Transcripts For CNBC Squawk Box 20140808

Nigeria. All of this really having an impact on the markets. The Global Markets tumbling after the president s address last night. The futures at one point down by about 100 points. We have seen some improvement, that there are still some pretty sizable declines this morning. Youll see those dow futures down by about 47 points below fair value. The s p futures off by seven points. This is coming after the markets closed lower yesterday. The dow closing at its lowest level since april. The s p 500 closing at its lowest level since may. So again, pressure this morning. This looks like a third week in a row of losses for the markets here. Also in europe, if you want to see how things are reacting, you can see the dax down by another almost. 9 of a percent. The ftse in london off by. 7 of a percent. And in italy, thats the only ed a vancor that were looking at. In asia, the nikkei suffering its worst deline in five months. A decline of about 3 . Shanghai and hang seng saw much more modest moves, but again, a lot of pressure, and brian, well send it to you. As becky mentioned, the president giving the green light to airstrikes against isis if necessary. Were joined on set by cnbcs chief international correspondent, who was recently on assignment in the irbil region. Lets get first to eamon with the news. The president spoke after a day of speculation after what washingtons intentions were in the northern part of iraq as those isis forces surrounded an ethnic minority and the Minority Group about ten to 40,000 people were forced to flee to northern iraq. The president saying last night that the United States will undertake two missions in iraq. First will be a humanitarian mission. The second will be targeted airstrikes, if those isis forces move on u. S. Personnel who are located in irbil. And a humanitarian effort to help save thousands of iraqi civilians who are trapped on a mountain without food and water, and facing almost certain death. To stop the advance on irbil, ive directed our military to take targeted strikes against isil terrorist convoys should they move toward the city. We intend to stay vigilant and take action if these terrorist forces threaten our personnel or facilities anywhere in iraq. Including our consulate in irbil and our embassy in baghdad. Weve gotten information now from the u. S. Military of what exactly happened overnight. U. S. Air forces moving into the region with one c17 and two c130 aircraft escorted by two fa18 fighter jets for air support. They dropped, according to the military, 72 bundles of supplies, including 5,300 gallons of fresh Drinking Water and 8,000 meals ready to eat. But the president last night really had pains to make the point that he was the president who campaigned on getting the United States out of iraq, and he said he will not allow the United States to be dragged in to a fresh ground war in that country, guys. Okay, thank you, eamon, for that. Lets get some more color on the city of irbil. Michelle was there in late june and joins us now at the table. So, its extraordinary that irbil is under threat. There are reports of sheer panic in irerbil. It looked calm. Everything was moving fine. Thats because in part the kurdish region very much verges on a police state because they were very concerned about terrorism in general. To see this happening is really quite startling. The weakness in the markets, i think part of it is you have to wonder if eventually theres some kind of u. S. Military option that gets more involved, because remember, dropping water and food on these 40,000 ethnic minorities does not get them off the mountain. It keeps them from starving. It keeps them from dying of thirst. But the rebels control the only passage out. So are you going to have to come off the mountain. How. Thats the question. How. Well, somebody has to physically remove isis. Right, right. Exactly. If its not the iraqis, who is it . Or do they stay there . Chase them off with air strikes. The report suggested they were a halfhour away by driving . Oh, theyre far from erbil. How far are they . There was one report saying they were literally a halfhour away. From erbil . Oh, i thought you were talking about the difference i mean, they were in kirkuk yesterday. There were explosions in kirkuk. Thats 26 miles. We did that drive not very long when we were there when we drove to kirkuk. So its close. So heres a map. You can see northwestern thats the mountain to the left where the ethnic minorities are stuck on the mountain. Kurdistan to the east. Lets show you some of the we cover markets here. Kurdistan has a lot of oil. A Company Called jenel. Look at what happens to the righthand side of the chart last week as it became very, very clear that isis was moving towards the kurdish region. The price of brent, close to that higher by 92 cents. The lira borders on kurdistan. Fourmonth low. What are they going to do . Syria and turkey right there. What happens . And the weakening lira in turkey remember is a big deal because this is a country that has a balance of payments issue. If you dont know what that means, dont worry about it. When their currency gets weaker its a lot harder to pay back their debts. Exactly. When you look at german tenures, theyre about to enter the club of perhaps less than 1 . 1 . For over ten years. Did you see what happened yesterday . This is going to be the most boring thing ive ever said on television, which is the german twoyear treasury note had a negative yield briefly yesterday. Negative yield. You are paying someone to hold the money for you. Youre going give the money and when you get it back, youre going to have less money. Thats an extraordinary thing to happen. Its a signal of insane markets at that point. Intense anxiety. People say why are you mentioning this . Its such a sign of anxiety. The other thing i would point out is were starting to see now a wider spread between germany, spain, and the other peripherals. We used to see everyone go down together. That is not happening anymore. Theres now differentiation because theres increasing worries about the southern part of europe all over again, ever since the italian gdp, right . And that would suggest some concerns about the strength of the eu in general. What is todays date, the 8th . Yeah. Im going to give you some month to date number. This is like deja vu all over again. This month, on a few trading days, spain is down 6 . Greece is down 7. 5 . The stock market italy is down 7 . And the german dax is down 5 in just a few trading days. And can i point out something that is incredibly amazing . Because of all this news, do you know what we have not mentioned . In the last 24 hours, i would say across wall street, the expectations for russia invading ukraine has shot up dramatically. Were seeing now 50 50, whereas most of the time people were saying ah, unlikely, he wouldnt want to do this, etc. , etc. But now because the ukrainians have been so effective at perhaps retaking donetsk, they dont think putins going to be able to stand for that and is going to have to do something more. I mean, think about how much International News that is, that that is now a footnote this morning. Thats how crazy this is at this point. Whats the day like so far . Youve got now resumed possible air strikes in iraq. Youve got the syrian genocide which continues to go on. Youve got ebola in africa. Ceasefire over in israel. Hamas is ready for a long fight. Youve got two hurricanes hitting hawaii. The european stock market looking again like 2011. And we should point out our tenyear, too. Just been looking at the international bonds. This is something to really Pay Attention to. 2. 7 . You had a guest on whos guessing we fall to 2 or lower. Hes been right on a bunch of stuff. I think in six months, will be below 2 on the tenyear. When youre looking at the bunde at 1 , that explains whats happening. Its not the central banks, its what youre talking about just relatively speaking. That was a mark grant call, too. Rick santelli, too. Lets talk a little bit more about whats been happening here with the reaction to iraq. Joining us now, the managing director at bk asset management. Boris, we have seen oil prices push a little higher, but this is going to add chaos to just about every market. You know, listening to you guys talk, i cant help but think maybe were creating the new 1 , which is 1 jgbs, 1 bundes. I know it sounds very crazy, but the net takeaway i think very much risk aversion sweeping across all the markets right now, and definitely dominating headlines as you guys were talking about. The critical thing i think to take away from this is, you know, i cant imagine when you have these geopolitical events happening, especially in the middle east, i cant imagine its just beginning to be one and done. Ive got to believe that isis is going to press forward. And if they do press forward into the kurdish region, were going to escalate our response. So i dont think this issue is just a overnight issue. Were probably going to have this on our hands the next couple of weeks. Thats going to keep the pressure down. So youre seeing all the yen crosses, yen strengthening, and thats probably going to be a trend that couldntntinues. Its hard to imagine what makes the markets feel better, what makes anyone feel better, because these are not easily solvable problems. Theyre not things that can be cleared overnight. Exactly. And the other takeaway from all of this is that when youre looking longterm, the absolute critical factor that a lot of analysts have been making and i kind of agree with this is that the fed is really not going to go back to monetary policy. Until and unless capital assets, equity markets are relatively stable. If you get a situation where we continue to have relatively decent growth, but our stock markets decline precipitously, thats going to keep the fed much longer on the sidelines and i think thats going to be another interesting pressure to the downside as far as risk aversion flow. Youre talking about months and months down the road. Im talking about months and months down the road. Its very hard to forecast something where were in a very fluid situation. The net takeaway, if this is a correction that remains relatively chronic and severe, its going to keep the fed much more accommodating mode than we think it would be otherwise. Investors are nervous. What should they be doing right now . Investors are running a typical safe haven assets in a reaction. You know, its very, very hard to gauge whether this is just a 10 , but youve got to believe on the underlying basis, when youre looking at the various economic factors, the other thing we dont know and you guys were talking about this, imagine a scenario where we escalated our engagement in the middle east and putin uses that essentially as camouflage to invade ukraine. If we have headlines like that, i think you have another move to the downside. I guess my point is it is not time to buy just yet. I think the risks are a little too steep at this point. And on friday, its going to be interesting to see if people are going to be willing to make a bid ahead of the weekend, or whether youll see some selling accelerators. With the suggestion that theres more to go, how much more . Give us worst case scenario. Also because people are going to be sitting there hearing what youre saying, saying okay, ive got to figure out how much farther this has to fall before i actually do something about it. You know, its tough. I think you can reasonably say maybe theres three to four more percent to the downside. From the currency side, the very, very interesting thing here is the dollar yen cross. Thats something you need to keep an eye on. Dollar yen has had support at 175 for the whole yearlong. Thats been a major, major support level. If that breaks, its like a dam breaking. I think that could create massive precipitous stoploss selling. So you need to keep that marker on your screens for a while to see if the fear factors really accelerate. Can we just say, that again, not discounting anything thats going on, and you have to start somewhere, but lets not forget that in 2011, the german dax fell 32 in about four months. Were down about 7 or 8 from our highs. Lets put everything in context. The thing thats interesting is then we had much bigger economic worries. If you make all the geopolitical stuff disappear with a magic wand, the underlying numbers are pretty good. When you strip away the geopolitics away from this thing, the economic story is relatively positive and should be a positive investment. Its just that this unknown right now is really casting a very bad pall. Generally, the way these things have worked out, assuming the worst has always been the right thing to do. Boris, thank you very much for joining us. When we return from hot spots to hot zones, the mess continues. The World Health Organization calling on a Global Response to the Ebola Outbreak in west africa. What would a coordinated effort to contain the epidemic look like . Well talk about that when we return. Also, hawaiian punches. And now julio on its way. The forecast and the storm track, weve got that when we return. As we head to this break, check out the futures. Red arrows across the board with the dow looking like its opening off about 45 points. Were back in a moment. 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. Welcome back to squawk box. A calm morning in new york city. A much different story in hawaii, taking on the full forces of two storms. One hitting now, the other close behind. Lets get to mike taibbi of nbc news, who is in maui this morning. Mike . Reporter they are feeling pretty lucky here right about now, what looked like an historic onetwo punch from two major hurricanes that were going to barrel over this island chain now looks like two Tropical Storms that are going to be nipping at an jabbing at the island from a less destructive distance. Its not to say that people havent been preparing for the worst in these islands. They have been doing that. The resorts and hotels boarding up or putting up wind barriers in the open areas of the hotel, setting up generators and light systems, removing anything that might become airborne, because those winds are still possible. But the full force of these major hurricane systems not going to be a direct hit on these islands. Now, there had been problems already and there will be. Theres been flooding in lowlying areas. The winds have already knock down trees and power lines. Here on maui where its not raining at all, the major Water Treatment plant is now out of commission because power lines have been knocked down to it and residents and users have been told to conserve water from this point forward. They dont know when theyll get that Water Treatment plant back online. The big concern right now is really not so much about Tropical Storm iselle. But about julio. Gusts to 145. Still a category three hurricane. Still heading to the west and on course. The projection is it might actually miss the islands and go to the north of this island chain, so again, not a direct hit on the islands. As one anchorman said about an hour and a half ago, we are lucky. Thats the word from here so far. Andrew . Okay, thank you, mike, for that. Appreciate it. The World Health Organization declaring the Ebola Outbreak in west africa as an International Health emergency. Meg tyrell joins us now with more. Weve been watching this so closely. It seems like things are getting worse, not better. Things do seem to be heating up. The w. H. O. Has said there is a risk of an International Spread here and there needs to be a coordinate ed effort among countries to stop the spread. This is the biggest and most serious outbreak of ebola in its nearly four decades of history. 