simple point when we bring up that chart. The higher the line graph goes, the more the central bank in theory is trying to stimulate the economy, right . So it looks like the ecb has been stimulating a lot less at a moment or destimulating. Depending on if its getting smaller. Where the United States and bank of england have been going way up. Carney over in england is flat but hes not letting it decline. Thats the blue line. And the orange line there is the fed and that big rampup there is qe3 and thats about to go flat right there. Now again a lot of things go in to inflation. But lets go look at the inflation outcomes here and what you see is maybe fairly predictable from a Monetary Policy theory which is that the fed has had inflation results closer to what it wants. And in europe, inflation keeps declining. I could show you the same chart when it came to growth outcomes. Now you could write in and you could argue theres a whole lot of other stuff going in in here but the theory has always been the central bank cannot pick an Unemployment Rate but it can pick an inflation rate. Good. And perhaps this is evidence of that. So the pressure and by the way, its not just me talking. The imf is talking. Private sector wall street economists are talking, that draghi needs to do more than hes done. And that means taking control of his Balance Sheet. Milton friedman who said, inflation is always a monetary phenomenon. Exactly. And it very eent usually works. Im going to be monitoring draghi today. My guess is he just simply doesnt have the consensus of the ecb the germans. The germans to make this change. And i think thats something were going to want to watch. And we know whats happening with the fed. The fed is going to stop qe in october. And then were going to go to Interest Rate hikes eventually. All right. Thank you, steve. Sure. Steve liesman. All right lets get back to our guest host Mario Gabelli, gamcos chairman and ceo. You wanted to make a point about mlps and reits. Just allowing capitalism under the capitalistic system to go to its higher rate of return risk adjusted after tax so companies are going out getting rulings from the irs, private letter rulings, plrs that they can convert part of their asset base to reits. The most recent one was the windstream at Telephone Company that had pipes in the ground of copper and fiber that applies to a lot of other companies. You saw outdoor advertising. So the extension of what is in quote eligible assets for a reit is taking on a new look. Youre eliminating double tax at levels and youre for example if i have a company that sells at six times ee bit to in a private market value and i have 30 of my assets that i can convert to reit or get a 6 cap rate or multiple i have raised the valuation of my company for example yesterday evening a Company Called cst which was a spinoff in the oil and gas you buy gasoline theres gas stations they have you go buy your pizza theres caseys theres murphy oil and so on, they announced that theyre buying a gp called lehigh and basically taking the gp dropping some of their assets its all part of the tax process. So theyre reducing the amount of taxes they are paying by going through these well to the degree that im 100 shareholder of a company that does this michelle its not complicated right now i pay 35 Corporate Tax i keep 65 i pay out the 65 i pay a 25 dividend tax, you go to an mlp theres one tax and its 40 . Mario, this sounds like a loophole that jack lew ought to just, you know, get rid of as soon as possible right . I mean this is not fair. This is now other you know now we have fewer services because hello youre doing a great job. Continue on. Continue i mean, is your point that if youre going youre going to penalize and make sinners of companies that do inversions then you got to make sinners of the mlps . It can get ridiculous is the point. The word i use is deserters. Deserters. Look, the point is that you dont want to politicize it subpoena 24r is no question you need tax reform. You have to look at all the loopholes the lobbyists have been able to get. Will it be done in 2015 . Will you be able to have a comprehensive tax structure . The tax laws have been perverted since 1986. The last time we touched this stuff. So i dont want to beat that to death. The point is, is there a consistency with regards to integrating the individual tax rate with the Corporate Tax rate for a sense of fairness. Should be there sub ss. This is a different issue. How does it impact economic values in a world in which youre seeking yield, current return and you could put a 6 cap rate on a stream of assets that you can then drop in and grow youre going to take a six multiple business or an eight multiple business so these Convenience Stores and there are a handful of them are extraordinarily attractive because somebody like columbus led the way. All right. So you want to buy murphy oil and cst so okay. All right. Mario is sticking with us. Up next, Rupert Murdoch withdraws his largest bid ever and says that time warner refused to engage with him over his offer. However there are still some people who think it may not mean that a deal still cant get done. Were going to talk about that and much more with media follower michael wolf of activate. Theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe the gap will close when healthcare changes. When frustration and paperwork decrease. When healthcare becomes simpler. So lets do it. Lets simplify healthcare. Lets close the gap between people and care. Last shot of our nations capitol. Were talking about media mergers in light of 21st century withdrawing its bid for time warner. Lets talk mergers and acquisitions. Joining us now michael wolf cofounder of activate and former president and coo of mtv. Our guest host Mario Gabelli is staying with us. Help us here. Is it is it a negotiating ploy . Rupert walking away. Its not foxs manifest test my to own time warner. And there are a lot of people whove talked about the logic of these deals. And the challenge is that neither of these Companies Really needs each other. But the opportunity is in the logic is that theres going to be a lot more streaming. Theres going to be a lot more value and content for these businesses, and when you look at that yesterday jeff buchus announced that