932 deaths. As of august 4th. And the World Health Organization saying that could actually be underreported because theres so much fear and so much denial of this disease. But they are saying that there are no restrictions right now on trade and travel, importantly. There have been some reports of airlines suspending travel to liberia, sierra leone and some of the countries that are affected. Its important for countries with infected people to screen folks who are leaving, so when theyre leaving the airports, screen them for fevers, do some sort of questionnaires, figure out whether they could be spreading the disease. And they also emphasize that this can be contain econtained. Its not spread through the airport. Its spread through contact with bodily fluids. So by detecting who is infected, detecting who theyve come into contact with, getting them care quickly and enhancing the understanding that people do survive this, thats really important to try to stop its spread. Theres a lot of talk about experimental drugs here. Theres a couple Companies Working on them. But theyre in the very early stages of testing. The World Health Organization is actually going to convene a meeting next week to discuss the ethical and medical considerations of using these drugs, because theyre so early in testing. Tekmira received word from the fda that its changed a clinical hold on its development to a partial clinical hold, so it could potentially be used in people with ebola. So more news coming next week on the potential use of experimental drugs here. Theres a story on the front page of the New York Times this morning that describes how difficult it is to try and contain this, in sierra leone where most of these cases have come, the majority of these cases, people arent going to the hospitals anymore because the hospitals are seen as death places. They tell people dont touch the walls. Everythings infected. When thats the case, when people are no longer going to the hospital, thats a very tricky thing to try and stop, to even try and figure out whats happening. You dont have any official reporting on this. Absolutely. Its a huge fear. The World Health Organization was talking about this a lot today. They have to engage with community leaders, thought leaders. They also have to give more support to the hospitals and make sure that they have the protective gear that they need. That the workers have been protected. Thats one of the calls for Material Support of having this protective gear. These places also dont have dependable electricity or running water. Health care workers arent even necessarily getting paid all the time. So a lot more needs to be done to ensure that hospitals are places that take care of people, and also to convince folks that they should get treated for this. They shouldnt stay in the communities because this is getting spread among family members. Its difficult when youre dealing with situationins where rumors are running that cola nuts can be contributing to this. Just trying to fight the rumors, too. Absolutely. Thats a big push that theyre trying to do. More communication. I just want to ask this airplane question. Or airport question. Would you have to actually check each person on their way out and check them for a fever . I mean, how would you do that . Weve seen these things, these fever meters and theres questions about whether those actually work. What the World Health Organization has laid out is actually a questionnaire, and then actually trying to screen people for fever. And if they do have a fever as theyre leaving, try to figure out whether thats associated with ebola. Could that lead to a quarantine . Well, to get them isolated, to get them treatment, to figure out whether theyre likely to have the disease, and more broadly, there is talk of quarantine here. They say potentially you could have to isolate a lot. Theres obviously concern on the corporate side as well. I know people have looked at the media and say oh, youre stoking fear, its hard to transmit. British airways, and emirates, have both stopped flights to sierra leone and guinea respectively. Theyre obviously concerned for some reason. They are. The World Health Organization was saying airlines shouldnt be doing that. Thats going to affect the economies of these countries, which already are under siege. And adds to the psychology of fear. Yeah, its a big problem. All right, meg, thank you very much. When we come back this morning, more reaction to the rising tensions in iraq. The futures are coming back a bit. You can see right now those dow futures only down by about 26 points after being down by about 100 points last night on news of these potential strikes. S p futures downright now by about 3. 5, but the dow yesterday closed at its lowest level since april. The s p closing at its lowest level since may. Should investors be buying these dips caused by international flareups . As we head to a break, take a look at yesterdays winners and losers. Ddy for defending our country. Thank you for your 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. 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World markets extending the weeks losses after president obama authorizing air strikes in iraq, if u. S. Personnel are threatened. The u. S. Trying to provide humanitarian aid in the form of food and water in northern iraq. Today, i authorized two operations in iraq. Targeted air strikes to protect our american personnel, and a humanitarian effort to help save thousands of iraqi civilians who were trapped on a mountain without food and water and facing almost certain death. President obama making that announcement late last night. Earlier in the day, the white house said it wouldnt consider any iraqrelated options, put them on or off the table, although it did repeat that there would be no u. S. Boots on the ground in iraq. Lets get a check on the markets. See the reaction to all of this. Last night as the president was speaking, you saw the futures really took a turn for the worst. They were down by about 100 points. Those losses are not nearly as steep. Right now the dow futures are down by about 30 points below fair value. S p futures off by four and a half and the nasdaq down by seven. You should remember, we have now seen three weeks in a row of losses for the dow, if we continue these declines without some major turnaround today. That hasnt happened in a year. The dow yesterday closing at its lowest level since april 25th. The s p closed at its lowest level since may 23rd. And the nasdaq closed at its lowest level since june 16th. Take a look at whats happening in europe. You do see some pressure there as well. The worst is the dax in germany, which is down by just over. 8 of a percent. In france, the cac is down by about a third of a percentage point. The ftse in london down by. 6 of a percent. Big declines overnight in japan. If you check out what happened in asian markets, the nikkei was down by close to 3 . A decline of 454 points. Oil prices picking up a bit on all of this news. We have seen a selloff over the last couple of weeks in oil prices, but this morning, nymex, wti up by about 69 cents. The tenyear is a big story. Were going to be watching, too. Because the yield there falling below 2. 4 . 2. 372 is the latest tick. This is following yields overseas. If you were looking through europe, we were just talking earlier about the german bunde, which is looking like its closing in on 1 . Could even fall below that at this point. Take a look at the dollar this morning. It is down against both the euro and the yen. The euro trading at 1. 3394. Dollar yen is at 101. 82. Gold prices with the increased anxiety have picked up a bit. Global markets getting a wakeup call this morning following the president s statement on possible air strikes against militant rebel forces in iraq. Just add that to the growing list now of global hot spots putting pressure on investors. Joining us now to talk more about this, the markets and everything is the senior economist at wells fargo securities, and with us here on the markets is craig hodges, Portfolio Manager of the hodges small cap fund. The way i see it is this. Youve got everything going on around the world. Ebola, hamas, ukraine. Now this with isis. But yet youve got some pretty solid Economic Data in the United States. Which do you believe will trump the other . You know, theres always an element of uncertainty thats going to add to or take away from sentiment. Of course, in the Second Quarter, we saw overall growth increase at 4 . And in fact, trade data will show that we actually got a bit of an increase. So well probably get some upward revision there. But if we factor in uncertainty, its going to take a bit of a hit, and its not just in the short term, its how long do we think were going to see this volatility and uncertainty . You know, craig, its interesting. Because were sort of looking at the markets as being driven by everything thats happening around the world. But as i always say, i have this imaginary viewer. The doctrine des moines. Thats who i picture. The doctrine des moines. Hes educated. Interested in the stock market and the economy, but hes not a trader. Hes not sitting there at a desk. Is he going to stop buying stocks longterm because of all the stuff going on around the world . On a shortterm basis, it may keep him from it. But our argument is that this has been i guess the least loved Market Expansion weve ever experienced. I mean, theres still a healthy, healthy mix of an anxiety. And a lot of people calling for crashes five of the last two years. There you go. But, you know, we feel like you just need to be opportunistic in this type of market. Early in the year, we had about a 5 , 6 selloff. In the spring around six or seven. We could get a little more. Weve been waiting a long time for 10 . It may not come. Do you want it . As a longterm that would help us. Which way is it, becky . You know, there is a lot of cash out there. So i think and every selloff weve seen this year has been met with buying. I think similar things will happen. And be opportunistic. Nobody seems that anxious. Were all talking about the news, and its a problem and i dont want to be dismissive of the news, but nobodys that its almost like theres a new issue in the world almost all the time. And its like, i dont know if we get immune to it or whatever. But as investors, you almost do. Theres noe element of panic here. We pointed out, anika, that the German Market in 2011 fell 32 in three months. Now, you have to start somewhere, i guess. Europe has been weak entirely. But go back to that doctrine des moines. That fake viewer that i have in my head here. I mean, is he or she not going to buy a home or buy a car or go to the mall or really be the economic engine of america because of all these terrible things which appear to be going on around the world . You know, it goes back to the comment that was just made around whether or not weve already factored in uncertainty. If we look at our overall forecast for consumer spending, we think it increases somewhere around 2. 5 , and that is really based on the labor market. Weve seen labor market strength in the past six months, and we expect it to continue. And so as long as the labor market is increasing, i think that, you know, the doctrine des moines i think we continue to get some of that strength. Of course, we still are looking at Slower Growth this year. But we expect it to pick up next year. And again, that uncertainty is being factored in. So, craig, tell us what to do. There is not andrew, youre right, not a huge amount of anxiety, thankfully. History always repeats itself and the world has been a violent place forever and probably unfortunately will continue to be so. What are you doing with your clients money . You know, were being opportunistic, just looking for things. You mentioned that theres so Much Negative news. But underneath it all, theres a lot of really good growth opportunities. You like a Company Called matador, which we highlighted last week on street signs. This company, which i had never heard of, i think went from 900 barrels a day a couple years ago to 12,000 barrels a day of oil today. Right. And theyre in the basin. Theyre becoming more opportunistic there. And so theres a lot of opportunities. Trinity industries has corrected almost about 20 from three weeks ago. Just look for opportunities like that. Were looking for industries with very high barriers of entry. And theres a lot of those. You just have to look. You have to kind of look underneath the surface. I think the u. S. Consumer will continue to do well despite everything that has been going on around the world . I do, but i think a lot of the momentum is beginning to rest on business fixed investment. Whether or not we can get those structures numbers up. Whether or not equipment and Software Actually picks up. And if we get that, we get a solid pace of Economic Growth into 2015. Anika, craig, thank you very much. We look forward to seeing you again. Thank you, thank you. When we return, a scandalous trial kicking off in shanghai involving a pharmaceutical giant. Bribery, corruption, and yes, even a sex tape. Were going to get the details when we return. As we head to a break, a check on whats happening in european markets right now. Red arrows there as well. Were back in a moment. 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 could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. 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. There is some pressure on u. S. Equity features at this hour after all the concerns of what weve seen around the globe. Believe it or not, those futures have actually improved quite a bit. This morning the dow futures only down by about 27 points. The nasdaq off by about six points. In Corporate News today, several media giants reported their numbers after the bell yesterday, and shares of cbs dropping after the tv network reported disappointing revenue, thanks to the loss on the ncaa mens college semifinals, and softness in the ad market. Media firms that had earned 78 cents a share, which did top expectations, but revenue shares fell to 1. 9 billion, missing the expectations of 3. 24 billion. Meantime, news corps reporting profits of a penny a share. Revenue, though, did manage to top expectations coming in at 2. 19 billion. This marks the first full year since Rupert Murdock split the publishing assets from 21st century fox. And lions gate, the film Company Behind the popular hunger games series and divergent reported nine cents better than estimates. The studio only had two films in wide release last year. Lets not forget, folks, there are earnings out there in the market even with Everything Else that is going on. Very true. And check out shares of lululemon this morn. That stock jumping after founder chip wilson agreed to sell half of his stake in the company to advent. As part of this 845 million deal, he agreed not to launch a proxy war at the yoga gear producer that he cofounded. A big trial opening up in shanghai involving a pharmaceutical giant. Corruption and a sex tape. Eunice joins us now where shes got all the details from beijing. Reporter hey, guys. The International Business community is very closely watching this trial of an investigator linked to the british drug giant gsk. The british basically, many people believe that this case really highlights a lot of the difficulties that companies are facing right now in doing business in china, and also the dangers to private investigators and consultancys that try to do due diligence. The british investigator in question is a man named peter humphrey. He and his american wife are very highly regarded here as corporate detectives. In fact, gsk hired them over a year ago in order to look into the background of an employee, who the company suspected could have been a whistleblower. Now, this trial is not officially linked to gsk, but a lot of people believe that it, in fact, is. Basically because of the sequencing of events. The couple was arrested soon after gsk was accused of funneling hundreds of millions of dollars to doctors as well as hospital staff in a wide scale bribery network. As of right now, the couple is standing trial on charges of illegally collecting personal information of chinese citizens. The trial is ongoing. This is considered an open trial in china. And by that, i mean that the court is actually live tweeting the proceedings. Those tweets are filtered. Also, what i mean by open is that the family is allowed inside the courtroom, as are british and american counselor officials. I spoke to the son, he said that he is hoping for leniency in this case because his parents do face up to three years in prison here if they are indeed found guilty. Also, right now, like i said, its ongoing, and most people do not believe we are going to have a verdict today. Okay. Eunice yoon, what a story. The video piece, though. The sex tape video piece. Are we going to be getting a little bit of the sex tape video . No. Okay. Next nobodys even laughing. Next, some of the stories getting overshadowed by iraq, gaza, hurricanes and ebola. Well talk about that in a moment. Check out the shares of mcdonalds, because the fastfood chain is going to be rolling out july sales figures. Thats coming around 8 00 a. M. Eastern time. Squawk returns in just a moment. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. horn, ding, ding how long have i had my Car Insurance . I dont know, eight, ten years. 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Call the number on your screen to switch to the aarp Auto Insurance program from the hartford and be rewarded for your experience behind the wheel. Recovercare, Auto Insurance that helps take care of me. Now ive seen it all. You wont drop me, you take care of me as well as my car, and you offer savings to switch. Its unbelievable if youre 50 or over call now to request your free quote. Im gonna call. Im calling. Im calling. Im calling. Call the hartford at the number on you screen to request your free quote. Well even send you this free calculator. Call now. Why wait . Welcome back to squawk box. Were talking about some of the story that have gained our attention this morning in the newspapers. A story that ive been looking at, its from the New York Times. A new chip functions like a brain, ibm says. This is a new chip called true north that ibm has created, ands faster and less power and more powerful, takes less energy than just about anything else out there what does it mean when it acts like a brain. Artificial intelligence . The number it actually acts you dont have to Program Everything . The neutrons can connect to each other. They talk about it like that. Contains apparently 5. 4 billion transistors. Draws only 70 milly watts of power. You might say what does that mean . An intel processor, the most modern ones out there only do 1. 4 billion transistors. This is five times as much and consumes 35 to 140 watts. So apparently what its going to be capable of doing but whose brain . Does it make the same irrational decisions in the name of love . Does it believe the eagles can cover as ninepoint underdogs . I mean, what whose brain is this . I dont know that. It says the processor may be able to recognize that a woman in a video is picking up a purse or control a robot that is reach nothing a pocket and pulling out a quarter. So it can do things like that that apparently are so far from being able to be done today. I mean last night the kids were watching transcendence the johnny depp movie about really jumping in. Right. Just becoming a part of the computer and being able to download your entire brain. We are moving towards that point. If joe were here hed talk about the singularity. Youve seen her. Have you seen it . They were a good Wireless Services company for some time. Ha ha. All right i want to tell you guys about another story, so often weve been talking about ebola and weve looked at it from the western perspective of the world. Theres an oped in the New York Times this morning called in the grip of evil. Its written by a journalist who writes for an african newspaper, front page africa. Hes been an Investigative Reporter there who has been going out to liberia and seeing some of the cases on the front lines. The reports are kind of astonishing. Hes talking about how july 27th to august 3rd was called the dark week there because they came up with 173 new ebola viruses and 94 new deaths. He actually has gone out in the villages though, and has seen where there are scattered protective gear lying around because villagers have chased out the doctors and the medical workers who have come in. And his point is that so much of the problem, he thinks, came because authorities in the beginning were first quarantining what hes calling reporting. Not quarantining the disease but not allowing things to be reported because they were afraid. They didnt want word to get out and that is what he thinks led to theres a lot of misconceptions, too, about how its spread. In terms of how its spread. And unfortunately, there are some folks that believe that doctors are helping to spread it. So they wont go to the doctor. I think you made that point earlier. Theres a book out there, unfortunately i read it last year which now when this comes out its sort of in my mind by a Science Writer i love David Quammen who has written a number of things and he wrote a book called spillover about pandemics. Im interested in him so i read it. And its colored my thinking about this ebola thing because of the way he describes how things spread. And its scary. Because its the stuff you dont know, not the stuff you do know. Yeah. And i think its behind the official statistics whats really happening, if people arent coming in to doctors, if they arent coming in to hospitals, and by the way, this has now jumped to urban areas which ebola has never been able to do in the past. It was always out far removed. The scariest news ive heard from the ebola thing and we did a thing on street signs the other day where i showed the oil centers of iraq the case in jed today . Well, for it to get you dont have to put that up. But for it to spread to nigeria, lagos is 18 million people. One of the biggest cities, most congested, dense populations in the world. Obviously an oil center, were cnbc so thats what we do. Probably was a flight. Somebodys not feeling good, im going to go home. And thats where the risk is. Thats where the risk is. Your story. All right. So mines actually not not getting a lot of play because theres so much other stuff going on. So its sort of on the bottom of the New York Times. Plot thickens as 900 writers battle amazon. Awesome story. Thank you. Guy wrote a letter basically slamming amazon and john grisham is this because of their fight just everything. I think you get and the reason im highlighting the story is the other day and lost in all the other news weve had is that google and barnes noble are teaming up to sort of try to take on amazon. Amazon has been seen as the sort of bastion of free markets forever. Youre starting to see it seems like retailers, authors, a pushback against amazon. Enough is enough. In the way that people have pushed back on walmart because they are monolithic and huge . You have to make some andrew youre a bestselling author. I would argue on what you write. Part of the issue is that one of amazons great constituents has to be the creator. And jeff bezos has always talked about the creator. His wife is a writer. Theyre trying to get into the tv business. So they need people, creative people. Theyre going in the wrong direction. Authors who want to be their friend and this is theyre losing the sort of pr war, at least, over this. You know, im interested in your opinion, as somebody who has written a bestselling book, as somebody who is working in the Television Industry what i can tell about this, look, if you have a popular book, their deal will be a good deal for you. Meaning they want to lower the price to 9. 99 and you will sell more books. But thats if your book is not a huge popular so theyre trying to push hachettes market . They want to lower the price to 9. 99 and be able to control the price and not let hachette control the price. The second piece is they want to take a bigger piece of the actual sale from hachette. This is part of a bigger story. Those are the two issues. Youre in the world of entertainment as well writing the book and working on some movies and stuff. We sort of straddle the world of entertainment versus business. And when i look at bette midler who tweeted out like a couple weeks ago 4 million plays on pandora, my check was 112 or Something Like this. Right . Weve had authors weve had song writers on whove said, ive had 10 million plays on whatever it is and i got a check for 50 bucks. Like we actually dont forget we actually have to make a living. This is our job. Im a 40yearold writer books and Everything Else are going to turn into music. Its going to turn into music. But people want everything to be free. All you young folks out there who got up early to watch squawk box. Number one, good for you. Number two, you got to get paid for what you create. Otherwise you wont create. When we come back this morning we will talk about the pressure on the markets as tensions flare up over iraq. Plus, the challenges facing our Health Care System. And making cancer drugs more affordable for patients. Doctor Zeke Emmanuel will be our special guest at 7 30 a. M. Eastern. Evere Rheumatoid Arthritis like me, and youre talking to your rheumatologist about a biologic. This is humira. This is humira helping to relieve my pain. This is humira helping me lay the groundwork. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for ten years. Humira works by targeting and helping to block that contributes to r. A. Symptoms. Humira is proven to help relieve pain and stop further joint damage in many adults. 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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. The president authorizing airstrikes against militants in iraq. Targeted airstrikes to protect our american personnel. How this latest global flareup is taking its toll on the markets that are already very jittery. Hawaiian punch. Hurricane iselle now a Tropical Storm, but not before making landfall. With another storm following closely behind, how walmarts preparing for the state of emergency. And the Global Response to the Ebola Outbreak in west africa. Can this International Health emergency be brought under control . One of the many topics well touch on with dr. Zeke emanuel. The second hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box here on cnbc. Im becky quick along with Andrew Ross Sorkin and brian sullivan. Joe is off today. With president obama authorizing the use of air strikes in iraq, if necessary, that has put some pressure on the futures, although they have come back a long way from where they were last night. Last night you saw some dow futures down by 100 points. Right now theyre only down about 30 points below fair value. The s p futures off by four points as well. This is coming on what looks to be the third week in a row we will see declines in the equity markets. The dow closing at its lowest level since april. The s p the lowest level since may. The tenyear the yield is the big story. Right now, 2. 366 . Some additional pressure on yields. As all of this around the globe has kind of ricocheted. Weve watched whats happened in germany. Whats happened in europe. All of those markets reacting in kind. You can see this morning the german dax is down by about 0. 8 . The ftse is off by 0. 6 . And crude oil prices have picked up after several weeks of declines. You can see right now wti up 81 cents to 9815. Shocking america last night really the announcement from the president authorizing airstrikes coming during the evening hours last night. Eamon javers joining us with more on the development surrounding the crisis. Also got michelle carusocabrera. Eamon give us the headlines but also separate the difference. Because theres a lot of speculation yesterday afternoon about this, and sort of an argument, if you will, between airdrops, versus airstrikes. It appears that both are in order. Yeah, thats right, brian. The president spoke at about 9 30 last night in the state dining room after a day as you say of speculation about what washington would do here to respond to this humanitarian crisis in northern iraq. What the president said when he took to the podium was he was authorizing two separate missions. The first one a humanitarian mission to relieve those civilians whove been trapped by isis forces on the top of mount sanjir. About 10,000 to 40,000 civilians there, depending on your different estimates, who are trapped and facing potential genocide. The president said the United States would airlift food and relief to those folks. He also said that he was authorizing strikes against isis forces if they threaten the city of erbil or if they threaten u. S. Forces on the ground in northern iraq. Those are two separate missions. We dont have any evidence as of yet that the military airstrike component of that has begun. But take a listen to the president last night making that distinction youre talking about, brian. Today i authorized two operations in iraq. Targeted airstrikes to protect our american personnel. And a humanitarian effort to help save thousands of iraqi civilians who are trapped on a mountain without food and water, and facing almost certain death. To stop the advance on erbil, ive directed our military to take targeted strikes against isil terrorist convoys should they move toward the city. We intend to stay vigilant and take action if these terrorist forces threaten our personnel or facilities anywhere in iraq. Including our consulate in erbil, and our embassy in baghdad. Now, according to the United States military, heres what we know did happen last night. They say that those humanitarian airdrops have begun, including one c17 and two c130 aircrafts. They said they were escorted by two fa18 fighter jets. They dropped 5,300 gallons of fresh Drinking Water for the civilians. And also 8,000 meals ready to eat there. That would presumably be, brian, the beginning of a much longer mission, because when you talk about 10,000 to 40,000 people, obviously theyre going to need more than 8,000 meals in order to survive. So we can expect there will be some more of these airdrops here. And then something is going to have to be done to figure out whether its a diplomatic or military solution, how to get those civilians safely off the top of that mountain and down into some kind of territory where they can be protected from those isis forces. The United States here moving to stop what many around the world see as a potential genocide situation. But its not clear exactly how all this is going to resolve itself at this point. I should say, guys, that the president emphasized, he was the president who was elected to get the United States out of war in iraq, not into it. He said that hes not going to allow the United States to be drawn into a larger war in iraq a second time, guys. All right. Eamon, thank you. Lets get some more color on the city of erbil and the region. Michelle was there in late june, and this is kind of a stunning turn of events. I think it would be super helpful to show everybody a map. Because the food drops were for one area of iraq, right. Where the 40,000 estimated religious minorities are in sanjir way to the west. The air strikes are to the east far to the east to protect erbil which is the capital of kurdistan. The reason we would do air strikes over there is one it looks like the islamic militants are headed that way. There was no panic in erbil yesterday. Two, because we have a consulate there. Right . So this is not about protecting kurdistan or protecting iraqis, its about protecting americans. The airstrikes. The airstrikes have nothing to do with trying to help the iraqis who are stuck on the mountain. The airdrops are about food, water so they can survive and to reamens point, now what do you do . Do they sit there, because the militants control the one way out. So somethings got to be done, somebodys got to take over that road so they have safe passage and they can get to somewhere. What is baghdad doing at this point . You know, thats a very good question. Baghdad clearly hasnt been able to they have dropped airstrikes against the militants. But clearly, it hasnt been sufficient at this point. And theyve been asking for help. And we know theyve been getting help from iran, et cetera. The kurds in the Northeastern Region of the country have been asking for military support, as well. From the United States. But clearly the iraqis havent been affected. Forget baghdad, whats nato doing . Where are the allies . Theyre very busy in the east dealing with ukraine at the moment. Cant spare a couple of jets to free the way for 40,000 people that are starving to death . Let me ask you a quick oil question because theres a report out from reuters this morning. You talked about general energy. A number of Companies Including chevron have been evacuating a number of employees. Tactac. Thats the big oil field. Chevron and exxon are doing exploratory drilling there. Theyre very early there, because remember baghdad does not want anybody drilling in kurd stan. So a lot of the Major Oil Companies would not go there for fear of being blackballed by baghdad. Now theyre willing to do so. But thats why theyve only got exploratory when they say theyre evacuating . I dont know the answer but im not thinking its big, big numbers. Does this do anything to bring baghdad and kurdistan a little closer to the other . They have within working to the, actually because they were trying to keep out the isis forces. Trying to sell oil . Theyve had issues when it comes to the oil. But eventually there had been a deal struck between baghdad and kurdistan to try to fight against isis. Isis is claiming part of the reason why theyre fighting moving towards erbil is for that very reason, becky. Okay. Lets bring in our guest host this morning to talk about the top stories of the day. The executive editor of reuters, also peter, reporters at the New York Times. Sits near me when im hanging with you. Question for both of you. We have been expecting, people keep talking about this correction that is coming in the markets. To the extent that we are now on a very messy friday, where are we . I mean do you think this is coming . Youre the credit guy but you always look at the credit market as a sort of barometer for equities. And i think you mentioned the tenyear yield was extremely important. I mean the fact that were back down to 2. 