the earnings of hbo were up 15 of a deal with amazon, the same thing is true that news corp. s deals have ended up leading a great deal more in terms of earnings for those companies. So the battle is about whos going to get their content in to the stream. In this environment, content is what matters. Just go back to the deal for one second. Yes. Negotiating ploy, have they really walked away . What happens . I dont know. I mean, they said clearly were done. Right. And should have jeff talked to him . Absolutely. So you think it was a mistake made . I think there is a mistake whenever theres an opportunity. Basically if you receive an offer youre saying the company is for sale at no price. Theres got to be a point at which shareholders can get a return by a merger. So what happens now . Fox remains independent . Time warner remains independent. People have talked for years about time warner not necessarily with merging with fox but merging with cbs. Thats a different issue. Viacom viacom. You know sumner as well as anybody else as a former viacom man. As growth rate for these companies slows, then the ceos of these Companies Get the urge to merge. And so i wouldnt be surprised if news corp. Doesnt come back but i also wouldnt be surprised if somebody doesnt come out of left field and make an offer. To make an offer for time i mean if it was cbs for example, les moonves cant buy time warner has to be a reverse situation. Then the question becomes is there a succession issue at time warner . You love jeff. I think theres a lot hes a young guy, 61. Sumner is 93. Moonves is about the same age. But that doesnt matter. Look at not 93 but closer to 61. There was always a question of michael eisner. So you know theres a lot of talent out there. You shouldnt have looked to these businesses as theres one guy, theres one star running these businesses. Reality is what the brands that matter, their content, their shows, whether its 24 or house of cards let me ask you a question about that. How important is Rupert Murdoch to the 21st Century Fox Company and franchise . And i ask the question because people said we dont want to take fox stock, because we dont know whether we want whos going to run the company in the future. You heard the same thing about Berkshire Hathaway and Warren Buffett so this is an ongoing saga about where theres an individual that has his fingerprints all over a company. Its a legitimate question to both companies. Management is a red herring. Weve got chase kerry who is an unbelievably great manager turned around directv. But i will give you this, his contract ends at the end of 2016. He would have been very thrilled to stay and run a combined company. Less interesting to not. Right . No. No . Its like steve burke at comcast. Ill bring it home to you darling buddy buck ba that basically dpshs you brought it home. Steve has done a fantastic job. Who knows steve burke other than those that are really know knowledgeable. So you need to have chase kerry is that kind of an individual. But but in every moment in the entertainment business somebody said one person is critical theyre the linchpin. Suddenly somebody else came along thats done a great job. Is there a point though that its better for a content company to be a lot bigger these days to negotiate these deals to make sure that they have a lot more heft when theyre dealing with other giants . Absolutely. Scale and content matters and thats why its going to be important. A lot of the prevailing wisdom has been that fox needed to get bigger so it was a foil for the big cable operators. The real issue is having a Critical Mass of content for the Big Companies like amazon, like netflix, and apple. So im going to ask you a digital question. You used to be on the board of yahoo theyre going to get a huge amount of cash from this alibaba transaction. Can they go buy a Media Company and would they given some of the strategies some of the stuff that marisas been trying to do . They dont need to buy a Media Company. They need to continue to improve their user experience. They can buy all the content that they want and produce their own content. Are you a fan of what shes doing . I am. I think its amazing to see that shes done what few companies in the internet have done which is turn around the traffic trends. Traffic is growing. People are using the product. Dont forget its only a 40 billion company so its not a big company. Not enough to be able to do that deal. But time warner where does the stock have to be in the next six months or to a year before shareholders slip back an activist you should have done that . Its anybodys guess. They just took some governance measures to really not allow an activist to make does that upset you . No. I think that ultimately these companies, theyve got to point their own path forward. I think activists are valuable and a company is way undermanaged. Time warner is a company thats been very well managed. Okay. Michael thank you for coming in. I still thank you. Youre on tmobile and sprint. Ran out of time. Great. Well talk to you a little bit about them in just a little bit. Coming up its time to pig out. Jane wells is high on the hog and joins us to tell us why. Holy cow. Look whats happening with bacon prices. Theyve been porking up. Were going to break a few eggs and talk about whats happening to them now. Good news for breakfast when squawk comes back. Tomorrow on squawk box, chair of medical ethics and Health Policy producer zeke emmanuel. Plus tonight marks the start of the nfl preseason. We talk pigskins and profits. Right here on squawk box. What if there was a credit card where the reward was that new car smell 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 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. Welcome back to squawk box, online buzz about mcdonalds, the chains restaurants announcing a new promotion promising drivethrough orders are ready in less than 60 seconds, if not, they get a free lunch item in a future visit. Theres a lot of people moving quick in the kitchen now. Thats true. Thats the point. Give us a quick serve restaurant, how fast are you in and out . Reason for being. I agree. If you cant do it, give the customer free service if thats your montra. Im going to test them out. Have to go to south florida. South