3 says that theres an enormous amount of caution in the market at the moment. And that will, i think, that will bleed through to the equity markets. I actually think its more an excuse than a cause in the equity markets. Ill buy the bond market and the currency market showing real concern about this. But i think in the equity markets, people are looking for excuses to lighten up. And now might be a great time to lighten up. Pick your choice. Pick your choice of reasons if you look around the globe. But they dont actually even have to be real reasons. I mean, theyre just excuses to say okay well lighten up, were a little scared, come back after labor day. But its more scary if stocks went up every day. If stocks went up every day and never fell id be terrified. Thats a worse situation. It kind of feels like its done that though for several years. It has. On bad volume. Whats the selloff at this point . Not very much . What do people call it hold your nose and buy the market rally. People dont like it. They dont like anything about it. Doesnt smell good. They have nowhere else to go, blah, blah, blah. We are in a spot where there is a recovery. This is going on. Energy prices, thats going to be the real rub here. All this bleeds into energy prices. Then but so the question, what you asked it, just in the last hour, is there a separation between whats going on in our economy and the United States, and do we care about all these other issues . You have a piece out this morning about the confidence in the mergers and Acquisition Market which is a barometer of confidence in the board room. Do they actually care about whats going on in the rest of the world . Yeah, i mean i think that yeah i mean i wrote that piece but im starting to wonder this morning whether or not who i think ive been rethinking over the next few weeks. One of the reasons that companies can do these deals is because their stocks are so richly valued. Makes it much easier to economically justify a big deal if you can do that. If you see a correction, you know, it will take it will make it a lot harder. You covered the credit markets. Is the junk bond market telling us something . Another hammering last week, 7 billion in outflows. Were in that phase now where the rational kind of adjustment had to happen. Now, were going into that zone where this is where it becomes, you know, concerning. And whether you start to wonder whether or not we are in a situation where this is signaling a real slowdown. Where were going beyond something that you just expect that has to happen because its been so frothy for so long, right . Peter, im going to spin your article, i almost wonder if prices come down if that makes it easier for acquisitions to really go through. If you look at Rupert Murdoch pulling away from the whole idea for time warner. Time warner shares were down would make it a little easier to go after that. I wonder if there are some acquisitions that wouldnt happen because of disciplined buyers saying forget it. Im not going to continue to pursue this every week. Maybe i can do this at a rational price. Thats a good point. But i think one of the reasons that obviously, and he said this, when pulling back from that deal, was that foxs stock went down. So like, but youre right. I mean, you could argue that, you know, as the tenyear comes down, debt will get cheaper and that will just restart the whole thing again in a few months. Thats been the cycle that weve been in for so long. S question is whether or not we like to focus on all these big picture things. Because and we should, right . Gaza, syria, ukraine, isis, hurricanes in hawaii. At the end of the day, though, what matters to stock prices, theoretically, is earnings. What mom and pop do. Is anybody going to say our car has got 100,000 miles on it, we need a new car but you know what, theres ebola in africa, lets not buy a new car. No ones going to say that. Consumer confidence is high, home sales are high, auto sales are high and jobs are better. Right. But u. S. Companies and the u. S. Stocks that drive the market are still to scale internationally. Africa, until last week, was burgeoning economic miracle. Right . That was my big worry about ebola, not to be heartless but from a market point of view, does ebola throw a wrench into the great african mir beingle that were seeing going on now. Does western europe and ukraine, what kind of market is that . How does that market affect . What does that do to u. S. Tech and Industrial Companies . Eventually its going to seep into the market. I think they do care about the international concern. But for now, the stock the market does. Im not saying but imaginary viewer that i have in my head who is a very good doctor, by the way, nice, he doesnt care. In des moines. He will care. Were going to take a pause on the conversation for now. Dan and peter are going to stay with us. Michelle, thank you. Im sure youre going to be back in just a little bit. Brian . All right. Hi. See i was thinking about the doctor and all the nice things. All right, next up a onetwo hawaiian punch. Two hurricanes targeting the islands within days of each other. Store shelves are empty. Residents preparing for the worst. Spam sold out everywhere across hawaii. Walmart senior director of Emergency Management will tell us how the retailer is tracking the storm, what they expect and whether or not needs are going to be met. More squawk in just a moment. E who dont have electricity and i just figured that its time i do something about it. What were doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. I think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when its needed by the consumer. A smarter Energy System is made with the ibm cloud. The ibm cloud is the cloud for business. 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. 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. All right welcome back, everybody. Lets take a quick look at some other headlines this morning. The ebola epidemic in west africa has been declared an International Health risk by the World Health Organization. The w. H. O. Is calling for a coordinated International Response to try and stop and reverse the International Spread of the deadly virus which has picked up. Weve seen it in nigeria. Its been spreading. There are concerns. Youre looking at some video in airports where theyve been screening people to try to get a check on their temperatures. This is one of the precautions that w. H. O. Is suggesting they pick up in some of these countries. Also, as International Sanctions against russia take hold, boeing and United Technologies are preparing for possible retaliation. The journal reports the two companies have been stocking up on titanium parts from a russian producer in case the increasing tensions disrupt the supply. Boeing and United Technologies buy a substantial chunk of that titanium from russia. Also, troubled Malaysia Airlines will be going a complete overhaul following two devastating disasters this year. Its stock is being delisted and the state Investment Fund will buy out the shares for 436 million. The airline plans to then cut back on routes, trim the payroll, and install new management. This is an airline that was having troubles before even the latest disaster. And this is the answer that they come up with since then. Hawaii bracing for the impact of not one, but two different storms. With citizens emptying store shelves and preparing for the worst. Joining us this morning to tell us how walmart is coping on the big island, mark cooper, senior director of walmarts Emergency Management. First off, mark, tell us what the situation is right now in hawaii. I mean, i think the one Tropical Storm is hitting, but youre waiting on the bigger one. Whats going on . Good morning. Yeah, so overnight we obviously have been in touch with our stores. We closed three out of precaution stores overnight that we plan to open at 6 00 a. M. But were not seeing any Power Outages as far as our stores are concerned. Weve been tracking this storm since the beginning of the week. Were fortunate because we deal with disasters on a regular basis. So we know, you know, what we need to do to prepare. Weve got a lot of experience in the gulf coast long the east coast were dealing with hurricanes. And so weve used those leaders to support our management people in the pacific and actually have one of our main leaders in the Pacific Coast that has worked on hurricanes in the gulf coast so we feel really good about our preparedness. What were seeing as far as our stores are concerned we feel really good about it. Customers were able to get in what they needed. Were prepared to support once Tropical Storm makes landfall were ready to open up and we have cargo ships full of whats going to be needed in the aftermath. That was my question. If you have a storm in oklahoma or louisiana you could put a truck on the road and in a day youre there. Youre on islands 3,000 miles off the coast of california. How long does it take to restock . What are the challenges of restocking in hawaii . Obviously that is a challenge. Were utilizing local vendors obviously to resupply water. And other supplies. Its not like we started looking at this yesterday or two days ago. We know what customers are going to need during a disaster were making sure were doing all we can to have the supplies, water, ready to eat meals, batteries, flash lights, were making sure those type items are there in the stores. Then if they run out doing all they can to get those back on the shelves. Weve heard from some of our colleagues at the Weather Channel that things are not as bad as they had been anticipating. Im sure you have your own war room where youre tracking this. What do you think the situation is right now . Our Operations Center is activated and i know our Pacific Division their war room is activated as well. As i told you we were preparing for the worst but were not seeing as bad as what it could have been. Were not seeing all of our stores have power which is a good thing. So were anticipating those three we closed overnight to make sure our Associates Get home safely, were opening those will open at 6 00 a. M. We have a great relationship with the state of hawaii, the civil defense. Weve been in contact with them, are ready to support them but it looks like things look pretty good. Were ready to support in the event that significant rainfall, there could be some flash flooding. Were ready to support. We do this on a regular basis. Unfortunately this is something that hawaii is not used to dealing with hurricanes. Were ready to support them as needed. Mark cooper. Thank you very much. Good luck to you and your team. Lets take another look at the markets because things have really turned around at this point youre going to be looking at the futures with positive arrows. This is something that you wouldnt have anticipated last night as the president was speaking. That really puts some concerns on the market. You did see futures down by about 100 points at one point this morning weve been looking at red arrows all morning until now. You can see right now that the dow futures are indicated higher by about 16 points. S p futures up by just under three points. And again part of this may be just the pressure that weve seen on stocks over the last three weeks. We are looking at probably the third week in a row that equities are going to close lower. Thats the first time that this has happened in a year. You have to go back to last august for that. Yesterday the dow closed at the lowest level weve seen since april. S p closed at the lowest level weve seen since may. Some people might be looking at this as a buying opportunity. It also makes sense to Pay Attention to whats been happening with the bond market because some of the pressure may have been coming from the yields that weve been watching that have also been getting pressure. Right now 2. 39 is the tenyear thats better than we had seen i was looking at i think 2. 36 is where weve been watching things this morning. So, thats a little bit of an improving yield just from the global fear perspective. The other thing you have to watch this morning is, whats happening with our tenyear versus the german tenyear. If you look at bunds theyve been looking at touching 1 for their yields. And maybe even falling below that and when you see those types of positions, and look at whats happened thats part of the reason weve seen rates here or yields under so much pressure. Well be watching this throughout the morning but again it looks like equity futures just turning positive for the first time this morning. I would say thats a very good explanation on no news. In the last 20 minutes. Coming up the tale of the trespassing toddler. Squawk box returns in just a moment with that. 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. E financial noise financial noise financial noise financial noise welcome back to squawk box. The Cleveland Browns could have a secret weapon. Lebron james showing up at practice. He could probably start for the browns. He played wide receiver in high school but he stuck with hoops, and the rest is history. Hes suiting up for the cavs in the fall and could be a little more challenging for him to play football because hes lost so much weight on this carbfree diet. Hes skinny. I need to hang out with lebron. Because he looks good. He was listed at jenny craig deals . He was listed last season at 250. And the talk now is that, well you said you thought he lost 40 pounds. Ive heard other people say 10, 15 pounds. But hes 68. Hes a big guy. 10, 12 pounds on a guy his height, im 64 or something, whatever. 12 pounds on me is a haircut. I mean, so i doubt that whatever. But kind of give a shoutout to cleveland. Kevin love signing yesterday, lebron coming back home. That was great. Im just happy for cleveland. Me, too. I just feel for them, right . You know, its great. I dont know how were going to segue to toddlers. Here it goes. We have a security breach, everybody. Theres Security Breaches all the time. But this one may take the cake. Secret service sprang into action and apprehended a trespasser at the white house. The trespasser was a toddler. Who squeezed through a fence and ended up on the lawn. The toddler made it onto the secure area just after 8 00 p. M. , and was returned to the parents. Neither the parents nor the tiny intruder was detained for questioning. Thats the good news. Quote, we were going to wait until he learned to talk to question him, but in lieu of that, he got a timeout and was sent on his way with his parents. Thats according to the white house report. First time in history the secret service has exhibited a sense of humor. Good job. We like it. All right, folks. Well be right back. Well be talking about the high price of health care with dr. Zeke emanuel. Edit 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 welcome back to squawk box. In the headlines this morning weve got a lot to talk about. Futures are now higher this morning, erasing earlier losses that followed president obamas authorization of possible airstrikes in iraq. Right now take a look. You got the dow looking like it would open up higher about 15 points the s p 500 up a little over three points and the nasdaq a little over eight points. Now a half hour away from the latest sales figures from mcdonalds. Analysts see global samestore sales falling 1. 2 compares to a year ago with lower numbers in all three world regions. Check out shares of techmera pharmaceuticals. Ordinarily we might not follow a company this small. It is notable because of its connection to the Ebola Outbreak. The fda has modified its quote hold on the companys experimental ebola treatment. That means the company will be allowed to make the drug available to patients. And youre looking at that stock up 17 in the premarket. There are some new developments in the ebola story. The World Health Organization declaring the Ebola Outbreak a public Health Emergency of international concern. W. H. O. Has declared similar emergencies in particular the swine flu in 2009. And more recently polio. Doctor zeke emanuel is the chair of medical ethics and Health Policy department and vice provost for global initiatives at the university of pennsylvania. Hes also the author of reinventing American Health care and dr. Emanuel, thanks for being here this morning. Its great. My pleasure. We have so many things to talk about with you. Lets start with ebola. We so often have been focusing on the western world and our reaction to it. Whats happening right now in africa is horrific. Yeah, and the big problem there is the inability to implement universal precautions. Gloves, masks, not touching bodily fluids, and having people when theyre sick go to the hospital instead of run away from the hospital and having their family care for them and therefore contract, or you know, touch some bodily fluid and contract ebola and having it spread. And it really is a public Health Emergency. These drugs are, you know, its important to find out whether they work or dont work. But the real solution to this problem is going to be the regular Public Health implementation of isolating people until it passes. Supporting them where you can. Have we jumped over some barrier at this point . How much more difficult is it to contain and how bad do you think it gets . The more people who get it, the more difficult it is to contain. The good thing about ebola, if there is a good thing, is that it doesnt spread so easily. It doesnt spread by aerosolized droplets. You really have to touch bodily fluids. And that makes it harder to contain. But again, without universal precautions theres going to be a problem. When you hear British Airways and others canceling flights, to places like sierra leone, is that the right decision . Is it the wrong decision . Im not an expert in that canceling flights. But again, its really hard to spread this thing and youre not going to spread it on an airplane. And if you bring someone back, its, you know you could if theres sickness on the plane. Not just the air, right . Right. Youd have to have a lot of bodily fluids. Remember, you dont spread this without symptoms. So you already feel sick and you feel flulike. I guess the question is, we keep hearing how difficult it is to spread but yet there are a few thousand people who have been affected by this in countries with millions of people. Agreed. But is it because of the burial techniques . Why has it spread this much already if it is so difficult to spread . Oh, because people stay at home, stay away from Health Facilities where they think they might die, and family members who are not educated in, you know, dont touch bodily fluids, dont touch spit, urine, whatever, end up caring for people and thats how these things spread. This is i mean we should put it in context. This is not like a flu pandemic where just coughing on someone, or touching hands is really makes it spread and you can have a worldwide pandemic. You are not going to get a worldwide pandemic from ebola. And i think people need to take the temperature down. It is a disaster for three west african countries. That is very different than east africa. We dont see anything in ethiopia or tanzania. Very different than south africa. And i think in that sense, you know, people need to put it in a little better context. You know, doctor, lets switch gears and talk about the aca. There was a story this week in the wall street journal that suggested that the number of people who will be getting exemptions from the personal fines that they have to pay if they dont have Health Care Insurance is well above what anybody ever anticipated in the beginning. I remember talking to you before this was even implemented, and understanding, look, there have to be personal fines because thats how you make this make sense from an economic perspective. What happens if 90 of people who dont have Health Care Insurance dont pay those personal fines . I think the big issue is the psychology of the country. And i think the psychology, do you need Health Insurance or not Health Insurance . And if people think i need to have Health Insurance, both because it protects me, its affordable, and im going to be able to see the doctor, which seems to be the psychology thats taking hold, you know, the individual mandate and the penalty is sort of a backstop. We never thought that it was the most i mean we thought it was important to make people have responsibility, and to convince them that they needed to get insurance. But, when you see drops in numbers like in arkansas, the state thats had more than 10 of the uninsured, i mean almost cut their uninsured rate in half in one year. Although, Mark Bertolini was here last week, the ceo of aetna and he says that one concern theyve had is that the number of healthy young people has not been quite as great as they had originally anticipated. And he worries what happens in january. I love speaking of. I love, mark is all over the place on whether theyve had enough young people or not enough young people. You talk to wellpoint or united, look, lets just look at their actions. All of these companies are expanding greatly in the exchanges. They see this coming. First, second and he did say that, as well. Their stocks are up. Theyre not suffering because of this. Okay. And the anticipation the margins are down. And the anticipation is that more people are going to come. And the last thing i would say is yes theres a big challenge going forward, renewing, keeping people in, and thats a challenge. But, its not a mountain. Good or bad news . We had the ceo of Tenet Health Care on the show last week. They had tremendous profits which they ascribe in large part to this. They have a lot more people coming through the door. Thats right. Should we be happier that they have a lot more people coming through the door . No really, in terms of the ultimate costs back to the taxpayer and to the country . Youre absolutely right. Hospitals are the biggest cost center when you look at health care spending. Theyre about a third of all expenditures. In the long run, we need to change peoples behaviors and we need to get them and not just people, doctors, too, how they care for patients. You know, i tell this story, in the 60s, my father used to do house calls. Then towards the end of the 60s, early 70s, he stopped. Every patient went to the emergency room. We got to change that. Right . We now have to go back and change how were caring for patients so that the hospital is not the default decision. That is the most expensive place. I thought the ceo of Tenet Health Care suggested that some of the new facilities, outpatient facilities, even higher margin for them. Why are we talking why are we talking so much about, you know, how to do how to fix you know when people are sick, why dont we talk more, why isnt doctor the dialogue more about why are we so sick . Why do americans consume so much health care . Why do we have such an obesity epidemic . Why do we have were talking about sort of the effect, how to treat people, but were not we almost never talk about the cause of why one in three americans is on a Prescription Medication for the rest of their lives. So, first of all, some of those Prescription Medications are doing a lot of good. Statins and thats not what were saying let me say that there, you know, we in leading up to the debate about the Affordable Care act people used to say we have a sick care system not a Health Care System. We need to keep people healthy. But we dont incentivize the Health Care System to keep people healthy. A health care does not make money, a doctor does not make money by keeping people healthy. Pharmaceutical companies dont make money by curing stuff, they make money by treating it forever. I think we need to change hose financial incentives. One of the things ive been working on since i left government and trying to change how we pay doctors and how we pay hospitals weve got to get off the fee for Service System that pays them every time they see a patient or every time they order a test and we have to move to a situation where people get doctors and hospitals get money for keeping people healthy and out of the hospital. That transition, thats going to be the most important thing to watch over the next few years. And one of the things we know, from recent experiments in this area, is that unless medicare comes in and plays in that field, its very hard for private insurers like aetna, like wellpoint, like united, to do it all on their own. They have to work with medicare. Is that ethos, two things, can you said five years. Is it five, is it ten . And can that ethos survive washington . And what were going to see in washington between the midterms, 2016, and possibly a gop administration . Two issues. We have to start it in the next five years. If we dont start it in the next five years its going to be very hard. And i do think theres a lot of interest, you know, Mark Bertolini is doing some interesting things at aetna. Almost every insurer, and medicare, are doing interesting things. We need them to come together and be put on steroids and go faster first. And the second thing is, if you talk to congressmen and senators, if you talk to their staff in particular, away from the hot lights here, right . Away from the media, theyre 70 , 80 agreement that this payment reform is the most important thing and we need to get it done. And so i actually think once we get past the elections, there will be agreement on this, and an effort to push it. But by the way, medicare has a lot of authority that we put in the aca without the need for legislation. And thats going to be the key. They need to aggressively go for payment reform. Theyve done a lot of things. But i think we need to push a lot harder on this. And if i were, you know, the secretary, and the head of medicare, this would be my primary area, how do we change payment . Because thats going to catalyze us to what we want, which is aa Health Care System, keeping people healthy, out of the hospital, away from doctors, and thats going to be really, really important going forward. Zeke, thank you so much for coming in. I always wish that we had more time when youre here. Its my pleasure. Its lovely to be here. Have a great weekend everyone. All right coming up, airdrops and airstrikes. The president shifting focus back to iraq to save the lives of tens of thousands of trapped refugees. Lets take a look at futures and given what were seeing in asia and europe, futures are a little bit higher here. Perhaps we are being viewed as a safe haven around the world. Who knows. It is still very early but the dow jones and s p and nasdaq indicating a higher open as europe continues its slide. We are back with more squawk box right after this. Lthy food. For the first time American Kids are slated to live a shorter life span than their parents. Its a problem that we can turn around and change. Revolution foods is a company we started to provide access to healthy, affordable, kidinspired, chefcrafted food. 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Youll know cuz sleep iq™ tells you. Only at a sleep number store, mattresses with sleepiq start at just 999. 98. Know better sleep with sleep number. Welcome back to squawk box. Futures have turned around. We do have some green arrows. Kind of surprising after we were really quite down after the announcement last night by the Obama Administration about whats going on in iraq. Take a look, dow jones looks like it will open higher about 23 points higher. S p 500 up about four points and the nasdaq up. 5 points. I think i might know why futures have turned around and are not falling. This is just a tweet out there, and who knows the validity of it but it doesnt seem unrealistic. Theres a tweet that russia is ready to mediate talks between the kiev government, east ukraine and independent supporters. Like theyve had work to do for months now. This is coming from who tweeted out before, the security chief from russia who knows the validity of this. But it appears this would be michelle, were going to get to iraq in just a second. If i could just call a little peyton manninglike audible. Michelle carusocabrera, your thoughts . You think there could be some mediation . Theyve talked about mediation for a long time. The russians have been quite, we want a ceasefire. We want things to calm down. And what they say out loud is very different than what they do. So, we have seen the market react before to russian statements. And, its been a head fake every single time. You look at the intraday of the dax today its moved very, very sharply. Maybe this is it. But we actually have to see russia actually disarm close to 0. 9 earlier. And this falls in perfectly. You know ive been doing this most of the week. My days are off. Either last friday or monday when there was an opposite head line and we started to see concern about ukraine and the markets took a dive within seconds. What is moving the market . Right now it appears russia, ukraine. More on the escalating situation in iraq. And its effect on the markets. Ian bremmer on the squawk newsline. He is a president of eurasia group. Obviously michelle is here right now. Ian before we get to iraq, just want to follow up with you because this is turning the markets around. Do you think there is a chance of a viable sort of ceasefire peacelike situation developing in ukraine, and crimea region . The other thing coming out of russia today is putin with an emergency meeting that hes trying to push to declare concern about this humanitarian crisis unfolding in the southeast, hes also called for the osce to come in and do something to protect these separatists with the greater Russian Troops on the border, i think frankly, russia, ukraine is tending negative, theres a greater likelihood of direct russian intervention now than there has been at any point in this crisis and i would not be by this news. In the last 24, 48 hours it seems across wall street the expectations have shot up dramatically about russia going into ukraine. Would you agree . Yeah i think thats right. Its not planning for putin. He doesnt want to invade. Hed rather play the long game. Wouldnt be popular in russia. Would hurt him with the southeast ukrainian population. Who hates kiev but doesnt want to see Russian Troops directly showing up, and obviously will hurt him with the europeans who have already intensified their sanctions. But he just put those sanctions tit for tat against the europeans, americans on food d anding ary culture. He has been avoiding doing that so hes girding himself for the longer fight. And if it turns out that the russian separatists on the ground in southeast ukraine look like theyre about to be routed by president poroshenko, then i think that putin would react. Hed probably say they were peacekeepers, hed try to not make it look like an invasion. That would be a rubicon kind of moment in terms of turning russia from the perspective of the u. S. Into an actual rogue state and giving iran type sanctions to give us back to the middle east against russia. That would be a very serious market impact, particularly for the europeans. You know, ian, i havent really thought this all through, but how does whats happening in the middle east, whats happening in iraq, whats happening with isis, how does russia feel about any of that . How does that bring us in to any sort of cooperation potentially within the middle east or does it not . Its certainly going to hurt. You know, if you ask me the russians have talked over the last few days about putting together a deal with the iranians, first by oil that would obviously be sanctionable. The iranian government is willing to negotiate because they want to put more pressure on the americans to get a deal happening saying hey, if you dont have we dont have a Nuclear Agreement the russians are going to sanctions bust. We already know the russians have been very supportive of the Syrian Government over the past couple of years. And theyre helping the Syrian Government to fight a cyberwar against local opposition and more broadly, clearly having a country