beach, ten mcdonalds, youre not going on south beef. Hog farmers picked up production as the bed di pig virus has faded and price are falling. Jane . Its about freaking time. Its about supply and demand. Look at this. This is what october lean hog futures looked like for the year as the deadly virus killed pig lets. And its improved as farmers sold surviving hogs at heavier weights to make up the loss of the virus and low feeds increased the herds, and the heat of summer is not good for the virus. Kind of evaporated over the summer months, warmer season this summer, not quite the effect on swine herds. Coming back this fall, temperatures begin to cool, were concerned that if we dont have the immunity, were going to have another void in our numbers. The south bend tribune say hackers are pulling back purchases hoping for lower prices, and american p Restaurant Association says wholesale bacon prices, wholesale, are below year ago levels. It will take awhile to work through to retail. If you look at bacon disappearance in june, or bacon demand in june, total disappearance in the month was the smallest seen since the early 1980s. Pork supply should in connection with 8 to 90 short term, but not fully recover until next summer. Jane, i know it was a huge deal for chickens that russia could have an impact with them not taking in new things that have impact on the poultry market. Is there a pork play when it comes to russia . Not so much. Thats a china, korea, or ja pa play. It is a chicken deal. Its a second largest importer of u. S. Broiler, and also big in california, pistachios. They are pulling out other crops to put in pistachio trees, ru russia is a big market for that. Wow, thank you. You bet. More, coming up, the ceo of on line retailer zulily talks about earnings and the state of the consumer. Travel trends and earnings from the ceo of orbitz joining us at post nine in a bit. Squawk box will be right back. G hundreds of millions of dollars in jobs and infrastructure. Thanks to startup ny, businesses can operate tax free for 10 years. No property tax. No business tax. And no sales tax. Which means more growth for your business, and more jobs. Its not just business as usual. See how new york can help your business grow, at startup. Ny. Gov having a perfectly nice day, when out of nowhere a pickup truck slams into your brand new car. One second it wasnt there and the next second. Boom youve had your first accident. Now you have to make your first claim. So you talk to your Insurance Company and. Boom youre blindsided for a second time. They wont give you enough money to replace your brand new car. Dont those people know youre already shaken up . Liberty mutuals new car replacement will pay for the entire value of your car plus depreciation. Call and for drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch to Liberty Mutual insurance and you could save up to 423 dollars. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening. They dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. Give fans more then just the game with the ibm cloud. The ibm cloud is the cloud for business. Yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were going public [cheering] the fastest inhome wifi for your entire family. Only from xfinity. Lets get back one more time with mario, and lets talk about whats been happening in terms of the deals. M a, weve seen these deals that have not gone through in the last couple times. People say thats a symptom of a top. Is that the case . Theres a question of where the top is. If you do a thousand deals, and theres a certain number that breaks, as deals go on in the latest stages of recovery, paying higher prices, Interest Rates go up, and theres push back. This is just the many wave on that. Theres a lot more transactions, Companies Want to grow, theres the currency, and Small Companies that are niches in the business fit in, and product line extensions, global deals, its kind of a pocket that refreshes and its an air pocket that will be changed quickly. Regulators . How much are you worry the about them looking at the sprint situation . Looking at the big deals, okay. Theres so many. Theres fdc approval, nobody cares because they slipunderpar the radar. They dont mean anything, the context of the merger of tmobile, so much focus when at t was doing the deal understanding the dynamics, and they would love to own it, and the point is a more interesting point, auction coming up, aws, and they want to be in it, everybody wants to be in it, but who will pay for the right to build the highway . Net neutrality run counter to that. Theres been the Financial Engineering papers, ew scripts split off the newspaper journal communication. Those does that mean they are pick up in a year or less . Newspapers have their own virtue, but the broadcasting packages with the tsunami from elections, the political elections, is big, but in 2016, a mother load. They get bought up or not . They are already consolidating, not further, but notwithstanding that, you make money with buyers. The media is a stock on the merger. Broadcasters and wireless will continue to be done. Theres companies out there that just dont get it that turn down deals like u. S. , and they have to to be bought up, and separately owned tmobile, and africa, that could be a deal, london to miami, a bunch of things around the world, exciting times. Were just about finished here with time, but when you look at lower prices like over the last several weeks, that makes you happy to get things for cheaper . Puts risk in the overall market, and it says, hey, how do you make a return over the next ten years owning a basket of efts like warren rems you own, making 5 to 7 compared to 4 when bonds stabilize. Thats not bad. Hopefully you do better. Dr. Love, thank you for being here. Bringing us love in a loveless week. That was really love. Nice to see you. Make sure you join us tomorrow. Squawk on the street begins right now. Good thursday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, and faber is off today. We have a lot of news to handle. Draghi on the tape now after the ecb and bank of england hold steady on rates, bank of america with record settlement, and ten year yields at 246, and jobless at 289, taking the average to the lowest since 2006 and europe mixed as drag