as large as russia being a principal adversary of the United States in the region has not been helpful. But of course very ironically, the russians are one of the only countries outside the region that have actually supported mr. Maliki against isis in iraq on that note, ian with obamas announcements were fighting with these guys. We had a currency analyst on earlier, happens to be russian, by the way, who thought it was quite possible that while the United States was so distracted by the humanitarian crisis in iraq, that might be the Perfect Moment that putin would use to do some kind of incursion into ukraine. It certainly is a better moment to abrogate the ceasefire for both sides, israel palestinian, hamas and gaza. I think that this doesnt send much of a message to putin. I think its been very clear to him that theres not going to be any military response on the part of the u. S. To help the ukrainians out. That doesnt change this announcement by the americans was late certainly, but also was very limited. And theres a lot happening in the world but i think that frankly putins interests in ukraine, the largest Foreign Policy interest he has in the world, they really trump for him, and for his own strategic calculations, what were seeing even today in the middle east. Ian, can you look into your crystal ball and figure out how this iraq situation ends up playing out . Well, you know, look, everyone was surprised with how strong isis has proven to be. Certainly the Obama Administration and the intelligence reports, its obama tried mightily to talk about how limited these strikes would be, limited in nature, and scope. No boots on the ground. But its going to be very hard for the United States to be in just a bit. Isis is they now have control of this dam at mosul, i dont personally believe that they would destroy it. But i do think that it could fall apart simply from lack of oversight. And the humanitarian catastrophe that you are on the precipice of seeing in iraq would actually make syria look like small ball. Thats clearly why obama decided that i need to ask this. Because its a sensitive question but im going to ask it anyway, ian, which is this. I understand, got to save these people, 40,000 people starving to death, being dehydrated to death up on this mountain. You referenced syria. Why are we getting back involved in iraq when nothing has been done about syria . And im not talking about the u. S. Im talking about the world. Where is nato . Hundreds of thousands are dead in syria. By the way, im not talking about a few thousand in on a mountain, though, the use of the term genocide obviously one that has enormous historical consequence. Im talking about putting mosul under 100 feet of water and baghdad maybe under 15 if this dam breaks. Im talking about a terrorist organization as opposed to assad which was, you know, a very brutal but nonetheless, civil war. I do think that there is a difference. Im not suggesting that the u. S. Should have stood by or the world should have stood by and done nothing in syria. But i think the more interesting question is even as the United States very late, very limited engagement militarily, at least in its intention, in iraq, where is anybody else to try to help the United States in iraq, as well. You know, where are the chinese . Wheres nato . Where are the brits . Where are the french . Theyre this is not an environment where we see a whole bunch of countries stepping up and say we really care about the plight of these people. Certainly ban kimoon at the United Nations has expressed incredible regret. He has a thesaurus for these words and ive increasingly heard a lot of International Leaders sounding like him. But theyre not acting. Ian bremmer, real pleasure to get you on. Thank you very much. My pleasure, guys. When we return, mcdonalds is ready to serve up sales numbers. What will they say about china and future growth . Were going to find out at the top of the hour. Stick with us on squawk box. Weve got the premarket info you need before you make your trades. Stocks to watch are coming up next. Defending our country. Thank you for your 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. 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. Could help your business didavoid hours of delaynd test caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. 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. Lets take a look at some stocks to watch. Five id yeah reported Second Quarter profit of 22 cents per share. Gave an upbeat forecast for the current quarter. Lulu lemon is on our watch list this morning. Founder chip wilson agreed to sell half of his 27 stake to Advent International price tag 845 million. The two sides also agreeing to avoid waging a proxy war. And solar panelmaker solar city reported smaller than expected loss for its latest quarter. That company which is backed by tesla founder elon musk says its seen unprecedented demand. Coming up the nations biggest fast food chain. You might have heard of them. A little shop called mcdonalds. Theyre said to report their sales out. Will they finally turn things around and deliver for investors . Were going to give you the breaking news out of mcdonalds when it rolls across. Then the who declaring the Ebola Outbreak an International Public Health Emergency. A live update on that meeting. More on your markets which have turned around on some positive headlines out of russia. That are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. Your studied day and night my mom works at ge. 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. 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. All right. Welcome back to squawk box, everybody. Weve got some breaking news for you right now. Mcdonalds out with samestore sales and they are much worse than had been expected. We knew things would be bad with the situation in china with the problems with the meat sourcing. But take a look at some of these numbers. Theres no way to frame them. Try not to editorialize. These are terrible. I dont know how else to say it. Global comparable sales down 2. 5 . The expectation was for a drop of 1. 2 . Sales around the world literally twice as bad as expected. The u. S. , samestore sales fell 3. 2 . They were expected to fall 2. 5 . So the expectations, folks were already bad. They were expected to drop. Theyre dropping more than expected. And, to your point, when you mention right before we came back on air, asia, asia region sales fell 7. 3 . Let me reiterate. Worse than expected in america. Worse than expected in asia. Worse than expected globally. The only semibright spot was europe 0. 5 up that is not a good number. If you had to find the least of the bad headlines that would be it. Asia pacific, middle east and africa the comp sales down 7. 3 like brian said. The estimate was only for down 1. 5 . So thats a much bigger miss than expected. The company goes out of its way to point out in the press release that this is because of the impact of food quality and safety issues at that supplier to mcdonalds and other Food Companies in china. They say as a consequence, results not just in china, but also japan and certain other markets experienced a significant negative impact. They say the effective markets represent about 10 of global systemwide sales. And negatively impacted the segments july comps by over 700 basis points. So explain this. Go ahead mcdonalds is undertaking recovery strategies. Its not just china. Right. Im going to but just hear what don thompson is saying. I was just about ready to go out. You can criticize him after we hear from him. Although julys results were not in line with mcdonalds expectations we intend to strengthen our performance by addressing the Current Business headwinds with the discipline and conviction that inspires our Customers Trust and loyalty. Theyre not business its a major structural problem in asia. The chinese food supply is generationally broken. This is this is the first line of the press release. And heres my problem, heres my beef, if you will. Mcdonalds Global Growth priorities providing our customers with their favorite food and drinks, creating memorable experiences, offering unparalleled convenience and becoming an even more trusted brand. Blah blah blah. Are the foundation of our customers approach to building our business for the longterm. Okay theres your problem. Youve got no less than a mini crisis if not more than that going on around the world. Your first sentence cant be, were a global trusted brand. Weve got problems. And were going to fix them. Thats what you say. What i will say, though, is this is not a mcdonalds only problem. This is affecting everyone who is operating in china. This is yum brands which is very large there with its operations for kfc. In their defense, mcdonalds did act quickly and say they was going to change its sourcing. Not to another Chinese Company but a Company Based in thailand. It is saying were going to take extreme measures. Your point is well noted. But we got to be careful here that we dont focus all this on china, and the concerns there. To me the biggest concern is that u. S. Sales fell 3. 5 . Yes. This is their biggest market but that makes china all the more important. There wasnt a food scare here. U. S. Sales are a secular thing. They need to grow in china. They cant afford to have continuing problems i would agree with problem. You can look to what happened as a oneoff and a solution that theyre fixing in china or trying to fix down 3. 2 when you were expected to only drop 1. 2 . Thats a big deal in your home market. Fair enough. It took yum how long to get over it . Is yum over it yet . No. No but theyre coming back. 18 months. Just to give you a sense of the context. During the month the u. S. , this is the u. S. Business down 3. 2 featured a favorites in conjunction with mcdonalds Global World Cup sponsorship. So theyre spending a fortune on the world cup. Theyre talking about how they promoted beef, they did all these different promotions. And apparently they said the segment lacked the prior year monopoly event. During the same period. Thats a more difficult comp to be up against. I would have thought the analysts would have known hat. Okay were going to tease it up. Weve got an analyst coming on. Well ask him is this now a cyclical or structural problem for mcdonalds longterm. Are the American People just choosing to go elsewhere for whatever reason . I want to hear more about that monopoly event a year earlier. We should talk about breakfast, as well. Thats right. Can we get some right now on set . By the way, i would take an egg mcmuffin right over here. We can work on that. Send it to me. Full service operation. The markets, the u. S. Equity futures did turn about 40 minutes ago, after huge concerns about whats happening in iraq with the president s speech last thiet. You can see that theyre still indicated higher. Those dow futures up by about 30 points above fair value. By the way this is coming despite mcdonalds which is a dow component looking like it is going to open lower on this news. S p futures are up by about four points this morning. If you look at what was happening overseas in asia, markets closed before you saw any of this turn weve seen here and in europe. Nikkei was down 3 on all of those concerns. A drop of 454 points. In the european markets things have turned like they have in our futures. Ftse is still down only by about 18 points. Green arrows in germany, france and italy. Lets continue the conversation about some of those concerns. The escalating conflict in iraq. David phillips joins us on the squawk news line. Director of columbia universitys peace building and rights. Good morning david. Help us through this sort of walk us through the permutations of what you think happens from here. We bombed some physicians of the iz lameic state forces but those are pinprick trikes. They are extremely well armed. Theyve got deep pockets. Theyve got their sights set on erbil which is the capital of iraqi kurdistan. Theres some Big Energy Companies like exxon mobil who are there. Are we going to stand by the kurds and continue to support them militarily . Allow them their right to selfdefense . Or are we going to let the Islamic State run rampant . David answer your own question. What are we going to do . The administration is risk averse. So theyve had to it was dragged into this recent military action. And the effort to drop food and water, to rescue people who were displaced by the conflict. I dont think it really has an appetite for expenses of military involvement. What that means the investment of troops and treasure that weve made in iraq over more than a decade is likely to get flushed down the drain. So, assuming i will. It could get flushed down the drain. Is there a Tipping Point at which you would imagine we would put boots on the ground even though the president has adamantly said that we wont . No, i dont think that there is a Tipping Point, nor should we put boots on the ground. The kurds, who are americas best friend in iraq, want the right to selfdefense. They dont have weapons, they are motivated and capable, we have been preventing countries from selling them weapons. But we should get a c130 to their airport yesterday. Loaded with antitank equipment. And give them a means to defend themselves. Tell us why the kurds have crimebled or seemingly so. Why is erbil now vulnerable . I dont understand why thats happened so quickly. And should that be a concern to the administration . Because how do you support a force that doesnt seem to be able to hold its own . Well they crumbled because they just dont have the military equipment. They havent seen a new weapon since 2003. Meanwhile the forces seized all the stateoftheart hardware that the u. S. Military has given to the iraqi army. When it invaded so the kurds are simply outgunned. If they had the means to defend themselves theyd be able to do so very capably. Okay. Were going to leave the conversation there. David phillips, thank you for joining us this morning. The outbreak of the ebola virus in west africa is a quote extraordinary event and a Public Health risk to other countries. So says the World Health Organization. Nbcs kate snow joins us now from atlanta with more. Kate . Good morning. Were standing outside the centers for Disease Control where they are monitoring all this so closely. As you say the World Health Organization held a meeting today over in europe. It was an Emergency Committee meeting where they discussed this outbreak. It is the largest outbreak in africa of ebola weve ever seen. They did call it extraordinary and called for a coordinated International Response. Now, one thing they did not do was to limit any trade or travel. Theyre saying were not going to limit International Trade and travel but we are going to ask airports and authorities in every country thats affected to really monitor travelers so theyre talking about at airports like in sierra leone, and in liberia, and in guinea they want to make sure that passengers dont have symptoms. So theyre actually literally checking peoples temperature. Checking them to make sure they dont have a fever. If anyone has outward symptoms of ebola, theyre simply not going to be allowed on the airplane. We should remind you that British Airways has suspended a number of flights in that region. Also one of the nigerian local airlines has suspended flights there, too. Mean time back here on capitol hill yesterday, a really interesting hearing on capitol hill about ebola, with an aid worker raising the alarm. The man works for the group that the two americans who have ebola worked for this organization, and he in front of a panel on capitol hill really got really was emphatic yesterday that the world has not treated this seriously enough. He said we we have failed as a world as an International Community to handle this outbreak. At the same time the cdc director tom friedan spoke at that hearing saying not to worry about the United States. He believes that there is no evidence that there will be any kind of outbreak here in this country. He said quote we can stop ebola, its just going to take some time to do that. And one last note for you the fda has fast tracked approval of that experimental medicine weve been talking about called zmap made by a company out of san diego. Theyre now saying they want that fast tracked. They want any ebola patient many more ebola patients to be able to have access to that experimental drug. Kate, thank you. Kate snow coming to us from outside the cdc in atlanta. When we come back, well serve up wall streets reaction to mcdonalds latest numbers and find out if ronald can keep investors coming back for more. And as we head to a break, check out the squawk box Market Indicator again. Things have turned around this morning. You do see green arrows across the board at this point the tenyear note is yielding 3. 86 . What can your fidelity greenline do for you . Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. 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Take a look at the futures. We do have some green arrows despite mcdonalds news. Were going to get to that in just a second. Samestore sales not pretty. Kind of an ugly picture. Dow up higher, the nasdaq up close to ten points. Want to tell you about the tenyear note. I think i said 3. 86 . It is yielding 2. 387 just to clarify for anybody who heard that. Mcdonalds samestore sales figures just moment ago that were well below what abe was anticipating. Lets get more on those numbers. Joining us is the senior restaurant and retail analyst at morningstar. And r. J. , we knew that wed be getting some potential bad news here but this is a lot worse than most people were expecting. Yeah, i think it was a lot worse on two fronts. We knew the news out of china was going to be bad but to see a negative 7. 3 gave us our first clear picture of how serious this is. Probably going to put the company in negative territory over the next couple of quarters because this only kicked in with the last ten days of the month. That becomes a concern not only with the top line but on the margin line, as well, given that they have a heavier Percentage Company owned store locations there. We could be looking at situations to leverage there. The u. S. Picture isnt much prettier there, too. Youve got a situation where a lot of initiatives Companies Put in place arent getting traction right now. And not having the ability to reconnect with the customer. They said in this this is partially because they were going up against tough comps when they had the Monopoly Game promotion going at this time last year. How much of that do you buy or do you think this is serious peril at this point . I think maybe it was a point or two. That still puts you in negative forth for the month if you factor that in. I think that becomes a situation where it is a larger issue. Its something that might be a more secular issue at play here. I think youve got a situation where the higher end and more affluent and even the millennial customer shifted away to chipotle, panner ra, you know, five guys and those players like that where the low end consumer is finding alternative channels. Is Don Thompsons job in jeopardy . We dont see much more of a turnaround and they had banked on a lot of initiatives, whether it be the customization efforts, marketing plans, then it starts to become a risk for thompson if we cant turn around the shift. Because were showing a chart of jack in the box, right, big out west. Their stocks have done great compared to mcdonalds. So its not that this sector is struggling as much. It appears to be really mcdonalds centric. The companys got to focus right now. Right now theyre trying to do too many things for too many people. Theyve got to focus what the target audience is. Weve seen some selfinflicted issues on the marketing and menu side of the business. Like what . Do they need to give up on the lets try to be healthy thing. You look at the chains that appear to be working and i hate it. Pretzel burger, three buns, three this, slathered in bacon and ranch. Thats what people are eating. Yeah, they have to pass some balance with the healthier alternatives. A lot of times they get pressure to introduce healthier fare but they need to really go after what works for their customer. Every time they try to go too health ye on the menu it comes back to bite them. And you think right now you go into a mcdonalds right now and you would think youre at a Health Food Store some of the time. No you wouldnt. A little bit. I was i think mcdonalds about five times since we were traveling and no. No . I was in one in the salt lake area why bother . Is there theres apples everywhere. Is anybody going to think its a Health Food Store . Thats my point theyre trying to do healthier stuff does that play to their audience . No. Its something that again they have to strike a balance. There is a niche that does work with but its a very small percentage of the base. We may see that shift over time but they have to be careful about the balance because it does come back to haunt them. I think the bigger issue is getting products to the stores quicker. It takes them too long to get something from a test base to the actual markets. You see wendys aand jack in the box come out with successful products and roll it out. Mcdonalds has gotten too big. The supply chain has gotten too cumbersome. I think thats a big issue in trying to get new products out there. We havent seen a new product platform that drives traffic. Given, you said its the size. Its very, very challenging to pull Something Like that off. On a relative basis to some of these smaller chains that youre talking about. Yeah its not something thats going to change overnight. With this stock you have 0 have some patience at this point. Is the traditional mcdonalds customer based still big enough to support the kind of growth shareholders want to see from this company . I mean you mention the casual, the chipotles, that gang, have those customers gone away, are they never coming back . Is there still the base to make this stock move . Yeah, i think the base is still large enough. I think the core customer youre looking at for mcdonalds, the lower to low middle income consumer, that group has been particularly challenged the last couple of years. They really havent seen much of a recovery. If you do see a cyclical upturn in the economy, and again thats a pretty big if at this point that customer does come back. I do think that the base is big enough to get this back. Again its also dependent on the company and their initiatives as well. Thank you for joining us today. We should point out something we didnt mention the company said at the bottom of the press release as a result of the china supplier issue the companys global comp Sales Forecast for 2014 is now at risk. Brian . All right coming up, hawaii bracing for iselles impact. Now it has been downgraded from a hurricane to a Tropical Storm. Not before dumping rain and wind on the big island overnight. And the bigger storm julio is on its way. Were going to give you an update on hawaii plus geopolitical concerns and ebola likely to keep markets on edge ahead of the weekend. Although futures have turned around because of some perhaps optimistic headlines coming out of russia regarding ukraine. Were going to give you all this for a big day. Squawk box coming right back. Might have a song that he has in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device, up to the cloud it goes, back down it comes, sounding better. We break down the walls of creation and we give music creation for the masses. Unlock the creativity in anyone. With the ibm cloud. The ibm cloud is the cloud for business. 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. All right, hawaii taking the full force of formerly hurricane iselle now Tropical Storm. Hurricane julio is not far behind it. Mike taibbi with more from maui. Mike . Good morning, brian. Yeah, what had been anticipated as an historic twopunch storm hit from both of these hurricanes, now looks like its going to be two Tropical Storms, which will be jabbing at these islands powerfully with wind and water, storm surge and rain. But at a much less destructive distance. Now, its not to say that people havent been preparing for days for these storms to approach the islands. Theyve done that, the resorts have protected themselves, et cetera. Its not to say there havent been problems, too. The maui electric is saying some 2700 people are now without power. The one Water Treatment facility on this island is also out of commission because of storm debris thats fallen across power lines, et cetera. And theres been flooding, and a lot of evacuations on the big island itself. But, right now the big concern here on maui particularly is for hurricane julio still about 1,000 miles to the east of here moving slowly toward the island and still packing category 3 Hurricane Force winds. About 115 miles an hour. And surging to 135 in some spots and gusts, and its moving in this direction. But its also likely to slow down, and to diminish as it approaches the islands. And also likely to track a little bit north of this island chain. So right now, everybody in maui here particularly, but across the island chain is getting a little bit lucky. They didnt get that direct hit. They prepared for the worst but doesnt look as though the worst will hit these islands. Not through it yet. But it doesnt look at this point as though what was going to be a historic onetwo punch is going to hit these islands before it is all through. Hurricane julio is not expected to approach the islands until late saturday or early sunday. Becky . All right, mike, thank you. A little bit of good news this morning. When we come back, productivity and labor cost data and later the unofficial start of the football season kicking off last night with six preseason games. Yeah. A lot of excitement. A lot of franchises in flux over ownership changes. Were going to break down who stands to lose the most. Right now as we head to a break again take another look at the u. S. 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Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. Hello. Welcome back to squawk box, everybody. The best show would be if you just tape the commercial breaks. Were just seconds away from productivity and labor cost numbers. Rick santelli is standing by at the cme group in chicago. But were going to talk about the futures for just one second. Thats why youre justic lating wildly. Becky im just a fillin. In about a minute and a half. Lets talk through whats happened this morning. Again we came in this morning and did see a lot of red arrows. After the president raised those concerns last night started talking about whats happening in iraq. The idea that wed be dropping food there and potentially having strikes that put a lot of pressure on the futures. We did see futures down by about 100 points at one point. We came in to red arrows but things have pushed around. Futures indicated up by about 31 points. People say we giving all the negligentive headlines . Theyre tweets and comments that russia may be interested in talking with some of the separatists to find a more peaceful solution. As soon as the stuff started to trickle out, we started to get the thing, peter do you buy it . No, not at all. Of course Steve Liesman, you lived in russia. I did. Perhaps want to point out one of the right, exactly. Never learn to be more of a capitalist than walking in the former soviet union. A very good barometer of risk is the german ten yaesh. The bund. Which fell as low as 102. Were looking at sub 10 tenyear money its now up a little bit so thats an indication that it did that the concern eased off just a wit. When the yield rose. We watched the same thing happen with u. S. Treasuries. Lower yields this morning. Were still talking below 2. 4 . We got to get to mr. Santelli standing by in chicago. Ricks got the numbers. Yes. Productivity the magic bullet, which japan wishes they had, came out stronger than expected. 2. 5 . Al know, although, always revisions, it seems as though nobodys getting these numbers right. We have to swap their crayons for sharper pencils. Minus 3. 2 is now mineous 4. 5. So pretty much any gains you made on the better number kind of were whitewashed in the rear view mirror. Remember since 1948, the United States has averaged over 2. 5 productivity. Now the numbers much closer to 1. 1 . Since 2011. So, these numbers are super important. Of course, we see yields moving down. Well tell you what, to hear people say 102, that all these yields are being affected so dramatically by geopolitics just has not been a wait for the last couple of years. Interest rates, around the globe, whether its gilds, bunds or treasuries, have moving aggressively lower. Aggressively lower. Long before the ukraine headlines ever hit a newspaper. We have been talking about that this year. Im youre thats why weve seen the tenyear below 2. 5 and below 3 when everyone thought this would be the year that yields rise. For more on the data Steve Liesman is here and steve what do you think about this . First i want to echo what rick said about productivity being the magic bullet. It is the measure of how well well live today and tomorrow the efficiency of the total economy. And rick is right that these are very important numbers. Unfortunately theyre also highly volatile numbers. And we simply do not know the trend because we had this incredible decline in the first quarter. Productivity falling. As rick said from minus 3. 2 to minus 4. 5 bouncing back to 2. 5 the trend year over year looks like its around a weak 1 . I will tell you people who are concerned about inflation are going to circle with a red pen and then underline it several times and then perhaps highlight it again, the unit labor cost revision to the first quarter. 11. 8 rise. And this is one of the things that people are going to be concerned about is the rise, however i can tell you, to calm you down, that for the Second Quarter it rose only 0. 6 . So look, weve had a tale of two quarters. First quarter incredibly weak. A bit of inflation in the system. Second quarter it rolls off a big bounceback in the growth numbers. So thats why were all watching the Third Quarter so carefully to get a sense of what the real underlying trend is. So far its been running pretty good. 3 the isms have been good. Early days in the data here. The insurance claims have been good. So so far if you have a tie, bad quarter, good quarter, it looks like the Third Quarter breaking the tie is breaking towards the good. But not as strong as the Second Quarter. All right also we should point out jim iuorio is at the futures group. Give us an explanation what happened here this morning because it has been a wild ride. Well, heres what im looking at. This goes for yesterday and the day before, too, the stock market tends to inishly react negatively to headlines right now. And then interprets them later as to how negative those headlines actually are. And granted, if we are potentially dropping bombs on iraq clearly thats a negative thing for our society but for the stock market it doesnt have to be particularly negative. So it bounced off those lows pretty well, and then when the head line came out that perhaps russia was interested in deescalating that pusheds a little further higher too. That same head line was leaked out in may and in april, im not positive russias really interested in that, probably just fighting a propaganda war. I think its impressive that the stocks bounced off their lows like they did. Im not sure this correction is over. My money says its not. The rates thing is a little different. To me that was a big function of option positions put on where people couldnt take the heat anymore and had to buy back the contracts. I think rates could start to drift higher from here because i think they were moved lower and somewhat exogenous factors. You know, it is interesting too, here guys because this is the big debate. This is the framed debate by the way and how were leading street signs at two clock. Youve got all this stuff going on, right . Iraq, syria, hamas, ebola, whatever it might be. On the other side youve got strong jobs numbers, this thing now with Wage Inflation which could be a good thing actually. Youve got a bunch of positive factors here in the u. S. Economy, and the question is, steve, and this is really to me the only question. Yeah. Whos going to win out . Is it going to be all the geopolitical stuff . Or mom and pop saying we need a car, were still going to buy a dog gone car . I think the market trades with a sense of global risk. Around each one of these things. And i think if you were to prioritize them, probably ukraine would be in the first order right there. And the market probably i dont know that its much higher. And i think israel hamas, its not like is that two or three . It would be number three actually because i think the market looks at has happening in iraq and what happened with the kurds, and the potential to lose that oil field out there as well as the notion that there would be some kind of radical Islamic State, established in the middle of that region right there. And so what president obama did last night i think is a step back from that. Guys, guys one more point, jim. Youre right brian that the domestic Economic Data has been on an upward trend and that is counterto reality of whats happening. Nobody cares what i think, but i think the recovery rolls on. Were forgetting one element guys and thats how the markets positioned when certain scenarios start to take place. Junk bonds two weeks ago were pricing in zero risk. Now all of a sudden they realize wow theres risk. So i mean these headlines are clearly bad globally. However markets may move in bigger swings based on what side of the boat everybodys running to. Two weeks ago like i said we werent pricing in any risk. Now all of a sudden we realize there is. The move in junk bonds and the move in stocks could be relatively big two things to be clear. I tweeted this out as well. Number one the economy and the stock market are very different things. Okay. So the stock market might go down who knows but the recovery i think rolls on. Weve got people on the radio right now to the dulcet sounds of beckys voice. I love your ads by the way for sirius. And youve got somebody an accountant thinking should i pull back on my 401 k contribution because of whats happening around the world . Who can answer that question . For that guy stuck in traffic. Go ahead. That doesnt feel to me like its whats moving the market. You know there are big bets made on correctional stuff now. The wagering in the market is coming from hedge funds, its coming in huge pools of liquidity. Its not like were waiting on necessarily the cardiologist in boca to pull the trigger on netflix. That said, we are in this space some guy. Cord yalgs he was just about to do it. And you stopped the train. You get my point though. I do. The cardiologist in boca, the doctor, they need advice. Do they stop buying stocks because of all this sfuf going on in isis and hamas and everything . They dont. Whats clear but they shouldnt. They shouldnt. Because what jim was talking about, which side of the boat theyre on to me there are like three very, very powerful forces in the universe. Theres the, you know, gravity. And theres compound interest. And then theres reversion to the mean. So, people go this way on the boat and that way but they revert around what is the center here and jim youre right. Theres increasing risk concern and then theres less risk concern and it sort of is around can i just point out something else, too. The guy in boca had two months where the market traded at alltime highs. You were supposed to reposition your portfolios for longterm at that point in time. Now you dont. Now that were down 5 now you wait should have taken something off the table. Amen to that. It was the middle of the year. It was a good time to do it. I didnt do it. Guys weve been showing these charts. For anybody who is listening on radio who cant see it we are talking about the futures up 45 points above fair value. Thats the highest weve seen all morning. At the same time the yield on the tenyear pushing above 2. 4 . Thats the highest level weve seen on the yield. We didnt bring in another risk factor which is the federal reserve. I think there were some comments the other day by lockhart out of atlanta that maybe calmed down this notion that the fed was going to be more rapid than people thought. And thats why i think the Third Quarter is so important. I think it comes in at 3 . It doesnt necessarily accelerate the fed. But i think when you Start Talking about a 3. 5 or 4 economy, watching wages very carefully, and titles in the labor market you could get a faster fed. We had 4 growth in the Third Quarters you could get there. Theres only like as long as mom and pop and the cardiologist in boca buys his bentley convertible still, well get 4 growth. That cardiologist buying a bentley i want to look at how much hes charging. All right. My brotherinlaw is a realtor. If i was a realtor id get an average car because i dont want people to think im doing too well. The producers on the phone to find us a cardiologist in boca. With a bentley. Thats right. Looking for a bentley. Steve, thank you very much. My pleasure. Jim, thank you. Coming up next, the nfl preseason kicked off last night. And with franchise teams teetering on valuations of over 1 billion ownership changes in the nfl now matter more than ever. Were going to break down the teams who could see big changes this year as we head to a break check out the futures dow looks like it will open up about 46 points higher. Tdd 18003452550 there are Trading Opportunities tdd 18003452550 just waiting to be found. Tdd 18003452550 at schwab, were here to help tdd 18003452550 bring what inspires you tdd 18003452550 out there. In here. Tdd 18003452550 out there, tdd 18003452550 there are stocks on the move. 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University of minnesota wants the Washington Redskins to wear threeback jerseys that do not feature the team name or the logo of the november 2nd game against the Minnesota Vikings being held at their college stadium. The college, which is leasing its stadium to the vikings as their new stadium gets built for a schedule 2016 opening has also asked that the game not have any washington apparel or paraphernalia sold on the premise and that the word redskins is not uttered by the games public announce addresser. Wow. That is the teams moniker not appear on the scoreboard as well or in the program guide. We get the point here. University stadium features a tribal nations plaza dedicated in honor of the 11 native american tribes in minnesota. So the first time that we have seen besides the general debate over the name, i dont want to see a team, because this is the university of minnesota, its not the vikings themselves apparently, saying not in our house. Right. Major ownership changes around the nfl and with franchise value averaging more than a billion dollars estate and succession plans are paramount. Joining us with a look at some of the shakeups and what is at stake. Heres what it comes down to, fans in the nfl are witnessing some of the biggest landscape changes in ownership theyve seen in quite some time with the nfl. And it all comes down to whether or not were going to see changes evolve with the Ownership Structure at major franchises. The first one, of course, is the Buffalo Bills. We know ralph wilson passed away and the team is being put up for sale. Morgan stanley is managing the auction process. Youve got so many high profile names in the mix for bidding for this franchise here. Terry pegula is considered the frontrunner by many. But look at all the names that have been tossed around. Maybe a donald trump, maybe a jim kelly type Investor Group, maybe a bon jovi Investor Group all of these guys around the Buffalo Bills. The reason why were seeing this is over the course of the past year we have seen the passing away of some of the most iconic owners in the game in the nfl. The Tennessee Titans bud adams passed away. Now his family and family trust now kind of owns and manages that part of the franchise. Malcolm glazer with the buccaneers, he passed away. The glazer family is owning that particular franchise and the Buffalo Bills. But its not just that. Its also the issues around some of the high profile mishaps around the nfl here. Look at jim irsay who owns the ins colts. He was arrested for a dwi charge, found with cash and prescription meds in his car and then theres pat bowlen, one of the most iconic owners in the nfl. The Denver Broncos owner who has stepped down from his active ownership of the franchise because he has alzheimers disease. When you look at this the reason why its such a big deal is those franchise values like you said about a billion dollars on average. Look at these big teams. The Dallas Cowboys according to forbes worth about 2. 3 billion. Even the number four new york football giants who i know dan is a big fan of worth about 1. 6 billion. The question then becomes if the Buffalo Bills get sold what will they go for . Remember the franchise record paid for any particular team is the 1. 1 billion. Dom that third one Washington Redskins 1. 7 billion. The question i guess dan snyder and others might have and you wonder why dan snyder is digging his heels so much if they remove that name. If it becomes the Washington Nationals or capitals or whatever, does that value go down considerably . Well i mean heres the question. Game. Go ahead, dan. No, no. I know you have some pretty big no these franchises own, and you need to built Estate Planning around them, especially in the nfl which still has a lot of family ownership. These firms, these teams and franchises are in a precarious situation. There have been franchises sold off because of Estate Planning in the past. Its a seriouser a but these are built to be sold. These are not cash flow generating things. These are big payouts on the back end. Heres a question, and i dont know the answer, but im surprised by those valuations especially after Steve Ballmer just bid 2 billion for a basketball team. I mean i would think that the new england patriots, the Washington Redskins, the new york giants would all be worth more than that basketball team. You need a couple Steve Ballmers. And theres not as much turnover in the nfl. Thats key though, right . These things do not come up for sale. Donald sperling held onto that thing for over 20 years. Arguably, when and if they do, shouldnt the number be higher . It could be. But for right now these are intrinsic values. They look at the stadium values, concessions but were not talking about the trophy buyer who decides that it doesnt matter. Which is sort of what every one of these teams must actually be sold for in reality. If the clippers are worth 2 billion its the clippers. But theyre in downtown l. A. Although theyve got the worst what should we do, dom . Should we double the number . I think its a conventional media question. You have to watch the ruperts, and cnns and time warners to see where these contracts come in. Thats where the big payoff is. Regional sports networks. Its all about the big tv money. If the redskins lost theyre nip and logo how much would the value go down . You said regional sports. One comment, and you may have a view, regional networks, the day that those get moved to a premium tier on cable, which i think is actually a possibility over the next couple of years, the day the whole thing starts to crumble actually. Doesnt get better, gets worse. What the valuation of these teams. Right. Because it gives them a finite economy where theyre not just premium in a morass. Exactly. Dom, thank you. When we come back, jim cramer from the new york stock exchange. Were going to wrap up this week of jittery trading on wall street. Also geopolitics looming large. Theres a gap out there. 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. Female announcer sundayduring sleep trains triple choice sale. For a limited time, you can choose to save hundreds on beautyrest and posturepedic mattress sets. Or choose 300 in free gifts with sleep trains most popular tempurpedic mattresses. You can even choose 48 months interestfree financing on the new tempurchoice, with headtotoe customization. The triple choice sale ends sunday at sleep train. Sleep train your ticket to a better nights sleep welcome back, everybody, geopolitical news is driving everything since last night, and that continues this morning. We have the latest. The pentagon just tweeted out u. S. Military aircraft conducted a strike on isis artillery. The artillery used against the Kurdish Forces defending u. S. Personn personnel. There have been air strikes now in northeastern iraq. We knew it a responsibility when the president spoke last night, and now it is reality. Jim cramer is standing by, and, jim, a wild ride since he heard about this last night with the futures down a hundred turning around now. What dupg now . Everythings russia. Iraq is a side show, not orvel if youre on that mountain. Were in an august 1990 period where we hear of negotiations with the iraqis of course, a different regime, and thats where we are, futures down 12. 5, and then up, and everything is somebody saying, merkel has to come from merkel, not the president , and someone has good information, turns out not to be good information. Were in rumorcentral trading. You have to be careful. No one knows whats happening. Jim, to your point, we think that turned things around this morning. Yeah, sure. The idea that russia would sit down and have talks, thats when we had positive territory this morning. Yeah, look, the United States did a fly by. Remember, we flew over iraq for years before the war, and we know every single inch of it. Lets not think for a second that we couldnt have stopped this nunless we decided the regime change is in iraq. We have the capability of pin pointing isis. Dont get confused. They could drive oil up, but this is about russia. Someone thinks they know theres a deal this weekend, and when theres no deal, come in, futures down 13 on monday. Its a treacherous environment for retail environments and financial institutions. How do you set yourself up for the weekend . You cant. Its not a good market. You cant. Just decide, listen, i want yield. Im going to take down my International Exposure because this is all about global weakness. The leaders of the world are not focus on the economy now or the stock market. You have to be cognizant numbers come down, when numbers come down, profits go down, stocks come down. The comments on mcdonalds this morning . They lost their way. Down badly, they are rebellion against the food chain. The companies doing well are natural and ogranic in that space, and mcdonalds stands for the Information Bureau that chipolte makes fun of. Its the idea you cant eat it anymore. Anyone who thinks its going to turn, you just youre going gets history. Look at white waves numbers yesterday, best in show. Why . Its plant based food. Mcdonalds is the opposite. Yeah. Go buy lettuce. Its animal vaccines and animal steroids. Guy, to clarify, again, michelle mentioned what the tweet contained before, and now according to nbc news, u. S. Officials told nbc news two u. S. Navy fa 18 struck two bombs on enemy forces, no word on casualties, but the two fighter jets flew off the uss george bush Aircraft Carrier in the persian gulf. For f18 s in the air . They were going to drop off supplies. We were told those did not have anything to do with dropping bombs, so this just now having someone there knows the answer to the questions. This is all were hearing at this point. Going to be drips and drabs as jim pointed out. It is a troech rous times. Quoting officials directly. Not raising numbers iraq or russia. I care about raising numbers, and sorry to be so you can raise monster beverage, jack in the box numbers with the sense there is a wave of people who want to own mexican, but qdoba is hardly natural and ogranic, but solar city, people said the cash flow was not good, but they are raving. You have to play the numbers, and the numbers for the big internationals come down because of everything we are reading. Jim, theres a lot on your plate coming up in a few minutes. Thank you. See you there. Futures right now, you can see right there, dow up about 29 points, close to 30 points, squawk box returns in a moment. Er look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. 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We are also looking at the tweet that was first out, admiral john kirby, official pentagon tweet saying u. S. Military aircraft conducted a strike on isis. Folks, this will be the situation, a lot of breaking news today, a lot of things to Pay Attention to, markets rock left and right, and we thank our guest hosts for joining us, great having you here. Right now, its time for squawk on the street. Good friday morning, welcome to squawk on the street, im Carl Quintanilla with jim cramer, and faber is off today. Futures had a wild ride over the night, down hundred points at the lows as the president authorized air strikes on iraqi mil militants, but we rebounded. The air strikes have taken place. Ten year note yields down this morning, lowest yields in a year. Dont forget to watch europe as well, barely hanging on to gains, the indexes down firmly for the week. Road map like